G.R. No. 190004. August 08, 2017
LAND BANK OF THE PHILIPPINES, PETITIONER, VS. EUGENIO DALAUTA, RESPONDENT. [G.R. No. 190004, August 08, 2017].
This case involves an action for determination of just compensation.
FACTS: Respondent Eugenio Dalauta (Dalauta) was the registered owner of an agricultural land in Florida, Butuan City, with an area of 25.2160 hectares and covered by Transfer Certificate of Title (TCT) No. T-1624. The land was placed by the Department of Agrarian Reform (DAR) under compulsory acquisition of the Comprehensive Agrarian Reform Program (CARP) as reflected in the Notice of Coverage, dated January 17, 1994, which Dalauta received on February 7, 1994. Petitioner Land Bank of the Philippines (LBP) offered P192,782.59 as compensation for the land, but Dalauta rejected such valuation for being too low.
The case was referred to the DAR Adjudication Board (DARAB) through the Provincial Agrarian Reform Adjudicator (PARAD) of Butuan City. A summary administrative proceeding was conducted to determine the appropriate just compensation for the subject property. In its Resolution,[5] dated December 4, 1995, the PARAD affirmed the valuation made by LBP in the amount of P192,782.59.
On February 28, 2000, Dalauta filed a petition for determination of just compensation with the RTC, sitting as SAC. He alleged that LBP's valuation of the land was inconsistent with the rules and regulations prescribed in DAR Administrative Order (A.O.) No. 06, series of 1992, for determining the just compensation of lands covered by CARP's compulsory acquisition scheme.
During the trial, the SAC constituted the Board of Commissioners (Commissioners) tasked to inspect the land and to make a report thereon. The Report of the Commissioners, dated July 10, 2002, recommended that the value of the land be pegged at 100,000.00 per hectare. With both Dalauta and the DAR objecting to the recommended valuation, the SAC allowed the parties to adduce evidence to support their respective claims.
On May 30, 2006, the SAC rendered its decision as follows:
Hence, LBP filed a petition for review under Rule 42 of the Rules of Court before the CA, arguing: 1] that the SAC erred in taking cognizance of the case when the DARAB decision sustaining the LBP valuation had long attained finality; 2] that the SAC erred in taking judicial notice of the Commissioners' Report without conducting a hearing; and 3] that the SAC violated Republic Act (R.A.) No. 6657[15] and DAR A.O. No. 6, series of 1992, in fixing the just compensation.
The CA Ruling
In its September 18, 2009 Decision, the CA ruled that the SAC correctly took cognizance of the case, citing LBP v. Wycoco[16] and LBP v. Suntay. It reiterated that the SAC had original and exclusive jurisdiction over all petitions for the determination of just compensation. The appellate court stated that the original and exclusive jurisdiction of the SAC would be undermined if the DAR would vest in administrative officials the original jurisdiction in compensation cases and make the SAC an appellate court for the review of administrative decisions.
With regard to just compensation, the CA sustained the valuation by the SAC for being well within R.A. No. 6657, its implementing rules and regulations, and in accordance with settled jurisprudence. The factors laid down under Section 17 of R.A. No. 6657, which were translated into a basic formula in DAR A.O. No. 6, series of 1992, were used in determining the value of Dalauta's property. It stated that the courts were not at liberty to disregard the formula which was devised to implement Section 17 of R.A. No. 6657. The CA, however, disagreed with the SAC's valuation of the farmhouse, which was made of wood and galvanized iron, for it was inexistent during the taking of the subject land.[19]
The appellate court also disallowed the awards of attorney's fees and litigation expenses for failure of the SAC to state its factual and legal basis. As to the award of commissioner's fees, the CA sustained it with modification to conform with Section 15, Rule 141[20] of the Rules of Court. Considering that the Commissioners worked for a total of fifteen (15) days, the CAroled that they were only entitled to a fee ofP.3,000.00 each or a total of P9,000.00.[21] The dispositive portion reads:
WHEREFORE, in view of all the foregoing, the instant petition is PARTIALLY GRANTED, and the assailed Decision dated May 30, 2006 of the RTC, Branch 5, Butuan City, in Civil Case No. 4972, is hereby MODIFIED as follows: (1) the compensation for the farmhouse (P100,000.00), as well as the awards for attorney's fees (P150,000.00) and litigation expenses (P50,000.00), are hereby DELETED; and (2) the members of the Board of Commissioners shall each be paid a commissioner's fee of Three Thousand Pesos (P3,000.00) by petitioner Land Bank of the Philippines. The assailed Decision is AFFIRMED in all other respect.
SO ORDERED.
Not in conformity, LBP filed this petition raising the following:
ISSUES: Whether or not the trial court had properly taken jurisdiction over the case despite the finality of the PARAD Resolution?
Primary Jurisdiction of the DARAB and Original Jurisdiction of the SAC. Jurisdiction is defined as the power and authority of a court to hear, try and decide a case. Jurisdiction over the subject matter is conferred only by the Constitution or the law. The courts, as well as administrative bodies exerctsmg quasi-judicial functions, have their respective jurisdiction as may be granted by law. In connection with the courts' jurisdiction vis-a-vis jurisdiction of administrative bodies, the doctrine of primary jurisdiction takes into play.
The doctrine of primary jurisdiction tells us that courts cannot, and will not, resolve a controversy involving a question which is within the jurisdiction of an administrative tribunal, especially where the question demands the exercise of sound administrative discretion requiring the special knowledge, experience and services of the administrative tribunal to determine technical and intricate matters of fact.
In agrarian reform cases, primary jurisdiction is vested in the DAR, more specifically, in the DARAB as provided for in Section 50 of R.A. No. 6657 which.
Meanwhile, Executive Order (E.O.) No. 229 also vested the DAR with (1) quasi-judicial powers to determine and adjudicate agrarian reform matters; and (2) jurisdiction over all matters involving the implementation of agrarian reform, except those falling under the exclusive original jurisdiction of the Department of Agriculture and the Department of Environment and Natural Resources.[26]
On the other hand, the SACs are the Regional Trial Courts expressly granted by law with original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners.
Adhering thereto, in Land Bank of the Philippines v. Heir of Trinidad S. Vda. De Arieta,[27] it was written:
On the supposedly conflicting pronouncements in the cited decisions, the Court reiterates its ruling in this case that the agrarian reform adjudicator's decision on land valuation attains finality after the lapse of the 15-day period stated in the DARAB Rules. The petition for the fixing of just compensation should therefore, following the law and settled jurisprudence, be filed with the SAC within the said period. This conclusion, as already explained in the assailed decision, is based on the doctrines laid down in Philippine Veterans Bank v. Court of Appeals and Department of Agrarian Reform Adjudication Board v. Lubrica. [Emphases and underscoring supplied]
Jurisdiction of the SAC is Original and Exclusive; The Courts Ruling in Veterans Bank and Martinez should be Abandoned. Citing the rulings in Veterans and Martinez, the LBP argues that the PARAD resolution already attained finality when Dalauta filed the petition for determination of just compensation before the RTC sitting as SAC. The petition was filed beyond the 15-day prescriptive period or, specifically, more than five (5) years after the issuance of the PARAD Resolution.
This issue on jurisdiction and prescription was timely raised by LBP as an affirmative defense, but the SAC just glossed over it and never really delved on it. When the issue was raised again before the CA, the appellate court, citing LBP v. Wycoco and LBP v. Suntay, stressed that the RTC, acting as SAC, had original and exclusive jurisdiction over all petitions for the determination of just compensation. It explained that the original and exclusive jurisdiction of the SAC would be undermined if the DAR would vest in administrative officials the original jurisdiction in compensation cases and make the SAC an appellate court for the review of administrative decisions.
The Court agrees with the CA in this regard. Section 9, Article III of the 1987 Constitution provides that "[p]rivate property shall not be taken for public use without just compensation." In Export Processing Zone Authority v. Dulay, the Court ruled that the valuation of property in eminent domain is essentially a judicial function which cannot be vested in administrative agencies. "The executive department or the legislature may make the initial determination, but when a party claims a violation of the guarantee in the Bill of Rights that private property may not be taken for public use without just compensation, no statute, decree, or executive order can mandate that its own determination shall prevail over the court's findings. Much less can the courts be precluded from looking into the 'just-ness' of the decreed compensation."[39] Any law or rule in derogation of this proposition is contrary to the letter and spirit of the Constitution, and is to be struck down as void or invalid. These were reiterated in Land Bank of the Philippines v. Montalvan,[40] when the Court explained:
To maintain the rulings would be incompatible and inconsistent with the legislative intent to vest the original and exclusive jurisdiction in the determination of just compensation with the SAC. Indeed, such rulings judicially reduced the SAC to merely an appellate court to review the administrative decisions of the DAR. This was never the intention of the Congress.
As earlier cited, in Section 57 of R.A. No. 6657, Congress expressly granted the RTC, acting as SAC, the original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners. Only the legislature can recall that power. The DAR has no authority to qualify or undo that. The Court's pronouncement in Veterans Bank, Martinez, Soriano, and Limkaichong, reconciling the power of the DAR and the SAC essentially barring any petition to the SAC for having been filed beyond the 15-day period provided in Section II, Rule XIII of the DARAB Rules of Procedure, cannot be sustained. The DAR regulation simply has no statutory basis.
On Prescription
While R.A. No. 6657 itself does not provide for a period within which a landowner can file a petition for the determination of just compensation before the SAC, it cannot be imprescriptible because the parties cannot be placed in limbo indefinitely. The Civil Code settles such conundrum. Considering that the payment of just compensation is an obligation created by law, it should only be ten (10) years from the time the landowner received the notice of coverage. The Constitution itself provides for the payment of just compensation in eminent domain cases.[41] Under Article 1144, such actions must be brought within ten (10) years from the time the right of action accrues. Article 1144 reads:
In this case, Dalauta received the Notice of Coverage on February 7, 1994.[43] He then filed a petition for determination of just compensation on February 28, 2000. Clearly, the filing date was well within the ten year prescriptive period under Article 1141.
Concurrent Exercise of Jurisdiction
There may be situations where a landowner, who has a pending administrative case before the DAR for determination of just compensation, still files a petition before the SAC for the same objective. Such recourse is not strictly a case of forum shopping, the administrative determination being not res judicata binding on the SAC.[44] This was allowed by the Court in LBP v. Celada[45] and other several cases. Some of these cases were enumerated in Land Bank of the Philippines v. Umandap[46] as follows:
On Just Compensation
Upon an assiduous assessment of the different valuations arrived at by the DAR, the SAC and the CA, the Court agrees with the position of Justice Francis Jardeleza that just compensation for respondent Dalauta's land should be computed based on the formula provided under DAR-LBP Joint Memorandum Circular No. 11, series of 2003 (JMC No. 11 (2003)). This Memorandum Circular, which provides for the specific guidelines for properties with standing commercial trees, explains:
Dalauta's sale of falcata trees indeed appears to be a one-time transaction. He did not claim to have derived any other income from the property prior to receiving the Notice of Coverage from the DAR in February 1994. For this reason, his property would be more appropriately covered by the formula provided under JMC No. 11 (2003).
JMC No. 11 (2003) provides for several valuation procedures and formulas, depending on whether the commercial trees found in the land in question are harvestable or not, naturally grown, planted by the farmerbeneficiary or lessee or at random. It also provides for the valuation procedure depending on when the commercial trees are cut (i.e., while the land transfer claim is pending or when the landholding is already awarded to the farmer-beneficiaries).
Dalauta alleges to have sold all the falcata trees in the property to Fonacier in 1993.[56] After Fonacier finished harvesting in January 1994, he claims that, per advice of his lawyer, he immediately caused the date of effectivity of this Joint Memorandum Circular x x x." It is submitted,
however, that applying the above formula to compute just compensation for respondent's land would be the most equitable course of action under the circumstances. Without JMC No. 11 (2003), Dalauta's property would have to be valued using the formula for idle lands, the CNI and CS factors not being applicable. Following this formula, just compensation for Dalauta's property would only amount to 225,300.00, computed as follows:
As to the just compensation, the September 18, 2009 Decision of the Court of Appeals decreeing payment of P2,639,557.00 as the value of the subject property is SET ASIDE. Let the case be remanded to the Regional Trial Court, Branch 5, Butuan City, sitting as Special Agrarian Court, for purposes of computing just compensation in accordance with JMC No. 11 (2003) and this disposition.
The amount shall earn legal interest from the time of taking at the rate of twelve percent (12%) per annum until June 30, 2013. Thereafter, the rate shall be six percent (6%) per annum until fully paid.
SO ORDERED.
[1] Penned by Associate Justice Danton Q. Bueser, with Associate Justices Romulo V. Borja and Elihu A. Ybañez, concurring, rollo, pp. 63-82.
[2] Penned by Presiding Judge Augustus L. Calo. Id. at 126-148.
[3] Id. at 221.
[4] Id. at 65.
[5] Land Valuation Case No. LV-X-02-164, id. at 179-180.
[6] Id. at 223-227.
[7] Records, p. 13.
[8] Rollo, pp. 68-69.
[9] Id. at 198-199.
[10] Id. at 69-70.
[11] Id. at 70.
[12] Id. at 70-71.
[13] Id. at 148.
[14] Id. at 147-148.
[15] Comprehensive Agrarian Reform Law of 1988.
[16] 464 Phil. 83 (2004).
[17] 561 Phil. 711 (2007).
[18] Rollo, p. 76.
[19] Id. at 77-80.
[20] Section 15. Fees of commissioners in eminent domain proceedings. - The commissioners appointed to appraise land sought to be condemned for public uses in accordance with these rules shall each receive a compensation of two hundred (P200.00) pesos per day for the time actually and necessarily employed in the performance of their duties and in making their report to the court, which fees shall be taxed as part of the costs of the proceedings. (13a)
[21] Rollo, pp. 80-81.
[22] Id.
[23] Asia International Auctioneers, Inc.v. Hon. Parayno, 565 Phil. 255, 265 (2007).
[24] Republic v. Bantigue Point Development Corp., 684 Phil. 192, 199 (2012).
[25] Paloma v. Mora, 507 Phil. 697, 712 (2005).
[26] Sta. Ana v. Spouses Carpo, 593 Phil. 108, 126 (2008).
[27] 642 Phil. 198 (2010).
[28] Id. at 222.
[29] 379 Phil. 141, 147 (2000).
[30] 582 Phil. 739 (2008).
[31] 685 Phil. 583 (2012).
[32] 331 Phil. 1070, 1077 (1996).
[33] Philippine Veterans Bank v. CA, supra note 29, at 147-149.
[34] 582 Phil. 739 (2008).
[35] 464 Phil. 83 (2004).
[36] 561 Phil. 711 (2007).
[37] Rollo, p. 76.
[38] 233 Phil. 313 (1987).
[39] Id. at 326.
[40] 689 Phil. 641, 652 (2012).
[41] Section 9, Article III of the 1987 Constitution provides that private property shall not be taken for public use without just compensation.
[42] Coderias v. Estate of Juan Chioco, 712 Phil. 354, 370 (2013); and Antonio v. Engr. Morales, 541 Phil. 306, 311 (2007).
[43] Rollo, p. 9; CA Decision, p. 2.
[44] There is no res judicata because the DAR determination is only a preliminary assessment of the reasonable compensation to be paid. It is not a judgment on the merits because it is the RTC acting as SAC, pursuant to its original and exclusive jurisdiction, that has the authority to ultimately settle the question of just compensation. (See Spouses Arevalo v. Planters, Development Bank, 686 Phil. 236 [2012]).
[45] 515 Phil. 467 (2006).
[46] 649 Phil. 396, 420-421 (2010).
[47] 376 Phil. 252 (1999).
[48] 464 Phil. 83 (2004).
[49] Supra note 44.
[50] 608 Phil. 658 (2009).
[51] Id. at 668-669.
[52] This much was also explained during trial by the LBP withness Alex G. Carido, as noted in the assailed CA Decision:
[54] Id. at 172, 174.
[55] Id. at 172, 175.
[56] Rollo, p. 10.
[57] 716 Phil. 267 (2013).
FACTS: Respondent Eugenio Dalauta (Dalauta) was the registered owner of an agricultural land in Florida, Butuan City, with an area of 25.2160 hectares and covered by Transfer Certificate of Title (TCT) No. T-1624. The land was placed by the Department of Agrarian Reform (DAR) under compulsory acquisition of the Comprehensive Agrarian Reform Program (CARP) as reflected in the Notice of Coverage, dated January 17, 1994, which Dalauta received on February 7, 1994. Petitioner Land Bank of the Philippines (LBP) offered P192,782.59 as compensation for the land, but Dalauta rejected such valuation for being too low.
The case was referred to the DAR Adjudication Board (DARAB) through the Provincial Agrarian Reform Adjudicator (PARAD) of Butuan City. A summary administrative proceeding was conducted to determine the appropriate just compensation for the subject property. In its Resolution,[5] dated December 4, 1995, the PARAD affirmed the valuation made by LBP in the amount of P192,782.59.
On February 28, 2000, Dalauta filed a petition for determination of just compensation with the RTC, sitting as SAC. He alleged that LBP's valuation of the land was inconsistent with the rules and regulations prescribed in DAR Administrative Order (A.O.) No. 06, series of 1992, for determining the just compensation of lands covered by CARP's compulsory acquisition scheme.
During the trial, the SAC constituted the Board of Commissioners (Commissioners) tasked to inspect the land and to make a report thereon. The Report of the Commissioners, dated July 10, 2002, recommended that the value of the land be pegged at 100,000.00 per hectare. With both Dalauta and the DAR objecting to the recommended valuation, the SAC allowed the parties to adduce evidence to support their respective claims.
On May 30, 2006, the SAC rendered its decision as follows:
WHEREFORE, AND IN VIEW OF ALL OF THE FOREGOING, DAR and LBP are directed to pay to:The SAC explained its decision in this wise:
1.) Land Owner Mr. Eugenio Dalauta the following:
2.) The Members of the Board of Commissioners:
- Two Million Six Hundred Thirty Nine Thousand Five Hundred Fifty Seven (P2,639,557.00) Pesos, Philippine Currency, as value of the Land;
- One Hundred Thousand (P100,000.00) Pesos, Philippine Currency for the farmhouse;
- One Hundred Fifty Thousand (P150,000.00) Pesos, Philippine Currency, as reasonable attorney's fees;
- Fifty Thousand (P50,000.00) Pesos, Philippine Currency as litigation expenses;
SO ORDERED.[13]
- Ten Thousand (P10,000.00) Pesos, Philippine Currency for the Chairman of the Board;
- Seven Thousand Five Hundred (P7,500.00) Pesos, Philippine Currency for each of the two (2) members of the Board;
Going over the records of this case, taking into consideration the Commissioners Report which is replete with pictures of the improvements introduced which pictures are admitted into evidence not as illustrated testimony of a human witness but as probative evidence in itself of what it shows (Basic Evidence, Bautista, 2004 Edition), this Court is of the considered view that the Report (Commissioners) must be given weight.Unsatisfied, LBP filed a motion for reconsideration, but it was denied by the SAC on July 18, 2006.
While LBP's witness Ruben P. Penaso may have gone to the area, but he did not, at least, list down the improvements. The members of the Board of Commissioners on the other hand, went into the area, surveyed its metes and bounds and listed the improvements they found including the farmhouse made of wood with galvanized iron roofing (Annex "C", Commissioner's Report, p. 132, Record)
All told, the basic formula for the valuation of lands covered by Voluntary Offer to Sell and Compulsory Acquisition is:
LV = (CNI X 0.6) + (CS X 0.3) + (MV X 0.1)The above formula is used if all the three (3) factors are present, relevant and applicable. In any case, the resulting figure in the equation is always multiplied to the number of area or hectarage of land valued for just compensation.
Where: LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration
Whenever one of the factors in the general formula is not available, the computation of land value will be any of the three (3) computations or formulae:
LV (CNI x 0.9) + (MVx 0.1)(Agrarian Law and Jurisprudence as compiled by DAR and UNDP pp. 94-95)
(If the comparable sales factor is missing)
LV (CS x 0.9) + (MV x 0.1)
(If the capitalize net income is unavailable)
LV = MV x 2 (If only the market value factor is available)
Since the Capitalized Net Income in this case is available, the formula to be used is:
LV = (CNI x 0.9) + (MV x 0.1)
Whence:
LV = (P350,000.00/.12 x 0.9) + (P145,570 x 0.1)
= (P2,916,666.67 x 0.9) + (P145,557.00) [sic]
= P2,625,000.00 + P14,557.00
= P2,639,557.00 plus P100,000.00 for the Farmhouse.[14]
Hence, LBP filed a petition for review under Rule 42 of the Rules of Court before the CA, arguing: 1] that the SAC erred in taking cognizance of the case when the DARAB decision sustaining the LBP valuation had long attained finality; 2] that the SAC erred in taking judicial notice of the Commissioners' Report without conducting a hearing; and 3] that the SAC violated Republic Act (R.A.) No. 6657[15] and DAR A.O. No. 6, series of 1992, in fixing the just compensation.
The CA Ruling
In its September 18, 2009 Decision, the CA ruled that the SAC correctly took cognizance of the case, citing LBP v. Wycoco[16] and LBP v. Suntay. It reiterated that the SAC had original and exclusive jurisdiction over all petitions for the determination of just compensation. The appellate court stated that the original and exclusive jurisdiction of the SAC would be undermined if the DAR would vest in administrative officials the original jurisdiction in compensation cases and make the SAC an appellate court for the review of administrative decisions.
With regard to just compensation, the CA sustained the valuation by the SAC for being well within R.A. No. 6657, its implementing rules and regulations, and in accordance with settled jurisprudence. The factors laid down under Section 17 of R.A. No. 6657, which were translated into a basic formula in DAR A.O. No. 6, series of 1992, were used in determining the value of Dalauta's property. It stated that the courts were not at liberty to disregard the formula which was devised to implement Section 17 of R.A. No. 6657. The CA, however, disagreed with the SAC's valuation of the farmhouse, which was made of wood and galvanized iron, for it was inexistent during the taking of the subject land.[19]
The appellate court also disallowed the awards of attorney's fees and litigation expenses for failure of the SAC to state its factual and legal basis. As to the award of commissioner's fees, the CA sustained it with modification to conform with Section 15, Rule 141[20] of the Rules of Court. Considering that the Commissioners worked for a total of fifteen (15) days, the CAroled that they were only entitled to a fee ofP.3,000.00 each or a total of P9,000.00.[21] The dispositive portion reads:
WHEREFORE, in view of all the foregoing, the instant petition is PARTIALLY GRANTED, and the assailed Decision dated May 30, 2006 of the RTC, Branch 5, Butuan City, in Civil Case No. 4972, is hereby MODIFIED as follows: (1) the compensation for the farmhouse (P100,000.00), as well as the awards for attorney's fees (P150,000.00) and litigation expenses (P50,000.00), are hereby DELETED; and (2) the members of the Board of Commissioners shall each be paid a commissioner's fee of Three Thousand Pesos (P3,000.00) by petitioner Land Bank of the Philippines. The assailed Decision is AFFIRMED in all other respect.
SO ORDERED.
Not in conformity, LBP filed this petition raising the following:
ISSUES: Whether or not the trial court had properly taken jurisdiction over the case despite the finality of the PARAD Resolution?
Whether or not the trial court correctly computed the just compensation of the subject property?
HELD: WHEREFORE, the Court hereby DECLARES that the final determination of just compensation is a judicial function; that the jurisdiction of the Regional Trial Court, sitting as Special Agrarian Court, is original and exclusive, not appellate; that the action to file judicial determination of just compensation shall be ten (10) years from the time of the taking; and that at the time of the filing of judicial determination, there should be no pending administrative action for the determination of just compensation.
Primary Jurisdiction of the DARAB and Original Jurisdiction of the SAC. Jurisdiction is defined as the power and authority of a court to hear, try and decide a case. Jurisdiction over the subject matter is conferred only by the Constitution or the law. The courts, as well as administrative bodies exerctsmg quasi-judicial functions, have their respective jurisdiction as may be granted by law. In connection with the courts' jurisdiction vis-a-vis jurisdiction of administrative bodies, the doctrine of primary jurisdiction takes into play.
The doctrine of primary jurisdiction tells us that courts cannot, and will not, resolve a controversy involving a question which is within the jurisdiction of an administrative tribunal, especially where the question demands the exercise of sound administrative discretion requiring the special knowledge, experience and services of the administrative tribunal to determine technical and intricate matters of fact.
In agrarian reform cases, primary jurisdiction is vested in the DAR, more specifically, in the DARAB as provided for in Section 50 of R.A. No. 6657 which.
Meanwhile, Executive Order (E.O.) No. 229 also vested the DAR with (1) quasi-judicial powers to determine and adjudicate agrarian reform matters; and (2) jurisdiction over all matters involving the implementation of agrarian reform, except those falling under the exclusive original jurisdiction of the Department of Agriculture and the Department of Environment and Natural Resources.[26]
On the other hand, the SACs are the Regional Trial Courts expressly granted by law with original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners.
Adhering thereto, in Land Bank of the Philippines v. Heir of Trinidad S. Vda. De Arieta,[27] it was written:
In both voluntary and compulsory acquisitions, wherein the landowner rejects the offer, the DAR opens an account in the name of the landowner and conducts a summary administrative proceeding. If the landowner disagrees with the valuation, the matter may be brought to the RTC, acting as a special agrarian court. But as with the DAR-awarded compensation, LBP's valuation of lands covered by CARL is considered only as an initial determination, which is not conclusive, as it is the RTC, sitting as a Special Agrarian Court, that should make the final determination of just compensation, taking into consideration the factors enumerated in Section 17 of R.A. No. 6657 and the applicable DAR regulations. x x x.[28] [Emphases and underscoring supplied]The DARAB Rules and Subsequent Rulings. Recognizing the separate jurisdictions of the two bodies, the DARAB came out with its own rules to avert any confusion. Section 11, Rule XIII of the 1994 DARAB Rules of Procedure reads:
Land Valuation 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. [Emphasis supplied]The Court stamped its imprimatur on the rule in Philippine Veterans Bank v. CA (Veterans Bank);[29] LBP v. Martinez (Martinez);[30] and Soriano v. Republic (Soriano).[31] In all these cases, it was uniformly decided that the petition for determination of just compensation before the SAC should be filed within the period prescribed under the DARAB Rules, that is, "within fifteen (15) days from receipt of the notice thereof." In Philippine Veterans Bank, it was written:
On the supposedly conflicting pronouncements in the cited decisions, the Court reiterates its ruling in this case that the agrarian reform adjudicator's decision on land valuation attains finality after the lapse of the 15-day period stated in the DARAB Rules. The petition for the fixing of just compensation should therefore, following the law and settled jurisprudence, be filed with the SAC within the said period. This conclusion, as already explained in the assailed decision, is based on the doctrines laid down in Philippine Veterans Bank v. Court of Appeals and Department of Agrarian Reform Adjudication Board v. Lubrica. [Emphases and underscoring supplied]
Jurisdiction of the SAC is Original and Exclusive; The Courts Ruling in Veterans Bank and Martinez should be Abandoned. Citing the rulings in Veterans and Martinez, the LBP argues that the PARAD resolution already attained finality when Dalauta filed the petition for determination of just compensation before the RTC sitting as SAC. The petition was filed beyond the 15-day prescriptive period or, specifically, more than five (5) years after the issuance of the PARAD Resolution.
This issue on jurisdiction and prescription was timely raised by LBP as an affirmative defense, but the SAC just glossed over it and never really delved on it. When the issue was raised again before the CA, the appellate court, citing LBP v. Wycoco and LBP v. Suntay, stressed that the RTC, acting as SAC, had original and exclusive jurisdiction over all petitions for the determination of just compensation. It explained that the original and exclusive jurisdiction of the SAC would be undermined if the DAR would vest in administrative officials the original jurisdiction in compensation cases and make the SAC an appellate court for the review of administrative decisions.
The Court agrees with the CA in this regard. Section 9, Article III of the 1987 Constitution provides that "[p]rivate property shall not be taken for public use without just compensation." In Export Processing Zone Authority v. Dulay, the Court ruled that the valuation of property in eminent domain is essentially a judicial function which cannot be vested in administrative agencies. "The executive department or the legislature may make the initial determination, but when a party claims a violation of the guarantee in the Bill of Rights that private property may not be taken for public use without just compensation, no statute, decree, or executive order can mandate that its own determination shall prevail over the court's findings. Much less can the courts be precluded from looking into the 'just-ness' of the decreed compensation."[39] Any law or rule in derogation of this proposition is contrary to the letter and spirit of the Constitution, and is to be struck down as void or invalid. These were reiterated in Land Bank of the Philippines v. Montalvan,[40] when the Court explained:
It is clear from Sec. 57 that the RTC, sitting as a Special Agrarian Court, has "original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners." This "original and exclusive" jurisdiction of the RTC would be undermined if the DAR would vest in administrative officials original jurisdiction in compensation cases and make the RTC an appellate court for the review of administrative decisions. Thus, although the new rules speak of directly appealing the decision of adjudicators to the RTCs sitting as Special Agrarian Courts, it is clear from Sec. 57 that the original and exclusive jurisdiction to determine such cases is in the RTCs. Any effort to transfer such jurisdiction to the adjudicators and to convert the original jurisdiction of the RTCs into appellate jurisdiction would be contrary to Sec. 57 and therefore would be void. Thus, direct resort to the SAC by private respondent is valid.Since the determination of just compensation is a judicial function, the Court must abandon its ruling in Veterans Bank, Martinez and Soriano that a petition for determination of just compensation before the SAC shall be proscribed and adjudged dismissible if not filed within the IS-day period prescribed under the DARAB Rules.
It would be well to emphasize that the taking of property under R.A. No. 6657 is an exercise of the power of eminent domain by the State. The valuation of property or determination of just compensation in eminent domain proceedings is essentially a judicial function which is vested with the courts and not with administrative agencies. Consequently, the SAC properly took cognizance of respondent's petition for determination of just compensation. [Emphases and underscoring supplied]
To maintain the rulings would be incompatible and inconsistent with the legislative intent to vest the original and exclusive jurisdiction in the determination of just compensation with the SAC. Indeed, such rulings judicially reduced the SAC to merely an appellate court to review the administrative decisions of the DAR. This was never the intention of the Congress.
As earlier cited, in Section 57 of R.A. No. 6657, Congress expressly granted the RTC, acting as SAC, the original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners. Only the legislature can recall that power. The DAR has no authority to qualify or undo that. The Court's pronouncement in Veterans Bank, Martinez, Soriano, and Limkaichong, reconciling the power of the DAR and the SAC essentially barring any petition to the SAC for having been filed beyond the 15-day period provided in Section II, Rule XIII of the DARAB Rules of Procedure, cannot be sustained. The DAR regulation simply has no statutory basis.
On Prescription
While R.A. No. 6657 itself does not provide for a period within which a landowner can file a petition for the determination of just compensation before the SAC, it cannot be imprescriptible because the parties cannot be placed in limbo indefinitely. The Civil Code settles such conundrum. Considering that the payment of just compensation is an obligation created by law, it should only be ten (10) years from the time the landowner received the notice of coverage. The Constitution itself provides for the payment of just compensation in eminent domain cases.[41] Under Article 1144, such actions must be brought within ten (10) years from the time the right of action accrues. Article 1144 reads:
Art. 1144. The following actions must be brought within ten years from the time the right of action accrues:Nevertheless, any interruption or delay caused by the government like proceedings in the DAR should toll the running of the prescriptive period. The statute of limitations has been devised to operate against those who slept on their rights, but not against those desirous to act but cannot do so for causes beyond their control.[42]
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment. (n)
In this case, Dalauta received the Notice of Coverage on February 7, 1994.[43] He then filed a petition for determination of just compensation on February 28, 2000. Clearly, the filing date was well within the ten year prescriptive period under Article 1141.
Concurrent Exercise of Jurisdiction
There may be situations where a landowner, who has a pending administrative case before the DAR for determination of just compensation, still files a petition before the SAC for the same objective. Such recourse is not strictly a case of forum shopping, the administrative determination being not res judicata binding on the SAC.[44] This was allowed by the Court in LBP v. Celada[45] and other several cases. Some of these cases were enumerated in Land Bank of the Philippines v. Umandap[46] as follows:
1. In the 1999 case of Land Bank of the Philippines v. Court of Appeals,[47] we held that the SAC properly acquired jurisdiction over the petition to determine just compensation filed by the landowner without waiting for the completion of DARAB's re-evaluation of the land.Nevertheless, the practice should be discouraged. Everyone can only agree that simultaneous hearings are a waste of time, energy and resources. To prevent such a messy situation, a landowner should withdraw his case with the DAR before filing his petition before the SAC and manifest the fact of withdrawal by alleging it in the petition itself. Failure to do so, should be a ground for a motion to suspend judicial proceedings until the administrative proceedings would be terminated. It is simply ludicruous to allow two procedures to continue at the same time.
2. In the 2004 case of Land Bank of the Philippines v. Wycoco,[48] we allowed a direct resort to the SAC even where no summary administrative proceedings have been held before the DARAB.
3. In the 2006 case of Land Bank of the Philippines v. Celada,[49] this Court upheld the jurisdiction of the SAC despite the pendency of administrative proceedings before the DARAB. x x x.
x x x x
4. In the 2009 case of Land Bank of the Philippines v. Belista,[50] this Court permitted a direct recourse to the SAC without an intermediate appeal to the DARAB as mandated under the new provision in the 2003 DARAB Rules of Procedure. We ruled:
Although Section 5, Rule XIX of the 2003 DARAB Rules of Procedure provides that the land valuation cases decided by the adjudicator are now appealable to the Board, such rule could not change the clear import of Section 57 of RA No. 6657 that the original and exclusive jurisdiction to determine just compensation is in the RTC. Thus, Section 57 authorizes direct resort to the SAC in cases involving petitions for the determination of just compensation. In accordance with the said Section 57, petitioner properly filed the petition before the RTC and, hence, the RTC erred in dismissing the case. Jurisdiction over the subject matter is conferred by law. Only a statute can confer jurisdiction on courts and administrative agencies while rules of procedure cannot.[51]
On Just Compensation
Upon an assiduous assessment of the different valuations arrived at by the DAR, the SAC and the CA, the Court agrees with the position of Justice Francis Jardeleza that just compensation for respondent Dalauta's land should be computed based on the formula provided under DAR-LBP Joint Memorandum Circular No. 11, series of 2003 (JMC No. 11 (2003)). This Memorandum Circular, which provides for the specific guidelines for properties with standing commercial trees, explains:
The Capitalized Net Income (CNI) approach to land valuation assumes that there would be uniform streams of future income that would be realized in perpetuity from the seasonal/permanent crops planted to the land. In the case of commercial trees (hardwood and soft wood species), however, only a one-time income is realized when the trees are due for harvest. The regular CNI approach in the valuation of lands planted to commercial trees would therefore not apply.[52] (Emphasis and underscoring supplied.)During the proceedings before the SAC, Dalauta testified that he derived a net income of P350,000.00 in 1993 from the sale to Fonacier of falcata trees grown in the property. He presented the following evidence to bolster his claim of income: (1) Agreement between Dalauta and Fonacier over the sale of falcata trees;[53] (2) copy of deposit slip of amount of P350,000.00;[54] and (3) Certification from Allied Bank as to fact of deposit of the amount of P350,000.00 on November 15, 1993.[55]
Dalauta's sale of falcata trees indeed appears to be a one-time transaction. He did not claim to have derived any other income from the property prior to receiving the Notice of Coverage from the DAR in February 1994. For this reason, his property would be more appropriately covered by the formula provided under JMC No. 11 (2003).
JMC No. 11 (2003) provides for several valuation procedures and formulas, depending on whether the commercial trees found in the land in question are harvestable or not, naturally grown, planted by the farmerbeneficiary or lessee or at random. It also provides for the valuation procedure depending on when the commercial trees are cut (i.e., while the land transfer claim is pending or when the landholding is already awarded to the farmer-beneficiaries).
Dalauta alleges to have sold all the falcata trees in the property to Fonacier in 1993.[56] After Fonacier finished harvesting in January 1994, he claims that, per advice of his lawyer, he immediately caused the date of effectivity of this Joint Memorandum Circular x x x." It is submitted,
however, that applying the above formula to compute just compensation for respondent's land would be the most equitable course of action under the circumstances. Without JMC No. 11 (2003), Dalauta's property would have to be valued using the formula for idle lands, the CNI and CS factors not being applicable. Following this formula, just compensation for Dalauta's property would only amount to 225,300.00, computed as follows:
LV = MV x 2As above stated, the amount would be more equitable if it would be computed pursuant to JMC No. 11 (2003). Moreover, the award shall earn legal interest. Pursuant to Nacar v. Gallery Frames,[57] the interest shall be computed from the time of taking at the rate of twelve percent (12%) per annum until June 30, 2013. Thereafter, the rate shall be six percent (6%) per annum until fully paid.
Where:
LV = Land Value
MV = Market Value per Tax Declaration*
• For the area planted to com, P7,740.00/hectare
• For idle/pasture land, P3,890/hectare
Thus:
For the 4 hectares planted to corn:
LV = (P7,740/hectare x 4 hectares) x 2
= P61,920.00
For the 21 hectares of idle/pasture land:
LV = (P3,890/hectare x 21) x 2
= P163,380.00
Total Land Value = P61,920.00 + P163,380.00
= P225,300.00
As to the just compensation, the September 18, 2009 Decision of the Court of Appeals decreeing payment of P2,639,557.00 as the value of the subject property is SET ASIDE. Let the case be remanded to the Regional Trial Court, Branch 5, Butuan City, sitting as Special Agrarian Court, for purposes of computing just compensation in accordance with JMC No. 11 (2003) and this disposition.
The amount shall earn legal interest from the time of taking at the rate of twelve percent (12%) per annum until June 30, 2013. Thereafter, the rate shall be six percent (6%) per annum until fully paid.
SO ORDERED.
[1] Penned by Associate Justice Danton Q. Bueser, with Associate Justices Romulo V. Borja and Elihu A. Ybañez, concurring, rollo, pp. 63-82.
[2] Penned by Presiding Judge Augustus L. Calo. Id. at 126-148.
[3] Id. at 221.
[4] Id. at 65.
[5] Land Valuation Case No. LV-X-02-164, id. at 179-180.
[6] Id. at 223-227.
[7] Records, p. 13.
[8] Rollo, pp. 68-69.
[9] Id. at 198-199.
[10] Id. at 69-70.
[11] Id. at 70.
[12] Id. at 70-71.
[13] Id. at 148.
[14] Id. at 147-148.
[15] Comprehensive Agrarian Reform Law of 1988.
[16] 464 Phil. 83 (2004).
[17] 561 Phil. 711 (2007).
[18] Rollo, p. 76.
[19] Id. at 77-80.
[20] Section 15. Fees of commissioners in eminent domain proceedings. - The commissioners appointed to appraise land sought to be condemned for public uses in accordance with these rules shall each receive a compensation of two hundred (P200.00) pesos per day for the time actually and necessarily employed in the performance of their duties and in making their report to the court, which fees shall be taxed as part of the costs of the proceedings. (13a)
[21] Rollo, pp. 80-81.
[22] Id.
[23] Asia International Auctioneers, Inc.v. Hon. Parayno, 565 Phil. 255, 265 (2007).
[24] Republic v. Bantigue Point Development Corp., 684 Phil. 192, 199 (2012).
[25] Paloma v. Mora, 507 Phil. 697, 712 (2005).
[26] Sta. Ana v. Spouses Carpo, 593 Phil. 108, 126 (2008).
[27] 642 Phil. 198 (2010).
[28] Id. at 222.
[29] 379 Phil. 141, 147 (2000).
[30] 582 Phil. 739 (2008).
[31] 685 Phil. 583 (2012).
[32] 331 Phil. 1070, 1077 (1996).
[33] Philippine Veterans Bank v. CA, supra note 29, at 147-149.
[34] 582 Phil. 739 (2008).
[35] 464 Phil. 83 (2004).
[36] 561 Phil. 711 (2007).
[37] Rollo, p. 76.
[38] 233 Phil. 313 (1987).
[39] Id. at 326.
[40] 689 Phil. 641, 652 (2012).
[41] Section 9, Article III of the 1987 Constitution provides that private property shall not be taken for public use without just compensation.
[42] Coderias v. Estate of Juan Chioco, 712 Phil. 354, 370 (2013); and Antonio v. Engr. Morales, 541 Phil. 306, 311 (2007).
[43] Rollo, p. 9; CA Decision, p. 2.
[44] There is no res judicata because the DAR determination is only a preliminary assessment of the reasonable compensation to be paid. It is not a judgment on the merits because it is the RTC acting as SAC, pursuant to its original and exclusive jurisdiction, that has the authority to ultimately settle the question of just compensation. (See Spouses Arevalo v. Planters, Development Bank, 686 Phil. 236 [2012]).
[45] 515 Phil. 467 (2006).
[46] 649 Phil. 396, 420-421 (2010).
[47] 376 Phil. 252 (1999).
[48] 464 Phil. 83 (2004).
[49] Supra note 44.
[50] 608 Phil. 658 (2009).
[51] Id. at 668-669.
[52] This much was also explained during trial by the LBP withness Alex G. Carido, as noted in the assailed CA Decision:
Petitioner's next witness was Alex G. Carido (Carido), the Agrarian Operation Specialist of its Cagayan de Oro branch, whose function, among others, is to compute the value of a land offered by a landowner to the DAR, using the guidelines provided by the latter. He recalled that the valuation of respondent's property was made in September 1994 pursuant to a Memorandum Request to Value the Land addressed to petitioner's President.[53] Records, pp. 13, 172.
Carido testified that the entries in the Claims Valuation and Processing Forms were the findings of their credit investigator. He explained that the data for Capitalized Net Income was not applicable then, as the land's produce was only for family consumption, and that since the property had no income, they used the fonnula Land Value (LV) = Market Value (MV) x 2, from DAR AO No. 6, series of 1992, in computing the total value of the subject land, where MV is the Market Value per Tax Declaration based on the Tax Declaration issued in 1994.
x x x x
On cross-examination, Carido admitted that there are different ways of computing the Land Value under DAR AO No. 6, and that to detennine which of the formulas is applicable for computing the land value of a particular property, the data gathered in the Field Investigation Report are to be considered. He maintained that he used the formula Land Value Market Value x 2 in computing the valuation of the subject land because the data for Capitalized Net Income (CNI) and/or Comparable Sales [CS] were not given to him.
During re-cross examination, when asked why no CNI was provided in the investigation report, Carido stated that CNI is relevant only if there is production from the property, and that while there was corn production in the subject land during ocular inspection in 1994, the same was for family consumption only, hence, CNI will not apply. He went on to say that the net income and/or production of the land within twelve (12) months prior to the ocular inspection shall be considered in determining the land value. (Rollo, pp. 69-71) [Emphasis and underscoring supplied].
[54] Id. at 172, 174.
[55] Id. at 172, 175.
[56] Rollo, p. 10.
[57] 716 Phil. 267 (2013).
