G.R. No. 144639 - People vs. Go

Case Summary (G.R. No. 144639)

Factual Background

Respondent was the registered owner of a 25.2160-hectare agricultural parcel in Florida, Butuan City, covered by TCT No. T-1624. The Department of Agrarian Reform (DAR) placed the land under compulsory acquisition pursuant to the Comprehensive Agrarian Reform Program, as reflected in the Notice of Coverage. LBP made an initial valuation and offered PHP 192,782.59 as compensation, which respondent rejected as inadequate. The matter passed through summary administrative proceedings before the Provincial Agrarian Reform Adjudicator (PARAD), which, by resolution, affirmed the LBP valuation.

Administrative Proceedings and PARAD Resolution

The PARAD conducted summary administrative proceedings pursuant to Section 16 of R.A. No. 6657 and the DARAB rules. The PARAD issued a land valuation resolution on December 4, 1995 that sustained the LBP valuation of PHP 192,782.59. That administrative determination prompted respondent to seek a judicial determination of just compensation by filing a petition in the SAC.

Trial Proceedings before the Special Agrarian Court

On February 28, 2000 respondent filed a petition for determination of just compensation before the RTC, sitting as SAC. The SAC appointed a Board of Commissioners to inspect the property and report. The Commissioners submitted a report recommending PHP 100,000 per hectare. The SAC allowed the parties to present evidence to substantiate competing valuation theories.

Evidence and Valuation Positions

Respondent adduced evidence that he realized a net receipt of PHP 350,000 in 1993 from the sale of harvested commercial trees (falcata) on about twenty-one hectares, with the remaining four hectares planted in corn for family consumption. He produced an agreement and bank deposit evidence for the PHP 350,000. He contended that the valuation formula in DAR A.O. No. 6, series of 1992, requiring consideration of the Capitalized Net Income (CNI), Comparable Sales (CS), and Market Value (MV), applied and yielded a valuation in the multi‑million peso range.
LBP maintained that the appropriate formula was LV = MV x 2 because the land had no income for the relevant twelve‑month period and thus CNI did not apply. LBP presented testimony of its appraisers and agrarian operations specialist who reported predominantly idle land with scattered trees, limited corn for family consumption, and used the market values reflected in tax declarations to compute LV = MV x 2, arriving at PHP 192,782.59.

Ruling of the Special Agrarian Court

On May 30, 2006 the SAC applied the CNI-based variant of the DAR formula and awarded respondent PHP 2,639,557.00 as the land value, plus PHP 100,000 for a farmhouse, attorney’s fees of PHP 150,000, litigation expenses of PHP 50,000, and commissioner fees. The SAC explained that the presence of a CNI required use of the formula LV = (CNI x 0.9) + (MV x 0.1) and performed the requisite computations using respondent’s claimed PHP 350,000 net income. The SAC denied LBP’s motion for reconsideration.

Court of Appeals Decision

LBP sought relief in the Court of Appeals under Rule 42. In its September 18, 2009 decision the CA affirmed the SAC in most respects. The CA held that the SAC properly exercised original and exclusive jurisdiction over petitions for determination of just compensation and that the SAC’s valuation was within R.A. No. 6657 and implementing regulations. The CA, however, deleted the PHP 100,000 farmhouse award for lack of proof of its existence at the time of taking, struck awards of attorney’s fees and litigation expenses for lack of factual and legal basis, and reduced the commissioners’ fees in conformity with Section 15, Rule 141 of the Rules of Court.

Issues Presented to the Supreme Court

LBP petitioned the Supreme Court under Rule 45 and raised two central issues: whether the SAC properly acquired jurisdiction despite the finality of the PARAD resolution, and whether the SAC correctly computed the just compensation for the subject property.

The Supreme Court’s Holding on Jurisdiction

The Court held that the final determination of just compensation is a judicial function and that the Regional Trial Court, sitting as a Special Agrarian Court, has original and exclusive jurisdiction over all petitions for the determination of just compensation, as provided in Section 57 of R.A. No. 6657 and consistent with Art. III, Sec. 9, 1987 Constitution. The Court explained that primary jurisdiction in the DAR or DARAB to make preliminary administrative determinations does not displace the SAC’s original and exclusive judicial power to make the final determination. Consequently, the Court abandoned its prior jurisprudence that made the DARAB rule requiring filing within fifteen days dispositive of SAC jurisdiction, and it ruled that DAR rules could not transform the SAC’s original jurisdiction into appellate jurisdiction.

Prescription and Timeliness

Because R.A. No. 6657 does not set a period within which a landowner must invoke judicial determination, the Court applied the Civil Code prescription for actions “upon an obligation created by law” and fixed a prescriptive period of ten years from the time the right of action accrues. The Court stated that the prescriptive period runs from the receipt of the Notice of Coverage and that any official delay or interruption caused by government proceedings before the DAR tolls prescription. Applying this rule, the Court found respondent’s petition, filed on February 28, 2000 after receipt of the Notice on February 7, 1994, to be within the ten‑year prescriptive period.

Concurrent Administrative and Judicial Proceedings

The Court recognized that a landowner may in some circumstances file a petition with the SAC while administrative proceedings before the DAR remain pending. The Court allowed such concurrent filings but discouraged simultaneous proceedings as wasteful and potentially chaotic. The Court advised that a landowner should withdraw the administrative case before pursuing judicial relief or, failing such withdrawal, that a party may move to suspend judicial proceedings pending termination of the administrative action.

The Supreme Court’s Ruling on Just Compensation and Remand

On the valuation issue the Court concluded that the SAC’s multi‑million peso award should be set aside. The Court agreed with Justice Jardeleza’s position that the valuation of lands bearing commercial trees must be governed by the rules specific to standing commercial trees. The Court directed that just compensation be recomputed in accordance with JMC No. 11 (2003), which provides tailored valuation methods for lands with commercial tree crops and recognizes that CNI is not appropriate for one‑time harvest

Case Syllabus (G.R. No. 144639)

Parties and Procedural Posture

Land Bank of the Philippines filed a petition for review on certiorari under Rule 45 seeking reversal of the Court of Appeals' September 18, 2009 Decision in CA-G.R. SP No. 01222-MIN which modified the Regional Trial Court, Branch 5, Butuan City, Special Agrarian Court's May 30, 2006 Decision in Civil Case No. 4972.
Eugenio Dalauta was the respondent-landowner who sought judicial determination of just compensation for compulsory acquisition of his agricultural property under the Comprehensive Agrarian Reform Program.
The case reached the Supreme Court by LBP's petition attacking the SAC's exercise of jurisdiction and the SAC's valuation of just compensation.

Key Factual Allegations

Respondent was the registered owner of a 25.2160-hectare agricultural parcel covered by TCT No. T-1624 in Florida, Butuan City.
The Department of Agrarian Reform issued a Notice of Coverage dated January 17, 1994 which Dalauta received on February 7, 1994.
LBP made an initial offer of P192,782.59 as compensation which Dalauta rejected as inadequate.
Dalauta alleged a P350,000.00 net income from the 1993 sale of falcata (commercial) trees and placed total claimed land value at P2,639,566.90.
LBP's field investigators reported only family-consumption corn on three hectares, scattered coconut and second-growth trees on the rest, and used the formula LV = MV x 2 to arrive at P192,782.59.

Administrative Proceedings

The Provincial Agrarian Reform Adjudicator (PARAD) conducted a summary administrative proceeding and in a Resolution dated December 4, 1995 affirmed LBP's valuation of P192,782.59.
The DAR administrative valuation was a preliminary determination made under the DAR adjudicatory process and was not, in the DAR's own rules, appealable to the Board but subject to direct action in the courts.

Trial Court Proceedings

Dalauta filed a petition with the RTC sitting as a Special Agrarian Court on February 28, 2000 to determine just compensation, contending that DAR A.O. No. 6, series of 1992 formulas applied.
The SAC constituted commissioners whose report recommended P100,000.00 per hectare and documented on-site improvements.
After full trial, the SAC applied the formula LV = (CNI x 0.9) + (MV x 0.1) using Dalauta's claimed CNI and awarded P2,639,557.00 as land value plus P100,000.00 for a farmhouse and monetary awards for counsel, litigation expenses, and commissioners.

Court of Appeals Ruling

The Court of Appeals held that the SAC properly took cognizance of the petition and affirmed SAC's use of agrarian valuation formulas based on Section 17 of R.A. No. 6657 except it set aside the farmhouse award for lack of existence during the taking and deleted awards for attorney's fees and litigation expenses for lack of factual and legal basis.
The CA reduced the commissioners' fees to P3,000.00 each to conform with Section 15, Rule 141 of the Rules of Court and otherwise affirmed the SAC.

Issues Presented

Whether the SAC properly exercised jurisdiction despite the finality of the PARAD Resolution.
Whether the SAC correctly computed just compensation for the subject property.

Supreme Court Holdings

The Court held that the SAC's jurisdiction to make the final determination of just compensation is original and exclusive under Section 57 of R.A. No. 6657.
The Court held that the DAR's role i