G.R. No. 173148 - Degayo vs. Magbanua-Dinglasan

Case Summary (G.R. No. 173148)

Petitioners

Vivencio Mateo
Eugenio Mateo
Joji Mateo Morales
Myrna Mateo Santos

Respondents

Department of Agrarian Reform (DAR)
Land Bank of the Philippines (LBP)
Mariano T. Rodriguez, et al. (farmer-beneficiaries)

Key Dates

• June 1994 – DAR entries into the subject property for redistribution.
• December 13, 1996 and February 11, 1997 – LBP deposits cash and agrarian reform bonds as initial compensation.
• April 30, 1997 – Mateos file complaint before the Regional Trial Court (RTC), acting as Special Agrarian Court (SAC).
• July 4, 2002 – SAC renders judgment fixing just compensation at ₱71,143,623.00.
• August 4, 2008 – Court of Appeals (CA) reverses and dismisses the complaint for failure to exhaust administrative remedies.
• January 28, 2009 – CA denies motion for reconsideration.
• February 15, 2017 – Supreme Court decision.

Applicable Law

• 1987 Philippine Constitution (decision in 2017)
• Republic Act No. 6657 (Comprehensive Agrarian Reform Law of 1988), particularly Sections 16–18, 50 and 57
• DAR Administrative Order No. 6, series of 1992 (amended by AO No. 11, series of 1994)
• Relevant jurisprudence (e.g., LBP v. Wycoco; Ramon Alfonso v. LBP and DAR)

Facts and Proceedings

The Mateos owned 1,323,112 m² (112.3112 ha) of coconut and rice lands covered by TCT No. T-22822.
In June 1994, DAR entered to redistribute their land under CARP. LBP valued it at ₱52,000/ha; the Mateos rejected this.
No summary administrative valuation by DARAB occurred until SAC orders in late 1997.
On April 30, 1997, the Mateos filed Civil Case No. 97-6331 for judicial determination of just compensation.
During trial, the Mateos presented expert reports, comparable sales, production data and passbook evidence; DAR and LBP offered their own valuation reports and testimony.

SAC Ruling

The SAC, relying on its appointed commissioners’ reports and other evidence, adopted:
• Fair Market Value (FMV) of land at ₱500,000/ha;
• Coconut and rice production estimates (1994–2002);
• Value of improvements and standing trees;
and fixed just compensation at ₱71,143,623.00, ordering LBP to pay after deducting prior deposits.

CA Decision

The Court of Appeals granted respondents’ appeals, holding that:
• The Mateos prematurely sought judicial relief without exhausting the DAR Adjudication Board’s (DARAB) primary jurisdiction.
• The SAC disregarded Section 17 of R.A. No. 6657’s mandatory factors for just compensation.
• The complaint was dismissed without prejudice.

Issues on Appeal

Whether the SAC had jurisdiction to hear the complaint in the absence of completed administrative proceedings.
Whether the SAC correctly applied Section 17 of R.A. No. 6657 and DAR valuation orders in fixing just compensation.

Supreme Court Ruling

Jurisdiction and Exhaustion of Remedies
– Sections 50 and 57 of R.A. No. 6657 grant DAR primary/quasi-judicial jurisdiction but confer upon SACs original and exclusive jurisdiction to determine just compensation once administrative valuation is contested.
– The doctrine of primary jurisdiction requires exhaustion of administrative remedies, but admits an exception where unjustifiable delay or inaction prejudices property owners.
– Here, DARAB failed to initiate summary proceedings for over two years despite SAC orders; only in 2000–2001 did DARAB affirm LBP’s valuation.
– Exception applies: the Mateos were deprived of possession in 1994, and DAR’s inaction prevented meaningful redress. SAC jurisdiction was properly invoked.
Compliance with Section 17 and DAR AOs
– Section 17 (pre-RA 9700) mandates consideration of:
• cost of acquisition;
• standing crops;
• current value of like properties;
• nature, use and income;
• sworn owner valuation;
• tax declarations; and
• government assessment, all translated into a basic DAR formula (AO 6).
– SAC’s valuation:
• omitted any explicit reference to AO 6’s formula or detailed factor computations;
• failed to fix the date of taking for valuation;
• aggregated eight years of production contrary to AO 6’s one-year average rule; and
• lacked substantiation for comparable sales and FMV per hectare.
Remand and Directions
– CA decision is reversed insofar as the complaint was dismissed; petitioners’ entitlement to judicial determination of compensation is upheld.
– Petition is denied insofar as it upholds SAC’s valuation.
– Case is remanded to the SAC to determine just com

Case Syllabus (G.R. No. 173148)

Facts and Antecedents

The Mateos owned 112.3112 hectares of coconut and rice lands in Barangay Fabrica, Bacon District, City of Sorsogon, covered by TCT No. T-22822.
In June 1994, the DAR entered the premises under the Comprehensive Agrarian Reform Program (CARP, R.A. No. 6657) for compulsory acquisition.
The Land Bank of the Philippines (LBP), as financial intermediary, valued the land at ₱52,000.00 per hectare; the Mateos rejected this figure.
On April 30, 1997, the Mateos filed Civil Case No. 97-6331 before the RTC of Sorsogon City, Branch 52 (Special Agrarian Court), seeking judicial determination of just compensation.

Evidence Adduced at Trial

Mateos’ evidence:
- Testimonies of Dr. Eleseo Mateo, Engr. Florencio Dino (commissioner), farmer Manuel Docot, caretaker Danilo Federio.
- TCT No. T-22822, Memorandum of Valuation, Claim Folder Profile, Valuation Summary of Agricultural Land.
- Deeds of sale of nearby parcels at ₱300,000–₱400,000/ha and newspaper clipping showing ₱350,000/ha.
- Engr. Dino’s detailed valuation report and a government purchase at ₱245,000/ha.
DAR’s evidence:
- Testimonies of agriculturist Romeo Brotamante, Ireneo Defeo, Cresenciano Lagajeno.
- Field Investigation Report (March 29, 1996), ledger cards (Dec 1994–Jun 1997), and passbooks showing ₱601,789.97 withdrawals.
LBP’s evidence:
- Testimony of Monita Balde and a Claims Valuation and Processing Form.

SAC Decision (July 4, 2002)

Fixed just compensation at ₱71,143,623.00 for 112.3112 ha, ordering LBP to pay the balance after deducting prior deposits.
Adopted Engr. Dino’s report as part of the judgment, but adjusted valuation to reflect:
- Fair market value of land at ₱500,000.00/ha.
- Capitalized net produce of coconuts and rice for 1994–2002.
- Value of improvements, coconut trunks and predicted yields.
Recapitulation yielded:
- ₱68,309,327.00 for 108 ha coconut land, ₱1,686,085.00 for 3.7649 ha rice land, less ₱601,789.00 in prior receipts.

Court of Appeals Decision (Aug 4, 2008; RR Jan 28, 2009)

Granted LBP and DAR appeals; dismissed complaint without prejudice for prematurity.
Held that the SAC lacked jurisdiction because the DAR Adjudication Board had not conducted summary administrative proceedings under Section 16 and Section 18 of R.A. No. 6657.
Ruled that judicial action was premature; administrative remedies had not been exhausted.
Observed that SAC’s compu