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LAND BANK OF PHILIPPINES v. LEONILA P. CELADA

FACTS:

The respondent, Leonila P. Celada, is the owner of agricultural land in Bohol, registered under TCT No. 16436. The Department of Agrarian Reform (DAR) identified 14.1939 hectares of the land as suitable for compulsory acquisition under the Comprehensive Agrarian Reform Program (CARP). The Land Bank of the Philippines (LBP) valued the land at P2.1105517 per square meter, amounting to a total of P299,569.61. The DAR offered this amount to the respondent, but it was rejected. In spite of the rejection, the LBP deposited the sum in cash and bonds in the name of the respondent. The case was referred to the DAR Adjudication Board (DARAB) for a summary administrative hearing.

Meanwhile, the respondent filed a petition for judicial determination of just compensation against LBP, the DAR, and the Municipal Agrarian Reform Officer (MARO) before the Regional Trial Court (RTC) of Tagbilaran City. The RTC resolved the petitioner's affirmative defense, denying LBP's claim of non-exhaustion of administrative remedies and forum-shopping. A pre-trial conference was conducted, and the trial on the merits commenced. The RTC rendered a judgment fixing the compensation for the land at P2.50 per square meter, totaling P354,847.50, with legal interest of 12% per annum.

LBP appealed the decision to the Court of Appeals, but the appeal was dismissed for procedural reasons. LBP filed a petition with the Supreme Court, arguing that procedural rules should not be rigidly applied at the expense of substantial justice and the right to appeal. LBP also raised issues regarding the jurisdiction of the RTC, the determination of just compensation, and the awarding of attorney's fees and incidental expenses.

The Court of Appeals dismissed petitioner's appeal on three technical grounds: lack of affidavit of service, failure of counsel to indicate his Roll of Attorneys' number, and failure to attach material portions of the records. However, the lack of affidavit of service is not fatal as the petition was accompanied by original registry receipts proving service. The failure of counsel to indicate his Roll of Attorneys' number does not affect substantive rights and could have been rectified without dismissing the petition on technical grounds. The failure to attach material portions of the records does not justify outright dismissal as the appellate court has the leeway to require parties to submit additional documents. The Court emphasizes that cases should be determined on their merits rather than on technicalities. Despite the need for remand, the Court resolves the case on the merits.

The petitioner argues that the Special Agrarian Court (SAC) erred in assuming jurisdiction over the petition for determination of just compensation due to the ongoing administrative proceedings before the DARAB. However, the Court holds that the SAC has original and exclusive jurisdiction over petitions for the determination of just compensation, as stated in the law. The taking of property under RA No. 6657 is an exercise of eminent domain, a judicial function vested with the courts. Therefore, the SAC properly took cognizance of the petition for determination of just compensation. The petitioner also contends that the respondent failed to exhaust administrative remedies by directly filing the petition, but the Court finds no merit in this argument.

ISSUES:

  1. Whether the direct resort to the Special Agrarian Court (SAC) by the private respondent for the determination of just compensation is valid.

  2. Whether the respondent failed to exhaust administrative remedies.

  3. Whether the SAC erred in setting aside petitioner's valuation of respondent's land.

  4. Whether the formula for the valuation of lands covered by voluntary offer to sell (VOS) or compulsory acquisition (CA) under DAR AO No. 5, s. of 1998 is applicable.

  5. Whether respondent’s failure to provide necessary data to determine the comparable sales factor (CS factor) affects the valuation of the land.

  6. Whether the petitioner's valuation of the land is in accordance with applicable laws.

  7. Whether the award of 12% interest per annum, attorney's fees, and costs of litigation is justified.

RULING:

  1. Yes, the direct resort to the SAC by the private respondent for the determination of just compensation is valid. The original and exclusive jurisdiction to determine cases involving the determination of just compensation under the agrarian reform law is vested in the Regional Trial Courts (RTCs) sitting as SACs. Direct resort to the SAC by the private respondent is in line with the law and is deemed valid.

  2. No, there is no merit to the petitioner's contention that the respondent failed to exhaust administrative remedies. The issue is deemed moot and academic since the valuation made by the petitioner had already been affirmed by the Department of Agrarian Reform Adjudication Board (DARAB).

  3. Yes, the SAC erred in setting aside the petitioner's valuation of respondent's land. While the SAC is required to consider various factors in determining just compensation, including the acquisition cost, current value of like properties, nature, actual use and income, sworn valuation by the owner, tax declarations, and assessments by government assessors, it cannot disregard the valuation formula provided by the Department of Agrarian Reform (DAR). The DAR's valuation formula, as issued through an administrative order, carries the force of law and must be applied by the courts unless declared invalid.

  4. The formula for the valuation of lands covered by VOS or CA under DAR AO No. 5, s. of 1998 is applicable. The Court explained that the formula shall be used if all three factors (capitalized net income [CNI], comparable sales [CS], and market value per tax declaration [MV]) are present, relevant, and applicable. In cases where one or two factors are not present, relevant, or applicable, different formulas will apply.

  5. Respondent’s failure to provide necessary data to determine the CS factor does not affect the valuation of the land. The Court noted that petitioner used available factors from the Department of Agriculture and Philippine Coconut Authority, and computed the valuation according to the formula provided. Respondent’s failure to submit adequate documentary evidence to support her claims for comparable sales transactions, acquisition cost, and market value based on mortgage hindered the determination of the CS factor.

  6. The explanation and computation of the petitioner's valuation are deemed sufficient and in accordance with applicable laws. Hence, the petitioner's valuation is upheld.

  7. The imposition of 12% interest per annum is not justified as there is no delay in the payment of just compensation. Therefore, the award of interest, attorney's fees, and costs of litigation in favor of the respondent is not warranted.

PRINCIPLES:

  • The original and exclusive jurisdiction to determine cases involving the determination of just compensation under the agrarian reform law is vested in the Regional Trial Courts (RTCs) sitting as Special Agrarian Courts (SACs).

  • Direct resort to the SAC for the determination of just compensation is valid.

  • The exhaustion of administrative remedies doctrine does not apply when the issue has become moot and academic.

  • Valuation of property or determination of just compensation in eminent domain proceedings is essentially a judicial function vested with the courts and not with administrative agencies.

  • Administrative issuances, such as rules and regulations, have the force of law and are entitled to great respect. Courts cannot ignore administrative issuances unless declared invalid.

  • The formula for the valuation of lands covered by VOS or CA under DAR AO No. 5, s. of 1998 is applicable if all three factors (CNI, CS, and MV) are present, relevant, and applicable.

  • Different formulas apply when one or two factors are not present, relevant, or applicable.

  • Failure to provide necessary data to determine the CS factor does not affect the valuation of the land. The valuation can still be carried out using available factors and the applicable formula.

  • In expropriation cases, the payment of interest is in the nature of damages for delay in payment, which entails the government's obligation of forbearance.

  • Just compensation must be promptly and validly deposited in the landowner's name in cash and/or negotiable LBP bonds.

  • The award of attorney's fees and costs of litigation must be supported by factual and legal justification.