Philippine Supreme Court Jurisprudence > Year 2011 > February 2011 Decisions > [G.R. No. 177190, February 23 : 2011] LAND BANK OF THE PHILIPPINES, PETITIONER, VS. HON. ERNESTO P. PAGAYATAN, IN HIS CAPACITY AS PRESIDING JUDGE OF THE REGIONAL TRIAL COURT, BRANCH 46, SAN JOSE, OCCIDENTAL MINDORO; AND JOSEFINA S. LUBRICA, IN HER CAPACITY AS ASSIGNEE OF FEDERICO SUNTAY, RESPONDENTS. :

The Case

This Petition for Review on Certiorari under Rule 45 seeks to annul the August 17, 2006 Decision^[1] and March 27, 2007 Resolution^[2] of the Court of Appeals (CA) in CA-G.R. SP No. 93206, which affirmed the Order dated March 4, 2005^[3] of the Regional Trial Court (RTC), Branch 46 in San Jose, Occidental Mindoro, in Agrarian Case No. 1390 for the fixing of just compensation, entitled Land Bank of the Philippines v. Josefina S. Lubrica, in her capacity as assignee of Federico Suntay, and Hon. Teodoro A. Cidro, as Provincial Agrarian Reform Adjudicator of San Jose, Occidental Mindoro. The RTC Order affirmed the Decision dated March 21, 2003^[4] of the Provincial Agrarian Reform Adjudicator (PARAD) of San Jose, Occidental Mindoro in Case No. DCN-0405-0022-02, entitled Josefina S. Lubrica, in her capacity as Assignee of Federico Suntay v. Hon. Hernani A. Braganza, in his capacity as Secretary of the Department of Agrarian Reform, and Land Bank of the Philippines.

The Facts

On October 21, 1972, the 3,682.0286-hectare Suntay Estate, consisting of irrigated/unirrigated rice and corn lands covered by Transfer Certificate of Title No. T-31(1326) located in the Barangays of Gen. Emilio Aguinaldo, Sta. Lucia, and San Nicolas in Sablayan, Occidental Mindoro, was subjected to the operation of Presidential Decree No. 27, under its Operation Land Transfer (OLT), with the farmer-beneficiaries declared as owners of the property. However, a 300-hectare portion of the land was subjected to the Comprehensive Agrarian Reform Program (CARP) instead of the OLT.  Thus, Certificates of Landownership Award were issued to the farmer-beneficiaries in possession of the land.^[5] Such application of the CARP to the 300-hectare land was later the subject of a case before the Department of Agrarian Reform Adjudicatory Board (DARAB), which ruled that the subject land should have been the subject of OLT instead of CARP. The landowner admitted before the PARAD that said case was pending with this Court and docketed as G.R. No. 108920, entitled Federico Suntay v. Court of Appeals.

Meanwhile, the owner of the land remained unpaid for the property. Thus, Josefina S. Lubrica, in her capacity as assignee of the owner of the property, Federico Suntay, filed a Petition for Summary Determination of Just Compensation with the PARAD, docketed as Case No. DCN-0405-0022-2002. Thereafter, the PARAD issued its Decision dated March 21, 2003, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered:

1. Fixing the preliminary just compensation for 431.1407 hectare property at P166,150.00 per hectare or a total of P71,634,027.30.
   
   
2. Directing the Land Bank of the Philippines to immediately pay the aforestated amount to the Petitioner;
   
   
3. Directing the DAR to immediately comply with all applicable requirements so that the subject property may be formally distributed and turned over to the farmer beneficiaries thereof, in accordance with the Decision of the DARAB Central in DARAB Case No. 2846.
   

No cost.

SO ORDERED.^[6]

Petitioner Land Bank of the Philippines (LBP) filed a Motion for Reconsideration dated April 10, 2003 of the above decision, but the PARAD denied the motion in an Order dated December 15, 2003.^[7]

The LBP then filed a Petition dated March 4, 2004 with the RTC docketed as Agrarian Case No. 1390, appealing the PARAD Decision.  In the Petition, the LBP argued that because G.R. No. 108920 was pending with this Court in relation to the 300-hectare land subject of the instant case, the Petition for Summary Determination of Just Compensation filed before the PARAD was premature.  The LBP argued further that the PARAD could only make an award of up to PhP 5 million only.  The PARAD, therefore, could not award an amount of PhP 71,634,027.30.  The LBP also contended that it could not satisfy the demand for payment of Lubrica, considering that the documents necessary for it to undertake a preliminary valuation of the property were still with the Department of Agrarian Reform (DAR).

By way of answer, Lubrica filed a Motion to Deposit the Preliminary Valuation under Section 16(e) of Republic Act No. (RA) 6657 and Ad Cautelam Answer dated June 18, 2004.^[8]  In the said motion, Lubrica claimed that since the DAR already took possession of the disputed property, the LBP is duty-bound to deposit the compensation determined by the PARAD in a bank accessible to the landowner.

In an Order dated March 4, 2005, the RTC resolved Lubrica's motion, as follows:

The foregoing considered and as prayed for by the respondent-movant The Land Compensation Department, Land Bank of the Philipines, is hereby directed to deposit the preliminary compensation as determined by the PARAD, in case and bonds in the total amount of Php 71,634,027.30, with the Land Bank of the Philippines, Manila, within seven (7) days from receipt of this order, and to notify this Court of compliance within such period.^[9]

Thus, the LBP filed an Omnibus Motion dated March 17, 2005 praying for the reconsideration of the above order, the admission of an amended petition impleading the DAR, and the issuance of summons to the new defendants. In the Omnibus Motion, the LBP contended:

In this AMENDED PETITION, Land Bank impleaded the DAR as respondent because DAR is the lead agency of the government in the implementation of the agrarian reform. It is the one which is responsible in identifying the lands to be covered by agrarian reform program, placing/identifying the farmer beneficiaries, parcellary mapping of the land, and determining the land value covered by PD 27/EO 228. The documents DAR prepares is placed in a folder called "claim folder" which it forwards to Land Bank for processing and payment.

21. At present there is no claim folder prepared and submitted by DAR to Land Bank, and therefore Land Bank has no claim folder to process and no basis to pay the landowner.^[10]

In an Order dated December 8, 2005,^[11] the RTC denied the Omnibus Motion finding no reversible error in its Order dated March 4, 2005 and denying the motion to amend the petition for being unnecessary towards land valuation.

Thus, the LBP appealed the RTC Orders dated March 4, 2005 and December 8, 2005 to the CA through a Petition for Certiorari dated February 13, 2006.  The LBP argued that without the claim folder from the DAR, it could not preliminarily determine the valuation of the covered lands and process the compensation claims. Moreover, it said that the amount to be deposited under Sec. 16 of RA 6657, or the Agrarian Reform Law of 1988, is the offered purchase price of DAR for the land contained in the notice of acquisition and not the price determined in an administrative proceeding before the PARAD.

Afterwards, on August 17, 2006, the CA issued the assailed decision, the dispositive portion of which reads:

WHEREFORE, premises considered, the petition is hereby DENIED DUE COURSE, and subsequently DISMISSED for lack of merit.

SO ORDERED.^[12]

The LBP moved for reconsideration of the CA Decision, but the CA did not reconsider it, as stated in its Resolution dated March 27, 2007.

Hence, the LBP filed this petition.

The Issue

What is the proper amount to be deposited under Section 16 of Republic Act No. 6657? Is it the PARAD/DARAB determined valuation or the preliminary valuation as determined by the DAR/LBP?^[13]

The Ruling of the Court

The petition is meritorious.

Private respondent Lubrica argues that, under the doctrines of res judicata and stare decisis, the instant case must be dismissed in light of the decision of this Court in Lubrica v. Land Bank of the Philippines,^[14] the dispositive portion of which reads:

WHEREFORE, premises considered, the petition is GRANTED. The assailed Amended Decision dated October 27, 2005 of the Court of Appeals in CA-G.R. SP No. 77530 is REVERSED and SET ASIDE. The Decision dated May 26, 2004 of the Court of Appeals affirming (a) the March 31, 2003 Order of the Special Agrarian Court ordering the respondent Land Bank of the Philippines to deposit the just compensation provisionally determined by the PARAD; (b) the May 26, 2003 Resolution denying respondent's Motion for Reconsideration; and (c) the May 27, 2003 Order directing Teresita V. Tengco, respondent's Land Compensation Department Manager to comply with the March 31, 2003 Order, is REINSTATED. The Regional Trial Court of San Jose, Occidental Mindoro, Branch 46, acting as Special Agrarian Court is ORDERED to proceed with dispatch in the trial of Agrarian Case Nos. R-1339 and R-1340, and to compute the final valuation of the subject properties based on the aforementioned formula.

SO ORDERED. (Emphasis supplied.)

The principles of res judicata and stare decisis do not apply to the case at bar.

In Lanuza v. Court of Appeals,^[15] the Court discussed the principle of res judicata, to wit:

Res judicata means a matter adjudged, a thing judicially acted upon or decided; a thing or matter settled by judgment. The doctrine of res judicata provides that a final judgment, on the merits rendered by a court of competent jurisdiction is conclusive as to the rights of the parties and their privies and constitutes an absolute bar to subsequent actions involving the same claim, demand, or cause of action. The elements of res judicata are (a) identity of parties or at least such as representing the same interest in both actions; (b) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) the identity in the two (2) particulars is such that any judgment which may be rendered in the other action will, regardless of which party is successful, amount to res judicata in the action under consideration. (Emphasis supplied.)

In Lubrica, the issue was as follows:

Petitioners insist that the determination of just compensation should be based on the value of the expropriated properties at the time of payment.Respondent LBP, on the other hand, claims that the value of the realties should be computed as of October 21, 1972 when P.D. No. 27 took effect.^[16]

While the Court directed that the valuation made by the PARAD be the amount to be deposited in favor of the landowner, it was done only because the PARAD's valuation was based on the time the payment was made.

The issue before Us is whether the RTC acted properly in ordering the deposit or payment to the landowner of the preliminary valuation of the land made by the PARAD. This is considering that Sec. 16(e) of RA 6657 clearly requires the initial valuation made by the DAR and LBP be deposited or paid to the landowner before taking possession of the latter's property, not the preliminary valuation made by the PARAD.

Evidently, the second element of res judicata is not present. The relief prayed for in Lubrica is that the amount for deposit in favor of the landowner be determined on the basis of the time of payment and not of the time of taking. But here, the prayer of the LBP is for the deposit of the valuation of the LBP and DAR and not that of the PARAD. These are two distinct and separate issues.  Res judicata, therefore, cannot apply.

We cannot apply the principle of stare decisis to the instant case, too. The Court explained the principle in Ting v. Velez-Ting:^[17]

The principle of stare decisis enjoins adherence by lower courts to doctrinal rules established by this Court in its final decisions. It is based on the principle that once a question of law has been examined and decided, it should be deemed settled and closed to further argument. Basically, it is a bar to any attempt to relitigate the same issues, necessary for two simple reasons: economy and stability. In our jurisdiction, the principle is entrenched in Article 8 of the Civil Code. (Emphasis supplied.)

To reiterate, Lubrica and the instant case have different issues. Hence, stare decisis is also inapplicable here.

The LBP posits that under Sec. 16(e) of RA 6657, and as espoused in Land Bank of the Philippines v. Court of Appeals,^[18] it is the purchase price offered by the DAR in its notice of acquisition of the land that must be deposited in an accessible bank in the name of the landowner before taking possession of the land, not the valuation of the PARAD.

The Court agrees with the LBP.  The RTC erred when it ruled:

Under Section 16 (e) the payment of the provisional compensation determined by the PARAD in the summary administrative proceedings under Section 16 (d) should precede the taking of the land. In the present case, the taking of the property even preceded the mere determination of a provisional compensation by more than 30 years.^[19]

Sec. 16 of RA 6657 contains the procedure for the acquisition of private lands, viz:

SEC. 16. Procedure for Acquisition of Private Lands.&mdashFor purposes of acquisition of private lands, the following procedures shall be followed:

(a) After having identified the land, the landowners and the beneficiaries, the DAR shall send its notice to acquire the land to the owners thereof, by personal delivery or registered mail, and post the same in a conspicuous place in the municipal building and barangay hall of the place where the property is located. Said notice shall contain the offer of the DAR to pay a corresponding value in accordance with the valuation set forth in Sections 17, 18, and other pertinent provisions hereof.

(b) Within thirty (30) days from the date of receipt of written notice by personal delivery or registered mail, the landowner, his administrator or representative shall inform the DAR of his acceptance or rejection of the offer.

(c) If the landowner accepts the offer of the DAR, the LBP shall pay the landowner the purchase price of the land within thirty (30) days after he executes and delivers a deed of transfer in favor of the Government and surrenders the Certificate of Title and other muniments of title.

(d) In case of rejection or failure to reply, the DAR shall conduct summary administrative proceedings to determine the compensation of the land by requiring the landowner, the LBP and other interested parties to submit evidence as to the just compensation for the land, within fifteen (15) days from the receipt of the notice. After the expiration of the above period, the matter is deemed submitted for decision. The DAR shall decide the case within thirty (30) days after it is submitted for decision.

(e) Upon receipt by the landowner of the corresponding payment or in case of rejection or no response from the landowner, upon the deposit with an accessible bank designated by the DAR of the compensation in cash or LBP bonds in accordance with this Act, the DAR shall take immediate possession of the land and shall request the proper Register of Deeds to issue a Transfer Certificate of Title (TCT) in the name of the Republic of the Philippines. The DAR shall thereafter proceed with the redistribution of the land to the qualified beneficiaries.

(f) Any party who disagrees with the decision may bring the matter to the court of proper jurisdiction for final determination of just compensation. (Emphasis supplied.)

Conspicuously, there is no mention of the PARAD in the foregoing Sec. 16(e) when it speaks of "the deposit with an accessible bank designated by the DAR of the compensation in cash or LBP bonds in accordance with this Act." Moreover, it is only after the DAR has made its final determination of the initial valuation of the land that the landowner may resort to the judicial determination of the just compensation for the land. Clearly, therefore, it is the initial valuation made by the DAR and LBP that is contained in the letter-offer to the landowner under Sec. 16(a), said valuation of which must be deposited and released to the landowner prior to taking possession of the property.

This too was the Court's interpretation of the above provision in Land Bank of the Philippines v. Heir of Trinidad S. Vda. De Arieta:^[20]

It was thus erroneous for the CA to conclude that the provisional compensation required to be deposited as provided in Section 16 (e) is the sum determined by the DARAB/PARAD/RARAD in a summary administrative proceeding merely because the word "deposit" appeared for the first time in the sub-paragraph immediately succeeding that sub-paragraph where the administrative proceeding is mentioned (sub-paragraph d). On the contrary, sub-paragraph (e) should be related to sub-paragraphs (a), (b) and (c) considering that the taking of possession by the State of the private agricultural land placed under the CARP is the next step after the DAR/LBP has complied with notice requirements which include the offer of just compensation based on the initial valuation by LBP. To construe sub-paragraph (e) as the appellate court did would hamper the land redistribution process because the government still has to wait for the termination of the summary administrative proceeding before it can take possession of the lands. Contrary to the CA's view, the deposit of provisional compensation is made even before the summary administrative proceeding commences, or at least simultaneously with it, once the landowner rejects the initial valuation ("offer") by the LBP. Such deposit results from his rejection of the DAR offer (based on the LBP's initial valuation). Both the conduct of summary administrative proceeding and deposit of provisional compensation follow as a consequence of the landowner's rejection under both the compulsory acquisition and VOS. This explains why the words "rejection or failure to reply" and "rejection or no response from the landowner" are found in sub-paragraphs (d) and (e). Such "rejection"/"no response from the landowner" could not possibly refer to the award of just compensation in the summary administrative proceeding considering that the succeeding sub-paragraph (f) states that the landowner who disagrees with the same is granted the right to petition in court for final determination of just compensation. As it is, the CA's interpretation would have loosely interchanged the terms "rejected the offer" and "disagrees with the decision", which is far from what the entire provision plainly conveys.

x x x x

Under the law, the LBP is charged with the initial responsibility of determining the value of lands placed under land reform and the compensation to be paid for their taking. Once an expropriation proceeding or the acquisition of private agricultural lands is commenced by the DAR, the indispensable role of LBP begins. EO No. 405, issued on June 14, 1990, provides that the DAR is required to make use of the determination of the land valuation and compensation by the LBP as the latter is primarily responsible for the determination of the land valuation and compensation. In fact, the LBP can disagree with the decision of the DAR in the determination of just compensation, and bring the matter to the RTC designated as [Special Agrarian Court] for final determination of just compensation.

The amount of "offer" which the DAR gives to the landowner as compensation for his land, as mentioned in Section 16 (b) and (c), is based on the initial valuation by the LBP. This then is the amount which may be accepted or rejected by the landowner under the procedure established in Section 16. Perforce, such initial valuation by the LBP also becomes the basis of the deposit of provisional compensation pending final determination of just compensation, in accordance with sub-paragraph (e). (Emphasis supplied.)

It is clear from Sec. 16 of RA 6657 that it is the initial valuation made by the DAR and the LBP that must be released to the landowner in order for DAR to take possession of the property. Otherwise stated, Sec. 16 of RA 6657 does not authorize the release of the PARAD's determination of just compensation for the land which has not yet become final and executory.

Moreover, it bears pointing out that, pursuant to DAR Administrative Order No. 02, Series of 1996, entitled Revised Rules and Procedures Governing the Acquisition of Agricultural Lands subject of Voluntary Offer to Sell and Compulsory Acquisition pursuant to Republic Act No. 6657, the DAR Municipal Office (DARMO) first prepares a claim folder (CF) containing the necessary documents for the valuation of the land. The DARMO then forwards this claim folder to the DAR Provincial Office (DARPO) which, in turn, has the following duties: "Receives claim folder and forwards to the DAR-LBP Pre-Processing Unit (PPU) for review/evaluation of documents. Gathers lacking documents, if any."^[21] The DAR-LBP PPU then forwards the CF to the LBP-Land Valuation and Landowner's Compensation Office (LVLCO) which "receives and evaluates the CF for completeness, consistency and document sufficiency. Gathers additional valuation documents."^[22] Thereafter, the LBP-LVLCO "determines land valuation based on valuation inputs" and "prepares and sends Memo of Valuation, Claim Folder Profile and Valuation Summary (MOV-CFPVS)" to the DARPO.^[23] The DARPO then "sends Notice of Valuation and Acquisition to LO [landowner] by personal delivery with proof of service or by registered mail with return card, attaching copy of MOV-CFPVS and inviting LO's attention to the submission of documents required for payment of claim."^[24]

Notably, DAR failed to prepare the claim folder which is necessary for the LBP to make a valuation of the land to be expropriated.  The proper remedy would have been to ask the DAR and LBP to determine such initial valuation and to have the amount deposited to his account, in accordance with Sec. 16 of RA 6657. Nevertheless, it was erroneous for private respondent to have filed a Petition for Determination of Just Compensation with PARAD when the remedy that she was seeking was for the deposit of the initial valuation that the DAR and LBP should have made.

Contrary to the CA's ruling, the RTC's failure to distinguish between the initial valuation that is contemplated in Sec. 16 of RA 6657 and the just compensation subject of judicial determination is a gross and patent error that can be considered as grave abuse of discretion. Gross abuse of discretion is defined, as follows:

A special civil action for certiorari, under Rule 65, is an independent action based on the specific grounds therein provided and will lie only if there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law. A petition for certiorari will prosper only if grave abuse of discretion is alleged and proved to exist. "Grave abuse of discretion," under Rule 65, has a specific meaning. It is the arbitrary or despotic exercise of power due to passion, prejudice or personal hostility; or the whimsical, arbitrary, or capricious exercise of power that amounts to an evasion or refusal to perform a positive duty enjoined by law or to act at all in contemplation of law. For an act to be struck down as having been done with grave abuse of discretion, the abuse of discretion must be patent and gross.^[25] x x x (Emphasis supplied.)

It should also be pointed out that in the related Land Bank of the Philippines v. Pagayatan,^[26] the Court had found the presiding judge of the RTC, Branch 16 in San Jose, Occidental Mindoro, herein respondent Judge Ernesto P. Pagayatan, guilty of Gross Ignorance of the Law or Procedure and Gross Misconduct for holding Teresita V. Tengco, Acting Chief of the Land Compensation Department of the LBP, and Leticia Lourdes A. Camara, Chief of the Land Compensation Department of the LBP, guilty of indirect contempt for allegedly disobeying the very same Order dated March 4, 2005 of the RTC.  In that case, Court ruled:

The partiality of respondent was highlighted when, out of his selective invocation of judicial courtesy, he refused to resolve Leticia and Teresita's February 14, 2007 Urgent Manifestation of Compliance and Motion and other pending incidents in view of the pendency before the appellate court of the LBP's Omnibus Motion praying for, among other things, the quashal of the warrant of arrest, whereas he had earlier found Leticia and Teresita guilty of contempt despite the pendency before the appellate court of LBP's motion for reconsideration of the dismissal of the petition in CA-G.R. SP No. 93206.

Evidently, the RTC had already acted with partiality in deciding the case and with grave abuse of discretion.

Moreover, in order to give life and breath to Sec. 16 of RA 6657, as well as DAR Administrative Order No. 02, Series of 1996, the Court is constrained to direct the DAR and the LBP to make the initial valuation of the subject land as of the time of its taking and to deposit the valuation in the name of the landowner or his estate, in accordance with RA 6657 and the pertinent decisions of this Court on the matter.

The length of time that has elapsed that the landowner has not received any compensation for the land cannot justify the release of the PARAD valuation to the landowner.  Sec. 16 of RA 6657 only allows the release of the initial valuation of the DAR and the LBP to the landowner prior to the determination by the courts of the final just compensation due. Besides, it must be stressed that it was only sometime in 2003 that the assignee of the landowner filed a petition for determination of just compensation with the PARAD.  Clearly, the landowner slept on his right to demand payment of the initial valuation of the land. Nevertheless, such lapse of time demands that the DAR and the LBP act with dispatch in determining such initial valuation and to deposit it in favor of the landowner at the soonest possible time.

WHEREFORE, the petition is GRANTED.  The CA's August 17, 2006 Decision and March 27, 2007 Resolution in CA-G.R. SP No. 93206 are hereby REVERSED and SET ASIDE.  The DAR and the LBP are hereby given three (3) months from receipt of notice that this Decision has become final and executory, within which to determine the initial valuation of the subject lot and to deposit its initial value to the account of private respondent Lubrica.

The PARAD Decision dated March 21, 2003 in Case No. DCN-0405-0022-02 is hereby ANNULLED and SET ASIDE. The RTC Order dated March 4, 2005 in Agrarian Case No. 1390 is also ANNULLED and SET ASIDE.

No costs.

SO ORDERED.

Corona, C.J., (Chairperson), Nachura,^* Del Castillo, and Perez, JJ., concur.

Endnotes:

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^* Additional member per Special Order No. 947 dated February 11, 2011.

^[1] Rollo, pp. 73-80. Penned by Associate Justice Juan Q. Enriquez, Jr. and concurred in by Associate Justices Godardo A. Jacinto and Magdangal M. de Leon.

^[2] Id. at 82-83.

^[3] Id. at 177-178.

^[4] Id. at 185-194.

^[5] Id. at 187.

^[6] Id. at 193.

^[7] Id. at 200-201.

^[8] Id. at 214-221.

^[9] Id. at 178.

^[10] Id. at 275-276.

^[11] Id. at 179-180.

^[12] Id. at 80.

^[13] Id. at 61.

^[14] G.R. No. 170220, November 20, 2006, 507 SCRA 415, 425-426.

^[15] G.R. No. 131394, March 28, 2005, 454 SCRA 54, 61-62.

^[16] Supra note 14, at 421.

^[17] G.R. No. 166562, March 31, 2009, 582 SCRA 694, 704.

^[18] G.R. No. 118712, October 6, 1995, 249 SCRA 149.

^[19] Rollo, p. 178.

^[20] G.R. No. 161834, August 11, 2010.

^[21] Rollo, p. 288.

^[22] Id.

^[23] Id.

^[24] Id. at 289.

^[25] Beluso v. Commission on Elections, G.R. No. 180711, June 22, 2010, 621 SCRA 450, 456.

^[26] A.M. No. RTJ-07-2089, September 8, 2009, 598 SCRA 592, 605.