Apiado, Elyn D.

LAND BANK OF THE PHILIPPINES vs EUGENIO DALAUTA

GR No. 190004; August 8, 2017
MENDOZA, J.:

STATEMENT OF FACTS
Eugenio Dalauta was the registered owner of an agricultural land in Florida, Butuan City.
The land was placed by the Department of Agrarian Reform (DAR) under compulsory acquisition
of the Comprehensive Agrarian Reform Program (CARP). Thus, Dalauta received on February 7,
1994 a Notice of Coverage notifying him that his land was subject of expropriation. Land Bank
of the Philippines (LBP) offered ₱192,782.59 as compensation for the land, but Dalauta rejected
such valuation for being too low.
The case was referred to the DAR Adjudication Board (DARAB). A summary
administrative proceeding was conducted to determine the appropriate just compensation for the
subject property. In its Resolution, the PARAD affirmed the valuation made by LBP in the
amount of ₱192,782.59. Dalauta filed a petition for determination of just compensation with the
RTC, sitting as Special Agrarian Court (SAC).
Dalauta argued that the valuation of his land should be determined using the formula in
DAR A.O. No. 6, series of 1992, which was Land Value (LV) = Capitalized Net Income (CNI) x
0.9 + Market Value (MV) per tax declaration x 0.1, as he had a net income of ₱350,000.00 in
1993 from the sale of the trees that were grown on the said land to Norberto C. Fonacier.
On May 30, 2006, the SAC rendered its decision pegging the just compensation in the
amount of ₱2,639,557.00, higher than the value made by LBP. Unsatisfied, LBP filed a motion
for reconsideration, but it was denied by the SAC.
Hence, LBP filed a petition for review under Rule 42 of the Rules of Court before the CA,
arguing, among others that the SAC erred in taking cognizance of the case when the DARAB
decision sustaining the LBP valuation had long attained finality and that the SAC violated
Republic Act (R.A.) No. 6657 and DAR A.O. No. 6, series of 1992, in fixing the just
compensation.
The CA ruled that the SAC correctly took cognizance of the case. It ruled that the SAC
had original and exclusive jurisdiction over all petitions for the determination of just
compensation.

STATEMENT OF THE CASE

The case was first referred to DARAB through the Provincial Agrarian Reform
Adjudicator (PARAD) for the determination of appropriate compensation of the subject
property. PARAD affirmed the computation made by LBP. Daluata filed a petition to RTC sitting
Apiado, Elyn D.

as SAC, alledging that the computation of LBP was inconsistent with the provision of DAR. SAC
recommended that the value of the land be pegged at 100,000 per hectare. Unconvinced,
petitioner filed a petition before the Court of Appeals. CA ruled that the computation of SAC is
correct. Aggrieved, petitioner raised the case to the Supreme Court.

ISSUE
1. Whether or not the trial court had properly taken jurisdiction over the case despite the
finality of the PARAD Resolution.
2. Whether or not the trial court correctly computed the just compensation of the subject
property.

RULING
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. 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. In agrarian reform cases, primary jurisdiction is vested in the
DAR, more specifically, in the DARAB. 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.
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). 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
Apiado, Elyn D.

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.

APPLICABLE LAWS, PRINCIPLES, AND DOCTRINES

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.

SEC. 50. Quasi-Judicial Powers of the DAR. - The DAR is hereby vested with primary
jurisdiction to determine and adjudicate agrarian reform matters and shall have exclusive original
jurisdiction over all matters involving the implementation of agrarian reform, except those falling
under the exclusive jurisdiction of the Department of Agriculture (DA) and the Department of
Environment and Natural Resources (DENR).

SEC. 57. Special Jurisdiction. - The Special Agrarian Courts shall have original and
exclusive jurisdiction over all petitions for the determination of just compensation to landowners,
and the prosecution of all criminal offenses under this Act. The Rules of Court shall apply to all
proceedings before the Special Agrarian Courts, unless modified by this Act.