l\epublic of tbe bilippine

i>upreme QCourt
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SECOND DIVISION

DEPARTMENT OF AGRARIAN G.R. No. 171836

REFORM, represented by HON.
NASSER C. PANGANDAMAN,
in
his capacity as DAR-OIC Secretary,
Petitioner,

-versus-

SUSIE IRENE GALLE,

Respondent.
x----------------------------x
LAND BANK OF THE PHILIPPINES, G.R. No. 195213
Petitioner,

Present:
-versus-
CARPIO, Chairperson,
BRION,
SUSIE IRENE GALLE, substituted DEL CASTILLO,
by her heirs, namely HANS PETER, PEREZ, and
CARL OTTO, FRITZ WALTER, PERLAS-BERNABE, JJ.
and GEORGE ALAN, all surnamed
REITH, Promulgat d:
Respondents. AUG 1 1 2014 <k\\\)\ a1otuat ck
x--------------------------------------------------------x - (Y
DECISION
DEL CASTILLO, J.:

It has been the consistent pronouncement of this Court that the

determination of just compensation is basically a judicial function. Also, it is
settled that in the computation of just compensation for land taken for agrarian
reform, both Section 17 f Republic Act No. 6657 (RA 6657 or the
Comprehensive Agrarian Reform Law of 1988/CARL) and the formula
prescribed in the applicable Administrativ er of the Department of Agrarian
Reform (DAR) should be considered. / vc/tJt!IY
Decision 1 G.R. No. 171836 & 195213

Before this Court are consolidated Petitions for Review on Certiorari1

assailing the following dispositions of the Court of Appeals (CA):

1. Its September 23, 2004 Decision2 and February 22, 2006 Resolution3
in CA-G.R. SP No. 80678, entitled “Department of Agrarian Reform, as
represented by Secretary Roberto M. Pagdanganan, Petitioner, versus
Hon. Reinerio (Abraham) B. Ramas, Presiding Judge, Regional Trial Court,
Br. 18, Pagadian City and Susie Irene Galle, Respondents”;

2. Its July 27, 2010 Consolidated Decision4 and January 19, 2011
Resolution5 in CA-G.R. SP Nos. 00761-MIN and 00778-MIN, entitled
“Land Bank of the Philippines, Petitioner, versus Susie Irene Galle,
substituted by her heirs, namely: Hans Peter, Carl Otto, Fritz Walter, and
George Alan, all surnamed Rieth, Respondents” and “Department of Agrarian
Reform, represented by OIC-Secretary Nasser C. Pangandaman, Petitioner,
versus Susie Irene Galle, substituted by her heirs, namely: Hans Peter, Carl
Otto, Fritz Walter, and George Alan, all surnamed Rieth, Respondents”,
respectively.

Factual Antecedents

Respondent Susie Irene Galle (Galle) owned two contiguous parcels

of land known as the Patalon Coconut Estate (the estate) in Patalon,
Zamboanga City, with a total area of 410.2271 hectares (or 4,102,271 square
meters) and covered by two titles issued in her name – Transfer Certificates of
Title Nos. T- 62,7366 (TCT T-62,736) and T-62,7377 (TCT T-62,737). The
estate is a fully developed and income-producing farm, thus:

TCT T-62,736 TCT T-62,737

Land Use Area [Has.] Land Use Area
[Has.] [Coconut Plantation] 178.713 [Coconut Plantation] 168.1127 [has.]
[Coconut with Coffee Trees] 5.0 [Coconut with Coffee Trees] 3.5
Quarry 5.0 Corn 1.5
Barangay Road 1.4 Forest [Land] 15.0
Forest [Land] 15.0 National Road 2.08

1
Rollo, G.R. No. 171836, pp. 9-23; rollo, G.R. No. 195213, pp. 53-160.
2 Rollo, G.R. No. 171836, pp. 25-33; penned by Associate Justice Mariflor P. Punzalan Castillo
and concurred in by Associate Justices Sesinando E. Villon and Rodrigo F. Lim, Jr.
3 Id. at 35-36; penned by Associate Justice Rodrigo F. Lim, Jr. and concurred in by Associate Justices
Teresita Dy-Liacco Flores and Ramon R. Garcia.
4 Rollo, G.R. No. 195213, pp. 164-199; penned by Associate Justice Edgardo A. Camello and concurred in
by Associate Justices Leoncia R. Dimagiba and Nina G. Antonio-Valenzuela.
5
Id. at 201-202.
6 Consisting of 205.1130 hectares.
7 Consisting of 205.1141 hectares.
8
Rollo, G.R. No. 195213, pp. 189-190.
 The estate contained between 35,810 to 38,666 coconut trees,9 producing
copra. Likewise, cattle, carabao and horses were raised therein.10

In August 1992, petitioner Land Bank of the Philippines (LBP)

valued 356.2257 hectares of the estate at P6,083,545.26, which valuation was
rejected by Galle. The rejected amount was supposedly deposited in the name
of Galle, in the form of cash and bonds.

On November 17, 1993, the Zamboanga City Registry of Deeds

cancelled Galle’s titles and transferred the entire estate to the State; TCT
Nos. T-110,927 and T-110,928 were issued in the name of the “Republic of
the Philippines – Department of Agrarian Reform.”

On November 25, 1994, TCT Nos. T-110,927 and T-110,928 were

cancelled and new titles – TCT Nos. T-111,098 and T-111,099 – were issued in
the name of “Patalon Estate Agrarian Reform Beneficiaries Association”
(PEARA).

Yet again, on May 13, 1994, the above two PEARA titles were cancelled,
and new titles were issued, as follows:

1. TCT No. T-113,496 for 15.0025 hectares in Galle’s name;11

2. TCT No. T-113,499 for 37.1209 hectares in Galle’s name;12

3. TCT No. T-113,497 for 47.1739 hectares in the name of PEARA;13 and

4. TCT No. T-113,498 for 307.5369 hectares in the name of PEARA.14

The above four titles covered 406.8342 hectares of the estate’s total area
of 410.2271 hectares, thus leaving 3.3929 hectares thereof unregistered. Thus,
it appears that as to Galle, a total of 358.1037 hectares, or 3,581,037 square
meters – which is the sum total of the areas covered by TCT Nos. T-
113,497 and T- 113,498, and the 3.3929 hectares unaccounted for but not re-
titled or returned to Galle – were taken from her by the government without
just compensation.

Meanwhile, the Department of Agrarian Reform Adjudication Board

(DARAB) conducted summary administrative proceedings for the acquisition
of
9
Id. at 26, 28.
10
Id. at 13.
11
Id. at 726-727.
12 Id. at 731.
13 Id. at 728.
14
Id. at 729-730.
the estate, docketed as DARAB Case No. JC-RIX-ZAMBO-0011-CO. On
October 15, 1996, a Decision15 was rendered in said case, the dispositive
portion of which reads:

WHEREFORE, premises considered, order is hereby issued

directing the Land Bank of the Philippines to determine and include the
value of the 1.4 hectares barangay road in the total valuation. It is likewise
directed to pay the landowner, Susie Irene Galle, the amount of TEN
MILLION SEVEN HUNDRED SIXTY SEVEN THOUSAND FOUR
HUNDRED SIXTY NINE
PESOS AND 00/100 (P10,627,148.00) [sic] upon completion of the
essential requirements.

SO ORDERED.16

Galle was notified of the above Decision on October 28, 1996. LBP
filed a motion for reconsideration, which remains unresolved to this day.17

Civil Case No.

4574

Galle instituted on November 12, 1996 – or within 15 days from receipt

of the Decision in DARAB Case No. JC-RIX-ZAMBO-0011-CO – a case
for “Cancellation of Transfer Certificates of Title and Reconveyance,
Determination and Payment of Just Compensation, and Damages” with the
Regional Trial Court (RTC) of Zamboanga City. Docketed as Civil Case No.
4574 and assigned to RTC Branch 12, the Complaint18 - entitled “Susie Irene
Galle, Plaintiff, versus Ernesto Garilao, et al., Defendants” – prayed, among
others, that:

The Honorable Court issue an Order:

1. Directing defendant Susana B. Muin, Register of Deeds of

Zamboanga City, to cancel all certificates of title issued subsequent to TCT
Nos. T-62,736 and T-62,737, thereby rendering all subsequent certificates
of title without force and effect, and restoring in the name of plaintiff
TCT Nos. T- 62,736 and T-62,737; and

2. Directing the Department of Agrarian Reform and all the

defendants to jointly and severally pay plaintiff the income she lost from the
time the said TCTs were cancelled on November 17, 1993 up to the time that
the TCTs will be restored in her name, with interest at the rate of 12% per
annum, to pay lawyer’s fees and to pay the cost of the suit.

In the alternative, it is respectfully prayed that the Honorable

Court render judgment:

15
Id. at 339-351.
16
Id. at 350.
17
Id. at 707, 791.
18
Id. at 444-450.
 1. Declaring just compensation for plaintiff’s expropriated
landholdings at an amount not less than P345,311,112.00 and
directing Land Bank of the Philippines to pay plaintiff the said
amount.

2. Requiring Land Bank of the Philippines to pay plaintiff the value

of the infrastructures and waterworks system installed on
plaintiff’s landholdings.

3. Requiring the Department of Agrarian Reform and Land Bank of

the Philippines and all other defendants to jointly and severally
pay damages to plaintiff in the form of 12% interest [per annum]
starting January 21, 1991 up to the time the final award of
compensation is paid to plaintiff, the interest to be computed
based on the final award of compensation to plaintiff, and
directing Land Bank of the Philippines to pay the amount to
plaintiff.

4. Requiring the Department of Agrarian Reform and Land Bank of

the Philippines and all other defendants to jointly and severally
pay damages to plaintiff by way of attorney’s fees in the amount
of 15% of the final award of compensation to plaintiff, and
directing Land Bank of the Philippines to pay the amount to
plaintiff.

5. Requiring the Department of Agrarian Reform and Land Bank of

the Philippines and all other defendants to jointly and severally
pay damages to plaintiff for all the expenses incurred to bring the
instant suit before the Honorable Court, which should not be
less than P400,000.00, and to pay the cost of the suit, and
directing Land Bank of the Philippines to pay the the [sic]
amounts to plaintiff.

6. To pay the cost of the suit.19

Galle likewise filed DARAB Case No. IX-ZC-766-96-(R) seeking

annulment of the titles which were issued subsequent to her original titles, or
TCT T-62,736 and TCT T-62,737. However, the case was later dismissed in a
January 10, 1997 Decision issued by the DARAB.

The DAR moved to dismiss Civil Case No. 4574, claiming that the
RTC had no jurisdiction over the case. The RTC denied the motion, as well as
DAR’s ensuing motion for reconsideration.

DAR thus filed a Petition for Certiorari with the CA, docketed as CA-
G.R. SP No. 47618. On August 21, 2001, the CA issued a Decision20
granting the Petition, thus:

WHEREFORE, the foregoing premises considered, the petition for

certiorari is GRANTED. The Orders of the public respondent dated June 23,

19 Id. at 449.
20 Id. at 451-455; penned by Associate Justice Juan Q. Enriquez, Jr. and concurred in by Associate
Justices Ruben T. Reyes (ret.) and Presbitero J. Velasco (now a Member of this Court).
 1997 and September 18, 1997, and all the proceedings had thereafter
including the Decision dated March 22, 1999 and the Order dated May 19,
2000 are hereby ANNULLED and SET ASIDE. No pronouncement as to
costs.

SO ORDERED.21

The CA held that the RTC in Civil Case No. 4574 had no power to
review decisions of the DARAB, and it had no jurisdiction over the case for
cancellation of titles since it was not the designated Special Agrarian Court
(SAC).

Galle then came to this Court by Petition for Review on

Certiorari, docketed as G.R. No. 152480. In a June 3, 2002 Resolution,22
however, the Petition was denied for failure to show that the CA committed
reversible error.

Civil Case No. 4436-2K3

On January 14, 2003, Galle filed a case for “Determination and Payment
of Just Compensation with Damages” against the Secretary of the DAR,
LBP, and PEARA, which was docketed as Civil Case No. 4436-2K3 and
assigned to Branch 18 of the RTC of Pagadian City, the designated SAC. The
Complaint23 essentially alleged that the estate was a fully developed and
income-generating farm which was situated near the Zamboanga City Special
Economic Zone Authority and the Ayala de Zamboanga Industrial Estate; that
the estate was a rich source of sand and gravel, and more than 62 hectares
thereof was coastal land; that at the time of taking by the State, the fair
market value thereof was no less than P100.00 per square meter, or P1
million per hectare; and that DAR and LBP offered compensation equivalent
to only P1.70 per square meter. Galle prayed that just compensation be fixed
in the amount of not less than P1 million per hectare or a total of
P350,569,636.10; that she be granted compounded interest on the just
compensation due her, computed from the time her land was taken until she
is paid; that she be awarded 15% attorney’s fees, “actual expenses”, and costs
of suit.

The DAR filed a Motion to Dismiss,24 which LBP adopted. Citing

prescription and forum-shopping, the DAR argued that Galle was given only
15 days from notice of the October 15, 1996 DARAB Decision in DARAB
Case No. JC-RIX-ZAMBO-0011-CO – pursuant to Rule XIII, Section 11 of
the 1994 DARAB Rules of Procedure25 – within which to file a just
compensation case
21 Id. at 454.
22 Id. at 456.
23
Id. at 401-407.
24
Id. at 417-423.
25
Section 11. Land Valuation and Preliminary Determination and Payment of Just Compensation.
The decision of the Adjudicator on land valuation and preliminary determination and payment
of just
compensation shall not be appealable to the Board but shall be brought directly to the Regional Trial
Courts
designated as Special Agrarian Courts within fifteen (15) days from receipt of the notice thereof. Any
party shall be entitled to only one motion for reconsideration.
with the SAC; her filing of Civil Case No. 4436-2K3 on January 14, 2003, or
six years later, is tardy, and the October 15, 1996 Decision of the DARAB
therefore became final and executory. It argued further that Galle was guilty
of forum- shopping for filing Civil Case No. 4436-2K3 after obtaining an
adverse Decision in Civil Case No. 4574, which likewise involved a prayer –
albeit in the alternative
– for the fixing of just compensation for her
estate.

Galle filed an Opposition26 to the Motion to Dismiss, arguing among

others that the October 15, 1996 DARAB Decision in DARAB Case No.
JC-RIX- ZAMBO-0011-CO did not become final and executory as there is still
a pending and unresolved Motion for Reconsideration27 filed by LBP; that the
courts have the power to review the Decision of the DAR, which is merely
preliminary and not final; that a landowner may file a case directly with the
SAC without awaiting the DAR’s preliminary determination on just
compensation;28 that the original and exclusive jurisdiction over cases for the
determination of just compensation lies with the SAC – the DAR cannot be
granted jurisdiction over cases of eminent domain, as the valuation of
property in eminent domain cases is essentially a judicial function which
cannot be vested in administrative agencies;29 that she was deprived of her
property without just and timely compensation, and her estate was placed in the
name of an agrarian reform beneficiaries association that did not exist in
fact and in law; and that no forum-shopping was committed with the filing of
Civil Case No. 4574 precisely since the trial court in said case had no
jurisdiction to cancel the titles issued or to fix just compensation as it was not
the designated SAC that possessed the power to do so. To this Opposition, LBP
filed a Reply.30

In a June 20, 2003 Order,31 the SAC denied the Motion to Dismiss.
DAR and LBP moved to reconsider, but in a September 12, 2003 Order,32 the
SAC stood its ground.

LBP thereafter filed its Answer with Counterclaim.33

CA-G.R. SP No.
80678

Instead of submitting an Answer, DAR filed a Petition for Certiorari

and Prohibition with the CA – docketed as CA-G.R. SP No. 80678 –
assailing the SAC’s June 20, 2003 and September 12, 2003 Orders, on the
claim that they were
26
Rollo, G.R. No. 195213, pp. 459-465.
27
Id. at 466-468.
28 Citing Land Bank of the Philippines v. Court of Appeals, 376 Phil. 252 (1999).
29 Citing Republic v. Court of Appeals, 331 Phil. 1070 (1996).
30
Rollo, G.R. No. 195213, pp. 474-476.
31
Id. at 477-478.
32
Id. at 501.
33
Id. at 502-505.
issued with grave abuse of discretion since Galle was already bound by the
final and executory October 15, 1996 Decision of the DARAB in DARAB
Case No. JC-RIX-ZAMBO-0011-CO and thus could no longer file Civil Case
No. 4436- 2K3 to fix anew the just compensation for her estate.

On September 23, 2004, the CA issued the herein assailed Decision

and February 22, 2006 Resolution respectively dismissing the Petition and
denying reconsideration thereof. The appellate court stated that DAR’s
Petition was defective as it failed to state the date of receipt of the SAC’s
assailed June 20, 2003 Order, and that the SAC’s Orders may not be elevated
to the higher courts until the hearing in Civil Case No. 4436-2K3 has been
terminated and the case decided on the merits, pursuant to Section 59 of RA
6657 or the Comprehensive Agrarian Reform Law of 1988 (CARL).34

Thus, the DAR filed the instant Petition, docketed as G.R. No. 171836.

Meanwhile, back in Civil Case No. 4436-2K3, the SAC conducted

pre-
trial, where the parties jointly moved for the creation of a commission of three
that would determine the just compensation for Galle’s estate. Thus,
Zamboanga City Assessor Erwin Bernardo (Bernardo), Zamboanga City
Engineer Luis Vicente Despalo (Despalo), and DBP Property Appraiser
Romel Calapardo (Calapardo) were called in to sit as commissioners.

The commission submitted a Report dated July 7, 2004, which the

parties and the SAC rejected. The commission was directed to convene and
conduct a revaluation. Meanwhile, Despalo was replaced by retired City
Assessor Obdulia Manalo (Manalo), and Bernardo was replaced by retired
Judge Cecilio Martin (Judge Martin).

Hearings were conducted whereby the parties presented their

respective evidence. Galle presented two witnesses, while LBP submitted only
documentary evidence.

Meanwhile, one of the commissioners – Judge Martin – resigned.

LBP manifested its willingness to proceed with the revaluation with only two
commissioners remaining.35

Commissioner Manalo submitted her Commissioners’ Report36 together

34
Section 59. Orders of the Special Agrarian Courts. —No order of the Special Agrarian Courts on any
issue, question, matter or incident raised before them shall be elevated to the appellate courts until the
hearing shall have been terminated and the case decided on the merits.
35
Rollo, G.R. No. 195213, p. 21.
36
Id. at 566-572.
with all the documents submitted by the parties and the transcript of
stenographic notes of the hearings and executive sessions of the
commissioners. Manalo’s Report reads, as follows:

COMMISSIONERS’ REPORT
Comes now the undersigned Commissioners, and in compliance with
the Order of the Honorable Court dated October 30, 2003, respectfully submit
this

REPORT

I. TASK OF THE COMMISSIONERS

As stated in the Order of the Honorable Court dated October 30,
2003, the task of the commissioners is “to conduct the re-evaluation of the
property subject of this case.” The records show that plaintiff’s land titles
were cancelled in 1993 hence the task of the commissioners is to determine
the value of her land in 1993.

II. THE PROPERTY SUBJECT OF THIS CASE

Located in Patalon, Zamboanga City, plaintiff’s land was
originally embraced under two certificates of title with a combined total area
of 410.2271 hectares (has.). These titles were cancelled on November 17,
1993. On May 13, 1994 two parcels of land with a total combined area
of 52.1234 has. were reconveyed to plaintiff for being not carpable. The total
area that comprises the property subject of this case is therefore 358.1037
has. Proof of this is given below:

Plaintiff’s original area:

TCT No. T-62,736 - 205.1130 has.
TCT No. T-62,737 - 205.1141 has.
TOTAL AREA - 410.2271 has.

Plaintiff’s reconveyed area:

TCT No. T-113,496 - 15.0025 has.
TCT No. T-113,499 - 37.1209 has.
TOTAL AREA - 52.1234 has

AREA TAKEN BY DAR - 358.1037 has.

=======

It is the function of DAR to determine the carpability of lands

for agrarian reform. The commissioners therefore do not have any
authority or jurisdiction to question the carpability of the land that was not
reconveyed to plaintiff. In other words, whatever was not reconveyed to
plaintiff is presumed to be carpable land and this area amounts to 358.1037
has.

This emphasis is being made because it appears from a collation of

the land area in the two titles that were reconveyed to plaintiff and the two
titles given to the Patalon Estate Agrarian Reform Beneficiaries Association
(PEARA) that 3.3929 has. are not covered by a certificate of title. As stated
above, the commissioners have no authority or jurisdiction to question the
lack of coverage of 3.3929 has. under a certificate of title. This is the
province of DAR and for DAR to address. Insofar as the area of the
property subject of this case is concerned, what was not returned to
plaintiff is 358.1037 has. and this is
therefore the area that is to be considered for valuation.

III. ACTIVITIES/HEARINGS OF THE COMMISSIONERS

1. Ocular Inspection
2. Hearing for the presentation of plaintiff’s evidence
3. Hearing for the presentation of defendant’s evidence
4. Organization meeting
5. Executive sessions

Because x x x plaintiff’s property was taken was some time ago x x

x and her property as it was before no longer exists, the commissioners note
the following observations made during their ocular inspection:

1. There are only a few coconut trees on the property subject of

this case and they are young trees. Whatever coconut trees
plaintiff had on the property have been cut down.

2. There is heavy extraction/quarrying of sand and gravel on

Patalon River which bounds plaintiff’s property.

3. There is very little agricultural activity on the property.

IV. THE EVIDENCES AND PLEADINGS FILED/SUBMITTED

BY THE PARTIES

The commissioners are submitting to the Honorable Court all the

pleadings and other papers filed by plaintiff and defendant Land Bank of
the Philippines (LBP) as attachments to this report, as well as the transcript
of all hearings. In view of the voluminous nature of these attachments, and
because they already have copies, plaintiff and LBP will only be provided
with copies of this report without its attachments.

A. Plaintiff’s Evidence

Testimonial

1. Mr. Rodolfo Luceñada, Head, Loan Administration Unit,

Zamboanga Lending Center, Land Bank of the Philippines

He testified that in July 2004 his unit appraised a 3[-]ha. Property

in Sinubung, a barangay adjacent to Patalon; furthermore that the [price]
range of [properties] in the area is P100 to P300 per square meter (sqm)

2. Mr. Rene Lacandalo, In-Charge of Sand and Gravel and Fishery

Section, Office of the City Treasurer, Zamboanga City

He testified that plaintiff’s property is bounded by two river

systems, the Patalon River and the Miluao River and that there is
extraction and quarrying in the river system[s]

Documentary

Plaintiff submitted a folder of documents (Annex A of this

Report) categorized, viz:
1. Prefatory Matters
a. Complaint dated Dec. 19, 2002, Civil Case No. 4436-2K3
b. Answer of LBP dated Sept. 30, 2003
c. Order dated Oct. 30, 2003

2. The Property Subject of the Complaint

a. TCT No. T-62,736
b. TCT No. T-62,737
c. TCT No. T-
110,927 d. TCT No.
T-110,928 e. TCT No.
T-111,098 f. TCT No.
T-111,099 g. TCT No.
T-113,496 h. TCT No.
T-113,497 i. TCT No.
T-113,498 j. TCT No.
T-113,499
k. Certification No. 2002-371 dated Sept. 4, 2002 issued by the
Register of Deeds for Zamboanga City
l. Colored Map of Zamboanga City showing all the barangays
m. Colored Map of the property subject of the complaint
n. Another map of the property subject of the complaint

3. Improvements on the property

a. Tax Declaration No. 01 60 00017
b. Tax Declaration No. 01 60 00018
c. Statement of the Livestock
d. Certification of the City Assessor on unit value of agricultural crops

4. Compensation due Susie Irene Galle

a. Resolution No. 2003-10
b. Resolution No. 2001-90
c. Resolution No. 2001-87
d. Resolution No. 2000-35
e. Resolution No. 2000-05
all of the City Appraisal Committee of the City of Zamboanga
f. Manifestation dated Oct. 19, 1995
g. Certification dated Mar. 14, 1995 issued by the Phil. Coconut Authority
h. Copra Millgate Prices for Western Mindanao prepared by the
Trade Information Relations Division, Philippine Coconut Authority

5. Other Matters
a. Certificate of Registration of Patalon Agrarian Reform Farmers Multi-
Purpose Cooperative (PARFAMCO), issued on Sept. 29, 1995
b. List of farmer-beneficiaries of PARFAMCO
c. Certificate No. 427-96, dated Sept. 19, 1996 of the Register of Deeds
that no documents on the alleged PEARA [are] on file with the
registry
d. Excerpts from cases on just

compensation Pleadings

1. Memorandum dated January 24, 2005 (Annex B)

2. Counter-Manifestation and Counter-Comment dated Feb. 15, 2005

(Annex C)
 B. Defendant’s Evidence

Testimonial

No witnesses were formally presented.

Documentary

LBP submitted a paper entitled Comment on Plaintiff’s Evidence

(Annex D) which contained the following attachments:

1. Field Inspection Report dated March 19, 1991 for land under TCT
T- 62,737

2. Appraisal Report dated March 19, 1991 for TCT T-62,737

3. Conference/Public Hearing Summary dated March 19,1991 for

land covered under TCT T-62,737

4. Tax Declaration 01 16080 88 for TCT T-62,736 dated Jan. 13, 1983

5. Tax Declaration 01 16080 89 for TCT T-62,737 dated Feb. 13, 1983

6. Notice of Decision and Decision dated Oct. 13,37 1996 of the DARAB

7. Memorandum of the DAR PARO to LBP dated Dec. 4, 1996 that

Susie Irene Galle x x x had accepted the price per LBP’s valuation of
her land

8. Decision of the Supreme Court in Land Bank of the Philippines vs.

Spouses Vicente Banal and Leonidas Arenas-Banal

9. Field Inspection Report, undated, for TCT No. T-62,736

10. Conference/Public Hearing Summary for TCT No. T-62,736,

dated March 19, 1991

Pleadings

1. Manifestations/Comments to Plaintiff’s Memorandum dated Feb. 1,

2005 (Annex E)

LBP requested that its Comment on Plaintiff’s Evidence be treated as

its memorandum.

V. EVALUATION/ANALYSIS OF THE EVIDENCES PRESENTED

BY THE PARTIES

In her complaint plaintiff alleged that the fair market value of

her property at the time of its taking was at least P100 per sqm. and she
prayed for compensation for 358.1037 has. Among plaintiff’s principal
documentary evidences presented to the commissioners is Resolution No.
2003.10 of the City Appraisal Committee of the City of Zamboanga which
placed the value of land
37
Should be October 15.
the City Government was expropriating in Patalon in 2003 at the equivalent
of P152.52 per sqm. Using 5% as an appreciation factor, and
conversely a depreciation rate, the raw value of plaintiff’s property in 1993
would be P91.32 per sqm. Multiplied by 3,581,037 sqm. (358.1037 has.) this
means a raw land value of P327,020,299.00. Another principal documentary
evidence of plaintiff is the Certification of the City Assessor of Zamboanga
City as to how much the City Government of Zamboanga would pay for
specified crops found on lands to be expropriated. Based on the crops
declared in plaintiff’s tax declarations, these improvements would be paid
P19,384,320.00. Distributing this amount to the area involved
(P19,384,320.00/3,581,037) would add P5.41 to the P91.32 per sqm. to add
up to P96.73 per sqm. On the other hand, the principal income of plaintiff
was from the sale of copra to the oil mills. Using the average millgate price
of P8.35 per kilo (average for the November 1993 to October 1994)
multiplied by 12.5 kilos of copra per tree multiplied by 38,666 coconut
trees would result to a gross income from the sale of copra of
P4,035,764 and deducting 20% as costs will give a net income of
P3,228,611.00 which, capitalized at 12% would add P7.51 per sqm. to the
value of the land for a total value of P104.24 per sqm. x x x. It can thus be
said that plaintiff has justified the amount of her claim for just compensation.

On the other hand, LBP stuck to its position that the amount of
compensation for plaintiff should be P7,534,063.92, or P2.10 per sqm.
Considering that LBP conducted its field investigation more than two and a
half years (2-1/2) before the taking of the property and used data therefore
obtaining in 1991 and tax declarations of 1983 and did not even attempt to
recompute based on the formula in the latest DAR Administrative Order,
which is applicable to all lands that have not yet been paid for, it can be
said that LBP failed to support its position.

VI. VALUATION METHODS USED BY COMMISSIONERS AND

RESULTS

The valuation of land is not an exact science. Specified in Sec. 17 of

R.A. 6657 and quoted in the Banal case a copy of which was furnished the
commissioners, just compensation involves the examination of these factors:

1. Cost of acquisition of the land

2. Current value of like properties

3. Nature, actual use and income

4. Tax declarations

5. Assessment made by government assessors

6. Social and economic benefits contributed by the farmers and

farmworkers and by the government to the property; and

7. Non-payment of taxes or loans secured from government

financing institutions

Cost of acquisition of the property subject of this case cannot be

determined. The land was acquired and developed by plaintiff and her forebears
into a fully developed self-sufficient estate. Since lands of the magnitude
of plaintiff’s do not exist on the west coast portion of the city, the current
value of similar properties cannot be ascertained. The commissioners instead
used the appraisal value of the city government’s appraisal committee
composed of the City Assessor, the City Engineer and the City Treasurer and
LBP, as well as the actual selling value of lands near plaintiff’s. Factors 6
and 7 above are not applicable to this case.

In arriving at the raw land value of the subject property, the

commissioners relied on the expertise of Commissioner Romel Calapardo
who is the Property Appraiser of the Development Bank of the Philippines,
Regional Management Office for Western Mindanao. His computation for
raw land value is given below:

A. Raw Land
Value

Land Data

Zamboanga City Appraisal Committee / Actual Sale

1. Land # 1 : Location - Patalon

Appraisa - [P]152.52/sqm.
l Date - May 2003
Area - 16,391 sqm.

2. Land # 2 : Location - Sinubung

Appraisa - [P]200.00/sqm.
l Date - October 2000
Area - 23,825 sqm.

Banks

1. LBP : Location - Sinubung

Appraisa - [P]250.00/sqm. along the
l road [P]150.00/sqm interior
portion
Date - 2003
Are - more than 6,000 sqm.
2. PNB : No exposure/appraisal done in the area

Comparative Adjustments

Adjustment Factor L1 L2 L3

Size -10.00 -10.00 -10.00

Location 0.00 -3.00 -3.00
Depth/Frontage -10.00 -10.00 -10.00
Time (+ or – 5% per yr 0.00 -15.00 0.00
Algebraic Sum -20.00 -38.00 -23.00
Market Data 152.50 200.00 250.00
Adjustment -30.50 -76 -57.5
Adjusted Value 122.00 124.00 192.50

Average Value of the Land at Present Time = P146.00/sqm.

 Bank Practice - 5% appreciation of land

Raw land value in 1993 - P146.00 – (5%) (P146)

(11)

= P83.04 per sqm.

= P297,369,312.00
=========

B. Capitalized Net Income

To arrive at the principal income of plaintiff, copra, the
commissioners used a density of 100 trees per ha. for a total of 35,810 trees.
Multiplied by 12.5 kgs. of copra per tree at an average millgate buying price
of P8.35, gross income is calculated at P3,737,669.00 and net income, using
the accepted 20% cost/expense factor, will be P2,990,135.00. Capitalizing net
income at 12%, the capitalized net income of plaintiff is calculated as
P24,917,792.00.

C. Salvage Value

Considering that all the 35,810 trees have been cut down and
presumably sold [as] lumber, the salvage value of these trees at P495.00 per
tree, the rate the City Government is paying for coconut trees, is
P17,725,950.00.

D Summary

Raw land value - P297,369,312.00

Capitalized net income - 24,917,792.00
Salvage value - 17,725,950.00
TOTAL P340,040,054.00
vvvvvvvvvvvvvv

SUBMISSION

It is reiterated that the task of the commissioners is to value the

property subject of this case. It is not the task of the commissioners to
determine just compensation for plaintiff. This matter is within the exclusive
jurisdiction of the Honorable Court and the commissioners merely provide the
expertise needed by the Court to arrive at a resolution.

The commissioners submit the sum of P340,040,054.00 as the value

of plaintiff Susie Irene Galle’s expropriated land.

City of Zamboanga for the City of Pagadian, Zamboanga del Sur,

May 06, 2005.

(signed)
ENGR. ROMEL S. MRS. OBDULIA A. MANALO
CALAPARDO xxxx
xxxx

RET. JUDGE CECILIO G. MARTIN

x x x x38

38
Rollo, G.R. No. 195213, pp. 566-572.
 On the other hand, Commissioner Calapardo submitted a
Dissenting Opinion on Commissioners’ Report39 dated June 3, 2005, which
states thus:

DISSENTING OPINION ON COMMISSIONERS’

REPORT

The undersigned Commissioner respectfully states that:

1. He is in receipt of the Commissioner’s Report rendered by Comm. Obdulia

A. Manalo, retired City Assessor of Zamboanga City.

2. That the Commissioner’s Report was discussed in an executive

session between Comm. Manalo and the undersigned on May 11, 2005.

3. That he does not agree with the report and thus, this Dissenting Opinion,
as follows:

 Commissioner Manalo use [sic] as basis for the valuation of the

properties the report of the first Commission formed by the court
composed of Zamboanga City Assessor Erwin Bernardo, City
Engineer Luis Despalo and the undersigned.

It is the believed [sic] of the undersigned Commissioner that this

should not have been so because the first Commission was a failure,
and in fact, the court rejected its report. The first Commission failed
to observe the Rules on Proceedings. Not a single hearing was
conducted.

 The report of the first Commission was never presented as evidence

in the course of the hearing of the current Commission, and thus, it
was also never discussed.

 While the raw land value as presented in the report of Comm.

Manalo was indeed drafted by the undersigned, again, some important
things and issues overlooked [sic] because no hearing was conducted.

 As presented by Comm. Manalo in her report, the computation of

the product of raw land value of P83.04 is incorrect.

 The capitalized net income and salvage value as presented by Comm.

Manalo in her report is her own and not of the Commission.

4. Presented hereunder is the report of the undersigned Commissioner, viz:

REPORT

Plaintiff, owner of two (2) parcels of land situated at Barangay

Patalon, Zamboanga City, containing an aggregate area of 410.2271 has.,
alleged the following:

a. The compensation offered for her property involving an area

of 356.2257 has. is unconscionable and confiscatory. That the
basis for the compensation should be the fair market value of the
property at
39
Id. at 575-579.
 the time of the taking, which is 1993.

b. The area reconveyed to her is only 52.1459 has. Thus, 3.3929

has. of her property were lost; that she did not received [sic] any
offer of compensation for this particular area; and that she was not
informed whatsoever what have became [sic] of this area.

The primary function of the commission is to determine the value of

the property at the time of the taking in 1993. In this case, the area in
consideration is 356.2257 has. As to the missing area of 3.3929 has.,
Commissioner Calapardo is in [sic] the opinion that its legality is beyond the
Commission’s authority.

DECISION

On August 20, 1992, defendant DAR offered a compensation of

Php6,083,545.26 for the property covering an area of 356.2257 has. This
offered compensation was later increased to Php7,534,063.92.

The case was then elevated to the Department of Agrarian

Reform Adjudication Board. DARAB, in its decision dated October 15, 1996,
awarded the landowner the amount of Php10,627,148.00 for an equivalent
area of 373.2271 has. inclusive of the 1.4 has. claim which was identified by
Land Bank as barangay road.

The declared value of the property per tax declaration is

Php9,056,990.00. As DARAB itself pointed out in its decision, adopting
the formula under Administrative Order No. 6 of “MV x 2”, the
compensation for the property would have been Php20,645,445.00.

Worth noting is the fact that when the case was presented before
the DARAB, the claim of the plaintiff was Php30,681,107.68 as presented by
LBP during the hearing on January 12, 2005.

While LBP claimed that plaintiff accepted the price as determined by

the DARAB, Plaintiff, through her counsel points otherwise. LBP was not
able to show proof that indeed Plaintiff accepted the DARAB valuation.

Plaintiff through her counsel, also confirmed that they have not seek
[sic] the assistance of an appraisal firm to come up with the valuation of the
property. An appraisal of the property by an independent appraisal company
at the time of the taking could have been an invaluable input in determining
just compensation. No person or owner of a property can claim that his
property is worth so much because he says so. Every claim has to be back
up [sic] by acceptable and credible method of valuation.

Plaintiff’s claim over the property in her complaint with the

Special Agrarian Reform Court in December 2002 is Php350,569,636.10
which is more than 90% over her original claim during the DARAB
proceedings. In her final Memorandum to the Board of Commissioners dated
January 24, 2005, her claim over the property was placed at
Php485,994,853.00.

It may be deduced that the amount of her claim is always based on

the current market value of the property, at the time every pleading is
prepared.
 On the part of the undersigned Commissioner, the appraisal of
the property, using accepted principals [sic] and banking practices, taking
into consideration present market data gathered and considering
improvements of the property as declared in the tax declaration at the time of
the taking, and working back to the time of the taking, resulted to [sic]
Php79,764,000.00.

The undersigned Commissioner’s computation however may proof

[sic] impractical considering the span of time that had elapse [sic] from the
time of the taking, which has resulted in altered land use in surrounding areas
and affected land valuation considerably. A case in point is the establishment
of the office of the Zamboanga Economic Zone and Freeport Authority a few
kilometers before the property of the plaintiff, which was established
sometime in 1997. A single development of this nature in a locality can
change the market attitude entirely. And with such change, market data
during the present time can never be comparable to the market condition
during the time of the taking.

Fair Market Value of real estate is determined by the desirability of

the property and the availability of a willing buyer and seller. Both must
possess sufficient knowledge of all the uses to which it is adapted and for
which it is capable of being used, and agrees to buy and to sell
respectively without pressure.

Under this concept, the value of the property at the time of the
taking cannot be more than Php30,681,107.68, the claim of the plaintiff in
1995, two years after the time of the taking. This is because a claim has
been made; it can be assumed that this amount is the value to which the
owner is willing to part with his property at that time.

Real estate, especially land, tends to appreciate in value with time. At

the time of the taking therefore, the value of the property is either equal to
or less than Php30,681,107.68.

The undersigned Commissioner also cannot agree with the valuation

of DARAB which priced the property at Php10,627,148.00 simply because
the property’s declared value per tax declaration is Php9,056,990.00, and as
DARAB itself pointed out, the compensation of the property should be
Php20,645,445.00 per Administrative Order No. 6.

It is common knowledge that real estate are [sic] usually declared

less than their [sic] true value simply because the declaration made by the
owner is only for tax purposes. Along this line, there is no reason for the
landowner to over value her property and be burdened by realty taxes in the
future.

The general rule is that real estate appreciates in value over time. As
to what percentage depends upon the development in the locality. Some
Banking institution, under normal condition, consider a 5% appreciation in
value to be acceptable. In the same manner, if only a short period of time
elapses, 5% decrease in price on the current market value may be practicable
to approximate value for a property several years back.

Under this condition, the claim of the Plaintiff of Php30,681,107.68

in 1995 may be recomputed. Considering the above-stated practice, in 1993,
the time of taking, the value of the property is approximately
Php27,612,996.90.
 Then again, the claim of the Plaintiff at Php30,681,107.68 has no
basis. Based on the records, she came up with this value on her own, which
may be self-serving. But as the owner of the property, she has the right to
demand her price, after all, a sale can only be consummated upon the meeting
of the minds of the seller and buyer.

The case at hand, however, is not a normal sale between a seller and
a buyer in the open market. It is based on the laws of the land as
promulgated.

Premises considered, the undersigned Commissioner, after due

consideration and analysis of evidence presented, believes that the fair
market value of the property at the time of taking in 1993 is Twenty
Million Six Hundred Forty Five Thousand Four Hundred Forty Five Pesos
(Php20,645,445.00).

The undersigned Commissioner however agrees with the Plaintiff

that the delay in the payment of just compensation may be construed as an
injustice. Thus, a reasonable interest should be granted to Plaintiff for the
failure of Dependants [sic] to come up with the acceptable price.

Respectfully submitted this 3rd day of June, 2005, at Zamboanga

City, Philippines.
(signed)
ROMEL S.
CALAPARDO
DBP Representative
Commission
Member40

The SAC held a hearing on the above reports on June 17, 2005, while
the parties filed their respective comments and manifestations thereto.41

On August 15, 2005, the SAC issued a Resolution,42 the dispositive

portion of which reads –

WHEREFORE, judgment is hereby rendered ordering defendants

Land Bank of the Philippines and the Department of Agrarian Reform to
jointly and severally pay plaintiff the following:

1. Just compensation in the amount of THREE HUNDRED

SIXTEEN MILLION SEVEN HUNDRED FIFTY-THREE THOUSAND
SIX HUNDRED THIRTY-TWO PESOS (P316,752,632.00) [sic].

2. Compounded legal interest as prayed for to be reckoned from

the time of taking up to the time that plaintiff is fully paid.

3. Commissioners fees to be taxed as part of the costs pursuant

to Section 12, Rule 67 of the 1997 Rules of Civil Procedure and Section 16,
A.M. No. 04-2-04-SC.
40
Id.
41
Id. at 580-586, 593-596, 597-601.
42
Id. at 295-319.
 4. Attorney’s fees in an amount equivalent to 15% of the total
award in items no. 1 and 2 above.

5. Cost of the

suit. SO

ORDERED.43

In arriving at the above conclusion, the SAC held, as follows:

After a careful and studied scrutiny of the voluminous records of

this case these facts were clearly established:

1. The area of the property subject of this case is 358.1037

hectares. The aggregate area in plaintiff’s44 TCT Nos. T-62,736 and T-
62,737 was 410.2271 hectares. What was eventually reconveyed or returned
to plaintiff in TCT Nos. T-113,496 and T-113,49745 totaled 52.1234 hectares.
DAR therefore took 358.1037 hectares. What DAR took constitutes the
property subject of this case for which just compensation should be paid.
Whether or not the area of 358.1037 hectares is fully covered under
certificates of title is not for this Court to inquire into but for DAR to
address. Furthermore, there can be no other assumption but that the total
area of 358.1037 hectares that DAR took is carpable, absent a protest
from the landowner that her land is not subject to the CARL. LBP has no
standing to protest that the landowner whose land was already taken by
DAR should not be paid for a portion of the land taken because that portion is
not carpable.

2. Plaintiff’s land titles mentioned above were cancelled and title of

the entire area covered in the titles transferred even before plaintiff was
paid compensation for her land.

3. The Patalon Estate Agrarian Reform Beneficiaries Association,

the recorded beneficiary of plaintiff’s property, is non-existent. It does not
exist in fact. It does not exist in law.

4. All the coconut trees that were standing on plaintiff’s property

when it was taken by DAR were eventually cut down. Her estate no longer
exists.

5. There is heavy extraction of sand and gravel on the river

that abounds [sic] plaintiff’s property.

6. Commissioner Obdulia Manalo arrived at a value for the

property subject of this case through a credible methodology that was clearly
presented in her report.

7. Plaintiff likewise arrived at a value for her property through

a credible method that was clearly presented in her Memorandum.

8. Commissioner Romel Calapardo, on the other hand, did not

present the methodology by which he arrived at P20,645,445.00 as the
value of

43 Id. at 319.
44 Respondent Galle.
45 Should be T-113,499.
plaintiff’s property. This is the value that DARAB said was arrived at by
using the formula “MV x 2” which formula is not applicable to plaintiff’s
property but was merely used to prove the arbitrary and confiscatory value of
P7,534,063.91 that LBP was offering for plaintiff’s property. Commissioner
Calapardo misappreciated DARAB’s statements.

9. Commissioner Calapardo also premised his discussions on

fiction, the fiction being that plaintiff claimed the amount of P30,681,107.68
in 1995 as just compensation for her property.

10. LBP did not present any documents to show how it arrived at
the value of P7,534,063.91. Neither did it explain in any pleading how this
amount was determined. It did not show the basis for whatever factors it
used nor the authorities or sources of its data and information. Furthermore,
it did not dispute plaintiff’s assertion that no actual field inspection of her
property was conducted as it claimed it did in 1991.

11. The Zoning Ordinance of the City of Zamboanga, City

Ordinance No. 29, enacted in 1978, declared large areas of land located along
the west coast portion of Zamboanga City as industrial areas which caused
an upward movement of the value of land along the west coast. Plaintiff’s
property is located along the west coast.

12. The City Government of Zamboanga valued a parcel of land

located in Patalon at P152.52 per square meter in 2003. In 2000 it valued a
parcel of land located in the adjacent barangay of Sinubung at P200.00 per
square meter. LBP valued land at Sinubung in 2003 at P300.00 per square
meter along the road.

The task of this Court is to determine the amount of just

compensation for plaintiff. As to what just compensation is, this has been
defined as the full and fair equivalent of the property taken from its owner by
the expropriator; the measure is not the taker’s gain [but] the owner’s loss.
The word “just” is used to intensify the meaning of the word
“compensation” to convey the idea that the equivalent to be rendered for the
property to be taken shall be real, substantial, full, ample. (Association of
Small Landowners in the Philippines, Inc., et al., vs. Secretary of Agrarian
Reform, G.R. No. 78742, July 14, 1989, 175 SCRA 343).

As to what just compensation for plaintiff should be, in a most

compelling sense the documents that she submitted convey in no uncertain
terms that the amount of P7,534,063.91 that LBP maintains should be paid to
her and the amount of P10,767,469.00 fixed by DARAB is confiscatory and
tantamount to a taking.

The Court does not see merit in LBP’s contention that the
compensation that the City Government of Zamboanga City pays for land
and its improvements cannot apply to land expropriated for agrarian
reform because of the revolutionary nature of land reform. It must be
recalled that in Land Bank of the Philippines vs. Court of Appeals, et al.,
G.R. No. 118712 and G.R. No. 118745, 249 SCRA 149 the Supreme Court
said: “We agree with the observation of the respondent court. The ruling in
the ‘Association’ case merely recognized the extraordinary nature of the
expropriation to be undertaken under RA 6657 thereby allowing a
deviation from the traditional mode of payment of compensation and
recognized payment other than in cash. It did not, however, dispense with
the settled rule that there must be full payment of just
 compensation before the title to the expropriated property is transferred.”

Finding both the report of Commissioner Obdulia Manalo and

the Memorandum of plaintiff to be well taken the Court rules that the value
of the property subject of this case is its raw land value of
P297,369,312.00 as determined by Commissioner Manalo and the value
of its improvements of P19,384,320.00 as determined in the Memorandum
to be what the City Government of Zamboanga would pay, for a total of
three hundred sixteen million seven hundred fifty three thousand six
hundred thirty-two pesos (P316,753,632.00).46

Both LBP and DAR moved to reconsider. LBP’s Motion for

Reconsideration47 is dated September 8, 2005, yet it set the motion for hearing
on October 28, 2005. DAR’s Motion for Reconsideration,48 dated September
12, 2005, was likewise set for hearing on October 28, 2005. Respondent
opposed the motions.49

On November 16, 2005, the SAC issued an Order50 denying

reconsideration of its August 15, 2005 Resolution. It held:

The Motion for Reconsideration of LBP is without merit. The

Motion for Reconsideration of DAR is likewise without merit. Both Motions
are pro forma and are mere scraps of paper.

Section 2, Rule 37 of the 1997 Rules of Civil Procedure, 3rd

paragraph require that a “Motion for Reconsideration shall point out
specifically the findings or conclusions of the judgment or final order which
are not supported by the evidence or which are contrary to law, making
express reference to the testimonial or documentary evidence or to the
provisions of law alleged to be contrary to such findings or conclusions.”
DAR and LBP aver that the Court failed to consider Section 17 of R.A.
6657 and apply the valuation formula of DAR Administrative Order No. 6,
Series of 1992, as amended. Section 17 is an enumeration of the factors that
shall be considered in the determination of just compensation. DAR and
LBP contend that because the Court did not determine just compensation
using the formula in an administrative issuance, DAR Administrative Order
No. 6, the Court consequently failed to consider Section 17 of RA 6657.

Their argument is baseless. Section 17 does not require the Court to

use the valuation formula in DAR Administrative Order No. 6. The
allegation that the contested Resolution is contrary to law is therefore
ludicrous. The law vests in the Court exclusive and original jurisdiction to
hear and determine just compensation to landowners of condemned lands.
The jurisdiction of the Court cannot be restricted or undermined by
administrative orders of administrative agencies. (EPZA vs. Dulay, 149
SCRA 305).
46
Rollo, G.R. No. 195213, pp. 316 -319.
47
Id. at 324-337.
48
Id. at 602-606.
49
Id. at 607-621.
50
Id. at 320-323.
 The Court is constrained to emphasize, moreover, that neither DAR
nor LBP presented the formula in DAR Administrative Order No. 6 to the
commission appointed in this case or to the Court. Neither did they present to
the commission or to this Court their calculations of just compensation based
on the formula in the said Order or on any order.

The Court considers as valid the objections of plaintiff that the

Motions for Reconsideration of LBP and DAR violated Section 11, Rule 13,
of the 1997 Rules of Civil Procedure. Both the Motion for Reconsideration of
LBP and the Motion for Reconsideration of DAR do not contain a written
explanation as to why the service of the motion on plaintiff was not done
personally. Accordingly, in the light of the pronouncement of the Supreme
Court in Perla S. Zulueta vs. Asia Brewery Inc., G.R. No. 138137, March 8,
2001, both motions should be expunged from the records.

Moreover, LBP and DAR set their motion for hearing on October
28, 2005, more than forty (40) days after the motions were filed, in clear
violation of Section 5, Rule 15, of the 1997 Rules of Civil Procedure. The
motions are pro forma, they are obviously intended to delay the proceedings
of this case. At the time the motion was filed, LBP already had a previously
set hearing on October 14, 2005 for another land reform case and there is no
cogent reason for LBP to set the hearing of their motion for reconsideration
in this case to a much later date.

On October 30, 2003 the parties agreed to refer the valuation of

the property subject of this case to a commission. The Court accepted
with modification the Commissioner’s Report. The records will show that
whatever objections now being raised in the motion for reconsideration of
LBP and DAR were not raised in a comment or objection to the
Commissioner’s Report.

With respect to Land Bank of the Philippines’ objection that

interest should be based on market interest rates aligned with 91-day treasury
bill rates, the Court does not see any conflict with Section 18(4) R.A. 6657.
Compounded legal interest rate will be imposed on that portion of the
compensation due plaintiff that will be [sic] should have been paid in cash if
compensation had been paid at the time of the taking in 1993, and the
proceeds of the LBP bonds that should have already matured and bore market
interest rates aligned with 91-day treasury bill rates. Inasmuch as more than
ten (10) years have elapsed since the time of the taking of plaintiff’s
property, compensation due her should now be paid entirely in cash.

WHEREFORE, the Motions for Reconsideration of Land Bank of

the Philippines and Department of Agrarian Reform are DENIED for being
patently without merit and for being pro forma and intended merely to
delay the proceedings of this case. The Resolution dated August 15, 2005
is hereby amended insofar as [the imposition of] compounded legal
interest on compensation due. It is hereby Ordered that compounded legal
interest shall be imposed not on the entire compensation due but only on the
cash portion of the compensation that should have been paid plaintiff in 1993,
or at the time of the taking, and on the proceeds of the corresponding portion
of the Land Bank of the Philippines bonds that should have matured yearly
and bore market interest rates aligned with 91-day treasury bill rates starting
1994 up to the time that plaintiff shall be fully paid.
 SO ORDERED.51

Rulings of the Court of Appeals

LBP instituted a Petition for Review with the CA, which was docketed
as CA-G.R. SP No. 00761-MIN. For its part, the DAR filed a separate Petition
for Review, docketed as CA-G.R. SP No. 00778-MIN.

In a January 17, 2004 Order, the two petitions were consolidated.52

On July 27, 2010, the CA issued the assailed Consolidated

Decision, decreeing as follows:

FOR THE STATED REASONS, these consolidated petitions are

PARTLY GRANTED as follows:

(1) The total amount of just compensation for the Three Million
Five Hundred Sixty-Eight Thousand Two Hundred Fifty-Seven square
meters (or 356.8257 hectares) of respondent’s land is RECOMPUTED and
fixed at the total amount of Two Hundred Ninety-Six Million Three
Hundred Eight Thousand Sixty-One Pesos and Twenty-Eight Centavos
(P296,308,061.28).

(2) The award of compounded legal interest is MODIFIED to

12% simple interest rate per annum in the total amount of just compensation
which is reckoned from the time of taking until respondent shall be fully
paid.

(3) The award of attorney’s fees in an amount equivalent to 15% of

the total award of just compensation and legal interest is REDUCED to
Three Hundred Thousand Pesos (P300,000.00).

SO ORDERED.53

In disposing of the Petitions, the CA circumscribed the issues that

needed to be resolved to 1) the total area actually taken by the government
for agrarian reform, and 2) the amount of just compensation that must be paid
to Galle.

On the issue of total land area actually expropriated, the appellate court
held as follows:

Respondent demands compensation for a total area of 358.1037

hectares, but LBP wants to compensate her only for 356.8257 hectares.
53
Id. at 198-
199.
51
Id. at 321-323.
52
Id. at 36.

53
Id. at 198-
199.
 The original area of respondent’s land was 205.1130 hectares in
TCT No. T-62,736 and 205.1141 hectares in TCT No. T-62,737. That
comprises a total area of 410.2271 hectares. The area eventually
reconveyed by DAR to respondent was 15.0025 hectares in TCT T-113,496
and 37.1209 hectares in TCT No. T-113,499, or a total reconveyed land area
of 52.1234 hectares. Thus, the area that was retained by DAR is 358.1037
hectares.

But it is not as simple as

that. x x x x

It appears from this presentation that approximately 3.4000 hectares

was [sic] not included in LBP’s computation of the total land area to be
compensated. The 3.4000 hectares corresponds [sic] to the alleged “missing”
3.3929 hectares. The 3.4000 hectares includes the 1.4000 hectares of
respondent’s land used as barangay road and the 2.000 hectares of
respondent’s land which formed part of the national road. The 3.4 hectare
portion of respondent’s land classified as road portions were excluded by LBP
from valuation.

xxxx

Thus, the DARAB ordered the inclusion of the 1.4000 hectares

barangay road in the determination of the total valuation. The DARAB
excluded only the approximate 2.000 hectares comprising the existing national
road. x x x

xxxx

It matters to keep in mind that the power to determine with

exactitude what areas may come within the coverage of the
Comprehensive Agrarian Reform Program (CARP) is essentially lodged with
the DAR. Thus, the total area of respondent’s land covered by CARP should
be 356.8257 hectares, not 358.1037 hectares.54

With regard to the issue of just compensation, the CA made the following
pronouncement:

Sections 17 and 18 of Republic Act No. 6657 provides [sic] the

guideposts for the determination of just compensation, to wit:

Sec. 17. Determination of Just Compensation. – In

determining just compensation, the cost of acquisition of
the land, the current value of like properties, its nature,
actual use and income, the sworn valuation by the owner,
the tax declarations, and the assessment made by government
assessors shall be considered. The social and economic
benefits contributed by the farmers and the farmworkers
and by the Government to the property as well as the non-
54
Id. at 189-
191.
 payment of taxes or loans secured from any government
financing institution on the said land shall be considered as
additional factors to determine its valuation.

54
Id. at 189-
191.
 Sec. 18. Valuation and Mode of Compensation. – The
LBP shall compensate the landowner in such amount as may
be agreed upon by the landowner and the DAR and LBP or as
may be finally determined by the court as the just
compensation for the land.

The LBP proposed to compensate respondent for the value of

the 356.8257 hectares at Seven Million Five Hundred Thirty-Four Thousand
Sixty- Three Pesos and Ninety-One Centavos (P7,534,063.91), or at Two
Pesos and Eleven Centavos (P2.11) per square meter. The DAR did not
agree with LBP’s valuation; it pegged the value of the land at Ten Million
Seven Hundred Sixty- Seven Thousand Four Hundred Sixty-Nine Pesos
(P10,767,469.00).

Considering the documents submitted by the respondent, the SAC

found both LBP’s and DAR’s valuation as confiscatory and tantamount to
unjust taking of respondent’s land.

Indeed, it has been established that when the DAR took

respondent’s land, it was a fully-developed estate. x x x

No doubt, the subject land is not idle. It has been planted to

coconut trees with intercrops, mango trees, bamboo clamps [sic], coffee trees
which were then fruit bearing. Respondent also raised in the land livestock
such as cattle, carabao, and horses which she proposed to sell to DAR based
on normal cattle weights to be paid by LBP. In fact, respondent’s land was
fenced and patrolled by security guards prior to DAR’s taking.

It is even significant to consider that more than sixty-two hectares of

the land is coastal fronting the Sulu Sea, while on the south portion of the
land lies the Miluao River and on the north, the Patalon River. Not only that.
The subject land is located along Zamboanga-Labuan road – a national road
which covers an approximately two (2) hectare-stretch of the land.
Respondent was likewise even recognized by DAR for providing the1.4
hectare-portion of the land as barangay road. The undisputed presence of
water and road networks in respondent’s land certainly defy LBP’s valuation
of the land at P7,534,063.91, which translates to the ridiculously unfair
amount of P2.11 per square meter.

In arriving at a valuation of P83.04 per square meter, the SAC

meticulously evaluated the following factors:

[1] the report of the Commissioners vis-à-vis the Dissenting

Opinion; [2] the nature of the land, its actual use and income;

[3] the sworn valuation by the owner; the tax declarations;

[4] the current value of like properties or the comparative sales of

adjacent land;

[5] the permanent improvements on the land and value of

improvements; and

[6] the potential use.

Decision 1 G.R. No. 171836 & 195213

It cannot, therefore, be said that the SAC had no basis for its
valuation of respondent’s land. It took into consideration the required
important factors enumerated in Section 17 of Republic Act No. 6657 which,
in turn, were the very same matters that made up the DAR formula. Verily, it
can be said that the SAC had substantially applied the formula by looking
into all the factors included in it, i.e., nature, actual use and income,
comparable sales and market value, assessment made by government
assessors, to arrive at the proper land value.

Indeed, the valuation of respondent’s property at P83.04 per

square meter is founded on evidence. Records show the following “raw land
value” as determined by Zamboanga City Appraisal Committee based on
actual sale:

1 Land # 1: Location - Patalon

Appraisal - P152.52 /
sqm. Date - May 2003
Area - 16,391 sqm.

2 Land # 2 Location - Sinubung

Appraisal - P200.00 /
sqm. Date - October 2000
Area - 23,825 sqm.

The Commissioners’ Report even considered the value of the

land located at Sinubung, Zamboanga City an adjacent area from Pantalon
[sic], Zamboanga City which LBP appraised at P250.00 and P150.00 per
square meter for land situated along the road and for interior lands,
respectively. From the existing data on raw value of land, the
Commissioners’ Report makes the comparative adjustments, as follows:

Adjustment Factor
L1 L2 L3
Size -10.00 -10.00 -10.00
Location 0.00 -3.00 -3.00
Depth/Frontage -10.00 -10.00 -10.00
Time (+ or – 5% per yr 0.00 -15.00 0.00
Algebraic Sum -20.00 -38.00 -23.00
Market Data 152.50 200.00 250.00
Adjustment -30.50 -76 -57.5
Adjusted Value 122.00 124.00 192.50

This leads to the conclusion that the average value of the land at the
time of the investigation of the commissioners was P146.00 per square
meter. The commissioners correctly point out, that the value of real
property appreciates through the years, and not otherwise, though the
percentage of increase depends upon the developments in the locality.
Under normal conditions, however, banking institutions consider as
acceptable a 5% appreciation in value per annum. It matters to note that
the commissioners were unanimous on the methodology of arriving at
raw land value at the time of the taking. Thus, the SAC’s application of the
bank practice in determination of the raw land value of land at the time of the
taking of the land in 1993 was reasonable and proper.

Applying the bank practice of fixing annual appreciation of land at

5%, the raw value of the land has been correctly computed at P83.04 per
square meter. From this valuation, the total value of the Three Million Five
Hundred
Decision 1 G.R. No. 171836 & 195213

Sixty-Eight Thousand Two Hundred Fifty-Seven square meters (or

356.8257 hectares) of respondent’s land is Two Hundred Ninety-Six Million
Three Hundred Eight Thousand Sixty-One and 28/100 Pesos
(P296,308,061.28).

Hence, we find in order the modification of the SAC Resolution

dated 15 August 2005 pertaining to the total amount of just compensation as
well as the award of compounded legal interest, attorney’s fees, and
commissioner’s fees.

On the matter of compounded legal interest, the SAC ordered the

DAR and LBP to jointly and severally pay compounded legal interest on just
compensation. We cannot allow that.

The charging of compounded [interest] has been held as proper as

long as its payment has been agreed upon by the parties. There is not even a
hint of such agreement. We, however, allow legal interest in the nature of
damages for the delay in payment which in effect makes the obligation on
the part of the government one of forbearance. Indeed, legal interest is the
measure of damages arising from delay (mora solvendi) under the Civil Code.

The Supreme Court consistently held that just compensation has

been defined as “the full and fair equivalent of the property taken from its
owner by the expropriator,”55 and that the gauge for computation is not the
taker’s gain but the owner’s loss. In order for the payment to be “just”,
it must be real, substantial, full, and ample. The concept of just
compensation embraces not only the correct determination of the amount to
be paid to the owner of the land, but also the payment of the land within a
“reasonable time” from the taking of the property.

Without prompt payment, compensation cannot be considered

“just” inasmuch as the property owner is made to suffer the consequences
of being immediately deprived of his land while being made to wait for a
decade or more before actually receiving the amount necessary to cope with
his or her loss.

In this case, the DAR literally took respondent’s land without

her knowledge and participation, and without paying her just compensation.
Worse, from the time of the taking of respondent’s land in 1993 up to the
present, LBP has not yet remunerated respondent although DAR has already
distributed the lands to the farmer beneficiaries for more than seventeen (17)
years ago [sic]. It is but just and equitable that the unreasonable delay in
the payment of just compensation should warrant the award of 12%
interest per annum in respondent’s favor.

On the matter of attorney’s fees, the SAC ordered the DAR and LBP
to jointly and severally pay attorney’s fees in the amount equivalent to 15% of
the just compensation and compounded legal interest.

We cannot sustain such an award of attorney’s fees. The general rule

is that attorney’s fees cannot be recovered as part of damages because of the
policy that no premium should be placed on the right to litigate. In all cases,
it must be reasonable, just and equitable if the same is to be granted. It is
necessary for the court to make findings of fact and law to justify the grant
of such award. The
55
Citing among others Apo Fruits Corporation v. Court of Appeals, 543 Phil. 497 (2007); Land Bank of
the Philippines v. Wycoco, 464 Phil. 83 (2004); and Reyes v. National Housing Authority, 443 Phil. 603
(2003).
Decision 1 G.R. No. 171836 & 195213

matter of attorney’s fees must be clearly explained and justified by the trial
court in the body of its decision. In this case, the SAC failed to substantiate its
award of attorney’s fees which amounts to fifteen percent (15%) of the
just compensation and legal interest.

However, we deem it proper to fix the award of attorney’s fees

at P300,000.00. It is good to note that although the main case was merely
for determination of just compensation with damages, involving as it did
modest legal issues, that complaint had in reality generated several incidents
during the close to seventeen (17) years that this case was under litigation.
Once, the DAR elevated the case to this Court seeking relief from the denial
of their motion to dismiss. Then, after the SAC had constituted the Board
of Commissioners, respondent had to wriggle her way through in presenting
and defending her claim for just compensation and damages. And now,
respondent has to contend with the separate petitions for review filed by
DAR and LBP. It is even sad to note that the original respondent had
already passed to the great beyond without seeing the dawn of her toils
and efforts, all because of the prolonged determination of her just
compensation. In fine, taking into account the overall factual environment
upon which this case has proceeded, we find the award of P300,000.00
sufficient and reasonable.56

LBP filed a Motion for Reconsideration,57 arguing that the CA erred

in fixing just compensation without taking into consideration the formula
prescribed in DAR Administrative Order No. 6, Series of 1992 (AO 6), as
amended by Administrative Order No. 11, Series of 1994 (AO 11);58 that the
CA erred in finding the bank liable for interest and attorney’s fees; that
Galle’s complaint for just compensation has prescribed; and that in filing
Civil Case No. 4436-2K3, Galle is guilty of forum-shopping.

On January 19, 2011, the CA issued the second assailed Resolution

denying LBP’s motion for reconsideration. Thus, the present Petition in G.R.
No. 195213.

As stated earlier, on September 23, 2004, the CA issued the herein

assailed Decision and February 22, 2006 Resolution respectively dismissing
the DAR’s Petition in CA-G.R. SP No. 80678 and denying its motion for
reconsideration thereof, declaring that the Petition was defective as it failed to
state the date of receipt of the SAC’s assailed June 20, 2003 Order, and that
the SAC’s Orders may not be elevated to the higher courts until the hearing in
Civil Case No. 4436-2K3 is terminated and the case decided on the merits, as
required under Section 59 of the CARL.

In a June 1, 2011 Resolution of this Court, G.R. No. 195213 was ordered
56
Rollo, G.R. No. 195213, pp. 191-198.
57
Id. at 629-665.
58
Rules And Regulations Amending The Valuation Of Lands Voluntarily Offered And
Compulsorily Acquired As Provided For Under Administrative Order No. 17, Series Of 1989, As
Amended, Issued
Pursuant To Republic Act No. 6657.
Decision 1 G.R. No. 171836 & 195213

consolidated with G.R. No. 171836.

Issues

The following issues are raised:

In DAR’s Petition in G.R. No. 171836

1. THE HONORABLE COURT OF APPEALS ERRED WHEN IT

DISMISSED THE PETITION FOR CERTIORARI AND
PROHIBITION BASED ON MERE TECHNICALITY, RATHER
THAN DECIDE THE CASE ON THE MERITS;

2. THE HONORABLE COURT OF APPEALS ERRED WHEN IT

RULED THAT PETITIONER VIOLATED SECTION 59 OF
REPUBLIC ACT NO. 6657 WHEN IT FILED INSTANT (PETITION
IN CA-G.R. SP No. 80678);59

In LBP’s Petition in G.R. No. 195213

1. THE COURT OF APPEALS ERRED IN NOT FINDING

THAT THE COMPLAINT FOR JUST COMPENSATION FILED BY
THE RESPONDENT BEFORE THE SPECIAL AGRARIAN COURT
HAS ALREADY PRESCRIBED.

2. THE COURT OF APPEALS ERRED IN NOT FINDING

THAT THE RESPONDENT IS GUILTY OF FORUM-SHOPPING
WHEN SHE FILED THE COMPLAINT BEFORE THE SPECIAL
AGRARIAN COURT.

3. GRANTING ARGUENDO THAT A JUST

COMPENSATION HAS TO BE DETERMINED, THE COURT OF
APPEALS COMMITTED A SERIOUS ERROR OF LAW IN
AFFIRMING WITH MODIFICATION THE RESOLUTION DATED
AUGUST 30, 2005 AND ORDER DATED DECEMBER 2, 2005 OF
THE SPECIAL AGRARIAN COURT (SAC) AND FIXED THE JUST
COMPENSATION AT P296,308,061.68 FOR THE 356.8257 HECTARES
OF COCONUT LANDS, THE SAME BEING NOT IN ACCORDANCE
WITH THE LEGALLY PRESCRIBED VALUATION FACTORS
UNDER SECTION 17 OF R.A. 6657 AS TRANSLATED INTO A BASIC
FORMULA IN DAR ADMINISTRATIVE ORDER NO. 06, SERIES OF
1992, AS AMENDED BY DAR AO NO. 11, SERIES OF 1994, AND AS
RULED BY THE SUPREME COURT IN THE CASES OF SPS.
BANAL,
G.R. NO. 143276 (JULY 20, 2004); CELADA, G.R. NO. 164876 (JANUARY
23, 2006); AND LUZ LIM, G.R. NO. 171941 (AUGUST 2, 2007)
AND OTHER JURISPRUDENCE ON THE MATTER.

4. THE COURT OF APPEALS ALSO ERRED IN HOLDING

PETITIONER LBP LIABLE FOR:
59
Rollo, G.R. No. 171836, pp. 15-16.
 (C) 12% SIMPLE INTEREST RATE PER ANNUM BASED ON
THE TOTAL AMOUNT OF JUST COMPENSATION; AND

(D) THE AMOUNT OF THREE HUNDRED

THOUSAND (P300,000.00) AS ATTORNEY’S FEES AND
LEGAL INTEREST.

Accordingly, Petitioner LBP raises these questions of law:

1. HAS THE PERIOD TO FILE A COMPLAINT FOR JUST

COMPENSATION PRESCRIBED?

2. IS THE RESPONDENT GUILTY OF FORUM-SHOPPING?

3. CAN THE COURT OF APPEALS DISREGARD THE

VALUATION FACTORS UNDER SECTION 17 OF R.A. 6657 AS
TRANSLATED INTO A BASIC FORMULA IN DAR
ADMINISTRATIVE ORDER NO. 06, SERIES OF 1992, AS AMENDED,
AND AS HELD IN THE CASES OF SPS. BANAL; CELADA; AND LUZ
LIM, SUPRA., IN FIXING THE JUST COMPENSATION OF THE
SUBJECT PROPERTY OF THE RESPONDENT?

4. IS PETITIONER LBP LIABLE FOR INTEREST AND

ATTORNEY’S FEES?60

The Parties’ Respective Arguments

In G.R. No. 171836. The DAR argues in its Petition and Reply61 that
its failure to state in its Petition in CA-G.R. SP No. 80678 the dates of its
receipt of the SAC’s assailed June 20, 2003 and September 12, 2003 Orders –
on July 11, 2003 and September 29, 2003, respectively – was a simple and
honest oversight, an inadvertence that may be cured since it did not adversely
affect the substantial rights of the respondents therein. It contends that the
outright dismissal of its Petition on the basis of technical rules is too strict and
rigid, considering that an issue of jurisdiction is raised therein, specifically that
since the October 15, 1996 DARAB Decision fixing just compensation in
DARAB Case No. JC-RIX- ZAMBO-0011-CO has become final and
executory, the SAC did not have jurisdiction to act on Galle’s petition for
determination anew of just compensation in Civil Case No. 4436-2K3. It adds
that the CA’s application of Section 59 of the CARL is misplaced, since what
is being raised in CA-G.R. SP No. 80678 is the SAC’s jurisdiction to take
cognizance of Civil Case No. 4436-2K3, which must first be resolved if only
to free the parties from the rigors and expense of unnecessary trial. It thus
prays that the assailed CA dispositions be reversed, and that Civil Case No.
4436-2K3 be dismissed.

61
Rollo, G.R. No. 171836, pp. 112-
62 114.
Id. at 213-234.
 LBP likewise filed a Reply,62 echoing the DAR’s contention that Galle’s
60
Rollo, G.R. No. 195213, pp. 83-85.

61
Rollo, G.R. No. 171836, pp. 112-
62 114.
Id. at 213-234.
option for the judicial determination of just compensation for her estate has
long prescribed due to her failure to file a case within the 15-day period
prescribed by Rule XIII, Section 11 of the 1994 DARAB Rules of Procedure;
that her filing of Civil Case No. 4574 could not have tolled the 15-day period;
that her subsequent filing of Civil Case No. 4436-2K3 was improper and
constituted forum- shopping, and violated the principle of res judicata as
regards the final and executory October 15, 1996 DARAB Decision in
DARAB Case No. JC-RIX-ZAMBO- 0011-CO; that the SAC failed to
observe the proper formula in fixing just compensation, as required under
DAR AO 6, as amended by AO 11; that it was erroneous for the CA to apply
the pronouncement in Apo Fruits Corporation v. Court of Appeals63 in
awarding just compensation to Galle without the benefit of applying the formula
in DAR AO 6, since the ruling in said case is merely pro hac vice; that the
applicable cases would be Land Bank of the Philippines v. Spouses Banal,64
Land Bank of the Philippines v. Gallego, Jr.,65 Land Bank of the
Philippines v. Lim;66 Land Bank of the Philippines v. Suntay;67 Land Bank of
the Philippines v. Heirs of Eleuterio Cruz;68 Land Bank of the Philippines v.
Dumlao;69 Allied Banking Corporation v. Land Bank of the Philippines;70 and
Land Bank of the Philippines v. Colarina,71 which mandate the application of
the DAR AO 6 formula.

In her Comment,72 which was later supplemented by a consolidated

Comment,73 Galle insists that the October 15, 1996 DARAB Decision in
DARAB Case No. JC-RIX-ZAMBO-0011-CO did not become final and
executory as there is still a pending and unresolved motion for reconsideration
filed by LBP, which thus did not foreclose her right to institute Civil Case No.
4436-2K3; that she is not guilty of forum-shopping in filing Civil Case No.
4574 precisely since said case was erroneosly filed with a court which was not
the designated SAC having jurisdiction over her complaint for the fixing of just
compensation; that the CA is correct in its pronouncements; and that contrary to
what is claimed in the Petition, her substantial rights are materially affected
considering that her property had been expropriated and awarded to a non-
existent organization without payment of just compensation. Thus, she prays
for the affirmance of the questioned CA pronouncements.

In G.R. No. 195213. In its Petition, LBP advances essentially the

same arguments laid down in the above Reply it submitted in G.R. No.
171836. It
63
Supra note 55.
64
478 Phil. 701 (2004).
65
596 Phil. 742 (2009).
66
555 Phil. 831 (2007).
67
561 Phil. 711 (2007).
68
588 Phil. 345 (2008).
72
Rollo, G.R. No. 171836, pp. 81-
73 86.
Id. at 167-208.
69
592 Phil. 486 (2008).
70
600 Phil. 346 (2009).
71
G.R. No. 176410, September 1, 2010, 629 SCRA 614.

72
Rollo, G.R. No. 171836, pp. 81-
73 86.
Id. at 167-208.
additionally claims that Galle’s right to have the just compensation for her
estate determined by the SAC was foreclosed by her failure to institute the
proper court action within the prescribed period under Rule XIII, Section 11
of the 1994 DARAB Rules of Procedure, and for this reason, the SAC in Civil
Case No. 4436- 2K3 had no jurisdiction to take cognizance of Galle’s
complaint; that the failure of the DARAB in Case No. JC-RIX-ZAMBO-0011-
CO to resolve LBP’s pending motion for reconsideration of its October 15,
1996 Decision cannot validate Galle’s late filing of Civil Case No. 4436-2K3,
and instead indicates that the filing of said case was premature; that LBP’s
pending motion for reconsideration affected only LBP, and not Galle, against
whom the October 15, 1996 Decision should have become final and executory;
that the filing of Civil Case No. 4436- 2K3 following the nullification of the
proceedings in Civil Case No. 4574 constituted forum-shopping; that the
SAC and CA failed to observe the proper formula in fixing just
compensation, as provided under DAR AO 6, as amended by AO 11 and
applicable jurisprudence; that in fixing just compensation for the estate at the
unconscionable amount of P83.04 per square meter (or over P830,000.00 per
hectare), no hearing was conducted and the SAC merely relied on the
commissioners’ report; that in view of the enormous difference in the
valuations of the two commissioners (Manalo’s at P340,040,054.00 and
Calapardo’s at P20,645,445.00) and the principle that the determination of
just compensation is ultimately a function of the courts, the SAC should not
have relied blindly on Manalo’s findings and should have conducted its own
evaluation of the evidence and computation; that the manner of computing just
compensation in agrarian reform cases differs from that in ordinary
expropriation cases, in that the taking of land for agrarian reform purposes
involves the exercise of police power and thus necessarily entails loss on the
part of the landowner; and that the CA erred in awarding 12% interest per
annum, attorney’s fees and legal interest.

LBP thus prays for the nullification and setting aside of the assailed
CA pronouncements on the ground of prescription and forum-shopping. It
included an alternative prayer for the Court to fix just compensation at
P7,534,063.91 for the acquired area of 356.2257 hectares or the remand of the
case to the SAC for further proceedings to correctly determine just
compensation.

In their consolidated Comment,74 the respondents in G.R. No.

195213 reiterate their view that the October 15, 1996 DARAB Decision in
DARAB Case No. JC-RIX-ZAMBO-0011-CO did not become final and
executory as there is still a pending and unresolved motion for reconsideration
filed by LBP, which thus did not foreclose Galle’s right to institute Civil Case
No. 4436-2K3; that Galle is not guilty of forum- shopping in filing Civil Case
No. 4574 precisely since said case was erroneosly filed with a court which was
not the designated SAC having jurisdiction over her complaint for the fixing of
just compensation; that the CA did not err in its pronouncements; and that
contrary to what is claimed in the Petition, her substantial rights are materially
affected considering that her property had been
74
Rollo, G.R. No. 195213, pp. 953-994.
Decision 1 G.R. No. 171836 & 195213

expropriated and awarded to a non-existent organization without payment of just

compensation.

Notably, respondents bewail that their mother’s estate was taken, yet
there is no agrarian reform beneficiary. They claim that the beneficiary of
record – PEARA – is a phantom association that is not even registered with
the Securities and Exchange Commission or the Cooperative Development
Authority, as testified by representatives of the said agencies in Civil Case No.
4574.

Respondents thus pray for the Court to affirm the assailed CA

dispositions.

Our Ruling

The Court denies the Petition in G.R. No. 171836 and partially grants
the Petition in G.R. No. 195213.

The existence of PEARA

In National Federation of Labor v. National Labor Relations

Commission,75 the existence of PEARA as a legitimate cooperative accredited
by the DAR and beneficiary of Galle’s estate – which was then known as the
Patalon Coconut Estate – was recognized. There thus appears to exist no issue
at this point regarding the authenticity and existence of the organization.

The October 15, 1996 DARAB Decision is null and void

An examination of the October 15, 1996 DARAB Decision in Case

No. JC-RIX-ZAMBO-0011-CO will reveal that in arriving at its
conclusions, the DARAB relied mainly on the claim folder profile prepared by
LBP, thus:

A perusal of the claimfolder profile prepared by the Land Bank of

the Philippines showed that the subject lanholdings has [sic] the following
land use:

xxxx

In its determination of the land value, LandBank has used the

valuation factors on Capitalized Net Income (CNI) and Market Value per Tax
Declaration (MV/TD) multiplied by ninety percent (90%) and ten percent
(10%) respectively. In using such valuation factors, it has come up with a
total land value of SEVEN MILLION FIVE HUNDRED THIRTY FOUR
THOUSAND
SIXTY THREE PESOS (P7,534,063.91) [sic] broken as follows:

xxxx
Decision 2 G.R. No. 171836 & 195213
75
383 Phil. 910 (2000).
Decision 1 G.R. No. 171836 & 195213

The Board agrees with the data inputs adopted in determining

the capitalized net income (CNI) of coffee, corn as well as the market value
per tax declaration for each landholding including the crop improvements x x
x.

It is the Board’s view to adopt all the data used by the LandBank in
the revaluation except for the coconut land the average gross production of
which is 912 kilograms per hectare for both landholdings x x x.76

However, in Manalo’s Commissioners’ Report in Civil Case No.

4436- 2K3, it is particularly noted that LBP’s computations were based on field
investigations which were conducted in 1991 – or more than two and a half
years (2-1/2) prior to the taking of the property in 1993, and it used data
obtaining in 1991 and 1983 tax declarations,77 which are clearly outdated and
could not form the basis for an accurate and fair computation of just
compensation for Galle’s estate, given the fundamental principle in eminent
domain that “the owner shall receive the market value of his property at the
time of the taking.”78 These findings were not denied nor refuted by LBP in its
Manifestations/Comments79 to the Commissioners’ Report and Calapardo’s
Dissenting Opinion; on the contrary, it appears to have agreed to Calapardo’s
computation of just compensation at P20,645,445.00.80

Indeed, in its August 15, 2005 Resolution, the SAC observed that –

10. LBP did not present any documents to show how it arrived at
the value of P7,534,063.91. Neither did it explain in any pleading how this
amount was determined. It did not show the basis for whatever factors it
used nor the authorities or sources of its data and information. Furthermore,
it did not dispute plaintiff’s assertion that no actual field inspection of the
property was conducted as it claimed it did in 1991.81

In its Motion for Reconsideration82 of the above Resolution, LBP

even admitted that from the start, it utilized 1988 tax declarations for Galle’s
estate in arriving at its computation of just compensation at P7,534,063.92;83
it simply assumed that in 1993 – the time of taking – the same values in
the 1988 tax declarations still applied.

In a past pronouncement this Court finds relevant, it was held that –

76
Rollo, G.R. No. 195213, pp. 344-346.
77 Id. at 570.
78 Land Bank of the Philippines v. Castro, G.R. No. 189125, August 28, 2013, 704 SCRA 253, 269,
citing
Provincial Government of Rizal v. Caro de Araullo, 58 Phil. 309, 316 (1933).
79
Rollo, G.R. No. 195213, pp. 593-596.
80 Id. at 594.
81 Id. at 318.
82
Id. at 324-337.
83 Id. at 329.
Decision 1 G.R. No. 171836 & 195213

In this particular case, the tax declarations presented by the petitioner

as basis for just compensation were made by the Lapu-Lapu municipal, later
city assessor long before martial law, when land was not only much
cheaper but when assessed values of properties were stated in figures
constituting only a fraction of their true market value. The private
respondent was not even the owner of the properties at the time. It
purchased the lots for development purposes. To peg the value of the lots
on the basis of documents which are out of date and at prices below the
acquisition cost of present owners would be arbitrary and confiscatory.84

For the above reasons, the October 15, 1996 DARAB Decision in Case
No. JC-RIX-ZAMBO-0011-CO is patently defective and erroneous for being
based on wrong and outdated information, and thus null and void.

No prescription or forum-shopping with respect to Civil Case No. 4436-2K3

With the above pronouncement, it becomes clear that Galle was

not precluded from instituting Civil Case No. 4436-2K3. Being null and void,
it is as if the October 15, 1996 DARAB Decision in Case No. JC-RIX-
ZAMBO-0011- CO was never issued. Thus, Galle was never constrained by
the application of Rule XIII, Section 11 of the 1994 DARAB Rules of
Procedure requiring the filing of a case directly with the SAC within 15 days
from notice of the DARAB’s Decision fixing just compensation.

It likewise follows that there is no forum-shopping involved. Even if we

were to consider Civil Case No. 4574, still no forum-shopping was committed;
the trial court in said case did not have jurisdiction over cases for the fixing
of just compensation, and any remedy obtained by Galle in said court
relative to the fixing of just compensation for her estate is of no value, being
susceptible as it is to nullification.

The SAC’s August 15, 2005 Resolution and the assailed CA Decision

As already discussed, the determination of just compensation is a

judicial function. Moreover, both Section 17 of RA 6657 and the formula
prescribed in the applicable AO of the DAR must be considered in the
computation.

Reading the August 15, 2005 Resolution in its entirety, it readily

appears that the SAC did not apply the formula in the applicable
Administrative Circulars of the DAR (AOs 6 and 11) in arriving at its own
independent valuation of Galle’s estate. It relied upon Manalo’s
Commissioners’ Report, which likewise did not
84 Export Processing Zone Authority v. Judge Dulay, 233 Phil. 313, 324 (1987).
Decision 1 G.R. No. 171836 & 195213

apply the formula in AOs 6 and 11,85 although it took into consideration some
of the factors laid down in Section 17 of RA 6657.86

The CA is guilty of the same mistake. Nowhere in the appellate

court’s decision can it be seen that the formula prescribed by AOs 6 and 11
were taken into account; all that were considered were the factors enumerated
in Section 17 of RA 6657, which thus makes its pronouncement incomplete.

Thus, while this Court acknowledges that Galle’s estate was

expropriated to the extent of 356.8257 hectares as the CA has found, the
computation of the exact amount of just compensation remains an issue that
must be resolved, taking into consideration both Section 17 of RA 6657 and
AOs 6 and 11. In an earlier case decided by this ponente, it was held that “the
evidence to be presented by the parties before the trial court for the valuation
of the property x x x must conform to Section 17 of RA 6657 and, as far as
practicable, DAR Administrative Order No.
85 A. There shall be one basic formula for the valuation of lands covered by VOS or CA regardless of
the date of offer or coverage of the claim:
LV = (CNI x 0.6) + (CS x 0.3) + (MV x
0.1)
Where:
LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration
The above formula shall be used if all the three factors are present, relevant, and
applicable.
A.1When the CS factor is not present and CNI and MV are applicable, the formula shall
be: LV = (CNI x. 0.9) + (MV x 0.1)
A.2 When the CNI factor is not present, and CS and MV are applicable, the
formula shall be: LV = (CS x 0.9) + (MV x 0.1)
A.3 When both the CS and CNI are not present and only MV is applicable, the formula shall be:
LV = MV x
2
In no case shall the value of idle land using the formula MV x 2 exceed the lowest value of land
within the same estate under consideration or within the same barangay or municipality (in that order)
approved by LBP within one (1) year from receipt of claimfolder.
A.4In all of the above, the computed value using the applicable formula shall in no case exceed the
LOs offer in case of VOS.
The LOs offer shall be grossed up from the date of the offer up to the date of receipt of claimfolder
by LBP from DAR for processing.
A.5 For purposes of this Administrative Order, the date of receipt of claimfolder by LBP from DAR
shall
mean the date when the claimfolder is determined by the LBP to be complete with all the
required documents and valuation inputs duly verified and validated, and is ready for final
computation/ processing.
A.6The basic formula in the grossing-up of valuation inputs such as LOs offer, Sales Transaction
(ST), Acquisition Cost (AC), Market Value Based on Mortgage (MVM) and Market Value per Tax
Declaration (MV) shall be:
Grossed-up
Valuation Input = Valuation input
x
Regional Consumer
Price Index (RCPI)
Adjustment Factor
xxxx
86 SEC. 17. Determination of Just Compensation. - In determining just compensation, the cost of
acquisition of the land, the current value of like properties, its nature, actual use and income, the sworn
valuation by the
owner, the tax declarations, and the assessment made by government assessors, shall be considered.
The social and economic benefits contributed by the farmers and the farmworkers and by the
Decision 2 G.R. No. 171836 & 195213
government to the
property as well as the non-payment of taxes or loans secured from any government financing institution
on
the said land shall be considered as additional factors to determine its valuation.
Decision 1 G.R. No. 171836 & 195213

6, series of 1992, as amended by DAR Administrative Order No. 11, series

of 1994.”87 This was followed by a recent pronouncement to the same effect,
thus:

In the recent case of Land Bank of the Philippines v. Honeycomb

Farms Corporation, we again affirmed the need to apply Section 17 of R.A.
No. 6657 and DAR AO 5-98 in just compensation cases. There, we
considered the CA and the RTC in grave error when they opted to come up
with their own basis for valuation and completely disregarded the DAR
formula. The need to apply the parameters required by the law cannot be
doubted; the DAR’s administrative issuances, on the other hand, partake of
the nature of statutes and have in their favor a presumption of legality.
Unless administrative orders are declared invalid or unless the cases before
them involve situations these administrative issuances do not cover, the courts
must apply them.

In other words, in the exercise of the Court’s essentially

judicial function of determining just compensation, the RTC-SACs are
not granted unlimited discretion and must consider and apply the R.A.
No. 6657- enumerated factors and the DAR formula that reflect these
factors. These factors and formula provide the uniform framework or
structure for the computation of the just compensation for a property
subject to agrarian reform. This uniform system will ensure that they
do not arbitrarily fix an amount that is absurd, baseless and even
contradictory to the objectives of our agrarian reform laws as just
compensation. This system will likewise ensure that the just compensation
fixed represents, at the very least, a close approximation of the full and real
value of the property taken that is fair and equitable for both the farmer-
beneficiaries and the landowner.

xxxx

After considering these factors and formula, we are convinced that

the RTC-SAC completely disregarded them and simply relied on Branch
36’s valuation. For one, the RTC-SAC did not point to any specific evidence
or cite the values and amounts it used in arriving at the P200.00 per
square meter valuation. It did not even consider the property’s market
value based on the current tax declaration that Yatco insists the RTC-SAC
considered in addition to Branch 36’s valuation. Assuming that the RTC-
SAC considered the property’s market value (which, again, we find that it did
not), this alone will not suffice as basis, unless justified under Item II.A.3 of
DAR AO 5-98 (as provided above). Then too, it did not indicate the formula
that it used in arriving at its valuation or which led it to believe that Branch
36’s valuation was applicable to this case. x x x88 (Emphasis and underscoring
supplied)

The SAC and the CA may have been of the opinion that reliance on
either
of the two – Section 17 of RA 6657 or AOs 6 and 11 – would suffice.

Remand for the proper computation of just compensation

Taking the foregoing into consideration, there is thus a need to remand the
87 Land Bank of the Philippines v. Livioco, G.R. No. 170685, September 22, 2010, 631 SCRA 86, 114.
Decision 2 G.R. No. 171836 & 195213
88 Land Bank of the Philippines v. Yatco Agricultural Enterprises, G.R. No.172551, January 15, 2014.
Decision 1 G.R. No. 171836 & 195213

case in order to properly compute the just compensation that Galle and her
heirs are entitled to, including interest and attorney’s fees, if any. This Court is
not the proper forum for that, as it is not a trier of facts, and it cannot receive
evidence to fix the correct amount of just compensation. For this purpose, the
CA may be commissioned to receive and evaluate the evidence of the parties;
this becomes especially relevant where the property was taken from its
owners way back and the case for just compensation has been pending for
decades, not to mention that the original owner – Susie Galle – did not live to
receive what is due her, even as she fought this protracted court battle.

Considering, however, that the land was acquired in 1989 and the
only surviving petitioner is now an octogenarian and is in need of urgent
medical attention, we find these special circumstances justifying in the
acceleration of the final disposition of this case. This Court deems it best
pro hac vice to commission the CA as its agent to receive and evaluate
the evidence of the parties. The CA’s mandate is to ascertain the just
compensation due in accordance with this Decision, applying Section 17 of
RA 6557 and applicable DAR regulations. As explained in Land Bank of the
Philippines v. Gallego, Jr., the remand of cases before this Court to the CA
for the reception of further evidence is not a novel procedure. It is
sanctioned by Section 6, Rule 46 of the Rules of Court. In fact, the Court
availed of this procedure in quite a few cases.89

Withdrawal of proceeds, pending determination of correct just

compensation

In light of the foregoing considerations, it is but just and proper to

allow, with becoming dispatch, withdrawal of the revised compensation
amount, albeit protested. The concept of just compensation contemplates of
just and timely payment; it embraces not only the correct determination of
the amount to be paid to the landowner, but also the payment of the land
within a reasonable time from its taking. Without prompt payment,
compensation cannot, as Land Bank of the Philippines v. Court of Appeals
instructs, be considered “just,” for the owner is made to suffer the
consequence of being immediately deprived of his land while being made to
wait for years before actually receiving the amount necessary to cope with his
loss.90

Using the foregoing pronouncement as precedent, this Court opts to

grant, in the interest of justice, Galle’s heirs the right to withdraw the
amount of P7,534,063.91, which LBP is willing to compensate the
respondents for their mother’s estate, in the meantime that the case is pending
determination anew in the CA.

With the view taken of the case, there is no need to resolve the other
issues raised by the parties. Particularly, the procedural issues raised in G.R.
No. 171836
89 Heirs of Lorenzo and Carmen Vidad v. Land Bank of the Philippines, G.R. No. 166461, April 30, 2010,
619 SCRA 609, 639.
90 Land Bank of the Philippines v. Department of Agrarian Reform Adjudication Board, G.R. No.
183279, January 25, 2010, 611 SCRA 106, 112-113.
Decision 40 G.R. No. 171836 & 195213

merit no further discussion since the very soul of the Petition therein -
allegations of prescription and forum-shopping- has been struck down in this
disquisition.

WHEREFORE, the Court resolves as follows:

1. The Petition in G.R. No. 171836 is DENIED. The assailed September

23, 2004 Decision and February 22, 2006 Resolution of the Court of Appeals in
CA-G.R. SP No. 80678 are AFFIRMED;

2. The Petition in G.R. No. 195213 is GRANTED IN PART. The

assailed July 27, 2010 Consolidated Decision and January 19, 2011 Resolution of
the Court of Appeals in CA-G.R. SP No. 00761-MIN and CA-G.R. SP No.
00778-MIN are REVERSED and SET ASIDE.

3. Civil Case No. 4436-2K3 is REMANDED to the Court of Appeals,

which is directed to receive evidence and immediately determine the just
compensation due to Susie Irene Galle's estate/heirs - including all applicable
damages, attorney's fees and costs, if any - in accordance with this Decision,
taking into consideration Section 17 of Republic Act No. 6657, the applicable
Department of Agrarian Reform Administrative Orders, including Administrative
Order No. 6, Series of 1992, as amended by Administrative Order No. 11, Series
of 1994, and prevailing jurisprudence. The Court of Appeals is further directed to
conclude the proceedings and submit to this Court a report on its findings and
recommendations within 90 days from notice of this Decision; and

4. The petitioner Land Bank of the Philippines is ORDERED to PAY

Susie Irene Galle's estate or heirs- herein respondents- the amount of SEVEN
MILLION FIVE HUNDRED THIRTY FOUR THOUSAND SIXTY
THREE AND 911100 PESOS ( 7,534,063.91), in cash, immediately upon
receipt of this Decision.

SOORDERED.

4f< j
MARIANO C. DEL CASTILLO
Associate Justice
Decision 1 G.R. No. 171836 &
195213

WE CONCUR:

ANTONIO T. CARPIO

U) Pdihai¥ 7 S O n
A sso cia te J ustice

ARTURO D. BRION JO
Associate Justice

Jo.O.. fUM/
ESTELA M:TERLAS-BERNABE
Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court's Division.

ANTONIOT.C
Associate
Justice
Chairperson
Decision 1 G.R. No. 171836 &
195213

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairperson's Attestation, I certifY that the conclusions in the above Decision
had been reached in consultation before the case was assigned to the writer
of the opinion of the Court's Division.

MARIA LOURDES P. A. SERENO

Chief Justice