In Vivencio Mateo, et al. v. Department of Agrarian Reform, et al., the Supreme Court ruled that landowners can seek judicial intervention for just compensation claims even without exhausting all administrative remedies if the Department of Agrarian Reform (DAR) unreasonably delays or fails to act. This decision ensures that landowners are not indefinitely deprived of fair compensation for land taken under the Comprehensive Agrarian Reform Program (CARP), reinforcing their right to timely and just payment.

Land Seizure and Compensation Delays: Did the DAR’s Inaction Justify Direct Court Action?

The case revolves around a dispute over just compensation for 112.3112 hectares of land owned by the Mateos, which the DAR expropriated for distribution to farmer-beneficiaries under CARP. The Land Bank of the Philippines (LBP) initially valued the land at P52,000.00 per hectare, which the Mateos rejected. Dissatisfied with the valuation and the slow pace of administrative proceedings, the Mateos filed a complaint with the Regional Trial Court (RTC) of Sorsogon City, acting as a Special Agrarian Court (SAC), seeking a judicial determination of just compensation. The SAC ruled in favor of the Mateos, ordering the LBP to pay P71,143,623.00. However, the Court of Appeals (CA) reversed the SAC’s decision, citing the Mateos’ failure to exhaust administrative remedies before seeking judicial relief.

The Supreme Court (SC) then addressed whether the CA erred in negating the SAC’s jurisdiction to determine just compensation in the absence of prior administrative proceedings. The central legal issue was whether the Mateos were required to exhaust administrative remedies before seeking judicial intervention, and whether the SAC properly determined the amount of just compensation. This required the SC to balance the administrative process mandated by agrarian reform laws with the constitutional right to just compensation for property taken for public use.

The Supreme Court first addressed the issue of jurisdiction and the doctrine of exhaustion of administrative remedies. While Section 50 of R.A. No. 6657 vests the DAR with primary jurisdiction over agrarian reform matters, Section 57 grants SACs original and exclusive jurisdiction over petitions for the determination of just compensation. The Court emphasized that the doctrine of primary jurisdiction typically requires parties to exhaust administrative remedies before seeking judicial intervention. However, this doctrine admits exceptions, such as when there is unreasonable delay or official inaction that irretrievably prejudices a complainant. As the Court noted in Addition Hills Mandaluyong Civic & Social Organization, Inc. v. Megaworld Properties & Holdings, Inc., et al., 686 Phil. 76 (2012),

the principle admits of exceptions, among which is when there is unreasonable delay or official inaction that irretrievably prejudices a complainant.

In the Mateos’ case, the DAR entered their property in 1994, but deposited cash and Agrarian Reform Bonds as payment only in 1996 and 1997. Despite the Mateos’ rejection of the initial valuation, the DAR failed to initiate timely summary administrative proceedings. The SAC even issued multiple orders compelling the DAR to conduct the necessary proceedings, but the DAR’s delay and inaction unjustly prejudiced the Mateos. The SC emphasized the importance of timely administrative proceedings to prevent landowners from being indefinitely deprived of just compensation. Ultimately, it would be unfair to prevent the Mateos from filing a complaint with the SAC, as the law does not intend for such injustice.

Moreover, the DARAB’s decisions upholding the LBP’s valuations were rendered while the trial before the SAC was underway. Referring the case back to the DAR would have been moot, as any challenge to the valuation would be cognizable by the SAC. The Court found that the CA erred in dismissing the Mateos’ complaint because the DAR’s delay and inaction justified direct resort to the SAC. Therefore, the doctrine of exhaustion of administrative remedies did not apply under these circumstances.

The SC next addressed the SAC’s non-compliance with Section 17 of R.A. No. 6657 and DAR Administrative Orders (AOs). The Court underscored the importance of applying both the valuation factors enumerated in Section 17 of R.A. No. 6657 and the basic formula laid down by the DAR when determining just compensation. The Court in Ramon Alfonso v. LBP and DAR, G.R. Nos. 181912 and 183347, November 29, 2016, summed up the guidelines:

First, in determining just compensation, courts are obligated to apply both the compensation valuation factors enumerated by the Congress under Section 17 of RA 6657 and the basic formula laid down by the DAR. x x x

Additionally, DAR’s formulas are administrative regulations with the force and effect of law, unless declared invalid. Courts may relax the application of the formula to fit the peculiar circumstances of a case, but must clearly explain any deviation. The SAC failed to adhere to these guidelines in the Mateos’ case.

The SAC did not make a clear finding of when the taking of the Mateos’ property occurred. The Court explained in LBP v. Lajom, G.R. No. 184982, August 20, 2014, that the dates of actual transfer through emancipation patents or certificates of land ownership awards are significant as the just compensation must be valued in relation thereto. Moreover, the SAC did not refer to any DAR AOs or formulas. Instead, the SAC’s valuation of the property lacked specific references to the mandated formulas under DAR regulations, and there was no explanation as to why the case should be excepted from the application of AO No. 6. The SAC also did not specify its basis for determining that the fair market value (FMV) of the subject property was P500,000.00 per hectare. The resolution the SAC referred to was regarding current prices, rather than the price at the time of taking, and the estimates it made were unclear.

Given these deficiencies, the Supreme Court found it necessary to remand the case to the SAC. It is important to apply Section 17 of R.A. No. 6657, AO No. 6, and any pertinent DAR AOs explicitly providing for their application over pending cases involving just compensation for lands taken before the AOs’ effectivity. While R.A. No. 6657 has been amended, the Court held that because the Claim Folder was received by LBP before July 1, 2009, the amendments introduced by R.A. No. 9700 do not apply.

Ultimately, the Supreme Court reversed the CA’s decision to ensure that the Mateos receive fair compensation for their land. The case serves as a reminder of the importance of timely administrative proceedings in agrarian reform cases. When the DAR fails to act promptly, landowners can seek judicial intervention to protect their right to just compensation.

FAQs

What was the key issue in this case?	The key issue was whether the Mateos were required to exhaust administrative remedies before seeking judicial intervention for the determination of just compensation for their land expropriated under CARP. The court also considered whether the SAC properly determined the amount of just compensation.
What did the Court rule regarding exhaustion of administrative remedies?	The Court ruled that landowners are not required to exhaust administrative remedies if the DAR unreasonably delays or fails to act on their claim for just compensation. This ensures that landowners are not indefinitely deprived of their right to timely and just payment.
What is the significance of Section 17 of R.A. No. 6657?	Section 17 of R.A. No. 6657 outlines the factors to be considered in determining just compensation, including the cost of acquisition, current value of like properties, nature, actual use, and income of the land. The court emphasized the importance of applying these factors and the basic formula laid down by the DAR in valuing expropriated land.
What are DAR Administrative Orders (AOs) and why are they important?	DAR AOs are administrative regulations issued by the DAR that provide guidelines and procedures for implementing agrarian reform laws, including the valuation of lands. These AOs have the force and effect of law and must be followed unless declared invalid or relaxed by the court for specific reasons.
What is the role of the Special Agrarian Court (SAC)?	The SAC has original and exclusive jurisdiction over petitions for the determination of just compensation to landowners under CARP. It ensures that landowners receive fair and just compensation for their expropriated lands, acting as a check on the administrative valuation process.
What does it mean to “remand” a case?	To remand a case means to send it back to a lower court for further action, such as re-evaluation or retrial. In this case, the Supreme Court remanded the case to the SAC for a re-determination of just compensation in accordance with the guidelines set forth in the decision.
Why was the case remanded to the SAC?	The case was remanded because the SAC did not adhere to the prescribed procedures in determining just compensation, failing to apply the valuation factors in Section 17 of R.A. No. 6657 and the formulas in DAR AOs. This ensures a more accurate and fair valuation process.
What interest rates apply to the unpaid just compensation?	The unpaid balance of just compensation is subject to annual legal interest at the rate of twelve percent (12%) from the time of taking until June 30, 2013, and six percent (6%) from July 1, 2013, until full payment, in accordance with Bangko Sentral ng Pilipinas-Monetary Board Circular No. 799.
What happens if the DAR delays the valuation process?	If the DAR delays the valuation process, landowners may be entitled to actual or compensatory damages, including legal interest on the value of the property from the time of taking until full payment. This serves to compensate the landowners for the delay and ensure they are not unduly prejudiced.

This decision underscores the importance of balancing administrative efficiency with the protection of individual rights in the implementation of agrarian reform. It also reinforces the judiciary’s role in ensuring that landowners receive just compensation for their properties taken for public use.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: VIVENCIO MATEO, ET AL. VS. DEPARTMENT OF AGRARIAN REFORM, ET AL., G.R. No. 186339, February 15, 2017