LAND BANK OF THE PHILIPPINES, PETITIONER, VS. RENE RALLA BELISTA, RESPONDENT.

Land Bank of the Philippines versus Belista

The Case

This is a petition for review on certiorari brought by the Land Bank of the Philippines against Rene Ralla Belista, a landowner whose eight parcels of land in Ligao, Albay had been placed under the Comprehensive Agrarian Reform Program. The landowner claimed just compensation; the adjudicator fixed it; and the Bank then went straight to the Regional Trial Court sitting as a Special Agrarian Court. That court dismissed the petition for failure to exhaust administrative remedies, and the Court of Appeals affirmed. The case matters because it settles a question every agrarian practitioner must answer: must a party first appeal the adjudicator's valuation to the DARAB Board before going to the Special Agrarian Court? The Supreme Court says no, and the reason is jurisdictional.

Procedural History

The landowner filed a petition for valuation and payment of just compensation before the Regional Adjudicator for Region V. The adjudicator ruled in her favor, preliminarily fixing just compensation, and later modified the amount on the parties' motions for reconsideration. Aggrieved, the Bank filed an original petition for determination of just compensation before the Regional Trial Court of Legaspi City, Branch 3, sitting as a Special Agrarian Court. That court, on its own motion, dismissed the case for failure to exhaust administrative remedies and for non-compliance with the 2003 DARAB Rules of Procedure. The Bank's motion for reconsideration was denied, so it elevated the matter to the Court of Appeals. The Court of Appeals dismissed the petition, holding that under the 2003 Rules an appeal from the adjudicator lies to the DARAB Board, not to the Regional Trial Court, and that the Rules applied because the Bank's petition was filed after their effectivity. Reconsideration was denied. The Bank then came to the Supreme Court by petition for review on certiorari under Rule 45.

Facts

Spouses Pablo Ralla and Carmen Munoz Ralla donated eight parcels of land in Ligao, Albay to their daughter, Rene Ralla Belista. The Department of Agrarian Reform placed those lots under the coverage of the Comprehensive Agrarian Reform Program under Presidential Decree Number 27 and Executive Order Number 228. The landowner then claimed payment of just compensation.

The Department evaluated the farms at 227,582 pesos and 58 centavos, while the Land Bank assessed them at 317,259 pesos and 31 centavos. Believing her lots were grossly underestimated, the landowner filed a petition for valuation and payment of just compensation before the Regional Adjudicator for Region V on the eleventh of November 2002.

On the seventh of July 2003, the adjudicator ruled in her favor, preliminarily fixing just compensation at 2,896,408 pesos and 91 centavos. After both parties moved for reconsideration, the adjudicator modified the decision, fixing her due share at 2,540,211 pesos and 58 centavos, minus amounts already paid. The Bank then filed its original petition before the Special Agrarian Court on the twenty-eighth of October 2003, and that court dismissed it, setting the stage for this appeal.

Issues

• Whether or not the Regional Trial Court sitting as a Special Agrarian Court erred in dismissing the Bank's petition on its own motion for failure to exhaust administrative remedies.
• Whether or not Sections 5, 6, and 7 of Rule XIX of the 2003 DARAB Rules of Procedure apply, such that the adjudicator's decision must first be appealed to the DARAB Board before resort to the Special Agrarian Court.
• Whether or not, in cases involving claims for just compensation under Republic Act Number 6657, the decision of the adjudicator must first be appealed to the DARAB before a party may resort to the Regional Trial Court sitting as a Special Agrarian Court.

Applicable Provisions

Section 50 of Republic Act Number 6657 provides:

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

This grants the Department primary jurisdiction over agrarian reform matters, but it is the exception carved out in the next provision that controls just compensation cases.

Section 57 of Republic Act Number 6657 provides:

Section 57. Special Jurisdiction. - The Special Agrarian Court shall have original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners, and the prosecution of all criminal offenses under this Act. x x x

This is the provision the Court treats as decisive: original and exclusive jurisdiction over just compensation petitions belongs to the Special Agrarian Court, not to the DARAB Board.

Section 5 of Rule XIX of the 2003 DARAB Rules of Procedure provides:

Section 5. Appeal. A party who disagrees with the resolution of the Adjudicator may bring the matter to the Board by filing with the Adjudicator concerned a Notice of Appeal within fifteen (15) days from receipt of the resolution. The filing of a Motion for Reconsideration of said resolution shall interrupt the period herein fixed. If the motion is denied, the aggrieved party may file the appeal within the remaining period, but in no case shall it be less than five (5) days.

This is the rule the trial court and the Court of Appeals applied, and which the Supreme Court holds cannot override the statute.

Section 11 of Rule XIII of the 1994 DARAB Rules of Procedure provides:

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.

This earlier rule, prevailing when the landowner's claim was filed, itself acknowledged that just compensation cases go directly to the courts.

Ruling

On the first issue, the Court ruled that the trial court erred in dismissing the petition on its own motion for failure to exhaust administrative remedies. The doctrine of exhaustion does not apply where the statute itself vests original and exclusive jurisdiction in the courts.

On the second issue, the Court ruled that Sections 5, 6, and 7 of Rule XIX of the 2003 DARAB Rules of Procedure cannot govern. Although Section 5 now makes the adjudicator's valuation appealable to the Board, the Court held that such a rule could not change the clear import of Section 57 of Republic Act Number 6657. The Court stated the principle plainly: jurisdiction over the subject matter is conferred by law. Only a statute can confer jurisdiction on courts and administrative agencies, while rules of procedure cannot.

On the third issue, the Court ruled in the negative: there is no need to appeal the adjudicator's decision to the DARAB Board before resorting to the Special Agrarian Court. The Court reasoned that under Section 50 the Department has primary jurisdiction, but Section 57 expressly excepts petitions for the determination of just compensation, which fall within the original and exclusive jurisdiction of the Regional Trial Court sitting as a Special Agrarian Court. The valuation of property in eminent domain is essentially a judicial function that cannot be vested in an administrative agency. Primary jurisdiction in the Department is administrative and preliminary, and its determination is always subject to challenge before the courts. Thus, Section 57 authorizes direct resort to the Special Agrarian Court, and the Bank properly filed its petition there.

Doctrine

First, the Regional Trial Court sitting as a Special Agrarian Court has original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners under Section 57 of Republic Act Number 6657. Second, this jurisdiction is conferred by statute and cannot be diminished by procedural rules; a rule that requires an appeal to the DARAB Board before judicial resort cannot convert the court's original jurisdiction into appellate jurisdiction. Third, the Department of Agrarian Reform's primary jurisdiction over agrarian reform matters is administrative and preliminary, and its valuation is subject to challenge before the courts, because the determination of just compensation in eminent domain is essentially a judicial function. Fourth, direct resort to the Special Agrarian Court is valid, and the doctrine of exhaustion of administrative remedies does not bar it.

Disposition

The petition was granted; the Court of Appeals decision and resolution were reversed and set aside, and the Regional Trial Court of Legaspi City, Branch 3, sitting as a Special Agrarian Court, was directed to hear without delay the Bank's petition for the determination of just compensation.

Remember This

Memorize the line: jurisdiction over the subject matter is conferred by law, and only a statute can confer it, while rules of procedure cannot. Examiners use this case to test whether you know that Section 57 of Republic Act Number 6657 gives the Special Agrarian Court original and exclusive jurisdiction over just compensation, so no DARAB rule can require a prior appeal to the Board.