G.R. No. 204010 , September 23, 2020.
Land Bank of the Philippines, Petitioner, vs. Ludovico D. Hilado, Respondent.

FACTS

Respondent Ludovico D. Hilado is the registered owner of a 31.3196-hectare parcel of land in Bago City, Negros Occidental. On October 24, 2000, he voluntarily offered the property for sale to the Department of Agrarian Reform (DAR) for Comprehensive Agrarian Reform Program (CARP) coverage at P200,000.00 per hectare. Upon inspection, only 17.9302 hectares were deemed covered by CARP. Petitioner Land Bank of the Philippines (LBP) valued this portion at P767,641.07 using the formula in DAR Administrative Order (A.O.) No. 5, series of 1998. Respondent rejected this valuation. After the DARAB sustained LBP’s valuation, respondent filed an action for fixing of just compensation before the Regional Trial Court (RTC) sitting as a Special Agrarian Court (SAC). The SAC fixed just compensation at P1,496,258.00. LBP appealed to the Court of Appeals (CA) via a petition for review. The CA initially dismissed LBP’s petition on technical grounds: (1) failure of the signing lawyers to indicate current Professional Tax Receipts (PTRs) and Integrated Bar of the Philippines (IBP) official receipts; (2) failure of the notary public to indicate current PTR and IBP receipt in the notarial acknowledgment; and (3) lack of proper proof of service. Upon LBP’s motion for reconsideration, the CA, while glossing over the procedural infirmities, denied the motion for lack of merit, affirming the SAC’s valuation. LBP filed the instant petition.

ISSUE

1. Whether the Court of Appeals committed a serious error of law in dismissing LBP’s petition for review.
2. Whether the Court of Appeals committed a serious error of law in adopting the SAC’s valuation, which allegedly ignored the valuation factors under Section 17 of Republic Act No. 6657 and the formula in DAR A.O. No. 5, series of 1998.

RULING

The petition is partly meritorious. On the first issue, the Supreme Court held that the CA committed a serious error in dismissing the petition on purely technical grounds. The Court emphasized that cases should be determined on their merits, and rules of procedure should not be applied rigidly to override substantial justice. LBP’s explanation and subsequent compliance through its motion for reconsideration should have inspired liberality. On the second issue, the Court ruled that while the SAC has original and exclusive jurisdiction to determine just compensation, and is not strictly bound to apply the DAR formula, its determination must still be based on the valuation factors enumerated in Section 17 of R.A. No. 6657 . The SAC’s decision, however, did not explain how it arrived at its valuation or how it considered these factors. It merely stated the compensation per land use without factual or legal basis. Therefore, the case was remanded to the SAC for the proper determination of just compensation in accordance with Section 17 of R.A. No. 6657 , as amended, and applicable jurisprudence.