Land Bank of the Philippines vs. Hon. Natividad

Failure to include a notice of hearing in a motion for reconsideration due merely to counsel’s heavy workload, "scanning and signing" without review, or carelessness constitutes inexcusable negligence that does not warrant relief from judgment under Rule 38, particularly when committed by an experienced lawyer. Additionally, where the agrarian reform process (including determination and payment of just compensation) remains incomplete upon the effectivity of RA 6657, just compensation must be determined under Section 17 of RA 6657, with PD 27 and EO 228 having only suppletory effect.

The case involves agricultural lands in Arayat, Pampanga covered by the government’s land reform program under Presidential Decree No. 27 (PD 27). Disputes arose regarding the valuation of just compensation long after the initial taking, with landowners filing direct judicial proceedings after administrative inaction by the Department of Agrarian Reform (DAR).

• Filed in RTC: May 14, 1993 – Private respondents filed a petition for determination of just compensation (Agrarian Case No. 2005) before the RTC of San Fernando, Pampanga, Branch 48 against DAR and Land Bank; amended to implead registered tenants
• Decision of Lower Court: July 5, 1996 – RTC ordered DAR and Land Bank to pay P30.00 per square meter as just compensation and P50,000.00 attorney’s fees
• Post-Trial Motions: Land Bank and DAR filed motions for reconsideration
• Denial of Motions: July 30, 1996 – RTC denied motions for reconsideration for being pro forma (no notice of hearing attached); prescriptive period for appeal not tolled
• Decision Becomes Final: Land Bank failed to file timely appeal; decision became final and executory
• Petition for Relief: Filed by Land Bank before RTC citing excusable negligence; denied by RTC Order dated November 18, 1996 for lack of excusable negligence
• Elevated to SC: December 6, 1996 – Land Bank filed instant Petition for Review

• Private respondents (Jose R. Caguiat, represented by attorneys-in-fact Jose T. Bartolome and Victorio Mangalindan) owned agricultural lands in San Vicente (or Camba), Arayat, Pampanga acquired by the State under PD 27
• May 14, 1993: Private respondents filed petition for determination of just compensation directly with the RTC after DAR failed to act on their letter dated January 15, 1993 objecting to the Municipal Agrarian Reform Office valuation
• RTC rendered judgment fixing just compensation at P30.00 per square meter based on 1993 values
• Land Bank’s counsel (Alfredo B. Pandico, Jr.) filed a motion for reconsideration without a notice of hearing
• In his affidavit supporting the petition for relief, counsel admitted: "he simply scanned and signed the Motion for Reconsideration... not knowing, or unmindful that it had no notice of hearing" due to heavy workload
• Counsel further admitted he had been a lawyer since 1973 and had "mastered the intricate art and technique of pleading"

• Counsel’s failure to include a notice of hearing was due to "heavy workload" and "pressure of work," constituting excusable negligence under Rule 38 warranting relief from judgment
• The motion for reconsideration raised meritorious defenses, and equity demands that Land Bank be heard on the substantive issues
• Private respondents failed to exhaust administrative remedies by filing directly with the RTC instead of first seeking reconsideration of the DAR’s valuation
• The trial court erred in treating PD 27 and EO 228 as mere guidelines and in relying on 1993 valuation (time of possession) instead of the 1972 valuation (time of taking under PD 27)

• Heavy workload does not constitute excusable negligence, especially for a lawyer practicing since 1973 who claims mastery of pleading techniques
• Private respondents wrote to the DAR Secretary to object to the valuation, but the letter was left unanswered, justifying the direct resort to judicial proceedings
• RA 6657, not PD 27 or EO 228, applies to the determination of just compensation

• Procedural Issues: Whether counsel’s failure to include a notice of hearing in a motion for reconsideration, allegedly due to heavy workload, constitutes excusable negligence entitling Land Bank to relief from judgment under Section 1, Rule 38 of the 1997 Rules of Civil Procedure
• Substantive Issues:
  • Whether private respondents failed to exhaust administrative remedies before filing the petition for determination of just compensation with the RTC
  • Whether just compensation should be determined under PD 27/EO 228 (using 1972 values) or under RA 6657 (using values at time of actual payment/possession in 1993)

• Procedural: No. Counsel’s negligence is inexcusable. "Excusable negligence" under Rule 38 requires negligence that "ordinary diligence and prudence could not have guarded against." The "scanning and signing" of a motion without verifying the presence of a basic procedural requirement like a notice of hearing—especially by an experienced lawyer—is arrant negligence. A motion without a notice of hearing is a mere scrap of paper that clerks of court have no duty to accept.
• Substantive:
  • No failure to exhaust administrative remedies. While the DAR has primary jurisdiction to determine just compensation administratively, the RTC has original and exclusive jurisdiction over judicial proceedings for the determination of just compensation. DAR’s determination is preliminary and subject to judicial challenge. Private respondents attempted administrative recourse by writing to the DAR Secretary but received no response.
  • RA 6657 applies, not PD 27/EO 228. The seizure of the landholding under PD 27 does not take effect on the date of PD 27’s effectivity (October 21, 1972) but on the payment of just compensation. Since the agrarian reform process remained incomplete (just compensation unsettled) when RA 6657 took effect, the determination of just compensation must proceed under Section 17 of RA 6657, with PD 27 and EO 228 having only suppletory effect. Using 1972 values would be inequitable given the considerable delay in determining compensation.

• Excusable Negligence (Rule 38) — Defined as negligence that ordinary diligence and prudence could not have guarded against. The SC established that:

  • Mere heavy workload, carelessness, or "scanning and signing" without reviewing pleadings does not qualify
  • Such failure by an experienced lawyer (practicing 20+ years) is particularly inexcusable
  • A motion lacking a notice of hearing is a "mere scrap of paper" with no legal effect

• Primary vs. Exclusive Jurisdiction in Agrarian Reform Proceedings — The DAR possesses primary jurisdiction to determine just compensation in an administrative capacity, but RTCs exercise original and exclusive jurisdiction over judicial proceedings for the determination of just compensation. The DAR’s administrative determination is preliminary and subject to judicial review.

• Applicable Law for Incomplete Agrarian Reform Proceedings — Where the agrarian reform process (including the determination and payment of just compensation) remains incomplete upon the effectivity of RA 6657, RA 6657 governs the determination of just compensation, with PD 27 and EO 228 having only suppletory application. This is based on the principle that just compensation must be the "full and fair equivalent" of the property taken, and using outdated valuation dates (1972) would be inequitable when payment is delayed.

• Time of Taking vs. Time of Payment — Under the "taking" concept in eminent domain for agrarian reform, the transfer of title or the "taking" is deemed to occur not on the date of the decree (PD 27 effectivity) but upon the payment of just compensation.

• "Negligence to be excusable must be one which ordinary diligence and prudence could not have guarded against."
• "The failure to attach a notice of hearing would have been less odious if committed by a greenhorn but not by a lawyer who claims to have 'mastered the intricate art and technique of pleading.'"
• "A motion that does not contain the requisite notice of hearing is nothing but a mere scrap of paper. The clerk of court does not even have the duty to accept it, much less to bring it to the attention of the presiding judge."
• "While it is true that litigation is not a game of technicalities, it is equally true that every case must be prosecuted in accordance with the prescribed procedure to ensure an orderly and speedy administration of justice."
• "Just compensation should be the full and fair equivalent of the property taken from its owner by the expropriator, the equivalent being real, substantial, full and ample."

• Gold Line Transit, Inc. v. Ramos — Controlling precedent defining excusable negligence as that which ordinary diligence and prudence could not have guarded against
• Norris v. Parentela, Jr. — Established that motions without notice of hearing are mere scraps of paper; clerks of court have no duty to accept them
• Philippine Veterans Bank v. Court of Appeals — Distinguished between DAR’s primary administrative jurisdiction and RTC’s exclusive original judicial jurisdiction over just compensation
• Office of the President v. Court of Appeals — Held that seizure under PD 27 takes effect upon payment of just compensation, not upon PD 27’s effectivity date
• Paris v. Alfeche — Established that RA 6657 applies to pending agrarian reform processes at the time of its effectivity, with PD 27/EO 228 having suppletory effect
• Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform — Defined just compensation as the full and fair equivalent of the property taken

• Rule 38, Section 1 of the 1997 Rules of Civil Procedure — Governs petitions for relief from judgment based on fraud, accident, mistake, or excusable negligence
• Rule 15 (implied through Norris) — Requirement that motions contain notices of hearing
• Presidential Decree No. 27 (PD 27) — The original emancipation decree; deemed merely suppletory when RA 6657 applies
• Executive Order No. 228 (EO 228) — Provided valuation formulas under the PD 27 regime; deemed merely suppletory
• Republic Act No. 6657 (Comprehensive Agrarian Reform Law of 1988), Section 17 — Mandates the factors for determining just compensation (cost of acquisition, current value of like properties, nature/use/income, sworn valuation, tax declarations, government assessment, social/economic benefits contributed by farmers/farmworkers and government)