Meneses vs. Secretary of Agrarian Reform

Just compensation for lands expropriated under P.D. 27 must be determined under R.A. 6657 where the agrarian reform process remains incomplete due to the government's prolonged failure to pay, P.D. 27 and E.O. 228 having only suppletory effect.

Petitioners were co-owners pro-indiviso of a 60.8544-hectare irrigated rice land in Barangay Batasan, San Miguel, Bulacan, registered in the name of their grandparents, the spouses Ramon Meneses and Carmen Rodriguez-Meneses. On October 21, 1972, the property was distributed to farmer-beneficiaries by virtue of Presidential Decree No. 27. From the time of distribution up to the filing of the complaint in 1993, no payment or rentals had been made to the petitioners, and titles had already been issued to the farmer-beneficiaries. Petitioners alleged the fair market value of the property to be P6,000,000.00.

• The Expropriation: Petitioners co-owned a 60.8544-hectare irrigated rice land in Bulacan. On October 21, 1972, the property was distributed to farmer-beneficiaries under the Operation Land Transfer scheme of P.D. No. 27. From 1972 to 1993, no payment or rentals were made to the petitioners, and titles were already issued to the farmer-beneficiaries.
• Procedural Ping-Pong: Petitioners filed a complaint for just compensation with the RTC in 1993, alleging a fair market value of P6,000,000.00. The farmer-beneficiaries, LBP, DAR Secretary, and DAR filed their respective answers, raising affirmative defenses and questioning the RTC's jurisdiction. The RTC initially dismissed the complaint for lack of cause of action, directing petitioners to the DAR. Petitioners filed with the DARAB, which dismissed the case for lack of jurisdiction. Petitioners returned to the RTC, which reopened the case. The parties agreed to limit the issue to whether petitioners were entitled to just compensation under R.A. 6657 rather than P.D. 27. The RTC directed the parties to file motions for judgment on the pleadings.
• Dismissal by the RTC: The RTC dismissed the complaint, ruling that since the property was taken in 1972 under P.D. 27, just compensation must be based on the value of the property at the time of taking. The CA affirmed the dismissal and denied the motion for reconsideration filed 44 days late, rendering the CA decision final and executory.

• Propriety of Judgment on the Pleadings: Petitioners argued that the CA erred in sustaining the propriety of the motion for judgment on the pleadings, contending that respondents are not claimants, counter-claimants, or cross-claimants who may seek such relief, and that the answers tendered genuine issues.
• Dismissal of the Complaint: Petitioners maintained that the CA erred in ruling that the RTC correctly dismissed the complaint since there was no initial valuation yet made by the DARAB.
• Applicable Law for Just Compensation: Petitioners argued that they are entitled to just compensation as provided for in R.A. 6657 and the 1987 Constitution, not P.D. 27, which was the basis of the valuation made by respondents.

• Finality of the CA Decision: Respondents argued that the CA Decision dated May 30, 2002, is already final and executory due to petitioners' failure to seasonably file a motion for reconsideration.
• Applicable Law for Just Compensation: Respondents countered that the applicable law is P.D. 27 and E.O. 228, which provide the formula for the determination of just compensation based on the value at the time of taking, as recognized in Land Bank of the Philippines v. Court of Appeals and Gabatin v. Land Bank of the Philippines.
• Jurisdiction and Prematurity: Respondents argued that jurisdiction over valuation cases lies with the DARAB and that the filing of the case is premature since there is no valuation yet made by the DAR based on E.O. 228.

• Relaxation of Procedural Rules: Whether the Court should relax the rules on the finality of judgments given the delayed filing of the motion for reconsideration.
• Propriety of Judgment on the Pleadings: Whether the CA erred in sustaining the RTC's ruling allowing a motion for judgment on the pleadings.
• Applicable Law for Just Compensation: Whether just compensation should be determined under P.D. 27, based on the value at the time of taking, or under R.A. 6657.
• Dismissal of the Complaint: Whether the CA erred in sustaining the RTC's dismissal of the complaint instead of determining the just compensation due to petitioners.

• Relaxation of Procedural Rules: The rules on the finality of judgments were relaxed to serve substantial justice. The negligence of petitioners' counsel in failing to inform the court of their change of address, causing the 44-day delay in filing the motion for reconsideration, should not result in serious injustice to the clients. Petitioners would be left without any recourse, as both the RTC and DARAB had already dismissed their separate complaints, and they have not been paid for over 30 years since the expropriation.
• Propriety of Judgment on the Pleadings: The CA erred in sustaining the propriety of the motion for judgment on the pleadings. Under Rule 34, Section 1 of the Rules of Court, a judgment on the pleadings may be sought only by a claimant, and only when an answer fails to tender an issue or otherwise admits the material allegations of the adverse party's pleading. The respondents' separate answers tendered issues through specific denials and affirmative defenses, and respondents were neither plaintiffs nor counter-claimants. The proper procedural device should have been a motion for summary judgment under Rule 35, as the issues raised were not factual ones requiring trial but legal issues on the applicable law.
• Applicable Law for Just Compensation: R.A. 6657 applies to the determination of just compensation, not P.D. 27. While Gabatin ruled that just compensation should be based on the value at the time of taking under P.D. 27, the more recent ruling in Land Bank of the Philippines v. Natividad established that the seizure of the landholding did not take place on the effectivity date of P.D. 27 but upon the payment of just compensation. Because the agrarian reform process remains incomplete due to the government's prolonged failure to pay, and R.A. 6657 was enacted before the process concluded, just compensation must be determined under R.A. 6657, with P.D. 27 and E.O. 228 having only suppletory effect. It would be inequitable to apply the 1972 valuation given the 30-year delay.
• Dismissal of the Complaint: The CA erred in sustaining the dismissal of the complaint. Even assuming that P.D. 27 applies, the RTC should have proceeded to determine the just compensation due to petitioners rather than simply dismissing the complaint. Petitioners were improperly thrown back and forth between the RTC and the DAR, and a dismissal would leave them without any recourse despite the long-standing expropriation of their property.

• Relaxation of Procedural Rules — Procedural rules may be relaxed and the finality of judgments set aside when the following circumstances are present: (a) matters of life, liberty, honor, or property are at stake; (b) the existence of special or compelling circumstances; (c) the merits of the case; (d) a cause not entirely attributable to the fault or negligence of the party favored by the suspension of the rules; (e) a lack of any showing that the review sought is merely frivolous and dilatory; and (f) the other party will not be unjustly prejudiced thereby. Applied to excuse the 44-day delay in filing a motion for reconsideration, as the negligence of counsel should not deprive the petitioners of their right to just compensation after a 30-year delay in payment.
• Determination of Just Compensation Under R.A. 6657 — When the agrarian reform process remains incomplete due to the government's failure to pay just compensation for lands expropriated under P.D. 27, and R.A. 6657 has taken effect before the process concludes, just compensation must be determined under R.A. 6657. The seizure of the landholding does not take place on the effectivity date of P.D. 27 but upon the payment of just compensation. Applied to ensure that landowners receive the full and fair equivalent of their property, as applying the 1972 valuation after an inordinate delay would be inequitable.

• "It would certainly be inequitable to determine just compensation based on the guideline provided by PD 27 and EO 228 considering the DAR's failure to determine the just compensation for a considerable length of time. That just compensation should be determined in accordance with RA 6657, and not PD 27 or EO 228, is especially imperative considering that 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."

• Land Bank of the Philippines v. Natividad, G.R. No. 127198, May 16, 2005 — Followed. Held that the seizure of the landholding did not take place on the effectivity date of P.D. 27 but upon the payment of just compensation; thus, R.A. 6657 applies when the agrarian reform process is incomplete.
• Gabatin v. Land Bank of the Philippines, G.R. No. 148223, November 25, 2004 — Distinguished. Held that just compensation for expropriation under P.D. 27 should be based on the value of the land at the time of taking. The Court found the application of Natividad more equitable under the circumstances of this case.
• Ginete v. Court of Appeals, 357 Phil. 36 (1998) — Followed. Counsel's negligence should not prejudice the merits of the client's case where serious injustice would result.
• Office of the President, Malacañang, Manila v. Court of Appeals — Followed. Ruled that the seizure of the landholding did not take place on the date of effectivity of P.D. 27.
• Land Bank of the Philippines v. Court of Appeals, G.R. No. 128557, December 29, 1999 — Cited. Held that the DARAB has the authority to determine the initial valuation of lands involving agrarian reform, contradicting the DARAB's dismissal in this case.

• Rule 34, Section 1, Rules of Court — Provides that a judgment on the pleadings is proper when an answer fails to tender an issue or otherwise admits the material allegations of the adverse party's pleading. Applied to show that the RTC and CA erred in allowing the motion for judgment on the pleadings, as the answers tendered issues and respondents were not claimants.
• Rule 35, Sections 1 and 2, Rules of Court — Governs summary judgment, a procedural device for the prompt disposition of actions where there is no genuine issue regarding any material fact. Applied to clarify that the RTC should have directed the filing of a motion for summary judgment instead of judgment on the pleadings, as the issues were legal, not factual.
• Section 17, R.A. 6657 — Enumerates the factors to be considered in determining just compensation, including the cost of acquisition, 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. Applied as the proper standard for valuation instead of the P.D. 27 formula, given the incomplete agrarian reform process.
• Presidential Decree No. 27 and Executive Order No. 228 — Provide the formula for land valuation under P.D. 27 (LV = 2.5 x AGP x GSP x (1.06)n). Applied suppletorily, not as the primary basis for just compensation, due to the inequity of applying the 1972 valuation after a prolonged delay.

Panganiban, C.J. (Chairperson), Ynares-Santiago, Callejo, Sr., and Chico-Nazario, JJ.