G.R. No. 181912 & 183347, November 29, 2016
Land Bank of the Philippines vs. Heirs of Lorenzo Tañada, et al.

FACTS

This case involves the determination of just compensation for agricultural lands placed under the Comprehensive Agrarian Reform Program (CARP). The Land Bank of the Philippines (LBP) valued the properties using the formula prescribed by the Department of Agrarian Reform (DAR) in its administrative orders. The landowners rejected these valuations, contending they were grossly inadequate. The case was elevated to the Special Agrarian Court (SAC), which fixed just compensation using a different method, allegedly without considering the factors mandated under Section 17 of Republic Act (R.A.) No. 6657, as amended by R.A. No. 9700 .
The core legal dispute centered on whether the SAC, in exercising its judicial function to determine just compensation, was bound to consider the specific valuation factors enumerated in the amended Section 17 of R.A. No. 6657 , or if it retained unfettered discretion to adopt other methods and evidence.

ISSUE

Whether the courts, in determining just compensation for CARP-covered lands, are legally obligated to consider the valuation factors enumerated in Section 17 of R.A. No. 6657 , as amended.

RULING

Yes. The Supreme Court, through the Separate Concurring Opinion of Chief Justice Sereno, clarified that courts have a legal duty to consider the factors in Section 17. The amendment, using the mandatory word “shall,” made this consideration compulsory. However, this duty does not conflict with the established doctrine that the determination of just compensation is a judicial function.
The provision serves as a mandatory guideline, not an exclusive formula. Congress itself circumscribed the application of these factors with the clause “subject to the final decision of the proper court.” This preserves judicial prerogative. Courts are required to take these legislated factors into account, but they are not straitjacketed into using them exclusively or mechanically. They retain the power to weigh the evidence, assess the relevance and sufficiency of these factors for each specific case, and ultimately decide on the “justness” of the compensation based on a totality of evidence. The law presumes Congress enacted an effective statute to implement agrarian reform; thus, courts must give effect to this mandated mode of valuation while still exercising independent judicial judgment. The case was remanded to the SAC for a proper determination of just compensation in accordance with this ruling.