GR 171038; (June, 2012) (Digest)
G.R. No. 171038 ; June 20, 2012
LAND BANK OF THE PHILIPPINES, Petitioner, vs. HEIRS OF JUAN LOPEZ, Respondents.
FACTS
The respondents, heirs of Juan Lopez, voluntarily offered to sell their 23.1301-hectare coconut land in Sorsogon to the Department of Agrarian Reform (DAR) under the Comprehensive Agrarian Reform Law. The Land Bank of the Philippines (LBP), tasked with preliminary valuation, valued the acquired 21.6101 hectares at ₱298,101.21. The respondents rejected this offer. The Provincial Agrarian Reform Adjudicator (PARAD) subsequently fixed just compensation at ₱928,330.17. The critical divergence stemmed from the data used for the Capitalized Net Income (CNI) factor: the LBP used an average copra selling price of ₱5.86 per kg from the Philippine Coconut Authority, while the PARAD used ₱16.00 per kg.
The LBP filed a petition for judicial determination of just compensation before the Regional Trial Court sitting as a Special Agrarian Court (RTC-SAC), arguing the PARAD’s valuation contravened DAR Administrative Order No. 5, series of 1998, which mandates using the 12-month average price prior to LBP’s receipt of the claim folder. The RTC-SAC affirmed the PARAD’s valuation, finding it fair and realistic after considering various factors under Section 17 of R.A. No. 6657 . The Court of Appeals dismissed the LBP’s appeal, prompting this petition.
ISSUE
Whether the RTC-SAC and the CA erred in affirming a valuation of just compensation that allegedly deviated from the formula and guidelines under DAR Administrative Order No. 5.
RULING
The Supreme Court denied the petition and affirmed the lower courts’ rulings. The Court held that while DAR administrative orders provide a framework, the determination of just compensation is a judicial function. The RTC-SAC is not strictly bound by the DAR formula; it must exercise its discretion by considering all factors enumerated in Section 17 of R.A. No. 6657 , including the property’s nature, actual use, income, and current value of like properties. The legal logic is that the constitutional imperative of “just compensation” is paramount and transcends strict adherence to an administrative formula, which is merely a guiding tool.
The Court found that the RTC-SAC did not disregard the DAR formula but reasonably exercised its judicial prerogative. It considered the evidence on record, including the property’s condition, location, comparable sales, and the landowner’s sworn valuation, to arrive at a fair and equitable amount. The LBP’s rigid insistence on its computed price, based solely on a specific data set, failed to account for the comprehensive assessment required by law. The valuation affirmed by the lower courts was deemed a realistic approximation of the land’s fair market value at the time of taking, fulfilling the constitutional standard of just compensation.