GR 171941; (August, 2007) (Digest)
G.R. No. 171941 ; August 2, 2007
LAND BANK OF THE PHILIPPINES, Petitioner, vs. LUZ LIM and PURITA LIM CABOCHAN, Respondents.
FACTS
Pursuant to the Comprehensive Agrarian Reform Law (RA 6657), the Department of Agrarian Reform compulsorily acquired 32.8363 hectares of agricultural land owned by respondents Luz Lim and Purita Lim Cabochan. Petitioner Land Bank of the Philippines (LBP) computed the land value at ₱725,804.21. Dissatisfied, respondents filed a petition for determination of just compensation with the Regional Trial Court (RTC). The RTC, after considering commissioner reports, initially valued the property at ₱1,548,000. Upon respondents’ motion for reconsideration, the RTC increased the valuation to ₱2,232,868.40, adopting the rate of ₱68,000 per hectare. This rate was based on the price LBP previously paid for the adjoining land owned by respondents’ brother, Roger Lim, which was admitted by LBP and DAR during pre-trial. The Court of Appeals affirmed the RTC’s order.
ISSUE
Whether the RTC erred in fixing just compensation by simply adopting the price previously paid for an adjoining property, instead of applying the valuation factors and formula prescribed under Section 17 of RA 6657 and the pertinent DAR Administrative Orders.
RULING
The Supreme Court ruled in the affirmative and reversed the decisions of the lower courts. The Court held that the RTC committed a reversible error by failing to observe the mandatory guidelines under Section 17 of RA 6657 and the formula in DAR Administrative Order No. 11, series of 1994. Just compensation must be determined by considering all the factors enumerated in Section 17, such as the cost of acquisition, current value of like properties, nature and use, and sworn valuation by the owner. These factors must be translated into a basic formula by the DAR. While courts are not strictly bound by the DAR formula, they must consider it and explain their departure from it. The RTC’s sole reliance on a single sales transaction, without considering the other statutory factors and the prescribed formula, was arbitrary. The case was remanded to the RTC for the proper determination of just compensation in accordance with the law and applicable jurisprudence. The award of interest and double costs was also set aside.