G.R. No. 174647; December 5, 2012
LAND BANK OF THE PHILIPPINES, Petitioner, vs. SPOUSES ROSA and PEDRO COSTO, Respondents.

FACTS

Respondents Spouses Costo voluntarily offered their 9.1936-hectare land in Sorsogon for acquisition under the Comprehensive Agrarian Reform Program (CARP). The Department of Agrarian Reform (DAR) qualified 7.3471 hectares, and petitioner Land Bank of the Philippines valued it at P104,077.01. The respondents rejected this valuation. Following the procedure, Land Bank deposited the amount as provisional compensation. The respondents then sought just compensation determination before the Provincial Agrarian Reform Adjudicator (PARAD), which fixed the value at P468,575.92.
Land Bank elevated the case to the Regional Trial Court (RTC), sitting as a Special Agrarian Court (SAC), which affirmed the PARAD’s valuation. The Court of Appeals (CA) subsequently upheld the SAC decision. Land Bank filed this petition, arguing that the SAC and CA erred by not adhering to the valuation formula in DAR Administrative Order No. 5, Series of 1998, which operationalizes the factors in Section 17 of Republic Act No. 6657, and by disregarding the Court’s ruling in Land Bank of the Philippines v. Banal.

ISSUE

Whether the SAC and the CA committed a reversible error in fixing the just compensation for the subject land at P468,575.92 without strictly applying the DAR administrative formula.

RULING

The Supreme Court denied the petition and affirmed the lower courts’ decisions. The Court held that the determination of just compensation is a judicial function, and the executive’s administrative formulas and guidelines are not binding on the courts. While Section 17 of R.A. No. 6657 provides the factors for valuation, and DAR formulas offer a framework, courts are not strictly bound to apply them in a mechanistic manner. The SAC, in the exercise of its exclusive jurisdiction, has the discretion to consider all relevant evidence to arrive at a fair and equitable valuation that serves the constitutional concept of just compensation.
The Court found that the SAC did not ignore the mandated factors. It examined the evidence, including the PARAD’s recomputation which considered the land’s nature, location, and market value, and found the resulting valuation realistic. The factual findings of the SAC, affirmed by the CA, are generally conclusive upon the Supreme Court. Land Bank’s insistence on a rigid application of the DAR formula was misplaced, as established jurisprudence allows courts to depart from it to ensure just compensation is truly “just.” Therefore, no reversible error was committed.