GR 177404; (June, 2009) (Digest)
G.R. No. 177404 & G.R. No. 178097, June 25, 2009.
LAND BANK OF THE PHILIPPINES, Petitioner, vs. KUMASSIE PLANTATION COMPANY INCORPORATED, Respondent. / KUMASSIE PLANTATION COMPANY INCORPORATED, Petitioner, vs. LAND BANK OF THE PHILIPPINES and THE SECRETARY OF THE DEPARTMENT OF AGRARIAN REFORM, Respondents.
FACTS
Kumassie Plantation Company Incorporated (KPCI) owned 802.2906 hectares of agricultural land in Davao del Sur. In 1992, a portion of this land, measuring 457.9952 hectares (the subject land), was compulsorily acquired by the Department of Agrarian Reform (DAR) under the Comprehensive Agrarian Reform Law. The Land Bank of the Philippines (LBP) valued the land at ₱19,140,965.00 (₱41,792.94 per hectare). KPCI rejected this offer as “unreasonably low,” but LBP deposited the amount in KPCI’s name, which KPCI withdrew. DAR then initiated a summary administrative proceeding before the DARAB, which affirmed LBP’s valuation. Subsequently, KPCI filed a Complaint for determination of just compensation with the Regional Trial Court (RTC) of Davao City, acting as a Special Agrarian Court, praying for a valuation of ₱160,000.00 per hectare. The RTC, after trial, fixed the value at ₱100,000.00 per hectare and ordered LBP and DAR to pay KPCI this amount plus legal interest from March 23, 1994. Both parties appealed to the Court of Appeals. The Court of Appeals affirmed the ₱100,000.00 per hectare valuation but deleted the award of legal interest. Both LBP and KPCI filed separate Petitions for Review before the Supreme Court.
ISSUE
Whether the RTC and the Court of Appeals erred in fixing the just compensation for the subject land at ₱100,000.00 per hectare without applying the factors enumerated in Section 17 of Republic Act No. 6657 and the formula prescribed in DAR Administrative Order No. 6, Series of 1992, as amended.
RULING
The Supreme Court ruled that the RTC and the Court of Appeals committed reversible error. The determination of just compensation must consider the factors enumerated in Section 17 of Republic Act No. 6657 and the formula provided in DAR Administrative Order No. 6, Series of 1992, as amended. The RTC’s valuation, based primarily on the commissioner’s appraisal report which relied on the “comparable sales” approach and did not utilize the mandated formula, constituted a grave abuse of discretion. The Court emphasized that while the determination of just compensation is a judicial function, the courts cannot disregard the specific factors and formula laid down by law and its implementing rules. The case was remanded to the RTC for the proper determination of just compensation in strict observance of Section 17 of Republic Act No. 6657 and the applicable DAR administrative orders.