GR 181953; (July, 2017) (Digest)
G.R. No. 181953, July 25, 2017
LAND BANK OF THE PHILIPPINES, Petitioner vs. RURAL BANK OF HERMOSA (BATAAN), INC., Respondent
FACTS
Respondent Rural Bank of Hermosa voluntarily offered to sell its 1.572-hectare agricultural land to the government under the Comprehensive Agrarian Reform Program (CARP). Petitioner Land Bank of the Philippines (LBP) valued the land at ₱28,282.09 using the formula prescribed in DAR Administrative Order No. 17, Series of 1989, as amended. Respondent rejected this valuation. After summary administrative proceedings affirmed the LBP’s valuation, respondent filed a petition for determination of just compensation before the Regional Trial Court (RTC), sitting as a Special Agrarian Court.
The RTC found the LBP’s valuation too low. It considered the land’s market value, its accessibility to a national road, proximity to a school and church, and the assessed value per tax declarations. The court fixed just compensation at ₱30.00 per square meter. The Court of Appeals affirmed this ruling, holding that the DAR administrative orders are mere guidelines and not binding on the courts, and that the RTC’s valuation complied with the factors in Section 17 of Republic Act No. 6657.
ISSUE
Whether the Court of Appeals committed reversible error in upholding the RTC’s valuation of just compensation at ₱30.00 per square meter, deviating from the formula under DAR administrative orders.
RULING
The Supreme Court denied the petition and affirmed the assailed rulings, but modified the legal interest. The Court reiterated that the determination of just compensation is a judicial function. While the factors enumerated in Section 17 of RA 6657, as translated into the applicable DAR formulas, must be considered out of regard for the DAR’s expertise, courts are not strictly bound by them. Judicial discretion allows for deviation from the formulas when warranted by the specific circumstances of the case, provided such departure is supported by a reasoned explanation grounded on the evidence.
In this case, the RTC validly exercised its discretion. It did not arbitrarily disregard the DAR formula but found its strict application inappropriate. The court’s valuation was based on competent evidence, including the land’s nature, actual use, assessed value per tax declarations, and its advantageous location. This reasoned consideration of the Section 17 factors justified the departure from the LBP’s computation. However, the Court corrected the legal interest rate on the compensation due. From the date of taking until June 30, 2013, interest shall be at 12% per annum. From July 1, 2013, until full payment, interest shall be at 6% per annum, in accordance with prevailing jurisprudence.