GR 183688; (August, 2010) (Digest)
G.R. No. 183688; August 18, 2010
LAND BANK OF THE PHILIPPINES, Petitioner, vs. RIZALINA GUSTILO BARRIDO and HEIRS OF ROMEO BARRIDO, Respondents.
FACTS
Respondents are the registered owners of a parcel of land in Iloilo. On April 30, 2003, a portion of the property was expropriated for agrarian reform. Petitioner Land Bank offered ₱60,385.49 as just compensation based on the formula under Presidential Decree (P.D.) No. 27 and Executive Order (E.O.) No. 228. Respondents rejected the offer and filed an original action for judicial determination of just compensation before the Regional Trial Court (RTC) acting as a Special Agrarian Court.
The RTC fixed just compensation at ₱94,797.09 per hectare. It arrived at this valuation by taking the average between the amount derived from the E.O. No. 228 formula and the market value per tax declaration. The court also awarded 12% interest per annum due to delayed payment. The Court of Appeals affirmed the RTC decision in its entirety. Petitioner elevated the case, arguing the RTC erred in not applying the P.D. No. 27 formula, in deviating from the formula under Republic Act (R.A.) No. 6657, and in awarding interest.
ISSUE
Whether the Court of Appeals erred in affirming the RTC’s determination of just compensation and its award of interest.
RULING
The Supreme Court reversed the Court of Appeals and remanded the case to the RTC. On the applicable law, the Court reiterated established jurisprudence that if just compensation is not settled prior to the passage of R.A. No. 6657 (the Comprehensive Agrarian Reform Law of 1988), it should be computed in accordance with said law, even for lands acquired under P.D. No. 27. P.D. No. 27 and E.O. No. 228 have only suppletory effect.
On the determination of just compensation, the Court held that the RTC, as a Special Agrarian Court, cannot disregard the factors and formula prescribed by law and its implementing rules. Section 17 of R.A. No. 6657 enumerates specific factors for valuation, which have been translated into a basic formula under DAR Administrative Order No. 5, series of 1998. The RTC committed a serious error by adopting its own formula—averaging the E.O. No. 228 valuation and the tax declaration value—instead of applying the mandated formula under R.A. No. 6657 and the pertinent administrative order. Courts cannot ignore this formula unless the administrative order is declared invalid. Consequently, the case was remanded to the RTC for proper determination of just compensation using the correct legal parameters. The Court did not rule on the propriety of the interest award, as the remand rendered the issue premature.