GR 186339; (February, 2017) (Digest)
G.R. No. 186339 February 15, 2017
VIVENCIO, EUGENIO, JOJI AND MYRNA, ALL SURNAMED MATEO, Petitioners vs. DEPARTMENT OF AGRARIAN REFORM, LAND BANK OF THE PHILIPPINES AND MARIANO T. RODRIGUEZ, ET AL., Respondents
FACTS
Petitioners, the Mateo family, were the registered owners of 112.3112 hectares of coconut and rice land in Sorsogon, covered by TCT No. T-22822. A portion was placed under the Comprehensive Agrarian Reform Program (CARP). The Land Bank of the Philippines (LBP) valued the property at approximately ₱52,000.00 per hectare, which the landowners rejected. They subsequently filed a complaint for judicial determination of just compensation before the Regional Trial Court, sitting as a Special Agrarian Court (SAC).
The SAC, in its 2002 Decision, fixed just compensation at ₱71,143,623.00, adopting the valuation report of the landowners’ commissioner and considering evidence of comparable sales. The Department of Agrarian Reform (DAR) and LBP appealed. The Court of Appeals (CA) reversed the SAC, finding that the valuation failed to consider the specific factors enumerated in Section 17 of Republic Act No. 6657 and DAR Administrative Order No. 5, Series of 1998. The CA also ruled that the SAC erred in using the Sanggunian Panlalawigan’s schedule of market values and in considering sales of small, non-agricultural lots as comparable. The Mateos elevated the case to the Supreme Court.
ISSUE
Whether the Court of Appeals erred in reversing the SAC’s determination of just compensation.
RULING
No, the Court of Appeals did not err. The Supreme Court affirmed the CA’s decision, emphasizing the proper methodology for determining just compensation in agrarian reform cases. The SAC’s valuation was fundamentally flawed as it did not adhere to the mandatory formula prescribed by DAR A.O. No. 5 (1998), which operationalizes Section 17 of R.A. No. 6657 . The law requires that just compensation be based on specific factors, including the land’s cost of acquisition, current value of like properties, nature and productivity, assessed value, and social and economic benefits contributed by the farmers.
The SAC primarily relied on the commissioner’s report, which was based on fair market value and comparable sales, including transactions for small residential lots and a newspaper clipping of an unverified offer to sell. This approach ignored the statutory formula. The Supreme Court clarified that while the SAC is not strictly bound by the administrative valuation, it must still consider the DAR formula as a starting point and explain any deviation therefrom. The SAC’s failure to do so rendered its determination arbitrary. Consequently, the case was remanded to the SAC for proper re-computation of just compensation in strict accordance with Section 17 of R.A. No. 6657 and the applicable DAR administrative orders.