GR 203242; (March, 2019) (Digest)
G.R. No. 203242 March 12, 2019
LAND BANK OF THE PHILIPPINES, Petitioner vs. LUCY GRACE AND ELMA GLORIA FRANCO, REPRESENTED BY ATTY.-IN-FACT VICENTE GUSTILLO, JR., Respondents
FACTS
Respondents Lucy Grace and Elma Gloria Franco voluntarily offered their 14.444-hectare agricultural land in Iloilo for sale under the Comprehensive Agrarian Reform Program (CARP) in 1995. The Department of Agrarian Reform (DAR) acquired 12.5977 hectares, initially valuing it at ₱714,713.78. Dissatisfied, the Francos sought a review, and the DAR Adjudication Board adjusted the valuation to ₱739,461.43, which they withdrew from petitioner Land Bank of the Philippines. Still contesting the amount as insufficient just compensation, the Francos filed a Complaint before the Regional Trial Court, sitting as a Special Agrarian Court (SAC).
ISSUE
Whether the Special Agrarian Court committed grave abuse of discretion in fixing the just compensation for the subject land at ₱1,024,115.49, deviating from the valuation formula under DAR Administrative Order No. 5, Series of 1998.
RULING
No. The Supreme Court affirmed the SAC’s determination. The Court reiterated that the final determination of just compensation is a judicial function vested in courts, including the SAC. While DAR administrative orders provide a basic formula, courts are not strictly bound by it. They may deviate, provided the deviation is supported by a reasoned explanation grounded on the evidence on record. In this case, the SAC validly exercised its discretion. It found both the Land Bank’s valuation and the landowners’ initial asking price unsatisfactory. The court then properly considered the factors enumerated in Section 17 of Republic Act No. 6657, such as the cost of acquisition, current value of like properties, and the property’s tax declarations. The SAC explicitly explained its synthesis of the DAR formula’s output and the market values indicated in the tax declarations to arrive at a fair and reasonable compensation. This reasoned justification, absent any arbitrariness, constituted a valid exercise of judicial prerogative and not grave abuse of discretion. The Court emphasized that a purely mathematical application of the administrative formula is an impermissible encroachment on the court’s constitutional duty to determine just compensation finally.