G.R. No. 214901. June 15, 2016.
LAND BANK OF THE PHILIPPINES, PETITIONER, VS. APOLONIO KHO, REPRESENTED BY HIS HEIRS, NAMELY: PERLA LUZ, KRYPTON, KOSELL, KYRIN, AND KELVIN, ALL SURNAMED KHO, RESPONDENTS.

FACTS

Apolonio Kho owned a 23.2885-hectare land in Negros Oriental, a 22.9747-hectare portion of which was placed under the Operation Land Transfer Program of P.D. No. 27. The Land Bank of the Philippines (LBP) initially valued the land under E.O. No. 228, offering amounts which Kho rejected. After administrative proceedings, the Provincial Adjudicator fixed just compensation at ₱109,748.35. The LBP appealed to the DARAB, which affirmed the valuation. Subsequently, the LBP filed a petition for judicial determination of just compensation before the Regional Trial Court (RTC) acting as a Special Agrarian Court (SAC).
During the pendency of the case, Republic Act No. 9700 took effect, and the respondents moved for re-evaluation under DAR Administrative Order (A.O.) No. 1, series of 2010. The RTC granted the motion. The LBP submitted a revalued computation of ₱842,483.40. The court-appointed Commissioners, however, recommended a valuation of ₱1,402,609.46, applying the factors in Section 17 of R.A. No. 6657 and the formula under DAR A.O. No. 1, series of 2010. The RTC adopted the Commissioners’ report in full.

ISSUE

Whether the RTC correctly applied DAR A.O. No. 1, series of 2010, in determining the just compensation for the subject land.

RULING

Yes, the RTC correctly applied the 2010 administrative order. The Supreme Court affirmed the CA decision, upholding the RTC’s determination of just compensation. The legal logic rests on the application of the governing law at the time of the judicial determination. While the property was acquired under P.D. No. 27, the just compensation case was pending when R.A. No. 9700 took effect. This law explicitly states that for lands where just compensation proceedings are pending, the compensation shall be determined in accordance with Section 17 of R.A. No. 6657, as amended.
DAR A.O. No. 1, series of 2010, is the implementing guideline for R.A. No. 9700. The Court ruled that where a just compensation case is pending upon the effectivity of R.A. No. 9700, the new law and its implementing rules shall apply. The SAC is not bound by the initial valuations under P.D. No. 27 or E.O. No. 228 and has the original and exclusive jurisdiction to determine just compensation independently, using the factors enumerated in Section 17 of R.A. No. 6657. Therefore, the RTC properly exercised its discretion in applying the formula under the 2010 A.O., which considers current data like the Average Gross Production and the Government Support Price relevant to the time of payment, to arrive at a fair and constitutional valuation. The Court also modified the interest rate on the unpaid balance to 12% per annum from May 27, 2002, until June 30, 2013, and 6% per annum from July 1, 2013, until full payment, following established jurisprudence.