Land Bank v. De Leon
REITERATIONFacts
The Antecedents: The Land Bank of the Philippines (LBP), a financial intermediary for the agrarian reform program, was designated to acquire agricultural land owned by the late Honorato De Leon, measuring 36.1238 hectares and covered by TCT No. 10918-R. The land was placed under the coverage of Presidential Decree (P.D.) No. 27. Respondents, the heirs of Honorato De Leon, received the notice of coverage in 1988. Finding the valuation offered by the Department of Agrarian Reform (DAR) to be low, respondents filed a complaint for the fixing of just compensation before the Regional Trial Court (RTC), Branch 26, Cabanatuan City, sitting as a Special Agrarian Court (SAC). Respondents prayed for just compensation based on a high average gross production (AGP) and government support price, totaling ₱19,371,385.00. Procedural History: A compromise agreement was entered into between DAR and the respondents, approved by the SAC, setting just compensation at ₱19,371,385.00. However, the SAC later denied the motion for execution of this compromise judgment, citing oversight on the part of the DAR official who entered into the agreement regarding his authority. Subsequently, the SAC rendered a decision ordering the DAR, through LBP, to pay respondents ₱1,896,499.50 as just compensation, using a government support price of ₱175.00 per cavan of palay and no longer imposing interest. The SAC also declared the compromise judgment without effect. LBP appealed to the Court of Appeals (CA), arguing that just compensation should be fixed based on the formula in P.D. No. 27 and Executive Order (E.O.) No. 228, with a government support price of ₱35.00, resulting in a claim of ₱706,754.90. The CA dismissed LBP's appeal. LBP then filed a petition for review on certiorari with the Supreme Court. The Petition: The LBP assailed the CA's decision, arguing that the appellate court committed a grave error of law by using different factors and data in determining just compensation, disregarding the evidence and the pertinent provisions of P.D. No. 27 and E.O. No. 228.
Issue(s)
Whether the Court of Appeals committed a grave error of law when it used different factors/data in the determination of just compensation of the subject riceland, in utter disregard of the evidence on record and the pertinent provisions of Presidential Decree No. 27 and Executive Order No. 228. Whether the compromise judgment, once approved by the Special Agrarian Court, is final and executory.
Ruling
The Supreme Court denied the petition for review on certiorari, reversed and set aside the decision and resolution of the Court of Appeals, and remanded the case to the Special Agrarian Court for the determination of just compensation strictly in accordance with DAR A.O. No. 5, series of 1998. WHEREFORE, the instant petition for review on certiorari is DENIED and the decision and resolution of the court of Appeals in CA-G.R. SP No. 77619 are REVERSED and SET ASIDE. Agrarian Case No. 98-AF is REMANDED to the Regional Trial Court, Branch 26, Cabanatuan City, which is directed to determine with dispatch the just compensation due respondents strictly in accordance with DAR A.O. No. 5, series of 1998. SO ORDERED.
Ratio Decidendi
On the issue of the proper formula for just compensation: The Court held that the determination of just compensation for agricultural lands acquired under agrarian reform, especially when Republic Act (R.A.) No. 6657 has supervened before the payment of just compensation, must be in accordance with the provisions of R.A. No. 6657. Section 17 of R.A. No. 6657 enumerates the factors to be considered in determining just compensation, including the cost of acquisition, current value, nature, actual use, income, sworn valuation, tax declarations, assessments, social and economic benefits, and non-payment of taxes or loans. The Court further clarified that these factors have been translated into a basic formula by the Department of Agrarian Reform (DAR) through its rule-making power under Section 49 of R.A. No. 6657. Specifically, the Court cited Land Bank of the Philippines v. Celada and Land Bank of the Philippines v. Sps. Banal, which mandated the application of DAR A.O. No. 5, series of 1998, or the applicable DAR regulation at the time, in computing just compensation. The Court emphasized that the mandatory application of these guidelines has been reiterated in subsequent cases, including Land Bank of the Philippines v. Lim and Land Bank of the Philippines v. Heirs of Cruz. Therefore, the petitioning Land Bank's argument to strictly adhere to the formula under P.D. No. 27 and E.O. No. 228 was rejected, as R.A. No. 6657 and its implementing rules provide the governing framework. On the validity of the compromise agreement: While the case was primarily about the determination of just compensation, the Special Agrarian Court (SAC) had previously denied the motion for execution of the compromise judgment on the ground of oversight regarding the authority of the DAR official who entered into the settlement. The SAC declared the compromise judgment to be without effect. Although the respondents filed a separate petition for certiorari and prohibition (G.R. No. 166972) seeking to nullify the CA's assumption of jurisdiction and to declare the compromise judgment final and executory, this petition was dismissed by the Supreme Court for failure to submit a verified statement of material dates and failure to verify the petition and submit a valid certification of non-forum shopping. Consequently, the issue of the compromise judgment's finality and executory nature was not resolved on the merits by the Supreme Court in this particular petition, as the focus shifted to the proper determination of just compensation under R.A. No. 6657.
Main Doctrine
The determination of just compensation for agricultural lands acquired under agrarian reform must strictly follow the guidelines and formulas prescribed by the Department of Agrarian Reform Administrative Orders, particularly DAR A.O. No. 5, series of 1998, when Republic Act No. 6657 has supervened before the payment of just compensation.