Land Bank v. Luciano
REITERATIONFacts
The Antecedents: Respondent Teresita Panlilio Luciano was the registered owner of two parcels of agricultural lands. She voluntarily offered to sell these lands to the government under Republic Act (RA) No. 6657. The Department of Agrarian Reform (DAR) sent Notices of Acquisition and endorsed the claim folders to petitioner Land Bank of the Philippines (Land Bank) for valuation. Land Bank initially valued the lands at ₱425,626.67. Respondent rejected this valuation. Pursuant to Section 16(d) of RA No. 6657, the Department of Agrarian Reform Adjudication Board (DARAB) undertook a summary administrative proceeding. During the pendency, DAR Administrative Order (AO) No. 6, series of 1992, was promulgated, and DARAB directed Land Bank to revalue the lands using this new AO. Land Bank then valued the lands at ₱643,662.54. Procedural History: Dissatisfied with the valuation, respondent filed a petition for eminent domain with the Special Agrarian Court (SAC) of Tarlac, Tarlac, seeking a writ of preliminary mandatory injunction. She argued that DAR AO No. 6, series of 1992, was illegally issued and that Land Bank erred in applying it. She also prayed for the deposit and withdrawal of preliminary compensation under Section 16(e) of RA No. 6657. The DAR filed an Answer, arguing for the regularity of Land Bank's valuation and agreeing to deposit the amount but objecting to its withdrawal pending final determination. Respondent admitted the areas and average gross production used by Land Bank, limiting the issue to the capitalization rate. Land Bank filed a Motion for Summary Judgment, which was granted. The RTC rendered a Decision fixing the just compensation at ₱825,050.71 for one parcel and ₱1,002,099.30 for the other, applying Presidential Decree (PD) No. 27 suppletorily. Land Bank's motion for reconsideration was denied. Land Bank appealed to the Court of Appeals (CA). The CA vacated the RTC Decision and remanded the case to the RTC for the presentation of evidence for the determination of just compensation, ruling that the RTC could suppletorily apply PD No. 27 but erred in fixing the selling price of palay. Land Bank filed a motion for partial reconsideration, arguing that it should be allowed to present evidence under Section 17 of RA No. 6657. The CA denied this motion. The Petition: Petitioner Land Bank filed a petition for review on certiorari, raising the sole issue that the CA erred in ruling that the RTC could employ the formula under PD No. 27 but not the prescribed price of palay under EO No. 228, thus limiting the computation of just compensation.
Issue(s)
Whether the Special Agrarian Court (SAC) correctly applied Presidential Decree No. 27 in determining just compensation for lands acquired under Republic Act No. 6657, and the role of Land Bank's valuation in this determination. Whether the Court of Appeals erred in remanding the case to the Regional Trial Court (RTC) for the presentation of evidence on just compensation, and the special circumstances justifying acceleration of the final disposition. Whether the RTC erred in fixing the selling price of palay at ₱8.00 per kilo without sufficient evidence and at the time of taking.
Ruling
The Supreme Court reversed and set aside the Decision of the Court of Appeals. The case was remanded to the Court of Appeals, which was directed to receive evidence and determine with dispatch the just compensation due respondent in accordance with Section 17 of RA No. 6657 and DAR AO No. 6, series of 1992, as amended by DAR AO No. 11, series of 1994.
Ratio Decidendi
On the application of Presidential Decree No. 27 versus Republic Act No. 6657, and the role of Land Bank's valuation: The Court held that the SAC erred in taking recourse under PD No. 27 in determining the just compensation of the subject lands. The subject lands were voluntarily offered for sale under RA No. 6657, and therefore, the valuation factors under Section 17 of RA No. 6657 and the formula under DAR AO No. 6, series of 1992, as amended by DAR AO No. 11, series of 1994, should be applied. The Court reiterated its consistent ruling that if the agrarian reform process under PD No. 27 is incomplete and RA No. 6657 has passed, the just compensation must be determined under the latter law. PD No. 27 and EO No. 228 have only suppletory effect under Section 75 of RA No. 6657. It would be inequitable to determine just compensation based on the guidelines of PD No. 27 and EO No. 228 when the DAR failed to determine it for a considerable length of time, and just compensation should be the full and fair equivalent of the property taken. The Court clarified that while Land Bank is charged with the initial responsibility of determining the value of lands under land reform, its valuation is only an initial determination and not conclusive. The RTC, sitting as a Special Agrarian Court, makes the final determination of just compensation, considering the factors in Section 17 of RA No. 6657 and applicable DAR regulations. Land Bank's valuation must be substantiated during a hearing. Therefore, Land Bank should be allowed to present its evidence to support its valuation during the proceedings before the CA. On the remand of the case for presentation of evidence, and the special circumstances justifying acceleration: The Court agreed with the CA that the RTC erred in fixing the just compensation without allowing the parties to present evidence. The determination of just compensation involves factual matters enumerated in Section 17 of RA No. 6657, such as the cost of acquisition, current value of like properties, nature, actual use and income, sworn valuation by the owner, tax declarations, assessments by government assessors, social and economic benefits, and non-payment of taxes or loans. These factors can only be established during a hearing where parties present their evidence. The Court noted that the RTC dispensed with the hearing and relied solely on memoranda, which is grossly erroneous. Therefore, a remand was necessary for the proper reception and evaluation of evidence. Considering the respondent's advanced age (96 years old at the time of filing her Comment) and the long period since the acquisition of the lands (1991), the Court found special circumstances justifying the acceleration of the final disposition. Thus, it deemed it best to pro hac vice commission the Court of Appeals as its agent to receive and evaluate the evidence of the parties to ascertain the just compensation due, applying Section 17 of RA No. 6657 and DAR AO No. 6, series of 1992, as amended. On the RTC's determination of the selling price of palay: The CA correctly found that the RTC erred in fixing the selling price of palay at ₱8.00 per kilo. The Court clarified that the selling price of palay should be the price at the time of the taking, which was August 28, 1989, not the current price. Furthermore, there was no evidence presented to support the RTC's finding that ₱8.00 per kilo was the selling price at that time. This further supports the need for a remand to allow proper presentation of evidence on this crucial factor.
Main Doctrine
The determination of just compensation for lands acquired under Republic Act No. 6657 must be based on the factors enumerated in Section 17 of the said law and the formula prescribed in DAR Administrative Order No. 6, series of 1992, as amended, and not on Presidential Decree No. 27 or Executive Order No. 228, especially when the agrarian reform process under PD No. 27 is incomplete and RA No. 6657 has already passed.