Land Bank v. Barrido
REITERATIONFacts
The Antecedents: Respondents Rizalina Gustilo Barrido and the Heirs of Romeo Barrido are the registered owners of a parcel of land. A portion of this land was expropriated by the government for distribution under the Land Reform Program. Petitioner Land Bank of the Philippines (LBP) offered ₱60,385.49 as just compensation, which respondents rejected. Procedural History: Respondents filed an action before the Regional Trial Court (RTC) for the judicial determination of just compensation. The RTC fixed the just compensation at ₱94,797.09 per hectare, plus 12% interest per annum, arriving at this valuation by averaging the DAR's valuation (based on P.D. No. 27 and E.O. No. 228) and the market value of the property. The Court of Appeals (CA) affirmed the RTC decision. The Petition: Petitioner LBP filed a petition for review, arguing that the CA erred in affirming the RTC decision, asserting that R.A. No. 6657, not P.D. No. 27 and E.O. No. 228, should be the applicable law, and that even under R.A. No. 6657, the valuation was incorrect as it did not follow the formula under DAR Administrative Order No. 5, series of 1998. Petitioner also questioned the award of 12% interest.
Issue(s)
Whether Republic Act (R.A.) No. 6657 is the applicable law for determining just compensation, or if Presidential Decree (P.D.) No. 27 and Executive Order (E.O.) No. 228 should govern, and whether the valuation of just compensation by the Regional Trial Court (RTC) and affirmed by the Court of Appeals (CA) complied with the provisions of R.A. No. 6657 and DAR Administrative Order No. 5, series of 1998. Whether the award of twelve percent (12%) interest per annum for alleged delay in payment is proper.
Ruling
The Supreme Court reversed and set aside the decision of the Court of Appeals and remanded the case to the Regional Trial Court for the determination of just compensation strictly in accordance with the formula laid down in DAR Administrative Order No. 5, series of 1998.
Ratio Decidendi
On the applicable law and valuation formula: The Court reiterated its ruling that if just compensation is not settled prior to the passage of Republic Act (R.A.) No. 6657, the computation should be based on R.A. No. 6657, even if the property was acquired under P.D. No. 27. This means that P.D. No. 27 and E.O. No. 228 have only suppletory effect in such cases. Section 17 of R.A. No. 6657 is the principal basis for the computation of just compensation. The factors set forth in this section have been translated into a basic formula outlined in DAR Administrative Order No. 5, series of 1998. Therefore, the RTC and CA erred in applying a formula derived from P.D. No. 27 and E.O. No. 228 as the primary basis for valuation. The Court found that the RTC adopted a different formula by averaging the DAR's valuation under E.O. 228 and the market value of the property. This was a departure from the mandate of R.A. No. 6657 and DAR Administrative Order No. 5, series of 1998. The Court emphasized that Special Agrarian Courts cannot abuse their discretion by not taking into full consideration the factors specifically identified by law and implementing rules. They are not at liberty to disregard the formula laid down in DAR A.O. No. 5, series of 1998, as courts have no option but to apply it unless declared invalid. The courts cannot ignore the formula provided by the DAR for the determination of just compensation without violating the agrarian law. On the award of interest: While the Court did not explicitly rule on the interest in the dispositive portion, the reversal and remand for redetermination of just compensation implies that the previous award, including interest, might be affected by the correct computation of the principal amount. The issue of interest is typically tied to the delay in the payment of the correct just compensation, which needs to be established first through the proper valuation method.
Main Doctrine
When just compensation for expropriated land is not settled prior to the passage of Republic Act (R.A.) No. 6657, it should be computed in accordance with R.A. No. 6657, with Presidential Decree (P.D.) No. 27 and Executive Order (E.O.) No. 228 having only suppletory effect. Special Agrarian Courts cannot disregard the formula laid down in DAR Administrative Order No. 5, series of 1998, in determining just compensation.