Land Bank v. Department of Agrarian Reform
REITERATIONFacts
The Antecedents: Private respondent Metraco Tele-Hygienic Services Corporation (METRACO) voluntarily offered to sell its three parcels of agricultural land, totaling 33.5917 hectares, for agrarian reform. METRACO assessed the value at P300,000.00 per hectare. Petitioner Land Bank of the Philippines (LBP) valued the landholdings at P4,669,259.92. METRACO rejected this valuation, and LBP deposited the amount. The Department of Agrarian Reform Adjudication Board (DARAB) fixed the just compensation at P180,000.00 per hectare or P5,580,000.00. Procedural History: LBP filed a case before the Special Agrarian Court (SAC) for the determination of just compensation. The SAC recomputed the compensation, using P9.00 per kilogram as the selling price of palay and including 1.1173 hectares for a drainage canal and road. The SAC decreed the total just compensation to be P6,293,635.50. The Court of Appeals (CA) affirmed the SAC's decision. LBP filed a petition for review on certiorari before the Supreme Court. The Petition: LBP assails the CA's affirmation of the SAC's decision, arguing that the use of P9.00 as the selling price of palay and the separate compensation for the road and canal portions violated DAR Administrative Order (AO) No. 5, series of 1998.
Issue(s)
Whether the Court of Appeals erred in affirming the trial court's decision using P9.00 as the selling price of palay per kilo. Whether the Court of Appeals erred in affirming the trial court's decision in which a computation and separate compensation was made for certain portions of the subject landholdings (specifically the irrigation canal and road) not separately compensable under pertinent DAR policy regulations implementing Section 17, in relation to Section 49, of the CARP Law (R.A. 6657).
Ruling
The petition is partly meritorious. The Supreme Court SET ASIDE the Court of Appeals' Decision and Resolution, DECLARED the valuation made by Land Bank of the Philippines in the total amount of P4,669,259.92 as just compensation, and ORDERED LBP to pay additional compensation for the excluded 1.1173 hectares based on the same formula and computation.
Ratio Decidendi
On the selling price of palay: The Supreme Court disagreed with the CA and SAC's use of P9.00 as the selling price (SP) for palay. The Court emphasized that DAR AO No. 5 clearly states that the SP must be the average of the latest available 12-months selling prices prior to the date of receipt of the claim folder (CF) by LBP, to be secured from the Department of Agriculture (DA), Bureau of Agricultural Statistics, or other appropriate regulatory bodies. The P9.00 price, sourced from the National Food Authority (NFA) certification and private buyer receipts, was not the average obtained within the specified period (July 2000 to May 2001) and was gathered from Santiago City, not the Municipality of Ramon where the properties are located, contrary to the AO's provisions. The Court found that the fluctuations in selling price were intended to be considered by using the average, and thus, the MARO's data, despite a notation about abnormal prices due to typhoons, should not have been completely disregarded. The Court reiterated that the LBP's valuation, which used P6.75 as SP based on MARO data, was sufficiently substantiated and in accordance with Section 17 of R.A. No. 6657 and DAR AO No. 5, series of 1998. On the exclusion of the irrigation canal and road: The Supreme Court found the petitioner's argument that the portions occupied by the NIA irrigation canal and road do not form part of the compensable area to be untenable. While Item II.F of DAR AO No. 5 provides that improvements introduced by the government shall not be paid for, the Court clarified that in this case, what is being compensated is not the cost or value of the improvements themselves, but the value of the entire land taken under the CARP law. Compensating the land upon which these improvements were built is consistent with the principle of equitable distribution and ownership under CARP, ensuring due process and just compensation for the landowner. The Court stressed that the taking of private lands under CARP is akin to an expropriation proceeding, where just compensation represents the full and fair equivalent of the property taken, measured by the owner's loss, not the taker's gain. Therefore, the excluded 1.1173 hectares should be included in the total compensable area and compensated based on the same formula and computation.
Main Doctrine
The determination of just compensation for lands under the Comprehensive Agrarian Reform Law (CARL) must consider all factors enumerated in Section 17 of R.A. No. 6657 and applicable DAR regulations, including the Capitalized Net Income (CNI), Market Value per Tax Declaration (MV), and the value of the entire landholding, even if portions are occupied by government-introduced improvements like canals and roads, as the landowner is entitled to the full and fair equivalent of the property taken.