Land Bank v. Gonzalez
REITERATIONFacts
The Antecedents: Respondent Atty. Ricardo D. Gonzalez is the registered owner of two contiguous parcels of land totaling 3 hectares in Barangay Abilan, Buenavista, Agusan del Norte, devoted to coconut production and tenanted by several individuals. The property is located approximately 1.5 kilometers from the national highway and 2-3 kilometers from local beaches. Pursuant to the Comprehensive Agrarian Reform Program (CARP), respondent voluntarily offered to sell the subject property to the Department of Agrarian Reform (DAR) for P250,000.00 per hectare on December 9, 1996. The DAR and Land Bank of the Philippines (LBP) valued the property at P150,795.51, which respondent rejected. The LBP deposited a portion of this sum in cash and the remainder in bonds, which respondent acknowledged receiving. Procedural History: The case was initially referred to the Regional Agrarian Reform Adjudicator (RARAD) for summary administrative hearing, which affirmed the valuation made by the DAR and LBP. Dissatisfied, respondent filed a petition for just compensation against the LBP, DAR, and tenants before the Special Agrarian Court (SAC). The SAC appointed a Board of Commissioners to determine the just compensation. The Board recommended a valuation of P100,000.00 per hectare for the coconut production portion, excluding the value of the trees, and P150,000.00 for the rice production portion, both of which were objected to by the parties. The SAC, on February 3, 2005, determined the fair valuation to be P143,904.25 per hectare, ordering the public respondents to pay respondent the total amount of P431,712.75 for the 3 hectares, plus commissioners' fees and attorney's fees. Both the DAR and LBP sought reconsideration, which was denied. The LBP appealed to the Court of Appeals (CA). The CA, on July 30, 2008, affirmed the SAC's decision with modification, deleting the award of attorney's fees. The CA denied the LBP's motion for reconsideration in a Resolution dated December 12, 2008. The Petition: This Rule 45 Petition seeks the reversal of the Court of Appeals' Decision and Resolution. Petitioner LBP argues that the CA erred in disregarding the valuation factors under Section 17 of R.A. No. 6657, as translated into DAR Administrative Order No. 05, series of 1998, in fixing the just compensation. LBP contends that the SAC's valuation, affirmed by the CA, used an exorbitant Average Gross Production (AGP) of 3,375 kilograms of copra per hectare, which is not supported by evidence and contradicts the Field Investigation Report. LBP asserts that its own valuation of P50,265.17 per hectare, based on an AGP of 1,125 kilograms, is just and proper. LBP also questions its liability for commissioners' fees and costs of suit, arguing it performs a governmental function. Respondent, on the other hand, maintains that the SAC and CA erred in their computation and that the just compensation should be higher, supported by actual data. Respondent also argues for the imposition of interest and attorney's fees due to delay in payment and that LBP should shoulder costs as it was exercising proprietary functions.
Issue(s)
Whether the Court of Appeals may disregard the valuation factors under Section 17 of R.A. No. 6657 as translated into DAR Administrative Order No. 5, series of 1998, in fixing the just compensation. Whether Petitioner LBP is liable for commissioners' fees considering it is performing a governmental function.
Ruling
The Supreme Court granted the petition, reversed the CA decision, and declared the valuation made by Land Bank of the Philippines in the total amount of ₱150,795.51 as just compensation. The Court directed the RTC to determine the commissioners' fee strictly in accordance with the Rules of Court.
Ratio Decidendi
On the issue of disregarding valuation factors under R.A. No. 6657 and DAR A.O. No. 5, series of 1998: The Court held that while the determination of just compensation is a judicial function, Special Agrarian Courts (SACs) cannot disregard the formula laid down in DAR A.O. No. 5, series of 1998, as this would violate the agrarian reform law. The Court found that the SAC, in arriving at its valuation, failed to substantiate its use of an Average Gross Production (AGP) of 3,375 kilograms of copra per hectare, which was significantly higher than the 1,125 kilograms per hectare used by LBP based on the Field Investigation Report and Philippine Coconut Authority (PCA) data. The SAC's reliance on the devaluation of the Philippine peso was not a factor enumerated in Section 17 of R.A. No. 6657. Consequently, the Court found LBP's valuation of ₱150,795.51 (₱50,265.17 per hectare) to be just and proper, as it was based on reliable data gathered pursuant to DAR A.O. No. 5, series of 1998. On the issue of LBP's liability for commissioners' fees and costs of suit: The Court reiterated that LBP, in implementing the Comprehensive Agrarian Reform Program (CARP), performs a governmental function. Therefore, it is exempt from paying costs of suit under Rule 142, Section 1 of the Rules of Court. Regarding commissioners' fees, the Court noted that both parties did not object to their appointment. However, the award made by the SAC was found to be excessive and without justification, as it was not based on the prescribed rates in the Rules of Court. The Court remanded the case for the determination of the proper amount of commissioners' fees, strictly adhering to Section 12, Rule 67 and Section 16, Rule 141 of the Rules of Court, and applying the old rate of ₱100.00 per day since the commissioners' report was submitted before the increase in fees.
Main Doctrine
The determination of just compensation for lands acquired under the Comprehensive Agrarian Reform Program (CARP) must strictly adhere to the formula and factors prescribed by DAR Administrative Order No. 5, series of 1998, which operationalizes Section 17 of Republic Act No. 6657. Courts cannot disregard these guidelines without violating the agrarian reform law. Furthermore, the Land Bank of the Philippines, in performing its governmental function in agrarian reform proceedings, is exempt from paying costs of suit.