Land Bank v. Rural Bank of Hermosa
REITERATIONFacts
The Antecedents: Respondent Rural Bank of Hermosa (Bataan), Inc. (respondent) voluntarily offered to sell to the government a 1.572-hectare agricultural land (subject land) for acquisition under the Comprehensive Agrarian Reform Program (CARP) pursuant to Republic Act No. (RA) 6657. The Land Bank of the Philippines (LBP) valued the subject land at ₱28,282.09 using the formula under DAR Administrative Order No. (AO) 17, Series of 1989, as amended. Respondent rejected this valuation. Procedural History: The Office of the Provincial Adjudicator adopted the LBP's valuation. Dissatisfied, respondent filed a petition before the Regional Trial Court of Bataan, Branch 1 (RTC), sitting as a Special Agrarian Court (SAC), seeking the determination of just compensation. The RTC fixed the just compensation at ₱30.00 per square meter, finding the LBP's valuation too low and unrealistic. The Court of Appeals (CA) affirmed the RTC's valuation. The LBP filed the instant petition for review on certiorari. The Petition: The LBP assailed the CA's Decision and Resolution, arguing that the CA erred in upholding the RTC's valuation of ₱30.00 per square meter.
Issue(s)
Whether the Court of Appeals committed reversible error in upholding the Regional Trial Court's valuation fixing the just compensation for the subject land at ₱30.00 per square meter, and how just compensation should be valued. Whether the just compensation should be determined under Republic Act No. 6657, as amended.
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 reception of evidence on the issue of just compensation in accordance with the guidelines set forth in the Decision. The RTC was directed to submit a report on its findings and recommended conclusions within sixty (60) days from notice.
Ratio Decidendi
On the valuation of just compensation and the CA's error: The Court held that just compensation must be valued at the time of taking, and the CA erred in sustaining the RTC's valuation as having been made in accordance with Section 17 of RA 6657, as amended, because the RTC failed to consider all the factors enumerated therein. A remand to the RTC, acting as a Special Agrarian Court (SAC), was necessary for the reception of further evidence to determine just compensation in accordance with Section 17 of RA 6657, as amended, and applicable DAR regulations. On the determination of just compensation under RA 6657: The Court reiterated the settled rule that when the agrarian reform process is incomplete, such as when just compensation has yet to be settled, it should be determined under RA 6657, as amended. This is because the determination of just compensation is a judicial function, and courts have the power to make a final determination thereof. The "justness" of the valuation factors and formulas used by the Department of Agrarian Reform (DAR) are matters for the courts to decide.
Main Doctrine
The determination of just compensation for lands acquired under the Comprehensive Agrarian Reform Program (CARP) is a judicial function. While courts should consider the factors enumerated in Section 17 of Republic Act No. 6657, as amended, and the applicable DAR formulas, they may deviate therefrom with a reasoned explanation grounded on evidence. The just compensation must be valued at the time of taking, considering the values prevalent for like agricultural lands at that time.