Land Bank v. Rufino
REITERATIONFacts
The Antecedents: Respondents Jose Marie M. Rufino, Nilo M. Resurreccion, Arnel M. Atanacio, and Suzette G. Mateo are registered owners of a 239.7113-hectare agricultural land in Sorsogon. They claimed to have voluntarily offered 138.4018 hectares of this property to the government for Comprehensive Agrarian Reform Program (CARP) coverage in 1989 at P120,000 per hectare. On October 21, 1996, the Department of Agrarian Reform (DAR) issued a Notice of Land Valuation and Acquisition, declaring the 138.4018 hectares subject to immediate acquisition at a valuation of P8,736,270.40, based on the assessment of the Land Bank of the Philippines (LBP). Respondents found this valuation unacceptable. Procedural History: The matter was referred to the DAR Adjudication Board (DARAB) for summary administrative proceedings to determine just compensation. By Decision of November 21, 1997, the DARAB sustained LBP's valuation due to respondents' failure to present evidence for an increase. Subsequently, the Register of Deeds of Sorsogon partially cancelled respondents' Transfer Certificate of Title (TCT) No. T-22934 and issued TCT No. T-47571 in the name of the Republic of the Philippines, which then subdivided the property for distribution to qualified farmer-beneficiaries. On February 23, 1998, respondents lodged a complaint for determination of just compensation with Branch 52 of the Sorsogon Regional Trial Court (RTC), acting as a Special Agrarian Court (SAC). The RTC appointed commissioners. LBP's nominee, Commissioner Jesus S. Empleo, appraised the property at P13,449,579.08. Respondents' nominee, Commissioner Amando Chua, using the market data approach, valued the property at P29,925,725, excluding secondary crops. By Decision of July 4, 2000, the trial court adopted the market data approach, valuing the 138.4018-hectare property at P29,926,000, to which it added P8,000,000 for improvements, totaling P37,926,000. LBP's Motion for Reconsideration was denied, leading both LBP and DAR to appeal. The Court of Appeals, by consolidated Decision of December 15, 2005, sustained the trial court's valuation of P29,926,000, excluding the value of secondary crops. Motions for Reconsideration filed by both petitioners and respondents were denied by Resolution of November 28, 2006. The Petition: Petitioners LBP and DAR separately sought recourse to the Supreme Court through Petitions for Review. LBP maintained that its valuation of P13,449,579.08 was based on factors in Republic Act No. 6657 (RA 6657) and prescribed DAR formulas, arguing that its expertise should be given weight and that agrarian reform involves police power, making part of the loss non-compensable. DAR averred that the valuation sustained by the appellate court contravened the criteria set by RA 6657 and relevant jurisprudence. Respondents, for their part, posited that factual findings affirmed by the appellate court are conclusive and that the just compensation due them should be equivalent to the market value of the property.
Issue(s)
Whether the Court of Appeals correctly upheld the valuation by the trial court of the property on the basis of the market data approach, in disregard of the formula prescribed by DAR Administrative Order No. 6, Series of 1992 (DAR AO 6-92), as amended.
Ruling
The challenged Decision of the Court of Appeals is REVERSED and SET ASIDE. Civil Case No. 98-6438 is REMANDED to Branch 52 of the Sorsogon RTC which is directed to determine with dispatch the just compensation due respondents strictly in accordance with the procedures specified above.
Ratio Decidendi
On Issue 1: The Supreme Court held that while the determination of just compensation is essentially a judicial function which is vested in the Regional Trial Court (RTC) acting as a Special Agrarian Court (SAC), such discretion must be discharged within the bounds of the law. The Court, in LBP v. Banal, LBP v. Celada, and LBP v. Lim, nonetheless disregarded the RTC's determination thereof when the judge did not fully consider the factors specifically identified by law and implementing rules. It reiterated that the factors laid down in Section 17 of Republic Act No. 6657 (RA 6657) and the formula stated in DAR Administrative Order No. 6, Series of 1992 (DAR AO 6-92), as amended by DAR Administrative Order No. 11, Series of 1994 (DAR AO 11-94), must be strictly adhered to by the RTC in fixing the valuation of lands subjected to agrarian reform. The Court was emphatic that the RTC is not at liberty to disregard the DAR valuation formula, which filled in the details of Section 17 of RA 6657, it being elementary that rules and regulations issued by administrative bodies to interpret the law they are entrusted to enforce have the force of law. In this case, the trial court, adopting the market data approach on which Commissioner Chua relied, merely put premium on the location of the property and the crops planted thereon, which are not among the factors enumerated in Section 17 of RA 6657, and did not apply the formula provided in DAR AO 6-92, as amended. This constitutes a clear departure from the settled doctrine regarding the mandatory nature of Section 17 of RA 6657 and the DAR issuances implementing it. Furthermore, Commissioner Empleo's computations, which petitioners relied upon, also failed to strictly follow DAR AO 6-92, as amended, by using incorrect reference dates for Average Gross Production (AGP), Selling Price (SP), and Regional Consumer Price Index (RCPI) Adjustment Factor, and by not considering secondary crops. Due to the insufficiency of evidence on record for the Court to compute the just compensation itself, the case was remanded to the trial court for a proper determination strictly in accordance with the mandatory legal and administrative guidelines.
Main Doctrine
The determination of just compensation for lands acquired under the Comprehensive Agrarian Reform Program (CARP) is a judicial function vested in the Regional Trial Court (RTC) acting as a Special Agrarian Court (SAC). However, the RTC must strictly adhere to the factors enumerated in Section 17 of Republic Act No. 6657 (RA 6657) and the valuation formula prescribed by the Department of Agrarian Reform (DAR) through its administrative orders, specifically DAR Administrative Order No. 6, Series of 1992 (DAR AO 6-92), as amended by DAR Administrative Order No. 11, Series of 1994 (DAR AO 11-94). These administrative issuances, which fill in the details of RA 6657, have the force of law and are mandatory, not merely recommendatory guides, for the determination of just compensation.