CASE DIGEST: Land Bank vs. Yatco

G.R. NO. 172551 : JANUARY 15, 2014




Respondent Yatco Agricultural Enterprises (Yatco) was the registered of owner of a 27-hectare parcel of agricultural land (property) in Calamba, Laguna. On April 30, 1999, the government placed the property under the coverage if its Comprehensive Agrarian Reform Program (CARP).

Land Bank of the Philippines (LBP) valued the property at P1,126,132.89. Yatco did not find the valuation acceptable and thus elevated the matter to the Department of Agrarian Reform (DAR) Provincial Agrarian Reform Adjudicator (PARAD), which then conducted summary administrative proceedings for the determination of just compensation.

The PARAD valued the property at P16,543,800.00, using the property current market value. LBP did not move to reconsider the PARAD ruling. Instead it filed with the RTC-SAC a petition for the judicial determination of just compensation.

RTC-SAC fixed the just compensation for the property at P200 per square meter based on the RTC branch 35 and 36. RTC-SAC did not give weight to the LBP evidence in justifying its valuation, pointing out that the LBP failed to prove that it complied with the prescribed procedure and failed to consider the valuation in the Comprehensive Agrarian Reform Law (CARL).

The CA dismissed LBP appeal.

ISSUE: Whether or not the RTC-SAC determination of just compensation for the property was proper?

HELD: The RTC-SAC determination of just compensation for the property was not proper.

Civil law : determination of just compensation under the DAR

The determination of just compensation is fundamentally a judicial function. Section 57 of R.A. No. 6657 explicitly vests the RTC-SAC the original and exclusive power to determine just compensation for lands under CARP coverage. To guide the RTC-SAC in the exercise of its function, Section 17 of R.A. No. 6657 enumerates the factors required to be taken into account to correctly determine just compensation.The law (under Section 49 of R.A. No. 6657) likewise empowers the DAR to issue rules for its implementation.The DAR thus issued DAR AO 5-98incorporating the law listed factors in determining just compensation into a basic formula that contains the details that take these factors into account.

That the RTC-SAC must consider the factors mentioned by the law (and consequently the DAR implementing formula) is not a novel concept. In Land Bank of the Philippines v. Sps. Banal, we said that the RTC-SAC must consider the factors enumerated under Section 17 of R.A. No. 6657, as translated into a basic formula by the DAR, in determining just compensation.

In the recent case of Land Bank of the Philippines v. Honeycomb Farms Corporation, we again affirmed the need to apply Section 17 of R.A. No. 6657 and DAR AO5-98 in just compensation cases.There, we considered the CA and the RTC in grave error when they opted to come up with their own basis for valuation and completely disregarded the DAR formula. The need to apply the parameters required by the law cannot be doubted; the DAR administrative issuances, on the other hand, partake of the nature of statutes and have in their favor a presumption of legality. Unless administrative orders are declared invalid or unless the cases before them involve situations these administrative issuances do not cover, the courts must apply them.

The RTC-SAC adopted Branch 36 valuation without any qualification or condition. Yet, in disposing of the present case, the just compensation that it fixed for the property largely differed from the former.Note that Branch 36 fixed a valuation of P20.00 per square meter; while the RTC-SAC, in the present case, valued the property at P200.00 per square meter. Strangely, the RTC-SAC did not offer any explanation nor point to any evidence, fact or particular that justified the obvious discrepancy between these amounts.

In ascertaining just compensation, the fair market value of the expropriated property is determined as of the time of taking. The ime of takingrefers to that time when the State deprived the landowner of the use and benefit of his property, as when the State acquires title to the property or as of the filing of the complaint, per Section 4, Rule 67 of the Rules of Court.

As a final note and clarificatory reminder, we agree that the LBP is primarily charged with determining land valuation and compensation for all private lands acquired for agrarian reform purposes. But this determination is only preliminary.The landowner may still take the matter of just compensation to the court for final adjudication.