CASE DIGEST : LAND BANK OF THE PHILIPPINES VS. SPOUSES RENE I. LATOG AND NELDA LUCERO G.R. No. 213161. February 01, 2023 GAERLAN

 

Facts

Spouses Rene I. Latog and Nelda Lucero voluntarily offered to sell their two agricultural lands in Iloilo, with a total area of 16.1089 hectares, to the government under the Comprehensive Agrarian Reform Program (CARP) pursuant to Republic Act No. 6657 (Comprehensive Agrarian Reform Law of 1988). Under Section 64 of R.A. No. 6657, in relation to Section 74 of R.A. No. 3844, the Land Bank of the Philippines (LBP) acts as the financial intermediary responsible for determining and paying just compensation. The spouses offered to sell the properties at ₱150,000 per hectare, but LBP's valuation was substantially lower based on the valuation formula prescribed by the Department of Agrarian Reform (DAR).

Dissatisfied with LBP's valuation, the spouses brought the matter before the Regional Trial Court (RTC), acting as a Special Agrarian Court (SAC), to determine just compensation. The RTC fixed a substantially higher valuation, which the Court of Appeals (CA) affirmed with modification. LBP elevated the case to the Supreme Court, arguing that the lower courts failed to properly apply the mandatory valuation factors under Section 17 of R.A. No. 6657 and the applicable DAR Administrative Orders, which provide the formulas for determining just compensation.

Issue

Whether the RTC and the Court of Appeals correctly determined the just compensation for the respondents' agricultural lands despite deviating from the valuation formula prescribed under Section 17 of Republic Act No. 6657 and the applicable DAR Administrative Orders.

Held

The Supreme Court granted the petition, reversed the decisions of the Court of Appeals and the RTC, and remanded the case to the RTC for the proper determination of just compensation. The Court held that Section 17 of R.A. No. 6657 expressly requires consideration of specific factors in valuing agricultural land, including the acquisition cost, current value of like properties, nature and actual use of the property, income, sworn valuation by the owner, tax declarations, assessments by government assessors, and social and economic contributions of farmers and the government. These statutory factors are implemented through DAR Administrative Orders, whose valuation formulas have the force and effect of law and must generally be followed by courts.

The Court clarified that while Special Agrarian Courts are not absolutely bound by the DAR formulas, they cannot disregard them arbitrarily. A court may deviate from the prescribed formula only when the evidence clearly shows that strict application would not result in just compensation, and any deviation must be supported by specific factual findings and a reasoned explanation. Because the RTC fixed the valuation without adequately explaining its departure from the statutory formula and without sufficient evidentiary basis, the valuation could not be sustained. The case was therefore remanded for reception of additional evidence and a recomputation of just compensation in accordance with Section 17 of R.A. No. 6657 and the applicable DAR valuation guidelines.