In Land Bank of the Philippines v. Dizon, the Supreme Court clarified that when determining just compensation for land acquired under the Comprehensive Agrarian Reform Program (CARP), Regional Trial Courts (RTCs) acting as Special Agrarian Courts (SACs) must conduct their own independent evaluation. They cannot simply adopt the findings of the Department of Agrarian Reform Adjudication Board (DARAB). This ruling ensures landowners receive fair market value based on judicial assessment and adherence to factors outlined in Republic Act No. 6657, emphasizing the judiciary’s role in safeguarding property rights in agrarian reform.

From Fields to Figures: Can Government Valuation Shortchange Landowners Under Agrarian Reform?

This case revolves around a dispute over the just compensation for a 25-hectare unirrigated land owned by Agustin Dizon in Tarlac, which the Department of Agrarian Reform (DAR) acquired for distribution to farmer-beneficiaries under CARP. The Land Bank of the Philippines (LBP) initially valued the property at P24,638.09 per hectare, a figure Dizon rejected, leading to a series of legal battles questioning the fairness and accuracy of the government’s land valuation process.

Dizon elevated the matter to the Tarlac DAR Adjudication Board (DARAB), which set the just compensation at P163,911.65 per hectare, based on a comparable farmholding owned by the province of Tarlac. The LBP then filed a petition before the Regional Trial Court (RTC) of Tarlac City, acting as a Special Agrarian Court (RTC-SAC), for judicial determination of just compensation, arguing that the DARAB’s valuation was not based on a proper evaluation of the facts and evidence. The RTC-SAC, however, affirmed the DARAB decision, a ruling that the Court of Appeals (CA) later upheld.

The Supreme Court (SC) addressed whether the RTC-SAC properly exercised its jurisdiction in determining just compensation for Dizon’s land. Section 57 of RA 6657 grants RTC-SACs original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners. This means the RTC-SAC is not an appellate court reviewing DARAB decisions, but rather a court of first instance that must independently assess the evidence and legal arguments presented by both parties.

Section 57. Special Jurisdiction. – The Special Agrarian Courts shall have original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners, and the prosecution of all criminal offenses under this Act. The Rules of Court shall apply to all proceedings before the Special Agrarian Courts unless modified by this Act.

Building on this principle, the Supreme Court emphasized that the RTC-SAC’s role is to conduct its own independent and thorough investigation of the evidence. The court should hold hearings, receive evidence, and independently consider the facts and the law to determine just compensation. Simply relying on and adopting the decision of the DARAB, an administrative body, is insufficient because the DARAB only preliminarily determines reasonable compensation.

The Court also highlighted the importance of procedural due process in just compensation cases. The RTC-SAC failed to observe the basic rules of procedure and the fundamental requirements in determining just compensation for the property. The determination of just compensation involves examining factors specified in Section 17 of RA 6657, as amended:

1. The cost of the acquisition of the land;
2. The current value of like properties;
3. Its nature, actual use, and income;
4. The sworn valuation by the owner, the tax declarations;
5. The assessment made by government assessors;
6. The social and economic benefits contributed by the farmers and the farmworkers and by the government to the property; and
7. The non-payment of taxes or loans secured from any government financing institution on the said land, if any.

These factors are factual matters that can only be established during a hearing where the parties present their evidence. Section 58 of RA 6657 authorizes Special Agrarian Courts to appoint commissioners to assist in valuing the land, underscoring the intricate nature of the valuation process.

In this case, the LBP presented documents showing how it computed the P24,638.09 valuation per hectare. Dizon, however, presented no evidence, relying solely on the DARAB resolution. The RTC-SAC disregarded the LBP’s evidence and, like Dizon, completely relied on the DARAB’s findings, affirming the DARAB’s decision in toto and awarding Dizon P163,911.65 per hectare. This procedural lapse led to substantive errors in the decision.

The Supreme Court also pointed out a significant due process violation: the lack of preponderance of evidence supporting the decision to adopt the DARAB’s ruling, which pegged just compensation at P163,911.65 per hectare. The DARAB based its determination on Dizon’s allegation that a comparable farmholding owned by the Province of Tarlac in Barang, Paniqui, Tarlac, was valued at the same price. The DARAB deduced that the properties shared common features and characteristics based solely on Dizon’s assertion.

Even though Dizon presented no evidence, the RTC-SAC could have validly entered judgment based on the LBP’s evidence had it been sufficient. The LBP, however, also did not present enough evidence to support the payment of just compensation at P24,638.09 per hectare. The bases LBP used in coming up with its valuation were inadequate. The LBP showed a valuation worksheet that only used two factors: average gross production and the market value per tax declaration. This method does not account for the other factors in Section 17 of RA 6657, such as the cost of acquisition of the land and the current value of like properties.

The RTC-SAC should have considered the guidelines and formula prescribed under DAR Administrative Order No. 5, series of 1998 (AO No. 5-98), the prevailing Administrative Order used in the computation of just compensation. The Court held that AO No. 5 precisely filled in the details of Section 17, RA 6657 by providing a basic formula by which the factors mentioned therein may be taken into account. This formula has to be considered by the SAC in tandem with all the factors referred to in Section 17 of the law.

Because the LBP did not present sufficient evidence for the RTC-SAC to make a complete and proper determination of just compensation, the Supreme Court remanded the case to the RTC, acting as SAC, for trial on the merits. In determining the valuation of the subject property, the RTC-SAC should consider the factors under Section 17 of RA 6657. The Court also referred to the formula provided in AO No. 5-98.

Furthermore, the RTC-SAC may appoint one or more commissioners to examine, investigate, and ascertain facts relevant to the dispute under Section 58 of RA 6657.

FAQs

What was the key issue in this case?	The key issue was whether the RTC-SAC properly determined the just compensation for Agustin Dizon’s land acquired under CARP by simply adopting the DARAB’s decision without conducting its own independent evaluation.
What did the Supreme Court rule?	The Supreme Court ruled that the RTC-SAC must conduct its own independent evaluation of the evidence to determine just compensation, and cannot solely rely on the DARAB’s findings.
Why is an independent evaluation important?	An independent evaluation ensures that the landowner receives fair market value for their property, based on judicial assessment and adherence to the factors outlined in RA 6657.
What factors should the RTC-SAC consider when determining just compensation?	The RTC-SAC should consider the cost of land acquisition, the current value of similar properties, the land’s nature and use, sworn valuations, tax declarations, government assessments, and social and economic benefits.
What is the role of DAR Administrative Order No. 5-98?	DAR Administrative Order No. 5-98 provides a formula that incorporates the factors mentioned in Section 17 of RA 6657, which the RTC-SAC should consider when determining just compensation.
Can the RTC-SAC appoint commissioners?	Yes, under Section 58 of RA 6657, the RTC-SAC may appoint commissioners to examine, investigate, and ascertain facts relevant to the dispute, including the valuation of properties.
What was the result of this Supreme Court decision?	The Supreme Court reversed the CA decision and remanded the case to the RTC for a trial on the merits, instructing the RTC to conduct its own evaluation and apply the mandated standards.
What is the significance of this ruling for landowners?	This ruling protects landowners by ensuring that the determination of just compensation is based on an independent judicial assessment rather than a mere adoption of administrative findings.

This Supreme Court decision reinforces the judiciary’s critical role in safeguarding property rights within agrarian reform. By requiring RTC-SACs to conduct independent evaluations, the ruling ensures a fairer process for determining just compensation, protecting landowners from potentially inadequate valuations. The emphasis on due process and adherence to statutory factors underscores the importance of a balanced approach in implementing agrarian reform while respecting private property rights.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: LAND BANK OF THE PHILIPPINES vs. AGUSTIN C. DIZON, G.R. No. 160394, November 27, 2009