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LAND BANK OF PHILIPPINES v. CA

FACTS:

The case involves the implementation of an agrarian reform program in the Philippines, specifically the Operation Land Transfer (OLT) under Presidential Decree (PD) 27 and Executive Order (EO) 228. Private respondent Jose Pascual owned three parcels of land in Gattaran, Cagayan which were placed under the OLT. The value of the lands under EO 228 is determined based on the average gross production (AGP) multiplied by two and a half (2.5) and the government support price (GSP).

Private respondent filed a petition to annul the recommended AGP and valuation of the land, challenging the valuation determined by the Provincial Agrarian Reform Officer (PARO) and the Office of the Secretary of Agrarian Reform. The Provincial Agrarian Reform Adjudicator (PARAD) ruled in favor of private respondent and ordered petitioner Land Bank of the Philippines (LBP) to pay compensation. LBP refused to comply, leading to the issuance of a writ of execution.

Petitioner LBP argued that the valuation of just compensation should be determined by the courts and not by the PARAD. The Secretary of Agrarian Reform acknowledged that the valuation of PD 27 lands falls within the administrative implementation and is within the exclusive jurisdiction of the Secretary. However, the Secretary also emphasized the finality of decisions of the Adjudication Board and stated that payment should be made unless enjoined by a higher authority, such as the courts.

Private respondent filed a petition for mandamus in the Court of Appeals to compel LBP to pay the valuation determined by the PARAD. The Court of Appeals granted the writ of mandamus and also required LBP to pay a compounded interest of 6% per annum in compliance with DAR Administrative Order No. 13. LBP appeals this decision, arguing that the court erred in granting the writ of mandamus and imposing the compounded interest.

ISSUES:

  1. Whether the Secretary of Agrarian Reform has jurisdiction to determine the value of rice and corn lands under Operation Land Transfer (OLT) of PD 27.

  2. Whether the DARAB has jurisdiction to determine the value of lands covered by OLT under PD 27.

  3. Whether the consent of the farmer-beneficiary is necessary in the appraisal of land value under Section 18 of Republic Act No. 6657 (RA 6657).

  4. Whether the Land Bank of the Philippines (LBP) is obligated to obey the order of the Secretary of Agrarian Reform to pay the landowner.

  5. Whether or not private respondent should have asked for a final resolution from the DAR before filing a case.

  6. Whether or not private respondent should have filed a case with the Special Agrarian Court.

  7. Whether or not private respondent is entitled to the 6% compounded interest based on Administrative Order No. 13.

RULING:

  1. No, the Secretary of Agrarian Reform does not have jurisdiction to determine the value of rice and corn lands under OLT of PD 27. The Court held that the DARAB has the authority to determine the initial valuation of lands involving agrarian reform, including those under OLT. The final determination of just compensation, however, is vested in the courts.

  2. Yes, the DARAB has jurisdiction to determine the value of lands covered by OLT under PD 27. The Court stated that the Secretary of Agrarian Reform erred in issuing a directive that the DARAB refrain from hearing valuation cases involving lands under OLT. The DARAB has authority to determine the initial valuation of agrarian reform lands, even though such valuation is preliminary and the final determination of just compensation lies with the courts.

  3. The consent of the farmer-beneficiary is unnecessary in the appraisal of land value under Section 18 of RA 6657. The doctrine in Sharp International Marketing v. Court of Appeals, which established that the Land Bank could not be compelled to obey the Secretary of Agrarian Reform unless it agreed to the amount of compensation, does not apply. Once the Land Bank agrees with the appraisal of the Department of Agrarian Reform (DAR), which has the approval of the landowner, it becomes its legal duty to finance the transaction. Therefore, the Land Bank can be compelled to perform its legal duty through the issuance of a writ of mandamus.

  4. The Land Bank is not relieved of its duty to pay the landowner even if the farmer-beneficiary is unwilling to pay. In the event that the farmer-beneficiary refuses to pay, the Land Bank can foreclose on the land as provided for in Sections 8 to 11 of Executive Order No. 228. The Land Bank will then be reimbursed for the amount it paid to the landowner.

  5. Private respondent need not ask for a final resolution from the DAR as the valuation of the parcels of land has already become final and executory. Therefore, there was no need to file a case for a final decision from the DAR.

  6. Private respondent is not required to file a case with the Special Agrarian Court as petitioner never contested the valuation made by the Provincial Agrarian Reform Adjudicator (PARAD). The land valuation stated in the PARAD's decision became final and executory.

  7. Private respondent is not entitled to the 6% compounded interest based on Administrative Order No. 13 as the PARAD already used a higher Government Support Price (GSP) in its computation of land value. The purpose of AO No. 13 is to compensate landowners for unearned interests, and since the GSP used by the PARAD was already higher than the GSP in AO No. 13, there is no need to add any interest.

PRINCIPLES:

  • Only the Secretary of Agrarian Reform can determine the value of rice and corn lands under OLT of PD 27, while the DARAB has jurisdiction over the valuation of lands covered by RA 6657.

  • The final determination of just compensation for agrarian reform lands is vested in the courts.

  • The consent of the farmer-beneficiary is not required in establishing the compensation for the landowner under RA 6657.

  • The provisions of PD 27 and EO 228 have a suppletory effect and are subject to the provisions of RA 6657.

  • Under Section 18 of RA 6657, the consent of the farmer-beneficiary is unnecessary in the appraisal of land value.

  • The Land Bank can be compelled to obey the order of the Secretary of Agrarian Reform to pay the landowner once it agrees with the appraisal of the DAR.

  • The Land Bank is entitled to reimbursement if the farmer-beneficiary refuses to pay, and the Land Bank forecloses on the land.

  • A writ of mandamus can be issued when there is no other plain, adequate, and complete remedy in the ordinary course of law.

  • Final and Executory Decision - Once a decision becomes final and executory, there is no need for a party to ask for a final resolution from the DAR.

  • Jurisdiction of Special Agrarian Courts - The Special Agrarian Courts have jurisdiction over the final determination of just compensation cases. However, if there is no contestation on the valuation made by the PARAD, there is no need to file a case in the Special Agrarian Court.

  • Compliance with Administrative Orders - When interpreting an administrative order, the specific provisions and requirements of the order must be examined to determine if a party is entitled to its benefits. If the requirements are not met, the party cannot avail of the benefits provided by the administrative order.