View full case

LAND BANK OF PHILIPPINES v. FELICIANO F. WYCOCO

FACTS:

The case involves consolidated petitions seeking the review of the Court of Appeals' decision that modified the decision of the Regional Trial Court acting as a Special Agrarian Court. The registered owner, Feliciano F. Wycoco, voluntarily offered to sell his 94.1690 hectare rice land to the Department of Agrarian Reform (DAR) for P14.9 million in line with the Comprehensive Agrarian Reform Program (CARP). After evaluation and determination of just compensation by the Land Bank of the Philippines (LBP), the DAR offered to acquire 84.5690 hectares for P1,342,667.46, which was later raised to P2,594,045.39 and then modified to P2,280,159.82. Wycoco rejected the offer, and the case was indorsed to the Department of Agrarian Reform Adjudication Board (DARAB) for the determination of just compensation. The property was distributed to farmer-beneficiaries while the case was pending. Wycoco subsequently filed a case for determination of just compensation with the Regional Trial Court as a special agrarian court. DARAB then dismissed the case to give way to the determination of just compensation by the trial court. DAR and LBP argued that Wycoco failed to exhaust administrative remedies. After pre-trial, the trial court took judicial notice of the prevailing market value and fixed the compensation for the land. The court awarded damages for unrealized profits.

The Department of Agrarian Reform (DAR) and the Land Bank of the Philippines (LBP) filed separate petitions before the Court of Appeals in relation to Agrarian Case No. 91 (AF). The petition brought by DAR on jurisdictional and procedural issues was dismissed, prompting the petitioner, Wycoco, to file a petition for mandamus before the Supreme Court. The petition brought by LBP on substantive and procedural grounds was also dismissed by the Court of Appeals, but the decision was modified to deduct the compensation due to Wycoco by the value of a portion of land previously sold to the Republic. LBP then filed a petition before the Supreme Court, raising several issues for resolution, including the jurisdiction of the Regional Trial Court as a Special Agrarian Court, the substantiation of the compensation determined, the compelment of DAR to purchase the entire land, and the validity of the awards of interest and damages for unrealized profits. The laws in question are Sections 50 and 57 of Republic Act No. 6657, which vest the DAR with primary jurisdiction to determine agrarian reform matters and confer original and exclusive jurisdiction to Special Agrarian Courts over petitions for just compensation.

ISSUES:

  1. Whether the Special Agrarian Courts have exclusive and original jurisdiction over the determination of just compensation to landowners and criminal offenses under R.A. No. 6657.

  2. Whether the trial court acquired jurisdiction over the complaint for determination of just compensation.

  3. Whether the trial court erroneously took judicial notice of the prevailing market value of agricultural lands without allowing the parties to present evidence on the matter.

  4. Whether the DAR can be compelled to purchase the entire property voluntarily offered by Wycoco.

  5. Whether Wycoco is entitled to payment of interest on the just compensation due.

  6. Whether the interest earnings accruing on the deposit account of the landowners would suffice to compensate them pending payment of just compensation.

  7. Whether the imposition of interest of 12% per annum on the just compensation due the landowner is appropriate.

  8. Whether the award of actual damages for unrealized profits should be granted.

  9. Whether the petition for mandamus should be dismissed.

  10. Whether the prayer for the inhibition of the judge in the case should be granted.

RULING:

  1. Yes, the Special Agrarian Courts have exclusive and original jurisdiction over the determination of just compensation to landowners and criminal offenses under R.A. No. 6657. The DARab's jurisdiction under Section 50 of R.A. No. 6657 must be construed in harmony with Section 57, which grants the Special Agrarian Courts original and exclusive jurisdiction over petitions for the determination of just compensation. The DAR, as an administrative agency, cannot be granted jurisdiction over cases of eminent domain and over criminal cases. The valuation of property in eminent domain is a judicial function vested with the Special Agrarian Courts. Therefore, cases involving the determination of just compensation and criminal cases for violations of R.A. No. 6657 are exceptions to the jurisdiction of the DAR.

  2. Yes, the trial court properly acquired jurisdiction over the complaint for determination of just compensation. The trial court's exclusive and original jurisdiction over determination of just compensation would be undermined if the DAR vested administrative officials with original jurisdiction in compensation cases and made the trial court an appellate court for the review of administrative decisions. The trial court acquired jurisdiction based on its original and exclusive jurisdiction over determination of just compensation. The fact that no summary administrative proceeding was held before the DARAB did not bar the trial court from acquiring jurisdiction. The DAR and the Land Bank of the Philippines (LBP)'s conformity to the pre-trial order, which limited the issue only to the determination of just compensation, estopped them from questioning the jurisdiction of the special agrarian court. The trial court took judicial notice of the prevailing market value of agricultural lands in Licab, Nueva Ecija as part of its determination of just compensation.

  3. The trial court erred in taking judicial notice of the prevailing market value of agricultural lands without allowing the parties to present evidence on the matter. The valuation of the property is a material issue in the case and should have been determined based on evidence presented by the parties.

  4. The DAR cannot be compelled to purchase the entire property voluntarily offered by Wycoco. The power to determine whether a parcel of land may come within the coverage of the Comprehensive Agrarian Reform Program is within the discretion of the DAR.

  5. Wycoco is partly entitled to payment of interest on the just compensation due. The DAR Administrative Circular allowing the opening of trust accounts as compensation for property was struck down as void. The trust account opened by the Land Bank of the Philippines (LBP) in Wycoco's name should be converted to a deposit account. The conversion should be retroactive to rectify the error committed by the DAR in opening a trust account. However, the Court did not specify the rate or period of interest to be awarded.

  6. The interest earnings accruing on the deposit account of the landowners would suffice to compensate them pending payment of just compensation.

  7. The imposition of interest of 12% per annum on the just compensation due the landowner is appropriate.

  8. The award of actual damages for unrealized profits should be deleted.

  9. The petition for mandamus should be dismissed.

  10. The prayer for the inhibition of the judge in the case should be denied for lack of basis.

PRINCIPLES:

  • Special Agrarian Courts have exclusive and original jurisdiction over the determination of just compensation to landowners and criminal offenses under R.A. No. 6657.

  • The valuation of property in eminent domain is a judicial function vested with the Special Agrarian Courts and cannot be lodged with administrative agencies.

  • The trial court properly acquires jurisdiction over a complaint for determination of just compensation based on its original and exclusive jurisdiction in such cases.

  • Conformity to a pre-trial order, which limits the issues to the determination of just compensation, estops the DAR and the LBP from questioning the jurisdiction of the trial court.

  • Judicial notice should be exercised with caution, especially in cases involving a vast tract of land. Parties should be allowed to present evidence on material issues.

  • The power to determine whether a parcel of land is covered by the Comprehensive Agrarian Reform Program rests with the DAR.

  • Administrative circulars or regulations cannot override clear provisions of the law.

  • Trust accounts opened as a mode of payment for just compensation should be converted to deposit accounts in cash or LBP bonds.

  • The conversion of trust accounts to deposit accounts should be retroactive to rectify any errors in the payment process.

  • Interest earnings on the deposit account can be used to compensate landowners pending payment of just compensation.

  • The imposition of interest is appropriate when there is a delay in tendering a valid payment of just compensation.

  • The award of actual damages must be proven with a reasonable degree of certainty.

  • Mandamus cannot be granted when there is a need to remand the case to determine just compensation.

  • The prayer for inhibition of a judge must have basis to be granted.