G.R. No. 171038 - Land Bank of the Philippines vs. Heirs of Lopez

Petitioner: Land Bank of the Philippines (LBP).
Respondents: Heirs of Juan Lopez, namely Monsserrat Lopez-Marchan, Lydia Lopez-Damasco, Thelma Lopez-Gerona, Elsa Fely Lopez-Rebustillo, Jose Lopez, and Herminio Lopez.

The disputed property is a coconut land parcel located in San Vicente, Castilla, Sorsogon, covered by Original Certificate of Title No. P-32.
The original area is recorded as 23.1301 hectares, although only 21.6101 hectares were considered for acquisition after a field investigation.

In July 2000, Monserrat L. Marchan, on behalf of the co-respondents, voluntarily offered to sell the parcel to the Department of Agrarian Reform (DAR) under R.A. No. 6657 (Comprehensive Agrarian Reform Law of 1988).
The LBP determined the property’s value at P14,101.51 per hectare, amounting to a total offer of approximately P304,735.09.
After deducting the value of a 0.3643-hectare legal easement, the offer was adjusted to P298,101.21.

The respondents rejected LBP’s offer and elevated the matter to the DAR Provincial Agrarian Reform Adjudicator (PARAD) in Sorsogon City.
On January 8, 2002, Provincial Adjudicator Manuel M. Capellan fixed the just compensation at P928,330.17 for the 21.6101-hectare property.
The higher valuation, exceeding the LBP’s offer by P630,228.96, resulted primarily from the PARAD’s use of an average selling price of P16.00 per kg of copra rather than the P5.86 per kg used by LBP.
LBP filed a motion for reconsideration which was subsequently denied.

On April 1, 2002, LBP initiated a petition for the judicial determination of just compensation before the RTC-SAC in Sorsogon City (Civil Case No. 2002-6986).
In its petition, LBP contended that the PARAD gravely abused his discretion by overvaluing the property through the adoption of an average selling price that was not in accordance with DAR regulations, citing DAR A.O. No. 5, series of 1998.
On August 15, 2003, the RTC-SAC affirmed the PARAD’s valuation, considering the property’s yield, condition, proximity, comparable sales, owner’s sworn valuation, tax declarations, and overall social and economic benefits.
LBP’s motion for reconsideration before the RTC-SAC was denied on October 27, 2003.

LBP appealed the RTC-SAC ruling to the Court of Appeals (CA).
On September 29, 2005, the CA affirmed both the RTC-SAC’s and PARAD’s decision, noting that both agencies applied the formula provided under DAR A.O. No. 5, series of 1998.
The CA held that LBP’s valuation was unrealistic and deviated from what the Constitution envisioned as just compensation.
A subsequent motion for reconsideration by LBP before the CA was denied on December 23, 2005.

LBP elevated the case to a petition for review on certiorari before the Supreme Court.
The central contention by LBP was that the valuation should have been computed using the average selling price of P5.86 per kg of copra (as delivered by PCA data) in strict conformity with DAR A.O. No. 5, rather than the P16.00 per kg used by the PARAD.

Whether the use of the average selling price of P16.00 per kg of copra by the PARAD, instead of the P5.86 per kg indicated by PCA data, constitutes an error in applying the guidelines provided in DAR A.O. No. 5, series of 1998.
Whether the determination of the correct average selling price is a question of fact or law, and thus, whether such factual determinations made by the RTC-SAC and affirmed by the CA are reviewable by the Supreme Court under Rule 45 of the Rules of Court.