Title
Land Bank of the Philippines vs. Court of Appeals
Case
G.R. No. 128557
Decision Date
Dec 29, 1999
Landowner Jose Pascual contested DAR's land valuation under agrarian reform. PARAD ruled in his favor, but LBP refused payment. SC upheld PARAD's jurisdiction, ordered LBP to pay, but removed 6% compounded interest.
court of appeals
writ of mandamus
land acquisition

Case Summary (G.R. No. 128557)

Statutory and Regulatory Framework

The valuation of rice and corn lands under P.D. No. 27 and E.O. No. 228 followed a formula prescribed by E.O. No. 228, where land value is computed as two and one-half (2.5) x AGP x Government Support Price (GSP). Under E.O. No. 228, the AGP is determined in accordance with DAR issuances, including DAR Memorandum Circular No. 26, series of 1973. Compensation to the landowner is financed through LBP pursuant to P.D. No. 251, and final and judicial determination of just compensation remains relevant to the constitutional guarantee of just compensation.

Jurisdictional provisions were also central. LBP relied on Section 12(b) of P.D. No. 946 to assert that determination of total production and value for P.D. 27 lands remained exclusively cognizable by the Secretary of Agrarian Reform. LBP further invoked E.O. No. 229 and R.A. No. 6657 to argue that valuation should not be within DARAB’s adjudicatory power in cases under P.D. No. 27. The Court, in addressing the mandamus issue, treated the controlling question as whether the valuation decision became final and whether LBP had a legal duty to pay once it agreed to the valuation under the law governing LBP’s role.

Parcel Facts and OLT Valuation under E.O. No. 228

Pascual’s three parcels were placed under OLT. Parcel 1 (TCT No. 16655) covered an area of 149,852 square meters as surveyed by the DAR, but the actual transferred area was estimated at 102,229 square meters and classified as unirrigated lowland rice. Parcel 2 (TCT No. 16654) covered 123,043 square meters as surveyed by the DAR, with an actual transferred area estimated at 85,381 square meters and classified as cornland. Parcel 3 (TCT No. 16653) covered 192,590 square meters as surveyed, with actual transferred area estimated at 161,338 square meters and classified as irrigated lowland rice.

In compliance with E.O. No. 228, the Provincial Agrarian Reform Officer (PARO) recommended an AGP based on a “Normal Crop Year” in “Accomplished OLT Valuation Form No. 1” dated 2 December 1989, assigning AGP of 25 cavans per hectare for the unirrigated lowland rice of Parcel 1 and AGP of 10 cavans per hectare for the cornland of Parcel 2. The DAR Secretary’s office conducted its own valuation proceedings. On 10 October 1990, Secretary Benjamin T. Leong issued an order valuing Parcel 1 at P22,952.97, using an AGP of 25.66 cavans for unirrigated rice, and required payment by LBP. LBP approved this valuation on 1 February 1991.

DARAB Quasi-Judicial Proceeding and the PARAD Decision

In 1991, Pascual filed a petition with the DARAB for the annulment of the recommended AGP and the valuation of the OLT lands, opposing the productivity and valuation assigned by the PARO. The case was heard by Oscar Dimacali, the PARAD of Cagayan. Despite due notice, the PARO who issued the challenged valuation recommendation, Francisco Baculi, did not appear. Pascual was allowed to present evidence ex parte.

Pascual submitted a different “Accomplished OLT Valuation Form No. 1” dated 22 June 1976 for Parcel 3, asserting that the assailed valuation severely undervalued AGP. Under that 1976 form, AGP based on a “Normal Crop Year” was 80 cavans per hectare for lowland rice unirrigated, 28 cavans per hectare for corn, and 100 cavans per hectare for lowland rice irrigated. Pascual also presented tax declarations for Parcels 1 and 2 stating AGP of 80 cavans for unirrigated rice and 28 cavans for corn.

On 11 June 1992, the PARAD ruled in favor of Pascual and nullified the 2 December 1989 AGP recommended by the PARO. Instead, the PARAD applied the 22 June 1976 AGP and the AGP stated in Pascual’s tax declarations to determine compensation. The PARAD also used a GSP of P300 per cavan of palay and P250 per cavan of corn. The PARAD ordered LBP to pay P613,200.00 for Parcel 1, P148,750.00 for Parcel 2, and P1,200,000.00 for Parcel 3, for a total of P1,961,950.00.

Pascual accepted the valuation and did not contest it. After the PARAD decision became final and executory, LBP refused to pay, which led Pascual to apply for a writ of execution; the PARAD issued a writ on 24 December 1992. Even then, LBP declined to comply. On 29 June 1994, Secretary Ernesto Garilao Jr. of the DAR wrote LBP demanding payment. LBP continued to refuse, and the bank’s executive, Jesus Diaz, argued that valuation should be determined by the courts, that the PARAD could not reverse a prior DAR order, and that valuation under EO 228 fell within exclusive Secretary cognizance, not DARAB jurisdiction.

On 23 January 1995, Secretary Garilao responded that valuation of P.D. 27 lands was administrative implementation cognizable by the Secretary, but maintained that, in that case, the PARAD decision had already been threshed out in quasi-judicial proceedings and had become final and executory, leaving no room to allow non-payment absent court intervention. LBP nevertheless persisted in its refusal. Pascual then demanded payment through further correspondence, and LBP replied that it would defer payment unless farmer beneficiaries concurred with financing requirements, asserting that it required beneficiary consent for financing viability.

Court of Appeals: Mandamus and Imposition of Interest

Because LBP remained noncompliant, Pascual filed a petition for mandamus with the Court of Appeals to compel LBP to pay the valuation fixed by the PARAD. On 15 July 1996, the Court of Appeals granted the writ and required LBP to pay compounded interest at six percent (six) per annum, in line with DAR Administrative Order No. 13, Series of 1994. LBP’s motion for reconsideration was denied on 11 March 1997, leading to the Supreme Court petition.

In its petition, LBP maintained that the Court of Appeals erred in issuing mandamus. It argued that it could not be compelled to enforce a valuation allegedly void for lack of jurisdiction and that the Court of Appeals could not impose six percent (six) compounded interest because Administrative Order No. 13 did not apply to Pascual’s case.

Issues Raised by LBP

LBP’s arguments before the Supreme Court proceeded along three interrelated lines. First, it contended that the Court of Appeals had no basis to compel enforcement of the PARAD’s valuation because DARAB allegedly lacked jurisdiction to determine valuation for P.D. 27 lands, invoking Section 12(b) of P.D. No. 946 and insisting that later enactments did not repeal that provision. LBP attempted to harmonize the laws by asserting that the Secretary alone determined valuation under OLT while other agrarian matters under R.A. No. 6657 would be under DARAB or related adjudicatory fora.

Second, LBP argued that mandamus could not issue to compel an act beyond its legal duty. It claimed that it had a ministerial role only to the extent of its agreement, and that financing under P.D. No. 251 required beneficiary concurrence as the principal debtor. It feared that if compelled to pay, the government would suffer losses if farmer beneficiaries refused to reimburse.

Third, LBP insisted that mandamus was improper because Pascual allegedly had other remedies, such as execution through the DARAB sheriff against the Agrarian Reform Fund, a request for DAR final resolution on financing, or a case for final determination of just compensation in the Special Agrarian Court.

Supreme Court’s Treatment of Jurisdiction and Finality

The Supreme Court rejected LBP’s jurisdictional premise. The Court held that LBP’s contention that Section 12(b) of P.D. No. 946 remained effective could not be sustained. It relied on Machete v. Court of Appeals, which held that E.O. No. 229 and R.A. No. 6657 effectively repealed Section 12(a) and (b) of P.D. No. 946, insofar as those provisions previously vested original exclusive jurisdiction in the courts of agrarian relations over rights and obligations connected with agrarian reform implementation. Accordingly, LBP could not insist that DARAB had no authority to entertain initial valuation disputes involving agrarian reform lands under P.D. No. 27.

The Court also clarified that while final determination of just compensation ultimately belongs to the courts, DARAB had authority to determine the initial valuation, which remains preliminary until judicial finality. It noted that the DARAB’s authority was consistent with the process for valuation disputes under the agrarian reform legal system.

Mandamus and LBP’s Legal Duty to Pay Once It Agreed

On whether mandamus could compel LBP, the Supreme Court focused on the nature of LBP’s duty under P.D. No. 251 and R.A. No. 6657, and on whether LBP had already agreed to the valuation.

The Court invoked Section 18 of R.A. No. 6657, which provides that the LBP shall compensate the landowner in the amount as may be agreed upon by the landowner, DAR, and LBP in accordance with statutory criteria, or as may be finally determined by the court. The Court emphasized that the statute identified only the landowner, DAR, and Land Bank as parties in the valuation and compensation process, without requiring farmer-beneficiary participation to establish the vinculum juris for compensation.

While LBP argued that Section 18 should not apply because the matter involved P.D. 27 lands, the Court held that R.A. No. 6657 expressly accorded suppletory effect to P.D. No. 27 and E.O. No. 228. It further observed that R.A. No. 6657 included rice and corn lands under P.D. No. 27 among the lands DAR would acquire and distribute, and therefore the valuation and compensation provisions of the statute should be adhered to for those lands. The Court cited that appellate rulings applying R.A. No. 6657 modes to P.D. 27 lands had upheld just compensation payment structures consistent with Section 18.

After establishing that farmer-beneficiary consent was unnecessary for establishing LBP’s duty, the Court examined whether LBP had agreed to the PARAD’s valuation. It held that LBP participated through counsel at the PARAD proceedings, did not appeal the PARAD decis

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