Case Summary (G.R. No. 128557)
Key Dates and Procedural Milestones
Relevant statutory/administrative origins: PD 27 (1972), EO 228 (1987). PARO recommended valuations dated 2 December 1989. SAR issued an order valuing Parcel 1 on 10 October 1990; LBP approved that valuation on 1 February 1991. Private respondent filed with DARAB in 1991; PARAD decision issued 11 June 1992. Writ of Execution from PARAD issued 24 December 1992; LBP refused payment. DAR Secretary directives to LBP occurred in 1994–1995. DAR Administrative Order No. 13, series of 1994 (AO No. 13) prescribed a 6% compounded annual interest formula for unpaid landowners. Court of Appeals issued a writ of mandamus on 15 July 1996; LBP's motion for reconsideration denied 11 March 1997. The case reached the Supreme Court.
Applicable Law and Authorities
Constitutional basis: 1987 Constitution (decision rendered after 1990). Statutory and administrative framework: PD 27 (emancipation of tenants and OLT), EO 228 (valuation method for rice and corn lands), PD 946 (Court of Agrarian Relations jurisdiction provisions, Sec. 12), EO 229 (quasi‑judicial powers of DAR, Sec. 17), Republic Act No. 6657 (Comprehensive Agrarian Reform Law, CARL; Secs. 7, 16–18, 50, 75, 76), PD 251 (LBP financing/guarantee functions), DARAB rules (1994 Revised Rules), Administrative Order No. 13 (1994). Precedents relied upon or discussed: Machete v. Court of Appeals; Sharp International Marketing v. Court of Appeals; Association of Small Landowners of the Philippines v. Secretary of Agrarian Reform.
Factual Background — Parcels, Classifications, and AGP Estimates
Three parcels owned by Pascual: Parcel 1 (TCT No. 16655) — unirrigated lowland rice; Parcel 2 (TCT No. 16654) — cornland; Parcel 3 (TCT No. 16653) — irrigated lowland rice. DAR survey areas differ from actual transferred areas; PARO recommended Average Gross Production (AGP) for Parcels 1 and 2 as 25 cavans/ha (unirrigated rice) and 10 cavans/ha (corn) based on a "(3) Normal Crop Year" valuation form dated 2 December 1989. Private respondent presented an older 22 June 1976 OLT Valuation Form and tax declarations showing higher AGPs: 80 cavans/ha for unirrigated rice, 28 cavans/ha for corn, and 100 cavans/ha for irrigated rice.
EO 228 Valuation Formula and Competing Government Valuations
EO 228 prescribes valuation of rice and corn lands using the formula LV (Land Value) or Price per Hectare = 2.5 × AGP × Government Support Price (GSP). GSPs referenced include the 1972 statutory support prices (P35 per cavan palay; P31 per cavan corn) and later GSPs used by adjudicators (PARAD and regional director used 1992 GSPs of P300 per cavan palay and P250 per cavan corn). SAR used an AGP of 25.66 cavans for Parcels and valued Parcel 1 at P22,952.97 (using 1972 GSP), which LBP approved on 1 February 1991.
DARAB Proceedings and PARAD Decision
Pascual filed for annulment of PARO's recommended AGP and valuation before DARAB. PARAD Dimacali allowed ex parte evidence when PARO failed to appear; PARAD accepted Pascual’s 1976 AGP figures and tax declaration AGPs, applied the 1992 GSPs (P300/P250), and computed compensation: Parcel 1 — P613,200.00; Parcel 2 — P148,750.00; Parcel 3 — P1,200,000.00; total P1,961,950.00. The PARAD’s decision became final and executory; Pascual accepted the valuation.
LBP’s Refusal to Pay and Administrative Attempts to Compel Payment
LBP refused to pay despite PARAD’s final judgment and repeated directives from the Secretary of Agrarian Reform (Secretary Garilao emphasized finality of DARAB decisions and requested payment). LBP’s stated reasons: (1) valuation of PD 27 lands is exclusively under the Secretary of Agrarian Reform (citing PD 946 Sec. 12(b)), (2) just compensation should be judicially determined, not by DARAB, and (3) LBP’s financing obligations require the concurrence of farmer‑beneficiaries before it becomes obligated to finance or disburse amounts. LBP proposed financing only if farmer‑beneficiaries concurred and re‑executed required agreements.
Court of Appeals Writ of Mandamus and Issue on Interest
Pascual filed a petition for mandamus in the Court of Appeals to compel LBP to pay the PARAD valuation. The Court of Appeals granted the writ and ordered payment with a compounded 6% per annum interest in accordance with AO No. 13. LBP sought relief to overturn that writ and to contest applicability of AO No. 13 interest.
Jurisdictional Question — DARAB Authority vs. Exclusive Administrative Power of Secretary
LBP argued DARAB lacked jurisdiction over PD 27 valuation under PD 946 Sec. 12(b). The Supreme Court relied on controlling precedent (Machete v. Court of Appeals) holding that EO 229 Sec. 17 and RA 6657 Sec. 50 vested quasi‑judicial powers and primary jurisdiction in DAR (and by implication DARAB), effectively superseding PD 946’s exclusive assignment. The Court concluded DARAB has authority to determine initial valuations in agrarian matters and that PARAD’s valuation constitutes a valid quasi‑judicial determination, though the final judicial determination of just compensation remains with the courts when invoked.
Financing Role of LBP — Consent of Farmer‑Beneficiaries Not Required for Vinculum Juris
LBP argued its statutory financing/guarantee obligations under PD 251 and related provisions require farmer‑beneficiary consent before it is obligated to finance compensation. The Court analyzed RA 6657 Sec. 18: valuation and compensation are to be agreed upon by the landowner, DAR, and LBP, or finally determined by courts; the statute does not require farmer‑beneficiary concurrence. The Court applied Sharp International Marketing precedent: LBP may be compelled only where it has agreed to the amount determined by the DAR/DARAB. Here, LBP participated in the PARAD hearing through counsel, did not appeal PARAD’s decision, and even stated willingness to pay the PARAD amount provided farmer beneficiaries concurred. The Court found LBP’s participation and conditional acceptance sufficiently evidenced agreement to the valuation, and the absence of required beneficiary concurrence did not negate LBP’s duty.
Adequacy of Alternative Remedies and Rationale for Mandamus
LBP contended that Pascual had adequate alternative remedies (sheriff levy against Agrarian Reform Fund, seeking final DAR resolution, or filing in Special Agrarian Court). The Court found those remedies not plain, adequate, and complete in the circumstances: the sheriff could not execute because LBP refused payment and controlled funds; the Secretary had already directed payment and further petition to DAR would be redundant; the Special Agrarian Court avenue was unnecessary because PARAD’s decision became final and executory and LBP did not litigate the valuation. The Court therefore upheld mandamus as appropriate to compel LBP to perform its legal duty.
Applicability of Administrative Order No. 13 (6% Compounded Interest)
AO No. 13 computes land value using the EO 228 formula with 1972 GSPs and then applies com
Case Syllabus (G.R. No. 128557)
Case Citation and Court
- G.R. No. 128557, December 29, 1999; Second Division, Supreme Court of the Philippines; reported at 378 Phil. 1248.
- Decision authored by Justice Bellosillo; Justices Mendoza, Quisumbing, Buena, and De Leon, Jr., concur.
Parties
- Petitioner: Land Bank of the Philippines (LBP), the financing arm in the operation of PD 27 and EO 228.
- Respondents: Court of Appeals (as the immediate tribunal whose decision was assailed) and private respondent Jose Pascual (landowner seeking payment of valuation).
Core Question Presented
- Whether the Court of Appeals properly issued a writ of mandamus compelling LBP to pay compensation as determined by the Provincial Agrarian Reform Adjudicator (PARAD) and whether the 6% compounded interest provided under DAR Administrative Order No. 13, series of 1994, was properly imposed.
Statement of Facts — Landholdings and Classification
- Private respondent Jose Pascual owned three parcels in Guttaran, Cagayan, with title numbers and DAR-surveyed areas as follows:
- Parcel 1 (TCT No. 16655): DAR survey area 149,852 sq. m.; actual transferred area estimated at 102,229 sq. m.; classified as unirrigated lowland rice.
- Parcel 2 (TCT No. 16654): DAR survey area 123,043 sq. m.; actual transferred area estimated at 85,381 sq. m.; classified as cornland.
- Parcel 3 (TCT No. 16653): DAR survey area 192,590 sq. m.; actual transferred area estimated at 161,338 sq. m.; classified as irrigated lowland rice.
Applicable Programative Instruments and Valuation Formula
- Lands placed under DAR Operation Land Transfer (OLT) pursuant to PD 27 and EO 228.
- EO 228 prescribes valuation of rice and corn lands using:
- Land Value (LV) or Price Per Hectare (PPH) = 2.5 x Average Gross Production (AGP) x Government Support Price (GSP).
- GSP established for 21 October 1972: palay P35/cavan (50 kilos), corn P31/cavan.
- DAR Administrative Order No. 13 (1994) prescribes a 6% compounded annual increment formula for LV using the 1972 GSP and AGP: LV x (1.06)^n (n = years).
Administrative Valuation Proceedings — PARO and SAR Actions
- Provincial Agrarian Reform Officer (PARO) in an "Accomplished OLT Valuation Form No. 1" (2 December 1989) recommended AGP:
- Parcel 1 (unirrigated lowland rice): AGP 25 cavans/ha (based on 3 normal crop years).
- Parcel 2 (cornland): AGP 10 cavans/ha.
- Office of the Secretary of Agrarian Reform (SAR) conducted separate valuation proceedings:
- On 10 October 1990, Secretary Benjamin T. Leong used AGP 25.66 for unirrigated rice and assessed Parcel 1 at P22,952.97; LBP approved that valuation on 1 February 1991.
PARAD Proceedings — Evidence and Hearing
- In 1991, Jose Pascual filed with DAR Adjudication Board (DARAB) a petition for annulment of the PARO's AGP recommendation.
- Provincial Agrarian Reform Adjudicator (PARAD) Oscar Dimacali presided. PARO Francisco Baculi, who made the recommendation, did not appear despite due notice; LBP was represented by counsel Atty. Eduard Javier.
- Private respondent presented ex parte evidence including:
- An "Accomplished OLT Valuation Form No. 1" dated 22 June 1976 reflecting AGP (3 normal crop years) of 80 cavans/ha for unirrigated lowland rice, 28 cavans/ha for corn, and 100 cavans/ha for irrigated rice.
- Tax declarations for Parcels 1 and 2 listing AGP 80 cavans (unirrigated rice) and 28 cavans (corn).
PARAD Decision and Valuations
- On 11 June 1992, PARAD ruled in favor of Jose Pascual, nullifying the 2 December 1989 PARO AGP recommendation and applying the 22 June 1976 AGP and the AGP shown in Pascual's tax declarations.
- PARAD employed the Government Support Prices (GSP) for 1992 (palay P300/cavan; corn P250/cavan) in computing Land Value.
- PARAD ordered LBP to pay:
- Parcel 1: P613,200.00
- Parcel 2: P148,750.00
- Parcel 3: P1,200,000.00
- Total: P1,961,950.00
- PARAD’s computation used formula: LV = 2.5 x AGP x (GSP as of 1992).
Subsequent Administrative Acts and Noncompliance
- Private respondent accepted the PARAD valuation. When judgment became final and executory, LBP refused payment.
- Private respondent obtained a Writ of Execution from PARAD (24 December 1992); LBP still declined compliance.
- DAR Secretary Ernesto Garilao, Jr. wrote to LBP (29 June 1994) mandating payment; LBP again rejected the directive.
- LBP’s Executive Vice President Jesus Diaz argued (in a letter to the Secretary) that:
- Valuation of just compensation should be determined by courts,
- PARAD could not reverse a prior order of the SAR, and
- Valuation under EO 228 is exclusively within SAR’s jurisdiction and not DARAB’s.
- SAR replied (23 January 1995) acknowledging that valuation under PD 27 is within administrative implementation of agrarian reform and thus typically under the Secretary’s exclusive cognizance, but stressed the finality of DARAB decisions where a quasi-judicial proceeding has been properly conducted and become final and executory, recommending payment unless enjoined by courts.
LBP’s Conditional Offer and Pascual’s Legal Response
- LBP (20 June 1995) stated willingness to pay the PARAD amount only if:
- Tenant beneficiaries were consulted and concurred,
- Land transfer claims were redocumented with beneficiaries re-executing agreements to show willingness to amortize the amount to LBP.
- Private respondent, after repeated refusals, filed an action for mandamus in the Court of Appeals to compel LBP to pay the PARAD valuation.
Court of Appeals Ruling
- On 15 July 1996, the Court of Appeals granted the Writ of Mandamus directing LBP to pay the PARAD-determined amounts to Jose Pascual.
- The appellate court also required LBP to pay a compounded interest of 6% per annum, pursuant to DAR Administrative Order No. 13, series of 1994.
- Petition for reconsideration was denied on 11 Mar