Title
Land Bank of the Philippines vs. Wycoco
Case
G.R. No. 140160
Decision Date
Jan 13, 2004
Landowner Wycoco disputes DAR's compensation offer for his 94-hectare land under CARP. RTC fixes higher value; SC remands for proper valuation, upholds SAC jurisdiction, deletes unrealized profits, and mandates cash/LBP bonds with 12% interest.
land bank
wycoco
supreme court

Case Summary (G.R. No. 140160)

Factual Background

Feliciano F. Wycoco owned a 94.1690 hectare unirrigated, untenanted rice land covered by Transfer Certificate of Title No. NT-206422 in Licab, Nueva Ecija. He filed a voluntary offer to sell under CARP and offered the property to the Department of Agrarian Reform (DAR) for P14.9 million. The Land Bank of the Philippines reviewed valuation and DAR issued a notice of intention to acquire 84.5690 hectares for P1,342,667.46, an amount later raised to P2,594,045.39 and thereafter modified to P2,280,159.82; the DAR offer excluded certain idle lands, river and road. Wycoco rejected the offer and DAR indorsed the matter to the Department of Agrarian Reform Adjudication Board (DARAB) as VOS Case No. 232 NE 93, whereupon LBP opened a trust account in Wycoco’s name and deposited the offered compensation while the property was distributed to farmer-beneficiaries.

Trial Court Proceedings

Wycoco brought Agrarian Case No. 91 (AF) in the Regional Trial Court of Cabanatuan City, Branch 23, acting as a Special Agrarian Court, impleading DAR and LBP. After a pre-trial on October 3, 1994, the court limited the sole issue to the determination of just compensation and allowed submission of memoranda. Wycoco offered his TCT, the Notice of Land Valuation, and a July 10, 1992 letter rejecting the counter-offer; DAR and LBP presented Land Valuation Worksheets. On November 14, 1995 the trial court took judicial notice of prevailing market values in Licab, fixed compensation at P142,500.00 per hectare and stated a total of P13,428,082.00, and awarded unrealized profits and legal interest; the dispositive portion ordered defendants to pay P13,419,082.00 and additional sums as unrealized profits and yearly amounts with legal interest.

Appeals and Parallel Proceedings

DAR and LBP separately sought relief from the Court of Appeals. DAR’s petition, docketed as CA-G.R. No. SP No. 39234, was dismissed on May 29, 1997 and became final June 26, 1997. LBP’s petition, CA-G.R. No. SP No. 39913, was dismissed on February 9, 1999 but the Court of Appeals modified that dismissal on September 22, 1999 by deducting from the awards the value corresponding to 3.3672 hectares found previously sold by Wycoco to the Republic. Meanwhile Wycoco filed a petition for mandamus in this Court, G.R. No. 146733, seeking execution of the RTC decision and the inhibition of Judge Rodrigo S. Caspillo.

Issues Presented

The Supreme Court framed the dispositive issues as whether the Regional Trial Court, acting as Special Agrarian Court, validly acquired jurisdiction over the petition for determination of just compensation; whether the compensation fixed was supported by evidence; whether Wycoco could compel DAR to acquire the entire property covered by the voluntary offer to sell; and whether the awards of interest and damages for unrealized profits were valid.

Parties’ Contentions

LBP argued that the RTC lacked jurisdiction because DARAB had primary jurisdiction under RA 6657 and that Wycoco failed to exhaust administrative remedies; that the trial court’s valuation was unsupported and rested improperly on judicial notice without notice and hearing in violation of Rule 129; that the trial court erred in requiring compensation for portions not declared for acquisition and not suitable for agriculture; that awards of legal interest and alleged unrealized profits were without legal basis because title remained with Wycoco; and that execution pending appeal and execution on the basis of age and health were improper. DAR likewise asserted jurisdictional and procedural objections.

Jurisdictional Analysis

The Court analyzed Sections 50 and 57 of Republic Act No. 6657 and reiterated that Special Agrarian Courts have original and exclusive jurisdiction over petitions for determination of just compensation. The Court relied on precedent, including Republic v. Court of Appeals and Land Bank of the Philippines v. Court of Appeals, holding that Section 57 must be construed to reserve to the courts the judicial function of assessing compensation in eminent domain and to prevent vesting such original jurisdiction in administrative adjudicators. The Court therefore held that the RTC, sitting as a Special Agrarian Court, properly acquired jurisdiction over Agrarian Case No. 91 (AF). The Court further observed that DAR and LBP had conformed to the pre-trial order which limited issues to valuation, and that the DARAB’s dismissal of the administrative case to give way to the court rendered moot the exhaustion argument.

Valuation and Judicial Notice

The Court found that the trial court erred in taking judicial notice of the prevailing market value of agricultural lands in Licab without announcing its intention and allowing the parties to be heard as required by Section 3, Rule 129 of the Rules on Evidence. Because the determination of just compensation was the decisive issue, the court should have afforded the parties an opportunity to present evidence or to be heard on any matter judicially noticed. The Court emphasized that judicial notice must be exercised with caution, particularly where a vast tract of land is involved, and that the trial court must consider the customary factors in assessing fair market value such as cost of acquisition, current values of like properties, size, shape, location and tax declarations. Consequently the Court remanded the case to the trial court for proper determination of just compensation.

Trust Accounts, Payment Mode and Interest

The Court reviewed the allocation of responsibilities under Executive Order No. 405, Series of 1990, which tasked LBP with initial valuation, and its prior decision in Land Bank of the Philippines v. Court of Appeals, which declared DAR Administrative Circular No. 9 invalid insofar as it permitted trust accounts in lieu of cash or LBP bonds as contemplated by Section 16(e) of RA 6657. The Court noted DAR Administrative Order No. 2, Series of 1996, which converted trust accounts to deposit accounts, and directed that the trust account opened by LBP in Wycoco’s name be converted to a deposit account retroactively to cure the DAR’s earlier procedural error. The Court awarded interest at the rate of twelve percent per annum on the just comp

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