### Facts:
Spouses Vicente and Leonidas Banal, hereinafter referred to as respondents, owned 19.3422 hectares of agricultural land in San Felipe, Basud, Camarines Norte, under Transfer Certificate of Title No. T-6296. A portion of their land (6.2330 hectares) was subject to compulsory acquisition by the Department of Agrarian Reform (DAR) under the Comprehensive Agrarian Reform Law of 1988 (Republic Act No. 6657, as amended). Based on applicable DAR Administrative Orders, Land Bank of the Philippines (Landbank), petitioner, valued the property at PHP 173,918.55, an amount contested by respondents.
Prompted by their rejection of Landbank’s valuation, an administrative proceeding before the Provincial Agrarian Reform Adjudicator (PARAD) was undertaken but affirmed Landbank’s valuation. Dissatisfied, respondents sought judicial intervention at the Regional Trial Court (RTC) of Daet, Camarines Norte, designated as a Special Agrarian Court, seeking PHP 623,000.00 as compensation. During the proceedings, the RTC, without conducting a hearing and based on facts from another case, awarded the respondents a sum exceeding their claim, along with compounded interest, amounting to a total of PHP 783,869.00.
The trial court’s decision prompted Landbank to file a petition for review with the Court of Appeals, which was subsequently affirmed. Landbank then escalated the issue to the Supreme Court through a petition for review on certiorari.
### Issues:
1. Whether the Court of Appeals erred in affirming the RTC’s valuation of the land.
2. Whether the RTC properly dispensed with the hearing and based its decision on another case.
3. Whether the proper legal formulas and orders were applied in determining just compensation.
### Court’s Decision:
The Supreme Court reversed the decision of the Court of Appeals, highlighting several procedural and substantive errors in how the lower court determined just compensation. The High Court pointed out the RTC’s failure to conduct an actual hearing, which is necessary to examine various factors outlined under Section 17 of RA 6657. Moreover, the Supreme Court criticized the RTC’s reliance on facts established in a separate case, a practice not sanctioned without express consent from the parties involved. The Court also noted the erroneous application of valuation formulas intended for different scenarios and the improper award of compounded interest.
Issue by issue, the Supreme Court clarified the proper procedure and legal basis for determining just compensation, emphasizing the need for an evidentiary hearing and the application of the specific formula provided in DAR Administrative Order No. 6, Series of 1992, as amended by DAR Administrative Order No. 11, Series of 1994.
### Doctrine:
The determinative process of just compensation for agrarian reform purposes involves the examination of several factors enumerated under Section 17 of RA 6657, necessitating an evidentiary hearing to establish these facts. Courts should not rely on facts established in unrelated cases without the consent of all parties involved. Furthermore, just compensation must be calculated based on formulas and procedures specifically outlined in relevant laws and administrative orders, ensuring that these calculations are tailored to the specifics of each case.
### Class Notes:
– **Just Compensation**: The determination involves various factors, including the cost of land acquisition, current value, use and income, and the social and economic benefits contributed by the property.
– **Evidence Hearing**: Necessary for the determination of just compensation, allowing for the establishment of factual matters crucial to the case.
– **DAR Administrative Orders**: The specific formulas provided in DAR AO No. 6, Series of 1992, as amended by DAR AO No. 11, Series of 1994, should be applied in determining just compensation for agrarian reform purposes.
### Historical Background:
This case underscores the challenges and complexities in the implementation of agrarian reform in the Philippines under the Comprehensive Agrarian Reform Law of 1988. It highlights the need for precise legal frameworks and procedures in determining just compensation, a critical factor in ensuring the success and fairness of agrarian reform initiatives.
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