59 LBP v Honeycomb Farms, Inc.
G.R. No. 166259 / November 12, 2012
Brion, J. / KED
SUBJECT MATTER: What Need Not Be Proved > Judicial Notice > When Hearing Necessary (Rule 129, Sec 3)
CASE SUMMARY: HFC voluntarily offered its land to the DAR for acquisition pursuant to CARP for P 581,932.00 at P20K
per ha. DAR and LBP determined an acquirable and compensable area while the remaining were excluded for being
hilly and underdeveloped. LBP pursuant to DAR-Administrative Order No. 6 fixed the value of the land in the amount
of P 165,739.44. HFC rejected the valuation and filed a Petition for Determination of Just Compensation. Pending
DARAB proceedings, HFC filed a Complaint for Determination of Just Compensation with the RTC Special Agrarian
Court (SAC). DARAB affirmed LBPs valuation. RTC - Rendered a Judgment and made its own valuation. CA - Reversed
RTC and dismissed HFC’s complaint. On LBP’s MR, CA recalled its earlier Decision and ruled that in expropriation
proceedings, the just compensation to which the owner of the condemned property is entitled to is the market value.
SC - Held that (1) to determine just compensation, RTC must take into consideration the factors prescribed by Sec 17
of RA 6657 and is obliged to apply the DAR formula and (2) RTC cannot take judicial notice of the nature of land in
question without the requisite hearing.
DOCTRINE: Rule 129, Sec. 3. Judicial notice, when hearing necessary.
During the trial, the court, on its own initiative, or on request of a party, may announce its intention to take judicial
notice of any matter and allow the parties to be heard thereon.
After the trial, and before judgment or on appeal, the proper court, on its own initiative, or on request of a party, may
take judicial notice of any matter and allow the parties to be heard thereon if such matter is decisive of a material
issue in the case.
The classification of the land is obviously essential to the valuation of the subject property. The parties should
thus have been given the opportunity to present evidence on the nature of the property before the lower
court took judicial notice of the commercial nature of a portion of the subject landholdings
ACTION BEFORE SC: Petition for Review on Certiorari
PARTIES:
Petitioner LAND BANK OF THE PHILIPPINES
Respondent HONEYCOMB FARMS CORPORATION
FACTS: Honeycomb Farms Corp. (HFC) is a registered owner of a parcel of land with an area of 29.0966 ha. It
voluntarily offered its land to the DAR for acquisition pursuant to CARP for P 581,932.00 at P20K per ha. DAR and LBP
determined an acquirable and compensable area of 27.5871 ha while the remaining were excluded for being hilly and
underdeveloped.
LBP, pursuant to DAR-Administrative Order No. 6, fixed the value of the land in the amount of P 165,739.44.
HFC rejected the valuation and filed with the DAR Adjudication Board (DARAB) a Petition for Determination of Just
Compensation, claiming that just compensation should be P25K per ha given its location and productivity for P725K
RTC (Special Agrarian Court or SAC) - Pending DARAB proceedings, HFC filed a Complaint for Determination of Just
Compensation with the RTC (SAC) praying for a P 725K just compensation plus attorneys fee of 10% of the just
compensation. HFC justified the filing in the RTC (SAC) for the unreasonable delay of DARAB. LBP countered that HFC's
petition was premature for failure to exhaust administrative remedies.
DARAB - Issued a decision affirming the LBPs valuation.
RTC - Rendered Judgment: 1) Fixing just compensation at P931,109.20 subject to the lien for the docket fee in excess
of P725K; 2) Ordering defendants to pay jointly and severally attorney’s fee equal to 10% of the just compensation.
Owing to the parties conflicting valuations, SAC made its own valuation and briefly concluded that (!):
A judicious evaluation of the evidence on record shows that the subject area is sporadically planted with
coconut and corn as is not fully developed when the government conducted its ocular inspection and
thereafter took over possession of the same although majority of it is a fertile grass land and undisputedly
deemed suitable to agriculture.
However, the parcel of land under consideration is located in the side of the road. It is likewise of judicial
notice that it is situated near the commercial district of Curvada, Cataingan, Masbate.
The just compensation for the land of herein plaintiff corporation under TCT No. T-2550 covered by agrarian
reform is P32K per ha or P882,787.20 for the area of 27.58571 ha plus consequential damages at the same
value (P32K) per ha for the remaining 1.5095 ha of the plaintiffs property left and rendered useless by the
compulsory coverage or for the total sum of P931,109.20.
CA
HFC argued that RTC erred in its determination of just compensation; P931,109.20 is not supported by
evidence on record while its presented evidence correctly shows that the market value of the land at the time
of taking was P113K per ha.
LBP raised the issue of whether SAC had jurisdiction to hear HFCs complaint due to the pending DARAB
proceedings. RTC committed a serious error when it took judicial notice of the property’s roadside location, its
proximity to a commercial district, its incomplete development as coconut and corn land, and its condition as
grassland, to determine just compensation; it eschewed the formula for fixing just compensation, provided
under DAR AO No. 6, series of 1992. Questioned award of consequential damages and attorney’s fees.
CA - Reversed RTC and dismissed HFCs complaint for failure to exhaust administrative remedies in Sec 16(f) of RA
6657. LBP "made a procedural shortcut" when it filed the complaint with SAC without waiting for the DARAB decision.
On LBP’s MR, recalled its earlier Decision. CA ruled that in expropriation proceedings, the just compensation to which
the owner of the condemned property is entitled to is the market value (factors such as the current value of like
properties, their actual or potential uses and their size, shape and location must be considered). RTC’s valuation was
based on the evidence on record since the latter considered the sketch plan of the property, the testimonies of the
witnesses and the field reports of both parties. CA deleted the award of attorney’s fees.
ISSUES:
1. WON RTC SAC must take into consideration the factors prescribed by Sec 17 of RA 6657 and is obliged to apply the
DAR formula – YES
2. WON RTC SAC can take judicial notice of the nature of land in question without the requisite hearing – NO
RATIO:
1. YES. To determine just compensation, SAC must take into consideration the factors prescribed by Sec 17 of RA
6657 and is obliged to apply the DAR formula.
It is the RTC, sitting as a SAC, which has the power to determine just compensation for parcels of land acquired by the
State, pursuant to the agrarian reform program, is made clear in Sec. 57 of RA 6657, which reads:
Sec. 57. Special Jurisdiction. - The Special Agrarian Courts shall have original and exclusive jurisdiction over all petitions
for the determination of just compensation to landowners, and the prosecution of all criminal offenses under this Act. The
Rules of Court shall apply to all proceedings before the Special Agrarian Courts unless modified by this Act.
Special Agrarian Courts shall decide all appropriate cases under their special jurisdiction within thirty (30) days from
submission of the case for decision.
To guide RTC in this function, Sec. 17 of RA 6657 enumerates the factors that have to be taken into consideration to
accurately determine just compensation. This provision states:
Sec. 17. Determination of Just Compensation. In determining just compensation, the cost of acquisition of the land, the
current value of like properties, its nature, actual use and income, the sworn valuation by the owner, the tax declarations,
and the assessment made by government assessors, shall be considered. The social and economic benefits contributed by
the farmers and the farm workers and by the Government to the property, as well as the non-payment of taxes or loans
secured from any government financing institution on the said land, shall be considered as additional factors to determine
its valuation.
DAR, as the administrative agency tasked with the implementation of the agrarian reform program, came up with a
formula to determine just compensation which incorporated the factors enumerated in Sec. 17 of RA 6657.
These factors have been translated into a basic formula in DAR AO No. 6, Series of 1992, as amended by DAR AO No.
11, Series of 1994, issued pursuant to the DAR's rule-making power to carry out the object and purposes of R.A. 6657,
as amended.
As the government agency principally tasked to implement the agrarian reform program, it is DAR's duty to issue rules
and regulations to carry out the object of the law. It must apply the formula provided in the applicable DAR AO to
determine just compensation.
Rules and regulations issued by administrative bodies to interpret the law which they are entrusted to enforce, have
the force of law, and are entitled to great respect. Administrative issuances partake of the nature of a statute and
have in their favor a presumption of legality.
While the determination of just compensation is essentially a judicial function vested in the RTC acting as a SAC, the
judge cannot abuse his discretion by not taking into full consideration the factors specifically identified by law and
implementing rules.
SAC is duty bound to take into consideration the factors fixed by Sec 17 of RA 6657 and apply the basic formula
prescribed and laid down in the pertinent administrative regulations, in this case, DAR AO No. 6, series of 1992, as
amended by DAR AO No. 11, series of 1994, to determine just compensation.
In the present case, CA and RTC, acting as a SAC, seriously erred when they effectively eschewed the basic
formula prescribed by the DAR regulations and chose instead to come up with their own basis for the
valuation of the land in question.
2. NO. SAC cannot take judicial notice of the nature of land in question without the requisite hearing.
Separately from disregarding the basic formula prescribed by the DAR, SAC also erred in concluding that the subject
land consisting of 29.0966 ha is commercial in nature, after taking judicial notice that it is "situated near the
commercial district of Curvada, Cataingan, Masbate."
The Court has categorically ruled that the parties must be given the opportunity to present evidence on the nature of
the property before the court a quo can take judicial notice of the commercial nature of a portion of the subject
landholding, thus: While the lower court is not precluded from taking judicial notice of certain facts, it must exercise
this right within the clear boundary provided by Sec. 3, Rule 129 of the Rules of Court, which provides:
Sec. 3. Judicial notice, when hearing necessary.
During the trial, the court, on its own initiative, or on request of a party, may announce its intention to take judicial notice
of any matter and allow the parties to be heard thereon.
After the trial, and before judgment or on appeal, the proper court, on its own initiative, or on request of a party, may
take judicial notice of any matter and allow the parties to be heard thereon if such matter is decisive of a material issue in
the case.
The classification of the land is obviously essential to the valuation of the subject property, which is the very issue in
the present case.
The parties should thus have been given the opportunity to present evidence on the nature of the property
before the lower court took judicial notice of the commercial nature of a portion of the subject landholdings.
The power to take judicial notice is to be exercised by courts with caution especially where the case involves a vast
tract of land. Care must be taken that the requisite notoriety exists; and every reasonable doubt on the subject should
be promptly resolved in the negative. To say that a court will take judicial notice of a fact is merely another way of
saying that the usual form of evidence will be dispensed with if knowledge of the fact can be otherwise acquired.
The court assumes that the matter is so notorious that it will not be disputed. But judicial notice is not judicial
knowledge.
The mere personal knowledge of the judge is not the judicial knowledge of the court, and he is not
authorized to make his individual knowledge of a fact, not generally or professionally known, the basis of
his action. (LBP. v. Wycoco)
The present case must be remanded to the court of origin for the determination of just compensation in accordance
Sec 17 of RA 6657 and applicable DAR regulations
A case was remanded to the SAC for further reception of evidence because the trial court based its valuation
upon a different formula and did not conduct any hearing for the reception of evidence. (LPB v. Sps. Banal)
The mandatory application of the guidelines has been reiterated recently in LBP v. Lim, LBP v. Heirs of
Eleuterio Cruz, and LBP v. HFC, where the Court also ordered the remand of the cases to the SAC for the
determination of just compensation, strictly in accordance with the applicable DAR regulations.
DISPOSITIVE: Petition is hereby GRANTED. Special Civil Case No. 4637 is REMANDED to the RTC of Masbate, Masbate,
Branch 48, for the determination of just compensation, based on Sec 17 of R.A. No. 6657 and the applicable
administrative orders of DAR.
