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COA to conduct a pre-audit of all government transactions and for all government
agencies. The only clear reference to a pre-audit requirement is found in Section 2,
paragraph 1, which provides that a post-audit is mandated for certain government
or private entities with state subsidy or equity andonlywhen the internal control
system of an audited entity is inadequate. In such a situation, the COAmayadopt
measures, including a temporary or special pre-audit, to correct the deficiencies.
Hence, the conduct of a pre-audit is not a mandatory duty that this Court
may compel the COA to perform. This discretion on its part is in line with the
constitutional pronouncement that the COA has the exclusive authority to define
the scope of its audit and examination. When the language of the law is clear
and explicit, there is no room for interpretation, only application.Neither can the
scope of the provision be unduly enlarged by this Court.

LANDBANK OF THE PHILIPPINES

v. HONEYCOMB FARMS CORPORATION
G.R. No. 169903, 29 February 2012, SECOND DIVISION (Brion, J.)
The compensation to be paid should not be less than the market value of the property
although the taking was not done in LBPs traditional exercise of the power of eminent domain.


Honeycomb Farms Corp. (HFC) voluntarily offered their two parcels of
land to the Department of Agrarian Reform (DAR) for P 10,480,000.00 and P
21,165.00. The Landbank of the Philippines (LBP) used the guidelines set forth
in DAR Administrative Order (AO) No. 3 series of 1991 in fixing the value of
these lands. HFC rejected the valuation. The voluntary offer to sell was referred
to the DAR adjudication Board. The Regional adjudicator fixed the value of
landholdings at P 5,324,529.00.
HFC filed a case with the Regional Trial Court (RTC) acting as Special
Agrarian Court against the DAR Secretary and LBP, praying to compensate HFC
for its landholdings amounting to P 12,440,000.00. In its amended complaint,
HFC increased the valuation to P 20,000,000.00. LBP, on the other hand, revalued
one of the lands to P 1,373,244.78, which was formerly fixed at P 2,527,749.60;
and the other to P 1,513,097.57, which was previously fixed at P 2,796,800.00. The
RTC made its own valuation when the Board of Commissioners could not agree
on the common valuation. The RTC took judicial notice of the fact that a portion
of 10 hectares of that land is a commercial land because it is near the commercial

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recent jurisprudence

district of Cataingan, Masbate.

The Court of Appeals (CA) decided in favor of HFC. CA held that lower
courts are not bound by the factors enumerated in Section 17 of RA 6657.
LBP filed a Petition for Review before the Supreme Court thereafter.
ISSUES:
1. Whether or not the application of DARs formula is mandatory in
determining just compensation
2. Whether or not the compensation to be paid should be less than the
market value of the property because the taking was not done in LBPs
traditional exercise of the power of eminent domain
3. Whether or not a hearing is necessary before the RTC can take judicial
notice of the nature of the land
HELD:
Mandatory application of the DAR formula
To guide the RTC in its function as Special Agrarian Court, Section 17
of RA 6657 enumerates the factors that have to be taken into consideration to
accurately determine just compensation. This provision states:

Section 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 farmworkers 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.

The DAR is the administrative agency tasked with the implementation of

the agrarian reform program. The RTC is required to consider the acquisition cost
of the land, the current value of like properties, its nature, actual use and income,
the sworn valuation by the owner, the tax declaration and the assessments made
by the government assessors to determine just compensation, it is equally true
that these factors have been translated into a basic formula by the DAR pursuant

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to its rule-making power under Section 49 of R.A. No. 6657. As the government
agency principally tasked to implement the agrarian reform program, it is the
DARs duty to issue rules and regulations to carry out the object of the law.
Special Agrarian Courts are not at liberty to disregard the formula laid
down in DAR A.O. No. 5, series of 1998, because unless an administrative order is
declared invalid, courts have no option but to apply it.The courts cannot ignore,
without violating the agrarian law, the formula provided by the DAR for the
determination of just compensation.
The compensation to be paid should not be less than the market value of
the property
When the State exercises its inherent power of eminent domain, the
Constitution imposes the corresponding obligation to compensate the landowner
for the expropriated property. This principle is embodied in Section 9, Article III
of the Constitution, which provides: Private property shall not be taken for public use
without just compensation.
When the State exercises the power of eminent domain in the
implementation of its agrarian reform program, the constitutional provision
which governs is Section 4, Article XIII of the Constitution, which provides that
the State shall, by law, undertake an agrarian reform program founded on the
right of farmers and regular farmworkers who are landless, to own directly or
collectively the lands they till or, in the case of other farmworkers, to receive a just
share of the fruits thereof.
Notably, this provision also imposes upon the State the obligation of
paying the landowner compensation for the land taken, even if it is for the
governments agrarian reform purposes. Specifically, the provision makes use of
the phrase just compensation, the same phrase used in Section 9, Article III of
the Constitution. That the compensation mentioned here pertains to the fair and
full price of the taken property.

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