When Landowners Pay Commissioners' Fees in Agrarian Cases: The LBP v. Heirs of Sanchez Ruling

The Supreme Court recently settled a recurring question in agrarian reform proceedings: who should pay the fees of commissioners appointed to value land subject to just compensation claims? In Land Bank of the Philippines v. Heirs of Bartolome J. Sanchez (G.R. No. 214902, January 22, 2020), the Court ruled that the Land Bank of the Philippines (LBP) is exempt from paying these fees, and that the landowner who initiates the case bears the cost. The ruling clarifies the application of the Rules of Court to agrarian expropriation cases and provides guidance on how commissioners' fees should be computed.

The Case Background

The Heirs of Bartolome J. Sanchez owned a 42.046-hectare parcel of land placed under the coverage of Republic Act No. 6657, the Comprehensive Agrarian Reform Law. The Department of Agrarian Reform (DAR) valued the property at P623,725.35, which the heirs found unreasonable. In 2002, they filed a complaint for the determination of just compensation before the Regional Trial Court sitting as a Special Agrarian Court (SAC).

During pre-trial, both parties agreed to appoint commissioners to value the property. The commissioners later requested full payment of their fees amounting to P120,000.00. The SAC granted this request and ordered the defendants—which included LBP—to deposit the amount with the clerk of court.

The Issue Presented

LBP challenged the SAC's order before the Court of Appeals and eventually before the Supreme Court. The central questions were: (1) whether LBP, as a government financial intermediary performing agrarian reform functions, is exempt from paying commissioners' fees; and (2) whether the P120,000.00 amount was legally justified.

The Supreme Court's Ruling

The Court ruled in favor of LBP on the first issue. Citing prior cases including Land Bank of the Philippines v. Gonzales, Land Bank of the Philippines v. Ibarra, and Land Bank of the Philippines v. Baldoza, the Court reiterated that LBP is exempt from paying costs of suit, including commissioners' fees, because it performs a governmental function in agrarian reform proceedings and is charged with the disbursement of public funds.

The Court also corrected the Court of Appeals' interpretation of Section 12, Rule 67 of the Rules of Court. That provision states that the fees of commissioners shall be taxed as part of the costs of the proceedings, and that all costs shall be paid by the plaintiff. The appellate court had concluded that the "plaintiff" referred to is the DAR, through LBP.

The Supreme Court disagreed. In agrarian expropriation cases, the landowner may voluntarily offer to sell the land, or may initiate the case when disputing the DAR's valuation. In such instances, the initial case filed with the SAC is not about the propriety of exercising eminent domain, but about resolving the proper valuation of the property. Here, the Heirs of Sanchez initiated the complaint because they found the DAR's valuation unacceptable. Therefore, they are the party who bears the costs of the proceedings.

Computing Commissioners' Fees

On the second issue, the Court found it premature to declare the P120,000.00 amount legally justified. Under Section 16, Rule 141 of the Rules of Court, commissioners appointed to appraise land shall receive compensation of not less than P300.00 per day for the time actually and necessarily employed in performing their duties and making their report to the court.

Since the case was still in the trial stage and the commissioners had not yet submitted their report—some had not even taken their oath—the proper amount of fees could not yet be determined. The Court remanded the case to the SAC for a detailed computation of fees based on the time actually and necessarily devoted by each commissioner, consistent with the Rules.

Practical Takeaways

• LBP is exempt from costs in agrarian cases. As a government instrumentality performing agrarian reform functions, LBP cannot be compelled to pay costs of suit, including commissioners' fees.
• The landowner who initiates the case may bear the costs. When a landowner files a complaint to challenge the DAR's valuation, that landowner is the party liable for commissioners' fees under the Rules of Court.
• Commissioners' fees must reflect actual work. Fees are computed based on the time actually and necessarily spent by commissioners in performing their duties, at a rate of not less than P300.00 per day, not on a fixed or lump-sum amount.
• Courts must await the commissioners' report. A determination of the reasonableness of fees is premature if the commissioners have not completed their work or submitted their report.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.