G.R. No. 188046, July 24, 2013 - LAND BANK OF THE PHILIPPINES, Petitioner, v. AMERICAN RUBBER CORPORATION, Respondent.
G.R. No. 188046, July 24, 2013
LAND BANK OF THE PHILIPPINES, Petitioner, v. AMERICAN RUBBER CORPORATION, Respondent.
D E C I S I O N
VILLARAMA, JR., J.:
On March 8, 2004[,] we conducted an ocular inspection. The entire membership of the Court appointed commissioners were all present and both the contending parties also sent their duly authorized representatives.
Our ocular inspection reveal that both parcels of land are pre-dominantly planted to rubber with an approximate density of 290-295 rubber trees per hectare. There are relatively smaller portions thereof which are devoted to the production of rice, cacao, coffee, black pepper, and coconuts. Also found inside the rubber plantation are plant nurseries, office buildings and other infrastructures. The land has an airstrip of about 10 hectares and is likewise traversed and criss-crossed by plantation roads, which were built by plaintiff, American Rubber, containing an area of 27 hectares more or less. The location [of] the rubber plantation is approximately 8 kilometers to the city proper of Isabela, Basilan.
During the course of ocular inspection, some of our members inquired from occupants/workers of the rubber plantation and adjoining owners to get information on the probable selling price of land particularly rubberland. Our inquiry revealed that rubberland commands a selling price of between P120,000 to P150,000 depending on the size of the land and condition of the rubber trees.
x x x x
x x x we conducted inquiries from the different government agency/officials such as the City Assessors Office of Isabela, Department of Agriculture, Register of Deeds, Department of Agrarian Reform, and the Bureau of Internal Revenue for the purpose of obtaining information on the approximate selling price of rubberland in the Isabela City area. Our investigation reveal that the reasonable selling price of rubber [land] within the City of Isabela ranges from P90,000 to P150,000.
During the March 26, 2004 hearing, defendant LBP submitted a Valuation Summary for plaintiff’s property while the plaintiff submitted a copy of the appraisal report prepared by Cuervo Appraisers Inc. x x x
x x x x
x x x x
In VIEW of all the foregoing considerations, this Commission hereby recommends that just compensation of the [plaintiff’s] property be fixed at ONE HUNDRED FIFTEEN MILLION THREE HUNDRED SEVENTY TWO THOUSAND TWO HUNDRED SIX PESOS (P115,372,206) x x x.15
WHEREFORE, judgment is hereby rendered ordering defendant LBP and DAR to jointly and severally pay [plaintiff] the following:cralavvonlinelawlibrary
1. Just compensation of [plaintiff’s] property amounting to ONE HUNDRED FIFTEEN MILLION THREE HUNDRED SEVENTY TWO THOUSAND TWO HUNDRED SIX PESOS (P115,372,206) which amount is broken down below:cralavvonlinelawlibrary
LAND USE AREA TAKEN VALUE/HECTARE TOTAL VALUE Rubberland 814.6625 P130,342 P106,184,739 Riceland 14.8470 P126,000 P 1,870,722 Coconutland 5.5676 P 98,430 P 548,018 Cacaoland 0.8971 P157,063 P 140,901 Idle/Rawland 13.4160 P 80,000 P 1,073,280 Black Pepper land 0.5918 P218,013 P 129,020 Plant Nursery 1.5574 P200,000 P 311,480 Plantation road 27.5043 P130,342 P 3,584,496 Airstrip 10.1970 P150,000 P 1,529,550 GRAND TOTAL P115,372,206
2. Interest based on the 91-day treasury bills rate as provided for under Section 18 of R.A. 6657 be reckoned from the [date] when [plaintiff’s] property was taken and/or transferred to the Republic of the Philippines
3. Commissioners fees to be taxed as part of the costs pursuant to Section 12, Rule 67, of the 1997 RCP, as amended, which shall be claimed in a Bill of Costs to be submitted to the Court for its evaluation and proper action thereto;chanroblesvirtualawlibrary
4. Reasonable attorney’s fees amounting to One Hundred Fifty Thousand Pesos (P150,000.00);chanroblesvirtualawlibrary
5. Costs of suit.
WHEREFORE, premises foregoing, the instant petition is PARTIALLY GRANTED. The assailed Orders dated June 16, 2005 and March 14, 2006 of Branch 18 of the Regional Trial Court of Pagadian City is hereby AFFIRMED with MODIFICATION that the award of interest based on the 91-day treasury bill is deleted.
1. THE COURT OF APPEALS COMMITTED A SERIOUS ERROR OF LAW IN AFFIRMING WITH MODIFICATION THE ORDERS DATED JUNE 16, 2005 AND MARCH 14, 2006 OF THE SPECIAL AGRARIAN COURT (SAC), THE COMPENSATION FIXED BY THE SAC NOT BEING IN ACCORDANCE WITH THE LEGALLY PRESCRIBED VALUATION FACTORS UNDER SECTION 17 OF R.A. 6657 AS TRANSLATED INTO A BASIC FORMULA IN DAR ADMINISTRATIVE ORDER NO. 05, SERIES OF 1998 AND JOINT DAR-LBP MEMORANDUM CIRCULAR NO. 7, SERIES OF 1999, AND AS RULED BY THE SUPREME COURT IN THE CASES OF SPS. BANAL, G.R. NO. 143276 (JULY 20, 2004); CELADA, G.R. NO. 164876 (JANUARY 23, 2006); AND LUZ LIM, G.R. NO. 171941 (AUGUST 2, 2007).
2. THE HONORABLE COURT OF APPEALS [ERRED] IN HOLDING PETITIONER LBP LIABLE FOR COMMISSIONERS’ FEE AS THE LATTER IS PERFORMING GOVERNMENTAL FUNCTION AND, THEREFORE, NOT LIABLE FOR COST.19
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.
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)
Where: LV = Land ValueCNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration28
In Land Bank of the Philippines v. Sps. Banal, we recognized that the DAR, as the administrative agency tasked with the implementation of the agrarian reform program, already came up with a formula to determine just compensation which incorporated the factors enumerated in Section 17 of RA 6657. We said:cralavvonlinelawlibrary“These factors [enumerated in Section 17] have been translated into a basic formula in DAR Administrative Order No. 6, Series of 1992, as amended by DAR Administrative Order 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.” [emphases ours]In Landbank of the Philippines v. Celada, we emphasized the duty of the RTC to apply the formula provided in the applicable DAR AO to determine just compensation, stating that:cralavvonlinelawlibrary“While [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 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 DAR’s duty to issue rules and regulations to carry out the object of the law. [The] DAR [Administrative Order] precisely “filled in the details” of Section 17, R.A. No. 6657 by providing a basic formula by which the factors mentioned therein may be taken into account. The [RTC] was at no liberty to disregard the formula which was devised to implement the said provision.We reiterated the mandatory application of the formula in the applicable DAR administrative regulations in Land Bank of the Philippines v. Lim, Land Bank of the Philippines v. Heirs of Eleuterio Cruz, and Land Bank of the Philippines v. Barrido. In Barrido, we were explicit in stating that:cralavvonlinelawlibrary
It is elementary that 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. As such, courts cannot ignore administrative issuances especially when, as in this case, its validity was not put in issue. Unless an administrative order is declared invalid, courts have no option but to apply the same.” [emphases ours]“While the determination of just compensation is essentially a judicial function vested in the RTC acting as a Special Agrarian Court, the judge cannot abuse his discretion by not taking into full consideration the factors specifically identified by law and implementing rules. 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.” (emphases ours)These rulings plainly impose on the RTC the duty to apply the formula laid down in the pertinent DAR administrative regulations to determine just compensation. Clearly, the CA and the RTC acted with grievous error when they disregarded the formula laid down by the DAR, and chose instead to come up with their own basis for the valuation of the subject land.30 [Additional emphasis and underscoring supplied; citations omitted.]
1. PREFATORY STATEMENT
The rubber plantation income models presented under the old rubber Land Valuation Guideline (LVG No. 6, Series of 1990) recognized the income of rubber plantations based on processed crumb rubber. However, recent consultations with rubber authorities (industry, research, etc.) disclosed that the standard income approach to valuation should measure the net income or productivity of the land based on the farm produce (in their raw forms) and not on the entire agri-business income enhanced by the added value of farm products due to processing. Hence, it is more appropriate to determine the Capitalized Net Income (CNI) of rubber plantations based on the actual yield and farm gate prices of raw products (field latex and cuplump) and the corresponding cost of production.
There is also a growing market for old rubber trees which are estimated to generate net incomes ranging between P20,000 and P30,000 per hectare or an average of about P100 per tree, depending on the remaining stand of old trees at the end of its economic life. This market condition for old rubber trees was not present at the time LVG No. 6, Series of 1990, was being prepared. (The terminal or salvage value of old rubber trees was at that time pegged at only P6,000 per hectare, representing the amount then being paid by big landholders to contractors for clearing and uprooting old trees.
LVG No. 6, Series of 1990, was therefore revised to address the foregoing considerations and in accordance with DAR Administrative Order (AO) No. 05, Series of 1998.
The “taking of private lands under the agrarian reform program partakes of the nature of an expropriation proceeding.” In computing the just compensation for expropriation proceedings, the RTC should take into consideration the “value of the land at the time of the taking, not at the time of the rendition of judgment.” “The ‘time of taking’ is the time when the landowner was deprived of the use and benefit of his property, such as when title is transferred to the Republic.36
1Rollo, pp. 89-118. Penned by Associate Justice Rodrigo F. Lim, Jr. with Associate Justices Michael P. Elbinias and Ruben C. Ayson concurring.cralawlibrary
2 Id. at 121-122.cralawlibrary
3 Records, Vol. I, pp. 233-245, 275-276. Penned by Presiding Judge Reinerio (Abraham) B. Ramas.cralawlibrary
4 Records, Vol. III, p. 2. The areas of TCT Nos. T-1285 and T-1286 are sometimes stated as 12.7970 and 922.9930, respectively, while the combined area is sometimes stated as 935.7906 in some parts of the records. See also pages 4 to 5 of the Commissioners’ Report on retained areas.cralawlibrary
5 Id. at 115, 117-118.cralawlibrary
6 Id. at 120.cralawlibrary
7 Records, Vol. I, p. 2.cralawlibrary
8 Records, Vol. III, pp. 142-143.cralawlibrary
9 Records, Vol. I, p. 2.cralawlibrary
10 Id. at 1-4.cralawlibrary
11 Id. at 30-33.cralawlibrary
12 Id. at 43-44.cralawlibrary
13 Id. at 46-50, 57.cralawlibrary
14 Records, Vol. III, pp. 2-19.cralawlibrary
15 Id. at 3-4, 18.cralawlibrary
16 Supra note 3, at 233-245.cralawlibrary
17 Id. at 244-245.cralawlibrary
18Rollo, p. 118.cralawlibrary
19 Id. at 55-56.cralawlibrary
20 G.R. Nos. 177404 & 178097, June 25, 2009, 591 SCRA 1.cralawlibrary
21Rollo, p. 75.cralawlibrary
22 Id. at 65.cralawlibrary
23 Supra note 20.cralawlibrary
24Rollo, pp. 354-355.cralawlibrary
25 543 Phil. 497, 527 (2007).cralawlibrary
26 Land Bank of the Philippines v. Heirs of Salvador Encinas, G.R. No. 167735, April 18, 2012, 670 SCRA 52, 60.cralawlibrary
27 DAR AO No. 06-92 dated October 30, 1992, as amended by DAR AO No. 11-94 dated September 13, 1994; see also DAR AO No. 05-98 dated April 15, 1998 and DAR AO No. 02-09 dated October 15, 2009.cralawlibrary
28Land Bank of the Philippines v. Heirs of Salvador Encinas, supra note 26, at 60-61.cralawlibrary
29 G..R. No. 169903, February 29, 2012, 667 SCRA 255.cralawlibrary
30 Id. at 269-271.cralawlibrary
31 Supra note 25.cralawlibrary
32Rollo, p. 402.cralawlibrary
33Land Bank of the Philippines v. Obias, G.R. No. 184406, March 14, 2012, 668 SCRA 265, 271-272.cralawlibrary
34 Apo Fruits Corporation v. Court of Appeals, supra note 25, at 519.cralawlibrary
35Export Processing Zone Authority v. Dulay, No. L-59603, April 29, 1987, 149 SCRA 305, 314-315.cralawlibrary
36 Supra note 26, at 59-60, citing Land Bank of the Philippines v. Department of Agrarian Reform, G.R. No. 171840, April 4, 2011, 647 SCRA 152, 169; Land Bank of the Philippines v. Imperial, 544 Phil. 378, 388 (2007); Gabatin v. Land Bank of the Philippines, 486 Phil. 366, 383-384 (2004); Land Bank of the Philippines v. Livioco, G.R. No. 170685, September 22 2010, 631 SCRA 86, 112-113; and Eusebio v. Luis, G.R. No. 162474, October 13, 2009, 603 SCRA 576, 586-587.cralawlibrary
37 See Land Bank of the Philippines v. Barrido, G.R. No. 183688, August 18, 2010, 628 SCRA 454, 460.cralawlibrary
38 See Land Bank of the Philippines v. Heirs of Salvador Encinas, supra note 26, at 63.cralawlibrary
39 See Land Bank of the Philippines v. Rufino, G.R. Nos. 175644 & 175702, October 2, 2009, 602 SCRA 399, 412.