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G.R. No. 181953, July 25, 2017 - LAND BANK OF THE PHILIPPINES, Petitioner, v. RURAL BANK OF HERMOSA (BATAAN), INC., Respondent.

G.R. No. 181953, July 25, 2017 - LAND BANK OF THE PHILIPPINES, Petitioner, v. RURAL BANK OF HERMOSA (BATAAN), INC., Respondent.

PHILIPPINE SUPREME COURT DECISIONS

EN BANC

G.R. No. 181953*, July 25, 2017

LAND BANK OF THE PHILIPPINES, Petitioner, v. RURAL BANK OF HERMOSA (BATAAN), INC., Respondent.

D E C I S I O N

PERLAS-BERNABE, J.:

Before the Court is a petition for review on certiorari1 assailing the Decision2 dated September 28, 2007 and the Resolution3 dated February 20, 2008 of the Court of Appeals (CA) in CA-G.R. SP No. 96701, which affirmed the Decision4 dated June 19, 2006 and the Order5 dated October 4, 2006 of the Regional Trial Court of Bataan, Branch 1 (RTC) in Civil Case No. 6428 fixing the just compensation for respondent Rural Bank of Hermosa (Bataan), Inc.'s (respondent) 1.572 hectares (has.) agricultural land acquired by the government (subject land) at P30.00 per square meter (sq. m.).

The Facts


Respondent is the registered owner of two (2) parcels of agricultural land situated in Saba, Hermosa, Bataan, with a total area of 2.1718 hectares, covered by Transfer Certificate of Title (TCT) Nos. T-1147136 and T-114714.7 Respondent voluntarily offered to sell (VOS) the same to the government but only the subject land was acquired, and placed under the Comprehensive Agrarian Reform Program (CARP) pursuant to Republic Act No. (RA) 6657,8 as amended.9

Petitioner the Land Bank of the Philippines (LBP) valued the subject land at P28,282.0910 using the formula under Department of Agrarian Reform (DAR) Administrative Order No. (AO) 17, Series of 1989,11 as amended by DAR AO 03, Series of 1991 (DAR AO 17, Series of 1989, as amended),12i.e., LV = (CNI x .70) + (MV x .30),13 but respondent rejected the said valuation, prompting the LBP to deposit the said amount in the latter's name.14

After the summary administrative proceedings for the determination of just compensation, the Office of the Provincial Adjudicator of Dinalupihan, Bataan rendered a Decision15 dated December 13, 1994 in DARAB Case No. 035-92 adopting the LBP's valuation.16 Respondent moved for reconsideration,17 which was, however, denied in an Order18 dated August 8, 1995.

Dissatisfied, respondent filed before the RTC, sitting as a Special Agrarian Court (SAC), a petition19 seeking the determination of just compensation for the subject land, or in the alternative, to be allowed to withdraw its VOS should the valuation arrived at be unacceptable to it.20

The RTC Ruling


In a Decision21 dated June 19, 2006, the RTC found the LBP's valuation as too low and unrealistic, and based on a mere government valuation policy and not on its market value as reflected on the tax declarations for the two (2) parcels of land. It gave credence to the testimony of the geodetic engineer who made the relocation survey and claimed that he would be willing to pay the price of P30.00 per sq. m. therefor considering its accessibility to the national road and its location which is a mere ½ kilometer away from a school and about 50 meters away from a Catholic church. Consequently, it fixed the just compensation for the subject land at P30.00 per sq. m.22

The LBP moved for reconsideration,23 which was, however, denied in an Order24 dated October 4, 2006.

Unperturbed, the LBP elevated the matter before the CA.25

The CA Ruling


In a Decision26 dated September 28, 2007, the CA upheld the RTC's valuation as being in accord with the guidelines set forth under Section 17 of RA 6657, as amended, since the RTC considered not only the testimony of the parties' respective witnesses, but also the nature of the land's use and its assessed value based on the tax declarations. It rejected the LBP's contention that DAR AO 17, Series of 1989, as amended, should control the computation of just compensation, holding that the said AOs are mere guidelines to be used by the LBP, and are not binding on the courts.27

Aggrieved, the LBP filed a motion for reconsideration,28 but the same was denied in a Resolution29 dated February 20, 2008; hence, the instant petition.

The Issue Before the Court


The essential issue for the Court's resolution is whether or not the CA committed reversible error in upholding the RTC's valuation fixing the just compensation for the subject land at P30.00 per sq. m.

The Court's Ruling


"Settled is the rule that when the agrarian reform process is still incomplete, such as in this case where the just compensation due the landowner has yet to be settled, just compensation should be determined and the process be concluded under RA 6657,"30 as amended.

"For purposes of determining just compensation, the fair market value of an expropriated property is determined by its character and its price at the time of taking," or the time when the landowner was deprived of the use and benefit of his property, such as when title is transferred in the name of the Republic of the Philippines (Republic),31 or Certificates of Land Ownership Award (CLOAs) are issued in favor of the farmer-beneficiaries. In addition, the factors enumerated under Section 17 of RA 6657, as amended, i.e., (a) the acquisition cost of the land, (b) the current value of like properties, (c) the nature and actual use of the property, and the income therefrom, (d) the owner's sworn valuation, (e) the tax declarations, (f) the assessment made by government assessors, (g) the social and economic benefits contributed by the farmers and the farmworkers, and by the government to the property, and (h) the non-payment of taxes or loans secured from any government financing institution on the said land, if any, must be equally considered.32

It is well to emphasize that the determination of just compensation is a judicial function. Thus, the "justness" of the enumeration of valuation factors in Section 17, the "justness" of using a basic DAR formula, and the "justness" of the components (and their weights) that flow into such formula, are all matters for the courts to decide.33 Nonetheless, to settle the perennial objections to the use of Section 17 and the resulting DAR formulas in the valuation of acquired properties under the CARP, the Court in Alfonso v. LBP (Alfonso)34 ruled:

For the guidance of the bench, the bar, and the public, we reiterate the rule: Out of regard for the DAR's expertise as the concerned implementing agency, courts should henceforth consider the factors stated in Section 17 of RA 6657, as amended, as translated into the applicable DAR formulas in their determination of just compensation for the properties covered by the said law. If, in the exercise of their judicial discretion, courts find that a strict application of said formulas is not warranted under the specific circumstances of the case before them, they may deviate or depart therefrom, provided that this departure or deviation is supported by a reasoned explanation grounded on the evidence on record. In other words, courts of law possess the power to make a final determination of just compensation.35

In the present case, the CA merely upheld the just compensation fixed by the RTC which considered only the nature of the land's use, and its assessed value based on the tax declarations, without a showing, however, that the other factors under Section 17 of RA 6657, as amended, were taken into account or otherwise found to be inapplicable, and completely disregarded the pertinent DAR formula contrary to what the law requires. On this score alone, the CA clearly erred in sustaining the RTC's valuation as having been made in accordance with Section 17 of RA 6657, as amended.

Nonetheless, the Court cannot likewise adopt the LBP's computation. It bears to reiterate that just compensation must be valued at the time of taking, such as when title is transferred in the name of the Republic,36 or CLOAs are issued in favor of the farmer-beneficiaries. Accordingly, the just compensation for the subject land should have been computed based on the values prevalent for like agricultural lands37 in accordance with the pertinent DAR regulations effective during such time of taking. However, while the subject land was placed under CARP coverage in 1991, records do not bear out the date when title was issued in the name of the Republic or CLOAs were issued in favor of the farmer-beneficiaries.

Moreover, during the pendency of the proceedings, DAR AO 17, Series of 1989, as amended, which was used by the LBP in computing the just compensation for the subject land, was repealed by DAR AO 6, Series of 199238 that was amended by DAR AO 11, Series of 1994,39 and subsequently superseded by DAR AO 5, Series of 1998,40 which was, in turn, revoked by DAR AO 2, Series of 2009.41 It must be pointed out, however, that DAR AO 2, Series of 2009 implementing RA 970042 expressly declared that all claim folders received by the LBP prior to July 1, 2009, as in this case, shall be valued in accordance with Section 17 of RA 6657, as amended, prior to its further amendment by RA 9700.43

Records further show that during the summary administrative proceedings before the PARAD,44 the subject land was revalued in accordance with DAR AO 6, Series of 1992 and DAR AO 11, Series of 1994,45 but resulted to a lower valuation on both instances.46 Nonetheless, the records are bereft of showing why the LBP insisted upon the applicability of DAR AO 17, Series of 1989, as amended, instead of the said AOs.

Consequently, despite the propriety of setting aside the just compensation fixed by the RTC, and affirmed by the CA, the Court cannot automatically adopt the LBP's own computation as prayed for in the instant petition. Notably, other than the Land Valuation Worksheet47 for the land covered by TCT No. T-114714, and the Field Investigation Reports for the lands covered by TCT No. T-11471348 and TCT No. T-114714,49 no competent evidence was adduced by the LBP to support the amounts used in arriving at the just compensation, not having attached any certification from the concerned government agency showing the relevant industry data on the average gross production (AGP) of palay in the locality for purposes of computing the capitalized net income (CNI),50 and the tax declarations from which it derived the market values used.51 Besides, the veracity of the facts and figures which the LBP used under the circumstances involves the resolution of questions of fact which is, as a rule, improper in a petition for review on certiorari since the Court is not a trier of facts. Thus, a remand of this case for reception of further evidence is necessary in order for the RTC, acting as a SAC, to determine just compensation in accordance with Section 17 of RA 6657, as amended, and the applicable DAR regulations.52 To this end, the RTC is hereby directed to observe the following guidelines in the remand of the case:

1. Just compensation must be valued at the time of taking, or the time when the owner was deprived of the use and benefit of his property, such as when title is transferred in the name of the Republic or CLOAs were issued in favor of the farmer-beneficiaries. Hence, the evidence to be presented by the parties before the RTC for the valuation of the subject land must be based on the values prevalent on such time of taking for like agricultural lands.53

2. Courts should consider the factors in Section 17 of RA 6657, as amended, prior to its amendment by RA 9700, as translated into the applicable DAR formula. However, if the RTC finds that a strict application of the relevant DAR formulas is not warranted, it may depart therefrom upon a reasoned explanation.54

3. Interest may be awarded as may be warranted by the circumstances of the case and based on prevailing jurisprudence. In previous cases, the Court has allowed the grant of legal interest in expropriation cases where there is delay in the payment since the just compensation due to the landowners was deemed to be an effective forbearance on the part of the State. Thus, legal interest on the unpaid balance shall be pegged at the rate of 12% per annum from the date of taking, as shall be determined by the RTC, until June 30, 2013 only. Thereafter, or beginning July 1, 2013, until fully paid, the just compensation due the landowners shall earn interest at the new legal rate of 6% per annum55 in line with the amendment introduced by Bangko Sentral ng Pilipinas-Monetery Board Circular No. 799,56 Series of 2013.57

WHEREFORE, the Decision dated September 28, 2007 and the Resolution dated February 20, 2008 of the Court of Appeals in CA-G.R. SP No. 96701 are hereby REVERSED and SET ASIDE. Civil Case No. 6428 is REMANDED to the Regional Trial Court of Bataan, Branch 1 (RTC) for reception of evidence on the issue of just compensation in accordance with the guidelines set in this Decision. The RTC is directed to conduct the proceedings in said case with reasonable dispatch, and to submit to the Court a report on its findings and recommended conclusions within sixty (60) days from notice of this Decision.

SO ORDERED.

Sereno, C.J., Velasco, Jr., Leonardo-De Castro, Peralta, Bersamin, Del Castillo, Mendoza, Leonen, Caguioa, Martires, Tijam, and Reyes, Jr., JJ., concur.
Carpio, and Jardeleza, JJ., see separate concurring opinion.

Endnotes:


* Part of the Supreme Court's Case Decongestion Program.

1Rollo, pp. 26-54.

2 Id. at 15-21. Penned by Associate Justice Magdangal M. De Leon with Associate Justices Rebecca De Guia-Salvador and Ricardo R. Rosario concurring.

3 Id. at 8-13.

4 Id. at 104-111. Penned by Judge Benjamin T. Vianzon.

5 Id. at 123.

6 Records, p. 369 (including dorsal portion).

7 Id. at 368.

8 Entitled "AN ACT INSTITUTING A COMPREHENSIVE AGRARIAN REFORM PROGRAM TO PROMOTE SOCIAL JUSTICE AND INDUSTRIALIZATION, PROVIDING THE MECHANISM FOR ITS IMPLEMENTATION, AND FOR OTHER PURPOSES," approved on June 10, 1988.

9 See rollo, pp. 16 and 104. See also Notice of Land Valuation dated January 2, 1992 and CARP (VOF) Form No. 1 dated July 25, 1989; records, pp. 370 and 566, respectively.

10Rollo, p. 16. See also Claims Processing Form dated October 30, 1991; records, pp. 506-509.

11 Entitled "RULES AND REGULATIONS AMENDING VALUATION OF LANDS VOLUNTARILY OFFERED PURSUANT TO EO 229 AND RA 6657 AND THOSE COMPULSORILY ACQUIRED PURSUANT TO RA 6657."

12 Entitled "RULES AND REGULATIONS AMENDING CERTAIN PROVISIONS OF AO 17 WHICH GOVERNS THE VALUATION OF LANDS VOLUNTARILY OFFERED PURSUANT TO EO 229 AND RA 6657 AND COMPULSORILY ACQUIRED PURSUANT TO RA 6657" dated April 25, 1991. See rollo, p. 195.

13 Where:
LV       =      Land Value
CNI     =     Capitalized Net Income
MV      =     Market Value per Tax Declaration

See id. at 291.

14 See id. at 16-17.

15 Id. at 178-181. Penned by Provincial Adjudicator Benjamin M. Yambao.

16 See id. at 181.

17 See "Motion for Reconsideration and/or to Set Aside Decision dated December 13, 1994" dated December 27, 1994; id. at 182-183.

18 Id. at 184.

19 Dated August 28, 1995 and docketed as Civil Case No. 6428. Id. at 185-188.

20 See id. at 187.

21 Id. at 104-111.

22 See id. at 111.

23 See Motion for Reconsideration dated July 6, 2006; id. at 112-122.

24 Id. at 123.

25 See petition for review dated November 17, 2006; id. at 124-147.

26 Id. at 15-21.

27 See id. at 18-20.

28 Dated October 17, 2007. Id. at 71 -79.

29 Id. at 8-13.

30LBP v. Heirs of Jesus Alsua, 753 Phil. 323, 332 (2015).

31 See DAR v. Sps. Sta. Romana, 738 Phil. 590, 600-601 (2014); and DAR v. Beriña 738 Phil 605 619-620 (2014).

32 See Heirs of Pablo Feliciano, Jr. v. LBP, G.R. No. 215290, January 11, 2017; LBP v. Kho, G.R. No. 214901, June 15, 2016; DAR v. Sps. Sta. Romana, id.; and DAR v. Beriña, id.

33 See Alfonso v. LBP, G.R. Nos. 181912 & 183347, November 29, 2016.

34 Id.

35 See Alfonso v. LBP, supra note 33.

36 See DAR v. Sps. Sta. Romano, supra note 31, at 601; DAR v. Beriña, supra note 31, at 620.

37 See Heirs of Pablo Feliciano, Jr. v. LBP, supra note 32; LBP v. Kho, supra note 32; DAR v. Sps. Sta. Romano, id.; and DAR v. Beriña, id.

38 Entitled "RULES AND REGULATIONS AMENDING THE VALUATION OF LANDS VOLUNTARILY OFFERED AND COMPULSORILY ACQUIRED AS PROVIDED FOR UNDER ADMINISTRATIVE ORDER NO. 17, SERIES OF 1989, AS AMENDED, ISSUED PURSUANT TO REPUBLIC ACT NO. 6657," adopted on October 30, 1992.

39 entitled "REVISING THE RULES AND REGULATIONS COVERING THE VALUATION OF LANDS VOLUNTARILY OFFERED AND COMPULSORILY ACQUIRED AS EMBODIED IN ADMINISTRATIVE ORDER NO. 06, SERIES OF 1992," dated September 13, 1994.

40 Entitled "REVISED RULES AND REGULATIONS GOVERNING THE VALUATION OF LANDS VOLUNTARILY OFFERED OR COMPULSORILY ACQUIRED PURSUANT TO REPUBLIC ACT NO. 6657," dated April 15, 1998.

41 Entitled "RULES AND PROCEDURES GOVERNING THE ACQUISITION AND DISTRIBUTION OF AGRICULTURAL LANDS UNDER REPUBLIC ACT (R.A.) NO. 6657, AS AMENDED BY R.A. NO. 9700," dated October 15, 2009.

42 Entitled "AN ACT STRENGTHENING THE COMPREHENSIVE AGRARIAN REFORM PROGRAM (CARP), EXTENDING THE ACQUISITION AND DISTRIBUTION OF ALL AGRICULTURAL LANDS, INSTITUTING NECESSARY REFORMS, AMENDING FOR THE PURPOSE CERTAIN PROVISIONS OF REPUBLIC ACT NO. 6657, OTHERWISE KNOWN AS THE COMPREHENSIVE AGRARIAN REFORM LAW OF 1988, AS AMENDED, AND APPROPRIATING FUNDS THEREFOR," approved on August 7, 2009.

43 See Heirs of Pablo Feliciano, Jr. v. LBP, supra note 32.

44 See rollo, p. 184.

45 See id. at 105, 179, 184, and 209.

46 See id. at 105. See also records, pp. 101 and 372.

47 Records, pp. 510-513.

48 Id. at 515-519.

49 Id. at 520-524.

50 See id. at 511.

51 See id. at 512.

52 See LBP v. Heirs of Lorenzo Tañada, G.R. No. 170506, January 11, 2017.

53 See Heirs of Pablo Feliciano, Jr. v. LBP, supra note 32; LBP v. Kho, supra note 32; DAR v. Sps. Sta. Romana, supra note 31, at 601; and DAR v. Beriña, supra note 31, at 620.

54 See Heirs of Pablo Feliciano, Jr. v. LBP, supra note 32; and Alfonso v. Land Bank of the Philippines, supra note 33.

55 See Nacar v. Gallery Frames, 716 Phil. 267, 281-283 (2013).

56 "Rate of interest in the absence of stipulation" (July 1, 2013).

57 See Heirs of Pablo Feliciano, Jr. v. LBP, supra note 32; LBP v. Kho, supra note 32; DAR v. Sps. Sta. Romana, supra note 31, at 601; and DAR v. Beriña, supra note 31, at 620.





SEPARATE CONCURRING OPINION


CARPIO, J.:


In this case, the Court of Appeals upheld the Regional Trial Court's valuation of just compensation as being in accord with the guidelines set forth under Section 17 of Republic Act No. 6657 (RA 6657), as amended. It rejected the Land Bank of the Philippines' contention that DAR AO 17, Series of 1989, as amended, should control the computation of just compensation, holding that the said administrative orders are mere guidelines to be used by the LBP, and are not binding on the courts.

The ponencia reversed the Court of Appeals and remanded Civil Case No. 6428 to the Regional Trial Court for reception of evidence to determine just compensation in accordance with the guidelines set in the ponencia, which pertinently state that "[c]ourts should consider the factors in Section 17 of RA 6657, as amended, prior to its amendment by RA 9700, as translated into the applicable DAR formula, x x x."

I submit this Separate Concurring Opinion to point out the gravely erroneous statement in Alfonso v. LBP1 that "the DAR formulas partake of the nature of statutes, which under the 2009 amendment became law itself x x x." While the ponencia does not cite this particular statement in its discussion, it nevertheless stated that the Court supposedly "settle[dj the perennial objections to the use of Section 17 and the resulting DAR formulas in the valuation of acquired properties under the CARP" in Alfonso. With a fallacious statement that "the DAR formulas partake of the nature of statutes, which under the 2009 amendment became law itself x x x," Alfonso incorrectly settled the various objections to the use of the DAR formulas.

The statement in Alfonso that the DAR formulas partake of the nature of statutes is wrong for two reasons.

First, the DAR formulas are embodied in administrative issuances merely for the guidance of the courts in the determination of just compensation, and therefore they clearly do not partake of the nature of laws. Statutes are written laws passed by the legislature that courts construe and apply to specific situations. Congress did not craft the DAR formulas. As such, the DAR formulas are not statutes and therefore, the courts, which construe and apply laws,2 are not bound by such formulas.

In the same case of Alfonso, the majority stressed that "courts should x x x consider the factors stated in Section 17 of RA 6657, as amended, as translated into the applicable DAR formulas in their determination of just compensation for the properties covered by the said law. If, in the exercise of their judicial discretion, courts find that a strict application of said formulas is not warranted under the specific circumstances of the case before them, they may deviate or depart therefrom, provided that this departure or deviation is supported by a reasoned explanation grounded on the evidence on record. In other words, courts of law possess the power to make a final determination of just compensation." If the DAR formulas "partake of the nature of statutes," then courts will have to mandatorily implement the DAR formulas without deviation. The fact that the Court in Alfonso declared that courts can deviate from the DAR formulas proves that these formulas do not partake of the nature of statutes.

Clearly, the majority in Alfonso admit that the DAR formulas are not binding on the courts. There is no dispute that the courts must consider the DAR formulas in determining just compensation. However, the courts may depart or deviate from the DAR formulas. In other words, while the courts are bound to consider the DAR formulas in determining just compensation, the courts are not bound to implement the DAR formulas in computing just compensation. Otherwise, the courts serve merely as rubber stamps of the DAR, obligated to give their imprimatur to the DAR formulas. To hold that courts are bound by DAR's valuation makes resort to the courts an empty exercise.

Second, under the 2009 amendment of Section 17 of RA 6657, the DAR formulas never "became law," contrary to the statement in Alfonso that the DAR formulas "became law" under the 2009 amendment. Nowhere in the amended Section 17 of RA 6657 did the DAR formulas become law to be mandatorily implemented by the courts.

Section 17 of RA 6657, as amended by RA 9700, reads:

SEC. 17. Determination of Just Compensation. — In determining just compensation, the cost of acquisition of the land, the value of the standing crop, the current value of like properties, its nature; actual use and income, the sworn valuation by the owner, the tax declarations, the assessment made by government assessors, and seventy percent (70%) of the zonal valuation of the Bureau of Internal Revenue (BIR), translated into a basic formula by the DAR shall be considered, subject to the final decision of the proper court. The social and economic benefits contributed by the farmers and the farmworkers and by the Government to the property as well as the nonpayment of taxes or loans secured from any government financing institution on the said land shall be considered as additional factors to determine its valuation. (Emphasis supplied)

This provision merely states that the DAR formulas translating the factors in determining just compensation shall be considered, but remain subject to the final decision of the courts. The DAR formulas did not become law in the amended Section 17 of RA 6657 to be followed mandatorily without deviation by the courts. The courts are merely statutorily required to consider the DAR formulas; however, the courts are not bound by law to implement the DAR formulas. If the DAR formulas "became law" under the 2009 RA 9700 amendment, then the DAR formulas could no longer be changed by the courts, and the phrase "subject to the final decision of the courts" in the amendment would be a superfluity. To insist that the DAR formulas "became law" not only goes beyond the express language and intent of the law, such insistence also defies reason.

As I stated in my Separate Concurring Opinion in Alfonso, the clause "a basic formula by the DAR shall be considered, subject to the final decision of the proper court" means that the law requires the courts to consider the DAR formula in determining just compensation, but the courts are not bound by the DAR formula since the determination of just compensation is essentially a judicial function. This amendment recognizes that the DAR has adopted a formula for determining just compensation. However, the same amendment recognizes that any DAR formula is always, in the appropriate case, "subject to the final decision of the proper court." This is an express recognition by the legislature that the DAR formulas are neither mandatory nor binding on the courts, and that the determination of just compensation is essentially a judicial function.

In Land Bank of the Philippines v. Yatco Agricultural Enterprises3 and Land Bank of the Philippines v. Eusebio, Jr.,4 the Court held that the SACs must consider the DAR formulas in determining just compensation; however, the SACs are not strictly bound to apply the DAR formulas, thus:

When acting within the parameters set by the law itself, the RTC-SACs, however, are not strictly bound to apply the DAR formula to its minute detail, particularly when faced with situations that do not warrant the formula's strict application; they may, in the exercise of their discretion, relax the formula's application to fit the factual situations before them. They must, however, clearly explain the reason for any deviation from the factors and formula that the law and the rules have provided.

I reiterate my Separate Concurring Opinion in Alfonso. The application of the DAR formulas is not mandatory on Special Agrarian Courts (SACs) in the determination of just compensation. The first paragraph of Section 18 of RA 6657 or the Comprehensive Agrarian Reform Law of 1988 reads:

Section 18. Valuation and Mode of Compensation. — The LBP shall compensate the landowner in such amounts as may be agreed upon by the landowner and the DAR and the LBP, in accordance with the criteria provided for in Sections 16 and 17, and other pertinent provisions hereof, or as may be finally determined by the court, as the just compensation for the land. (Emphasis supplied)

This provision on valuation of just compensation consists of two parts. The first part refers to the amount of just compensation "as may be agreed upon by the landowner and the DAR and the LBP" while the second part pertains to the amount of just compensation "as may be finally determined by the court." In other words, the amount of just compensation may either be (1) by an agreement among the parties concerned; or (2) by a judicial determination thereof.

In the first case, there must be an agreement on the amount of just compensation between the landowner and the DAR. Such agreement must be in accordance with the criteria under Sections 16 and 17 of RA 6657.5 Section 16 outlines the procedure for acquiring private lands while Section 17 provides for the factors to be considered in determining just compensation. To translate such factors, the DAR devised a formula, which is embodied in DAO No. 5.6 The DAR, using the formula in DAO No. 5, will make an initial determination of the value of the land and thereafter offer such amount to the landowner. If the landowner accepts the DAR's offer, he shall be paid the amount of just compensation as computed by the DAR. If the landowner rejects the DAR's offer, he may opt to file an action before the courts to finally determine the proper amount of just compensation.7Clearly, the DAR cannot mandate the value of the land because Section 18 expressly states that the landowner shall be paid the amount of just compensation "as may be agreed upon" by the parties. In other words, the DAR's valuation of the land is not final and conclusive upon the landowner. Simply put, the DAR's computation of just compensation is not binding on the landowner.

Since the landowner is not bound to accept the DAR's computation of just compensation, with more reason are courts not bound by DAR's valuation of the land. To mandate the courts to adhere to the DAR's valuation, and thus require the courts to impose such valuation on the landowner, is contrary to the first paragraph of Section 18 which states that the DAR's valuation is not binding on the landowner. If the law intended courts to be bound by the DAR's valuation, and to impose such valuation on the landowner, then Section 18 should have simply directly stated that the landowner is bound by DAR's valuation. To avoid violating Section 18, courts must be given the discretion to accept, modify, or reject the DAR's valuation.

In my Separate Concurring Opinion, I also emphasized that the law itself vests in the Regional Trial Courts, sitting as SACs, the original and exclusive jurisdiction over actions for the determination of just compensation. Section 57 of RA 6657 reads:

Section 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.

The Special Agrarian Courts shall decide all appropriate cases under their special jurisdiction within thirty (30) days from submission of the case for decision. (Emphasis supplied)

Since the SACs exercise exclusive jurisdiction over petitions for determination of just compensation, the valuation by the DAR, presented before the agrarian courts, should only be regarded as initial or preliminary. As such, the DAR's computation of just compensation is not binding on the courts. In Heirs of Lorenzo and Carmen Vidad v. Land Bank of the Philippines,8 the Court held:

In fact, RA 6657 does not make DAR's valuation absolutely binding as the amount payable by LBP. A reading of Section 18 of RA 6657 shows that the courts, and not the DAR, make the final determination of just compensation. It is well-settled that the DAR's land valuation is only preliminary and is not, by any means, final and conclusive upon the landowner or any other interested party. The courts will still have the right to review with finality the determination in the exercise of what is admittedly a judicial function. (Emphasis supplied)

I likewise cited in my Separate Concurring Opinion the case of Apo Fruits Corporation v. Court of Appeals,9 which enunciated that the DAR formula is not controlling on the courts, thus:

x x x [T]he basic formula and its alternatives – administratively determined (as it is not found in Republic Act No. 6657, but merely set forth in DAR AO No. 5, Series of 1998) – although referred to and even applied by the courts in certain instances, does not and cannot strictly bind the courts. To insist that the formula must be applied with utmost rigidity whereby the valuation is drawn following a strict mathematical computation goes beyond the intent and spirit of the law. The suggested interpretation is strained and would render the law inutile. Statutory construction should not kill but give life to the law. As we have established in earlier jurisprudence, the valuation of property in eminent domain is essentially a judicial function which is vested in the regional trial court acting as a SAC, and not in administrative agencies. The SAC, therefore, must still be able to reasonably exercise its judicial discretion in the evaluation of the factors for just compensation, which cannot be arbitrarily restricted by a formula dictated by the DAR, an administrative agency. Surely, DAR AO No. 5 did not intend to straightjacket the hands of the court in the computation of the land valuation. While it provides a formula, it could not have been its intention to shackle the courts into applying the formula in every instance. The court shall apply the formula after an evaluation of the three factors, or it may proceed to make its own computation based on the extended list in Section 17 of Republic Act No. 6657, which includes other factors[.] x x x. (Emphasis supplied)

To adhere to the DAR formula, in every instance, constitutes an undue restriction of the power of the courts to determine just compensation. This is clear from the case of Land Bank of the Philippines v. Heirs of Puyat10 which stated:

As the CA correctly held, the determination of just compensation is a judicial function; hence, courts cannot be unduly restricted in their determination thereof. To do so would deprive the courts of their judicial prerogatives and reduce them to the bureaucratic function of inputting data and arriving at the valuation. While the courts should be mindful of the different formulae created by the DAR in arriving at just compensation, they are not strictly bound to adhere thereto if the situations before them do not warrant it.

To repeat, the DAR valuation of just compensation is not binding or mandatory on the courts. No administrative order can deprive the courts of the power to review with finality the DAR's determination of just compensation in the exercise of what is admittedly a judicial function.11 What the DAR is empowered to do is only to determine in a preliminary manner the amount of just compensation, leaving to the courts the ultimate power to decide the final just compensation.

ACCORDINGLY, I vote to remand Civil Case No. 6428 to the Regional Trial Court of Bataan, Branch 1 for reception of evidence on the issue of just compensation.

Endnotes:


1 G.R. Nos. 181912 & 183347, 29 November 2016.

2 See United States v. Ang Tang Ho, 43 Phil. 1 (1922).

3 724 Phil. 276, 287-288 (2014).

4 738 Phil. 7, 22 (2014).

5 Section 16 of RA 6657 provides:

SECTION 16. Procedure for Acquisition of Private Lands. - For purposes of acquisition of private lands, the following procedures shall be followed:

(a) After having identified the land, the landowners and the beneficiaries, the DAR shall send its notice to acquire the land to the owners thereof, by personal delivery or registered mail, and post the same in a conspicuous place in the municipal building and barangay hall of the place where the property is located. Said notice shall contain the offer of the DAR to pay a corresponding value in accordance with the valuation set forth in Sections 17, 18, and other pertinent provisions hereof.

(b) Within thirty (30) days from the date of receipt of written notice by personal delivery or registered mail, the landowner, his administrator or representative shall inform the DAR of his acceptance or rejection of the offer.

(c) If the landowner accepts the offer of the DAR, the Land Bank of the Philippines (LBP) shall pay the landowner the purchase price of the land within thirty (30) days after he executes and delivers a deed of transfer in favor of the Government and surrenders the Certificate of Title and other monuments of title.

(d) In case of rejection or failure to reply, the DAR shall conduct summary administrative proceedings to determine the compensation for the land by requiring the landowner, the LBP and other interested parties to submit evidence as to the just compensation for the land, within fifteen (15) days from the receipt of the notice. After the expiration of the above period, the matter is deemed submitted for decision. The DAR shall decide the case within thirty (30) days after it is submitted for decision.

(e) Upon receipt by the landowner of the corresponding payment or, in case of rejection or no response from the landowner, upon the deposit with an accessible bank designated by the DAR of the compensation in cash or in LBP bonds in accordance with this Act, the DAR shall take immediate possession of the land and shall request the proper Register of Deeds to issue a Transfer Certificate of Title (TCT) in the name of the Republic of the Philippines. The DAR shall thereafter proceed with the redistribution of the land to the qualified beneficiaries.

(f) Any party who disagrees with the decision may bring the matter to the court of proper jurisdiction for final determination of just compensation.

Section 17 of RA 6657 provides:

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.

Republic Act No. 9700, which took effect on 1 July 2009, amended Section 17 of RA 6657 to read as follows:

SEC. 17. Determination of Just Compensation. - In determining just compensation, the cost of acquisition of the land, the value of the standing crop, the current value of like properties, its nature, actual use and income, the sworn valuation by the owner, the tax declarations, the assessment made by government assessors, and seventy percent (70%) of the zonal valuation of the Bureau of Internal Revenue (BIR), translated into a basic formula by the DAR shall be considered, subject to the final decision of the proper court. The social and economic benefits contributed by the farmers and the farmworkers and by the Government to the property as well as the nonpayment of taxes or loans secured from any government financing institution on the said land shall be considered as additional factors to determine its valuation.

6 DAO No. 5, entitled Revised Rules and Regulations Governing the Valuation of Lands Voluntarily Offered or Compulsorily Acquired Pursuant to Republic Act No. 6657, amended DAO No. 11, series of 1994, which in turn amended DAO No. 6, series of 1992, entitled the Rules and Regulations Covering the Valuation of Lands Voluntarily Offered or Compulsorily Acquired.

7Republic v. Court of Appeals, 331 Phil. 1070, 1077 (1996).

8 634 Phil. 9, 31 (2010).

9 565 Phil. 418, 433-434 (2007).

10 689 Phil. 505, 522 (2012).

11 See Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform, 256 Phil. 777, 815 (1989).





SEPARATE CONCURRING OPINION

JARDELEZA, J.:


I concur with the ponencia. I write this Opinion, however, to respond to the Separate Concurring Opinion referring to a "gravely erroneous" statement made by this Court in its Decision in Alfonso v. Land Bank of the Philippines (Alfonso).1

The Separate Concurring Opinion took particular exception to the Court's statement in Alfonso to the effect that "the DAR formulas partake of the nature of statutes" which under Republic Act No. 9700,2 became law itself."

First. The allegedly objectionable statement has, in fact, appeared in one form or another in previous cases decided by the Court.3 The Court in Alfonso merely affirmed the prevailing, and in its view, correct, rule.

Second, and in my view more importantly, the objections raised in the Separate Concurring Opinion have already been completely (and soundly) rejected by the Court in Alfonso. I quote:

Arguing against the binding nature of the DAR formula, Justice Carpio. in his Separate Concurring Opinion, cites Apo Fruits which held, to wit:

What is clearly implicit thus, is that the basic formula and its alternatives— administratively determined (as it is not found in Republic Act No. 6657, but merely set forth in DAR AO No. 5, Series of 1998)—although referred to and even applied by the courts in certain instances, does not and cannot strictly bind the courts. x x x

The argument of Apo Fruits that the DAR formula is a mere administrative order has, however, been completely swept aside by the amendment to Section 17 under RA 9700. To recall, Congress amended Section 17 of RA 6657 by expressly providing that the valuation factors enumerated be "translated into a basic formula by the DAR x x x." This amendment converted the DAR basic formula into a requirement of the law itself. In other words, the formula ceased to be merely an administrative rale, presumptively valid as subordinate legislation under the DAR's rule-making power. The formula, now part of the law itself, is entitled to the presumptive constitutional validity of a statute. More important, Apo Fruits merely states that the formula cannot "strictly" bind the courts. The more reasonable reading of Apo Fruits is that the formula does not strictly apply in certain circumstances. Apo Fruits should, in other words, be read together with Yatco.4 (Italics in the original, citations omitted.)

In fact, the Court in Alfonso has already rejected similar proposals (from no less than members of the Court) to abandon the doctrine as set forth in Banal,5Celada, and Yatco. In giving full constitutional presumptive weight and credit to Section 17 of Republic Act No. 6657,6 as amended, Department of Agrarian Reform (DAR) Administrative Order No. 5 (1998)7 and the resulting DAR basic formulas, the Court thus explained:

The determination of just compensation is a judicial function. The "justness" of the enumeration of valuation factors in Section 17, the "justness" of using a basic formula, and the "justness" of the components (and their weights) that flow into the basic formula, are all matters for the courts to decide. As stressed by Celada, however, until Section 17 or the basic formulas are declared invalid in a proper case, they enjoy the presumption of constitutionality. This is more so now, with Congress, through RA 9700, expressly providing for the mandatory consideration of the DAR basic formula. In the meantime, Yatco, akin to a legal safety net, has tempered the application of the basic formula by providing for deviation, where supported by the facts and reasoned elaboration.

While concededly far from perfect, the enumeration under Section 17 and the use of a basic formula have been the principal mechanisms to implement the just compensation provisions of the Constitution and the CARP for many years. Until a direct challenge is successfully mounted against Section 17 and the basic formulas, they and the collective doctrines in Banal, Celada and Yatco should be applied to all pending litigation involving just compensation in agrarian reform. This rule, as expressed by the doctrine of stare decisis, necessary for securing certainty and stability of judicial decisions x x x.8 (Italics in the original, emphasis supplied.)

This Court decided Alfonso barely a year ago. Absent any change in law, I see no reason why the established rule should be revisited so soon.

Endnotes:


1 G.R. Nos. 181912 & 183347, November 29, 2016.

2 An Act Strengthening the Comprehensive Agrarian Reform Program, Extending the Acquisition and Distribution of All Agricultural Lands, Instituting Necessary Reforms, Amending for the Purpose Certain Provisions of Republic Act No. 6657, Otherwise, Known as the Comprehensive Agrarian Reform Law of 1988, as Amended, and Appropriating Funds Therefor.

3 See Land Bank of the Philippines v. Yatco Agricultural Enterprises (Yatco), G.R. No. 172551, January 15, 2014, 713 SCRA 370; Land Bank of the Philippines v. Celada (Celada), G.R. No. 164876, January 23, 2006, 479 SCRA 495.

4Alfonso v. Land Bank of the Philippines, supra note 1.

5Land Bank of the Philippines v. Banal, G.R No. 143276, July 20, 2004, 434 SCRA 543.

6 Comprehensive Agrarian Reform Law of 1988.

7 Revised Rules and Regulations Governing the Valuation of Lands Voluntarily Offered or Compulsorily Acquired Pursuant to Republic Act No. 6657.

8Alfonso v. Land Bank of the Philippines, supra note 1.
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