FIRST DIVISION
G.R. No. 172352, September 16, 2015
LAND BANK OF THE PHILIPPINES, Petitioner, v. ALFREDO HABABAG, SR., SUBSTITUTED BY HIS WIFE, CONSOLACION, AND CHILDREN, NAMELY: MANUEL, SALVADOR, WILSON, JIMMY, ALFREDO, JR., AND JUDITH, ALL SURNAMED HABABAG, Respondents.
G.R. Nos. 172387-88
ALFREDO HABABAG, SR., SUBSTITUTED BY HIS WIFE, CONSOLACION, AND CHILDREN, NAMELY: MANUEL, SALVADOR, WILSON, JIMMY, ALFREDO, JR., AND JUDITH, ALL SURNAMED HABABAG, Petitioners, v. LAND BANK OF THE PHILIPPINES AND THE DEPARTMENT OF AGRARIAN REFORM, Respondents.
D E C I S I O N
PERLAS-BERNABE, J.:
Assailed in these consolidated petitions for review on certiorari1 are the Decision2 dated November 15, 2005 and the Resolution3 dated April 19, 2006 of the Court of Appeals (CA) in CA-G.R. SP Nos. 86066 and 86167, which set aside the Amended Decision4 dated March 22, 2004 and the Order5 dated August 10, 2004 of the Regional Trial Court of Sorsogon City, Branch 52 (RTC) in Civil Case No. 96-6217, fixing the amount of just compensation at P2,398,487.24, with interest at 12% per annum (p.a.), in view of the expropriation of certain parcels of land owned by the Heirs of Alfredo Hababag, Sr. (Hababag Heirs).chanrobleslaw
In reaching the above-stated total amount, the RTC applied the Income Productivity Approach. It also considered the Inspection and Appraisal Report submitted by Commissioner Cuba, finding the same to be "the more realistic appraisal [,] considering the economic condition of the country [,] as well as the acquisition of the property and the present assessed value and also the proximity of the property to the commercial center."16
Coconut land - 63.61 has @ P50,000.00/ha. P3,180,500.00Rice land - 4.75 has. @ P60,000.00/ha. 285,000.00 Total Land Appraised Value 3,465,500.00Fruit-bearing coconut trees - 9,723 x P200.00 1,944,600.00Timber trees 7 x P1,500.00 10,500.00 Total Plants and Trees Appraised Value 1,955,100.00Reasonable income of the coconut trees for the next 20 years (based on the Income Productivity Approach)14 233,340.00 Total P5,653,940.0015
Commissioner Cuba, however, retained the total appraised values for the subject lands and the plants/trees at P3,465,500.00 and P1,955,100.00, respectively, as similarly indicated in the December 20, 1999 RTC Decision.chanrobleslaw
RE-COMPUTATION OF COCONUT PRODUCTION ALFREDO HABABAG PROPERTY Situated at Brgy[s]. Carriedo, Manapao,[and] Casili, all at Gubat[,] Sorsogon Date: February 24, 2004A. Itemized re: computation of coconut production 1. Total existing coconut fruit bearing trees 9,723 x x x2. Average nuts produce per tree per harvest 10 pcs.3. An average of eight regular harvest of nuts/tree/year 80 pcs.4. Total nuts produce per year from (9,723) fruits bearing tree 777,840 pcs.B. Re: computation of copra production 1. Total nuts produce per year 777,840 pcs.2. Average weight of one nut to copra .30 kls.3. Total kilos of copra produce per year 233,352 kls.4. Gross income of copra produce per year by average of P15.00/kilo P 3,500,280.00Less: fifty percent labor cost/transportation expense and tenant share 1,750.140.00Total net income of copra produce per year P 1,750,140.005. Estimated income of copra for the remaining (20) years economic life of (9,723) coconut fruit bearing trees is more or less P35,002,800.0023
With their motions for reconsideration having been denied in an Order26 dated August 10, 2004, the LBP and the DAR filed separate petitions27 for review with the CA, docketed as CA-G.R. SP Nos. 86066 and 86167, respectively. For its part, the LBP averred28 that the RTC gravely erred in disregarding the factors under Section 17 of RA 6657 and DAR AO 6-92, as amended by DAR AO 11-94, as ordained by the Court in the case of LBP v. Banal.29 On the other hand, the DAR contended that the RTC erred30 in including in its computation the estimated income of the coconut trees for their remaining economic life (computed at 20 years) and in adjudging a just compensation award which is higher than the offered valuation of the landowner. Pending appeal, Alfredo passed away and was substituted by his heirs, i.e., the Hababag Heirs.chanrobleslaw
Coconut land - 63.61 has. @ P50,000.00/ha. P3,180,500.00Rice Land - 4.75 has. @ P60,000.00/ha. 285,000.00Total Land Appraised Value 3,465,500.00Fruit-bearing coconut trees - 9,723 x P200.00 1,944,600.00Timber trees 7 x P1,500.00 10,500.00Total Plants and Trees Appraised Value 1,955,100.00 Recomputed Estimated Income of the Copra for the remaining twenty (20) years economic life of the 9,723 coconut fruit bearing trees 35,002,800.00Total P 40,423,400.0025
Based on the foregoing, the average value per hectare of the 69.3857 hectare lands would therefore be P34,567.4576.
Land Use Area (ha.) Land Value/ha. TotalCoconut 66.9961 P35,586.24 P2,384,139.2034Unirrigated Riceland 1.3896 8,243.71 11,455.4635Cogonal 1.0000 2,892.58 2,892.5836 69.3857 has. P2,398,487.2437
Just compensation is defined as the full and fair equivalent of the property taken from its owner by the expropriator. It has been repeatedly -stressed by this Court that the measure is not the taker's gain but the owner's loss. The word "just" is used to intensify the meaning of the word "compensation" to convey the idea that the equivalent to be rendered for the property to be taken shall be real, substantial, full [and] ample.41ChanRoblesVirtualawlibraryIn this relation, the RTC, sitting as a Special Agrarian Court, has been conferred with the original and exclusive power to determine just compensation for parcels of land acquired by the State pursuant to the agrarian reform program.42 To guide the RTC in this function, Section 1743 of RA 6657 enumerates the factors which must be taken into consideration to accurately determine the amount of just compensation to be awarded in a particular case. They are: (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 nonpayment of taxes or loans secured from any government financing institution on the said land, if any.44 Corollarily, pursuant to its rule-making power under Section 4945 of the same law, the DAR translated these factors into a basic formula,46 which courts have often referred to and applied, as the CA did in this case. It, however, bears stressing that courts are not constrained to adopt the said formula in every case since the determination of the amount of just compensation essentially partakes the nature of a judicial function. In this accord, courts may either adopt the DAR formula or proceed with its own application for as long as the factors listed in Section 17 of RA 6657 have been duly considered.47
Endnotes:
1Rollo (G.R. No. 172352), pp. 30-55; rollo (G.R. Nos. 172387-88), pp. 3-27.
2Rollo (G.R. No. 172352), pp. 56-70; rollo (G.R. Nos. 172387-88), pp. 29-43. Penned by Associate Justice Delilah Vidallon-Magtolis with Associate Justices Elvi John S. Asuncion and Jose C. Reyes, Jr. concurring.
3Rollo (G.R. No. 172352), pp. 73-74; rollo (G.R. Nos. 172387-88), pp. 44-45. Penned by Associate Justice Jose C. Reyes, Jr. with Associate Justices Elvi John S. Asuncion and Regalado E. Maambong concurring.
4Rollo (G.R. No. 172352), pp. 148-150; rollo (G.R. Nos. 172387-88), pp. 126-127-A. Penned by Judge Honesto A. Villamor.
5Rollo (G.R. No. 172352), pp. 155-156; rollo (G.R. Nos. 172387-88), pp. 135-135-A.
6 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).
7Rollo (G.R. No. 172352), pp. 160-163. See Claims Valuation and Processing Form No. 05-VO-91-310.
Consisting of: coconut land 66.9961 has.
riceland 1.3869
cogonal 1.0000
Total 69.3857 has.
8Rollo (G.R. Nos. 172387-88), p. 46. Notice of Acquisition dated December 28, 1990. See also rollo (G.R. No. 172352), p. 57: rollo (G.R. Nos. 172387-88), p. 30.
9Rollo (G.R. Nos. 172387-88), pp. 47-50. Decision dated January 29, 1996. Penned by Provincial Adjudicator Manuel M. Capellan.
10 Id. at 51-55.
11Rollo (G.R. No. 172352), pp. 157-159. Dated December 17, 1996.
12Rollo (G.R. Nos. 172387-88), p. 58.
13 Id. at 57-61.
14 Id. at 60. The computation was based on the following figures:
INCOME PRODUCTIVITY APPROACH:
1. Coconut:15 Id. at 59-60.
- Average Production /Tree/Year = 10 nuts/tree x 8 = 80 nuts/tree/year
- Total Nuts gathered from 9,723 fruit trees/year - 777,840 nuts
- 777,840 nuts converted to kilos of copra = 155,560 kilos/year
- Average Price of Copra = P15.00
- Multiply 155,560 kilos by P15.00 = P23,334.00
- Estimated Remaining Productive life = 20 years from date
- Less 50 percent expenses for labor cost and tenant share out of the gross receipt
- Total income from the remaining 20 years productive life of the coconut trees = P233,340.00
for the owner less 50% expenses for labor cost and tenant share- Coconut (fruit bearing) in the land = 9,723
16 Id. at 59.
17 Id. at 111-121. Penned by Associate Justice Andres B. Reyes, Jr. with Associate Justices Buenaventura J. Guerrero and Regalado E. Maambong concurring.
18 Id. at 117-118.
19 Id. at 115.
Classification Sub-class Actual UseArea Unit ValueMarket Value Agricultural 2nd coconut land63.61 has. P50,000.00P3,180,500.00 Un-irrigated 2nd rice land4.75 has. P60,000.00285,000.00 Total Land Area68.16 has. P3,465,500.00
20 Id. at 118.
21 Id. at 119.
22 Id. at 120-121.
23 Id. at 123-A.
24Rollo (G.R. No. 172352), pp. 148-150; rollo (G.R. Nos. 172387-88) pp. 126-127-A.
25 Id.
26Rollo (G.R. No. 172352), pp. 155-156; rollo (G.R. Nos. 172387-88), pp. 135-135-A.
27Rollo (G.R. Nos. 172387-88), pp. 146-168 for the LBP and pp. 136-145 for the DAR.
28 Id. at 160-162.
29 478 Phil. 701 (2004).
30Rollo (G.R. No. 172387-88), pp. 142-143.
31Rollo (G.R. No. 172352), pp. 56-70; rollo (G.R. Nos. 172387-88), pp. 29-43.
32Rollo (G.R. No. 172352), p. 160. See also CA Decision, rollo (G.R. No. 172352), p. 65; and rollo (G.R. Nos. 172387-88), p. 38.
33 While the figures for just compensation in Commissioner Corcuera's Inspection and Appraisal Report and the Claims Valuation and Processing Form No. 05-VO-91-310 are basically identical, Commissioner Corcuera committed a mathematical error in the computation of the land value for the 66.9961-hectare coconut land, hence, the CA adopted the values in the said Claims Valuation and Processing Form.
34 Computed using the formula:
LV = Capitalized net income (CNI) x (0.9) + Market Value x (0.1)
Where: LV = Land Value
CNI = Capitalized Net Income
MV = Market Value per Tax Declaration
CNI = (AGPxSP)-CO + cumulative cost for NFBT
.12
Where: CNI = Capitalized Net Income
AGP = Latest available 12-month's gross production immediately preceding the date of offer in case of VOS or date of notice of coverage in case of CA
SP = The average of the latest available 12-month's selling prices prior to the date of Notice of coverage in case of CA
CO = Cost of operations
Landholdings planted to coconut which are productive at the time of offer shall continue to use the 70% NIR (net income rate).
.12 = Capitalization Rate
NFBT= non-fruit-bearing tree
35 Computed using the formula:
LV = (CNI x 0.9) + (MV x 0.1)
CNI = (AGP x SP) - CO
.12
Where: CNI = Capitalized Net Income
MV = Market Value
AGP = Latest available 12-month's gross production immediately preceding the date of offer in case of VOS or date of notice of coverage in case of CA
SP = The average of the latest available 12-month's selling prices prior to the date of notice of coverage in case of CA
CO = Cost of operations
Whenever the cost of operations could not be obtained or verified, an assumed NIR of 20% shall be used.
.12 = Capitalization Rate
cralawlawlibrary
36 Computed using the formula:
LV = MV x 2
Where: LV = Land Value
MV = Market Value per Tax Declaration
37Rollo (G.R. No. 172352), p. 68; rollo (G.R. Nos. 172387-88), p. 41.
38Rollo (G.R. No. 172352), pp. 69-70; rollo (G.R. Nos. 172387-88), pp. 42-43.
39Rollo (G.R. No. 172352), pp. 73-74; rollo (G.R. Nos. 172387-88), pp. 44-45.
40 256 Phil. 777 (1989).
41 Id. at 812.
42 Section 57 of RA 6657 reads as follows:chanRoblesvirtualLawlibrarySEC. 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.43 The instant petitions for review on certiorari were filed in May 2006 (G.R. Nos. 172387-88) and June 2006 (G.R. No. 172352), long before the passage of R.A. 9700, which amended Section 17 of RA 6657. Accordingly, it is Section 17 of RA 6657 which should control the challenged valuation. The said provision reads:chanRoblesvirtualLawlibrary
The Special Agrarian Courts shall decide all appropriate cases under their special jurisdiction within thirty (30) days from submission of the case for decision.ChanRoblesVirtualawlibrarySEC. 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.ChanRoblesVirtualawlibrary44LBP v. Palmares, G.R. No. 192890, June 17, 2013, 698 SCRA 655, 662-663.
45 SEC. 49. Rules and Regulations. - The PARC and the DAR shall have the power to issue rules and regulations, whether substantive or procedural, to carry out the objects and purposes of this Act. x x x.
46LBP v. Palmares, supra note 44, at 663.
47See Apo Fruits Corporation v. CA, 565 Phil. 418, 434 (2007).
48IBP v. Costo, G.R. No. 174647, December 5, 2012, 687 SCRA 122, 132-133.
49Rollo (G.R. No. 172352), p. 150; rollo (G.R. Nos. 172387-88), p. 127-A.
50Republic v. Rural Bank of Kabacan, Inc., G. R. No. 185124, 680 Phil. 247, 257 (2012).
51Rollo (G.R. No. 172352), p. 149; rollo (G.R. Nos. 172387-88), p. 127.
52 Section 3 (a) of RA 6657 defines "agrarian reform" as the "redistribution of lands, regardless of crops or fruits produced, to farmers and regular farm workers who are landless, irrespective of tenurial arrangement, to include the totality of factors and support services designed to lift the economic status of the beneficiaries and all other arrangements alternative to the physical redistribution of lands, such as production or profit-sharing, labor administration, and the distribution of shares of stock, which will allow beneficiaries to receive a just share of the fruits of the lands they work."
53 Section 4, Article XIII (Social Justice and Human Rights) of the 1987 Philippine Constitution on "Agrarian and Natural Resources Reform" provides:chanRoblesvirtualLawlibrarySEC. 4. 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. To this end, the State shall encourage and undertake the just distribution of all agricultural lands, subject to such priorities and reasonable retention limits as the Congress may prescribe, taking into account ecological, developmental, or equity considerations, and subject to the payment of just compensation. In determining retention limits, the State shall respect the right of small landowners. The State shall further provide incentives for voluntary land-sharing.ChanRoblesVirtualawlibrary54 See LBP v. Palmares, supra note 44, at 664.
55 Section 26 of RA 6657 provides:chanRoblesvirtualLawlibrarySEC. 26. Payment by beneficiaries. - Lands awarded pursuant to this Act shall be paid for by the beneficiaries to the LBP in thirty (30) annual amortizations at six percent (6%) interest per annum. The payments for the first three (3) years after the award may be at reduced amounts as established by the PARC: provided, that the first five (5) annual payments may not be more than five percent (5%) of the value of the annual gross production as established by the DAR. Should the scheduled annual payments after the fifth year exceed ten percent (10%) of the annual gross production and the failure to produce accordingly is not due to the beneficiary's fault, the LBP may reduce the interest rate or reduce the principal obligation to make the payment affordable.56LBP v. Santiago, Jr., G.R. No. 182209, October 3, 2012, 682 SCRA 264, 283-284.
The LBP shall have a lien by way of mortgage on the land awarded to beneficiary and this mortgage be foreclosed by the LBP for non-payment of an aggregate of three (3) annual amortizations. The LBP shall advise the DAR of such proceedings and the latter shall subsequently award the forfeited landholdings to other qualified beneficiaries. A beneficiary whose land, as provided herein, has been foreclosed shall thereafter be permanently disqualified from becoming a beneficiary under this Act.ChanRoblesVirtualawlibrary
57 See 647 Phil. 251 (2010).
58 See LBP v. Rivera, G.R. No. 182431, 692 SCRA 149, 154-155.
59 Rollo (G.R. No. 172352), p. 43.
60 See Sy v. Local Government of Quezon City, G.R. No. 202690, June 5, 2013, 697 SCRA 621, 633, citing Manila International Airport Authority v. Rodriguez, 518 Phil. 750, 761 (2006). To note, the government did not file an expropriation complaint in the present cases.
61 Section 2 of Central Bank Circular No. 905, series of 1982, reads:chanRoblesvirtualLawlibrarySEC. 2. The rate of interest for the loan or forbearance of any money, goods or credits and the rate allowed in judgments, in the absence of express contract as to such rate of interest, shall continue to be twelve per cent (12%) per annum.ChanRoblesVirtualawlibrary62 Section 1 of Bangko Sentral ng Pilipinas Circular No. 799, series of 2013, pertinently reads:chanRoblesvirtualLawlibrarySEC. 1. The rate of interest for the loan or forbearance of any money, goods or credits and the rate allowed in judgments, in the absence of an express contract as to such rate of interest, shall be six percent (6%) per annum.
x x x x
This Circular shall take effect on 1 July 2013.