LAND BANK OF THE PHILIPPINES, PETITIONER, VS. AUGUSTO PALIZA AND ARNELFA PALIZA, RESPONDENTS.
GAERLAN, S.H., J.:
FACTS
The antecedent facts, as culled from the 17 May 2012 Decision of the RTC-SAC, are as follows:
“I – The Case
Petitioner Land Bank of the Philippines filed the instant petition in accordance with Section 16(f) of Republic Act No. 6657, within the period of 15 days from its receipt of the decision rendered by the Department of Agrarian Reform Adjudication Board (DARAB), which fixed the land valuation of the property owned by private respondents, known as Lot 4302, covered by TCT No. 51512, and located at Upper Binogsacan, Guinobatan, Albay, in the amount of PhP13,577,339.00 for the acquired area of 28.7060 hectares, out of the total area of 41.7218 hectares, contrary to the earlier determination made by the petitioner, in n the amount of PhP2,090,786.01.The petitioner seeks the Court to render judgment, after due notice and hearing, affirming the earlier determination of the petitioner as afore-mentioned.
II – The Facts
The private respondents, Augusto Paliza and Arnelfa Paliza, are the owners of the coconut land mentioned above. The said agricultural property was placed within the coverage of the Comprehensive Agrarian Reform Program under the compulsory acquisition scheme.The Land Bank of the Philippines together with the Department of Agrarian Reform representative, the Municipal Agrarian Reform Officer (MARO), and the Barangay Agrarian Reform Council (BARC) representative, conducted the field investigation of the subject agricultural land on 27 August 1996 and recommended for acquisition 28.7060 hectares out of the total area of 41.7218 hectares.
The petitioner received the claims folder from the DAR on 26 May 1999.
On 17 August 1999 the Register of Deeds of Albay partially canceled TCT No. 51512 to give way to the issuance of certificates of title in the name of the Republic of the Philippines, represented by the Department of Agrarian Reform, corresponding to the 28.7060-hectare portion of Lot 4302.
Thereafter, the Land Bank of the Philippines, and pursuant to its mandate under Republic Act No. 6657, computed the land valuation for the areas acquired by the State. The Claims Valuation and Processing Form submitted by the petitioner to prove the valuation of the subject real property reflected the valuation thereof in the amount of PhP2,090,786.01. The petitioner used the two-factor formula pursuant to DAR AO No. 5, series of 1998.
The private respondents did not accept the preliminary determination of compensation by the petitioner. Thus, the matter reached the DARAB, which rendered decision fixing the compensation in the amount of PhP13,577,339.00.
The petitioner rejected the DARAB determination, and as a matter of its usual course of action, it initiated the instant suit in order to ask the Court to adopt or affirm the preliminary determination made by the petitioner as the just compensation for the property of the private respondents acquired by the State.
In other words, the petitioner is asking the Court to compel the landowner to accept the administrative determination made by petitioner Land Bank of the Philippines.”
The RTC-SAC issued an Order[4] dated 18 October 2010 designating the Agrarian Operations Center of the Land Bank of the Philippines (LBP) to conduct a reinvestigation on the subject land to determine the production data and selling prices within the 12-month period immediately preceding 30 June 2009.
On 17 May 2012, the RTC-SAC rendered the assailed Decision, fixing the amount of just compensation at Php2,670,681.37, computed as follows:
“Preliminary Considerations:
The Court is well-aware that some parts of the Province of Albay were severely devastated by Typhoon Reming which visited the locality on 30 November 2006. There is therefore merit in the report of the Commissioner that when he conducted the field investigation upon the directive of the Court he found no record of the actual production data of the subject landholding even as he also reported that the industry average in the Province of Albay may not be attainable because the area is still recovering from the onslaught of Typhoon Reming. Therefore, the only relevant data available and closest to the 12-month period preceding 30 June 2009 will be the industry data culled from the records of the Philippine Coconut Authority as reported by the Commissioner.
Relevant Data:
Average Farm Gate Prices of Copra per 100 kilos in the Province from July to December 2008 and January to June 2009 or the 12-month period preceding 30 June 2009:
2008 July ————————————————- Php3,600.00 August ——————————————– 3,600.00 September —————————————- 2,300.00 October ——————————————– 2,105.00 November —————————————- 2,125.00 December —————————————– 2,225.00 2009 January ——————————————– 1,850.00 February —————————————— 1,865.00 March ———————————————- 1,580.00 April ———————————————– 1,837.00 May ———————————————— 1,900.00 June ———————————————— 1,700.00 Total PhP26,687.00
12 monthsAverage Farm Gate Price of Copra per 100 Kilos PhP2,223.92 Based on the certification of the Philippine Coconut Authority as reported by the Commissioner, the average nut per kilo is 4 nuts and the average harvesting cycle per year is 8 times per year. Based on the PCA certification, the Average Actual Nut Production per Year in the Province of Albay within the 12-month period preceding June 30, 2009 are as follow, to wit:
2008 July to September 10.06 October to December 10.71 2009 January to March 5.81 April to June 7.57 Average Annual Nut Production 34.15 The commissioner reported also that the coconut land [Lot 4302 with an area of 28.7060 hectares, acquired by the State] has a coconut density of 85 trees per hectare.
Computation of just compensation for Lot No. 4302 for an area of 28.7060 hectares:
To find the gross production per tree:
Thus:
85 trees x 34.15 nuts/year
=2,902.75 nuts per year divided by 4 nuts (1 kg. of copra is equivalent to 4 nuts)
=725.69 kgs. of copra per year/hectareAverage Selling Price for the 12-month period preceding 30 June 2009 divided by 100 kgs. = Average Selling Price per kg.
Thus:
PhP2,223.92/100 = PhP22.24 (farm gate price per PCA certification)Based on available records and evidence submitted by the parties, the subject agricultural land with a location adjustment factor of 91%.
Pursuant to the pertinent ordinance passed by the Sangguniang Panlalawigan ng Albay which fixed the statement of the unit market values in Albay effective 2002, a second-class coconut land has a market value of PhP18,520.00 per hectare and the coconut tree for a third-class coconut land has a value of Php190.00.
A second-class coconut land in Upper Binogsacan, Guinobatan, Albay has a zonal value of PhP15.00 per square meter or PhP150,000.00 (PhP10.00 x 10,000 square meters).
The Court hereby takes judicial notice of the Regional Consumer Price Index for Region 5 as of June 2009, which is 160 based on the certified copy issued by the National Statistics Office and subject of Agrarian Case No. 08-04, wherein the petitioner in this case was a party.
Thus, the Court shall use the three-factor formula under AO No. 5, series of 1998, as amended by AO No. 2, series of 2009 and AO No. 1, series of 2010, the required data being all available. Thus:
LV = (CNI x 0.60) + (CS x 0.30) + (MV x 0.10) Where: LV = Land Value CNI = Capitalized Net Income (based on land use and productivity) CS = Comparable Sales (based on fair market value equivalent to 70% of BIR Zonal Value) MV = Market Value per Tax Declaration (based on Government assessment) To compute the amount of just compensation using the three-factor formula:
Land Value = (CNI x 0.60) + (CS x 0.30) + (MV x 0.10)
A – To find the CNI
CNI = (AGP x SP x NIR) 0.12 = 725.69 kgs./ha. x PhP22.24/kg. x 70% 0.12 = PhP94,146.18/hectare B – To find MV for Land and Trees
MV for Land & Tree:
MV for Land = UMV x Location Adj. Factor x RCPI Adj. Factor = (P18,520.00/ha. x 91% x 1.60) = P26,965.12/ha. MV for Trees = No. of Trees/ha. x UMV x Location Adj. Factor x RCPI Adj. Factor = (85T/ha. x P190/tree x 91% x 1.60) = (16,150.00 x 91% x 1.60) =P23,514.40/hectare MV = MV for land + MV for Trees = P26,965.12/ha. + P23,514.40/ha. = P50,479.52/hectare C – To find the LV using the three-factor formula:
Land Value = (CNI x 0.60) + (CS x 0.30) + (MV x 0.10) = (94,146.18/ha. x 60%) + (150,000.00/ha. x 70% x 30%) + (50,479.52/ha. x 10%) = (56,487.70/ha + 31,500.00/ha. + 5,047.95/ha.) = P93,035.47/hectare Land Value = Land Value/hectare x Acquisition Area = P93,035.47/hectare x 28.7060 hectares = P2,670,681.37 xxx xxx xxx WHEREFORE the Court hereby renders judgment and declares as follow (sic), to wit:
a) The just compensation for the agricultural lands owned by the private respondent, Augusto Paliza and Anrelfa Paliza, is hereby fixed in the amount of PhP2,670,681.37.
b) The petitioner is hereby directed to compensate the private respondents in the afore-said sums minus the sums already received by him, if anything, within a period of thirty (30) days from notice of this decision free of any interest, and with interest at the rate of 12 percent per annum if not compensated within the 30-day period herein mandated, which payment of interest shall commence on the 31st day from notice of the decision until the amount of just compensation are fully satisfied or received by the private respondent.
Further, the Court hereby dismisses the petition, insofar as the DAR or DARAB is concerned, for utter lack of merit.”
Both parties sought reconsideration of the 17 May 2012 RTC-SAC Decision, but their motions were denied in the Order[5] dated 2 July 2012.
Both parties feeling aggrieved, they filed their respective Petitions for Review[6], which, in a Resolution dated 8 March 2013, this Court resolved to consolidate.
C.A. – G.R. No. 125749 raised the following issues:[7]
I. WHETHER OR NOT THE VALUATION OF THE COURT A QUO OF THE SUBJECT PROPERTY IS IN ACCORD WITH LAW AND JURISPRUDENCE.
II. WHETHER OR NOT PETITIONER MAY BE PEREMPTORILY DECLARED LIABLE FOR INTERESTS.
On the other hand, C.A. – G.R. No. 125794 raised the following issues:[8]
I. WHETHER OR NOT THE SPECIAL AGRARIAN COURT (SAC) ERRED IN FIXING THE AMOUNT OF PhP2,670,681.37 AS JUST COMPENSATION FOR PROPERTY IN QUESTION.
II. WHETHER OR NOT THE SPECIAL AGRARIAN COURT (SAC) ERRED IN DENYING PETITIONER’S MOTION FOR RECONSIDERATION PRAYING FOR THE PAYMENT OF INTEREST ON THE JUST COMPENSATION AT THE LEGAL RATE OF 6% PER ANNUM.
THE COURT’S RULING
There are three (3) projected valuations of just compensation in this case for the compulsory acquisition of the subject property under the Comprehensive Agrarian Reform Program (CARP), as computed by the Land Bank of the Philippines (LBP); petitioners Augusto and Arnelfa Paliza; and the RTC-SAC. It behooves this Court to resolve which among the computations is legally and factually correct, if any.
Section 17 of R.A. No. 6657 is instructive on this matter, viz:
“Sec. 17. Determination of Just Compensation. — In determining just compensation, the cost of acquisition of the land, the current value of the like properties, its nature, actual use and income, the sworn valuation by the owner, the tax declarations, and the assessments 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.”
Jurisprudence is replete with reminders to special agrarian courts to strictly adhere to the factors set out in Section 17 of R.A. No. 6657.[9]
While this case was pending, a supervening event occurred with the advent of R.A. No. 9700, the Comprehensive Agrarian Reform Program Extension with Reforms (CARPER). In this new law which became effective on July 1, 2009, Congress saw fit to declare that “all previously acquired lands wherein valuation is subject to challenge by landowners shall be computed and finally resolved pursuant to Section 17 of R.A. No. 6657, as amended.” In turn, Section 17 of R.A. No. 6657 was amended to read as follows:
“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 (70%) percent of the zonal valuation of the 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. (Emphasized portions show the amendments.)”
In furtherance thereof, the Department of Agrarian Reform (DAR) issued Administrative Order (A.O.) No. 2, series of 2009, which provided in D(2) thereof that “all previously acquired lands wherein valuation is subject to challenge by landowner shall be completed and finally resolved pursuant to Section 17 of RA 6657, as amended.” In its transitory provisions in Chapter VI, however, the administrative order makes an exception to the application of the amended Section 17. It states: “x x x with respect to land valuation, all claim folders received by LBP prior to July 1, 2009 shall be valued in accordance with Section 17 of RA 6657 prior to its amendment by RA No. 9700.”[10]
Thus, the amended Section 17 has no retroactive effect insofar as the claim folders already received by LBP prior to the effectivity of R.A. No. 9700 are concerned.[11] It is for this reason that We find the above computation of the RTC-SAC in its assailed Decision, erroneous.
It will be recalled that the subject claim folder was received by LBP on 26 May 1999. This notwithstanding, the RTC-SAC applied retroactively to this case the provision of Section 17 of R.A. No. 6657, as amended by RA No. 9700, which the DAR translated into a basic formula in A.O. No. 2, series of 2009, and A.O. No. 1, series of 2010. The pertinent portion of the assailed Decision, revealing that it applied A.O. No. 2, series of 2009, and A.O. No. 1, series of 2010 in this case, reads:
“xxx xxx xxx
Thus, the Court shall use the three-factor formula under AO No. 5, series of 1998, as amended by AO No. 2, series of 2009 and AO No. 1, series of 2010, the required data being all available. Thus:
LV = (CNI x 0.60) + (CS x 0.30) + (MV x 0.10) Where: LV = Land Value CNI = Capitalized Net Income (based on land use and productivity) CS = Comparable Sales (based on fair market value equivalent to 70% of BIR Zonal Value) MV = Market Value per Tax Declaration (based on Government assessment) xxx xxx xxx”
The rationale for limiting the application of the amended provision prospectively is to avoid possibly prejudicing vested rights of parties.[12] It is for this reason that this Court rejects RTC-SAC’s valuation of just compensation in this case, as it erroneously gave retroactive effect to the provision of R.A. No. 9700 amending Section 17 of R.A. No. 6657, and the DAR regulations issued pursuant thereto.
Likewise, We believe and so hold that the usage by the RTC-SAC of a new date – 30 June 2009 — from which to reckon the valuation of just compensation, pursuant to A.O. No. 1, series of 2010, not only violates the rule on non-retroactivity of laws, but more so, contravenes the prevailing doctrine at that time, which dictates that the value of just compensation should be reckoned from the time when the landowner was deprived of the use and benefit of the property, such as when the title was transferred to the Republic[13] – in this case, sometime in August 1999.[14] Hence, the computation of the RTC-SAC, as well as the data and values used as basis therefor, should be set aside.
This brings Us to evaluate the correctness of the amount of just compensation as computed by the two opposing parties.
The LBP’s preliminary determination of just compensation valued the subject property at Php2,090,786.01, computed as follows:
“DATA AND FACTORS USED IN COMPUTATION:
A. Land Use / Production – twelve (12) months prior to date of Field Investigation
1. Capitalized Net Income (CNI):
CROPS
PLANTEDANNUAL
GROSS
PRODUCTION
(AGP)SELLING
PRICE
(P)NIR CAPITALIZATION
RATECNI Coco 850 kls. 15.92 kg. 70 % .12 P 78,936.67 2. Market Value per Tax Declaration (MVTD):
Actual
Land UseProductivity
ClassificationUnit
Market
Value
(P)Location
Adj.
FactorRegional
Consumer
Price
Index
(RCPI)Adjusted
UMVCoconut
Add: Improv.’t
85 trees/ha. X
P908,910.00 7,650.00
90% 90%
1,202 1,202
P 9,638.84 P 8,275.77
17,914.613. Unit Land Value (ULV) Computation:
Coconut Area = 28.7060 has. ULV = P78,936.67 (.90) + P17,914.61 (.10) = P71,043.00 + P1,791.46 = P72,834.46/ha. LV = P72,834.46/ha. x 28.7060 has. = P2,090,786.01”
On the other hand, the computation of petitioners Augusto and Arnelfa Paliza, as upheld by the Department of Agrarian Reform Adjudication Board (DARAB), amounted to Php 13,577,339.00, as shown hereunder:
“CNI = (AGP x SP) – CO 0.12 CNI = Capitalized Net Income per hectare AGP = Annual Gross Production per hectare SP = Average Selling Price of copra 0.12 = Capitalization Rate AGP = 14 nuts/tree x 150 trees/has. = 2,100.00 nuts/harvest/has.
2,100.00 nuts x 8 times/year = 16,800 nuts/year/has.
16,800 nuts/year/has. ÷ 3.5 nuts = 4,800 kilos of copra/has.CNI = 4,800 x P16.82 x 70% 0.12 = P80,736 x 70% 0.12 = P56,512.20 0.12 = P470,960.00/has. MV = 8,910.15 x 0.85 x 1.060 = P8,027.91 150 FBT x P90 x .85 x 1.060 = P12,163.50 P20,191.41 Therefore: LV = (CNI x .90) + (MV x10%) = (470,960 x .90) + (20,191.41 x .10) = 470,960 + P2,019.14 = P472,979.14 per ha. Total LV = 472,979.14 x 28.7060 has. = P13,577,339.00”
Both contending parties actually used the formula as provided under DAR A.O. No. 5, series of 1998. However, as observed by this Court, the main and substantial difference lies with the AGP used in their respective valuation. While the value used by LBP as AGP is 850 kilos per hectare, the value used by the private petitioners is 4,800 kilos per hectare.
In support of its valuation, particularly the AGP, LBP relied on the data and values indicated on the Field Investigation Report,[15] inter alia, which supposedly reflect the outcome of the joint ocular inspection on the subject property, conducted by the DAR, LBP and Barangay Agrarian Reform Council (BARC) on 27 August 1996. LBP also offered in evidence the Claims Valuation and Processing Form[16] purporting the total valuation of the property.
To Our minds, however, such evidence adverted to by LBP does not prove the correctness of the values or data contained therein. The computation in the Form may be mathematically correct, but there is no way of knowing if the values or data used in the computation are true. Hence, this Court cannot readily accept LBP’s valuation, lest, We would be jumping to a conclusion without anything to support it.[17]
By the same token, this Court is likewise not prepared to accept the valuation proposed by petitioners Augusto and Arnelfa Paliza. While a perusal of the submissions before this Court shows that the data and values used by the Palizas were based on several documentary evidence presented before the RTC-SAC, including a report from the Philippine Coconut Authority (PCA) on the evaluation conducted on the coconut farms of the Paliza family on 12 May 2000, copies of the documentary evidence alluded to by said private petitioners do not appear on Our records.
As much as this Court wants to fix just compensation due to petitioners Augusto and Arnelfa Paliza, if only to write finis to the controversy, the evidence on record is not sufficient for the Court to do so in accordance with DAR AO No. 5, series of 1998.[18] Thus, the proper recourse for Us is to remand the case to the RTC-SAC in order to determine the proper amount of just compensation anew in accordance with the following guidelines:
First. Just compensation must be valued at the time of the taking, or the “time when the landowner was deprived of the use and benefit of his property” which, in this case, was sometime in August 1999. Hence, the valuation of the subject portion must be based on evidence showing the values prevalent on such time of taking for like agricultural lands.[19]
Second. The evidence must conform to Section 17 of R.A. No. 6657, as amended, prior to its amendment by R.A. No. 9700.[20]
Third. On the matter of interest on the final compensation, it is established that in expropriation cases, interest is due the landowner if there was delay in payment. The imposition of interest is in the nature of damages for the delay in payment, which in effect makes the obligation on the part of the government one of forbearance. It follows that the interest in the form of damages cannot be applied where there was prompt and valid payment of just compensation.[21]
Records show that LBP fully paid the amount of Php2,090,786.01 with dispatch. Hence, petitioners Augusto and Arnelfa Paliza are not entitled to interest on the final compensation considering that LBP promptly deposited the compensation for their lands on 5 August 1999,[22] after they rejected LBP’s initial valuation. Such deposit of cash and bonds in the name of the landowners was made in accordance with Sections 16 (e) and 18 of R.A. No. 6657. Hence, the interest earnings accruing on the deposit account of landowners would suffice to compensate them pending payment of just compensation.[23]
WHEREFORE, premises considered, the consolidated petitions are hereby GRANTED. The assailed Decision dated 17 May 2012 and Order dated 2 July 2012, are hereby REVERSED and SET ASIDE. We REMAND Agrarian Case No. 2003-03 to the Regional Trial Court of Legaspi City, Branch 3, sitting as a Special Agrarian Court which is directed to determine with dispatch the just compensation due to petitioners Augusto and Arnelfa Paliza in accordance with R.A. No. 6657 and DAR A.O. No. 5, series of 1998.
SO ORDERED.
Pizarro, N.B., Chairperson, and *Galapate-Laguilles, Z.T., JJ., concur.
* Acting Junior Member, per Office Order No. 15-15-ABR, dated January 20, 2015
[1] CA-G.R. No. 125749, rollo, pp. 16-54; and CA-G.R. No. 125794, rollo, pp. 10-38.
[2] Ibid, pp. 56-73.
[3] Id., page 74.
[4] Id. page 127.
[5] Supra, note 3.
[6] Supra, note 1.
[7] CA-G.R. No. 125749, rollo, page 24.
[8] CA-G.R. No. 125794, rollo, page 15.
[9] Land Bank of the Philippines vs. Enrique Livioco, G.R. No. 170685, 22 September 2010.
[10] Ibid.
[11] Id.
[12] Id.
[13] Land Bank of the Philippines vs. Heirs of Encinas and Delgado, G.R. No. 167735, 18 April 2012.
[14] Rollo, page 57 (page 2 of assailed Decision).
[15] Rollo, pp. 92-98.
[16] Rollo, pp. 99-102.
[17] Supra, LBP vs. Livioco.
[18] Land Bank of the Philippines vs. Eleuterio Cruz, G.R. No. 175175, 29 September 2008.
[19] Land Bank of the Philippines vs. Jose Lajom, et al., G.R. No. 184982, 20 August 2014.
[20] Ibid.
[21] Land Bank of the Philippines vs. Atty. Ricardo Gonzales, G.R. No. 185821, 13 June 2013.
[22] Rollo. page 207.
[23] Land Bank of the Philippines vs. Feliciano Wycoco, G.R. No. 140160, 13 January 2004.