THIRD DIVISION
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allied banking corporation, Petitioner, - versus - The land bank
of the Respondents. |
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G.R. No. 175422 Present: YNARES-SANTIAGO, J., Chairperson, AUSTRIA-MARTINEZ,
CHICO-NAZARIO, NACHURA, and PERALTA, JJ. Promulgated: March 13, 2009 |
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CHICO-NAZARIO, J.:
This Petition for Review under Rule
45 of the Rules of Court seeks to reverse and set aside the
Allied owned two abutting parcels of
land located at Mabiga, Hermosa, Bataan, which were covered by Transfer
Certificates of Title (TCT) No. 97975 and No. 97976, with respective land areas
of 20.4840 hectares (204,840 square meters) and 21.3835 hectares (214,860
square meters). The two parcels of land
were compulsorily acquired by the DAR pursuant to Republic Act No. 6657.
In its Notices of Valuation dated 30
July 1997 and 23 October 1997, and by using the formula under DAR
Administrative Order (DAO) No. 17, Series of 1989, as amended by DAO No. 06, Series
of 1992, and further amended by DAO No. 11, Series of 1994, the Land Bank of
the Philippines (Landbank) pegged the value of the 20.4840-hectare land covered
by TCT No. 97975 at P1,170,683.70 or P57,151.123 per hectare, while
the second land with the area of 21.3835[3]
hectares covered under TCT No. 97976 was valued at P1,427,030.73 or at P66,735.13
per hectare. On P1,171,714.29 or P57,201.44 per hectare.
After allegedly having conducted a
survey on the prevailing market value of the lots within the vicinity, Allied
rejected the valuation and insisted that the two parcels of land in question be
valued at P180,000.00 per hectare, hence, the 20.4840 hectares should be
valued at P3,687,120, and the 21.3835 hectares at P3,867,489.
Allied presented its arguments before
the Provincial Agrarian Reform
Adjudicator. The Provincial Agrarian
Reform Adjudicator upheld the valuation of the Landbank.
On
On
On
For unknown reasons, only Hilario M.
Pariña, the commissioner nominated by Allied, submitted his report. The report, which adopted the findings of the
Asian Appraisal Company that was earlier commissioned by Allied, made use of
the Market Data Approach, which is
explained and illustrated in the said report:
The value of the land was arrived at by the Market
Data Approach. In this approach the value of the land is based on sales and
listings of comparable property registered within the vicinity. The technique
of this approach requires the establishing of comparable property by reducing
reasonable comparative sales and listings to a common denominator. This is done by adjusting the differences
between the subject property and those actual sales and listings regarded as comparable.
The property used as basis of comparison was premised on the factors of
location, size and shape of the lot, and time element.
In valuing the land, records of recent sales and
offerings of similar land are analyzed and comparison made for such factors as
size, characteristics of the lot, location, quality, and prospective use.
Although no sales of truly comparable land have occurred, the following are
believed to provide reasonable bases for comparison:
Listings:
1.
Currently,
an 18-hectare (180,000 sq. m.) property located along Barangay Road, within
Barangay Mabiga, Hermosa, Bataan is being offered for sale thru a certain Mr.
Paolo Hermoso, a local resident, at an asking price of P80 per sq.m.
2.
Currently,
a 4-hectare (40,000 sq. m.) property located along P40 per sq. m.
The abovementioned listings are located along
Due to the scarcity of market data that may be used
for direct comparison purposes, we have sought the opinion of some local
residents, the municipal assessor, bank appraisers and other knowledgeable
individuals who, in our opinion, may be considered as generally conversant with
land values in the area and gathered that fairly large tracts of land along
Barangay Road command a selling price of P30 to as much as P80
per sq. m., while interior parcels of agricultural land in the vicinity of the
subject property are ranging from P10 to P20 per sq. m.,
depending on size, shape, terrain, proximity to roadways and other physical
attributes of the land.[5]
Based on the Market Data Approach, the report valued the subject properties at P15.00
per square meter (P150,000.00 per hectare), thus:
After an analysis of the market data, considering such
factors as location, desirability, neighborhood, utility, size and time
element, the market value of the land, x x x is estimated as at P15 per
sq.m. or a total value of P6,296,000 for a total land area of 419,700
sq.m.[6]
In a Decision dated P15.00 per square meter or at P150,000.00
per hectare. The decretal portion reads:
WHEREFORE, in view of the foregoing, the two (2) lots
belonging to the petitioner located at Mabiga, Hermosa, Bataan, containing a
total area of 419,700 square meters be valued at Six Million Two Hundred Ninety
Six Thousand Pesos (P6,296,000.00), Philippine Currency.[7]
Landbank and DAR appealed the RTC
decision.
In a Decision dated
WHEREFORE, in view of the foregoing, the Decision
dated January 14, 2002 of the RTC of Balanga City, Branch 1, is hereby ANNULLED
and SET ASIDE. Civil Case No. 6885 is REMANDED to the RTC for determination of
just compensation for the subject parcels of land in strict compliance with the
provisions of R.A. 6657, as amended, the DAR Administrative Orders, and the
Rules of Court.[8]
Allied filed a motion for
reconsideration, which was denied by the Court of Appeals in its Order dated
Hence, the instant case.
Allied maintains that Landbank and
DAR are barred from questioning the determination made by its commissioner
since they agreed to such appointment and conceded to be bound by the findings
of such commissioners. Although only the
findings of Allied’s commissioner was considered, owing to the fact that the
other commissioners failed to submit their reports, said findings are binding
on the parties.
Allied likewise insists that Landbank
and DAR need not be separately notified
of the submission of the report of the former’s commissioner as the latter are given
ample opportunity to meet with said commissioner during the several hearings
set by the RTC and to question his report. According to Allied, this opportunity to meet
and to question its commissioner, which Landbank and DAR squandered, is
considered sufficient notice.
Allied takes exception to the Court
of Appeals’ statement that the RTC findings were uncorroborated by evidence. Allied argues that the RTC’s decision is
supported by evidence through the report of Allied’s commissioner.[9]
Allied
also contends that the Court of Appeals erred in ruling that the basic formula
in DAO No. 6, Series of 1992, as amended by DAO No. 11, Series of 1994, should
have been invoked instead of the Market Data Approach. It stresses that when an agrarian case for the
determination of just compensation is elevated to the RTC, the court, acting as
a special agrarian court, is not bound by Sections 17[10] of
the Comprehensive Agrarian Law and its implementing rules, DAO No. 6, Series of
1992. As the RTC made its own evaluation
in arriving at the just compensation of the subject lands, said evaluation
should be followed, even if it disregarded Section 17 of the Comprehensive
Agrarian Law and the pertinent rules and regulations of DAR.
Allied’s
arguments fail to persuade.
The procedure for the determination
of compensation cases under Republic Act No. 6657, as synthesized by this Court,[11] commences
with the Landbank determining the value of the lands under the land reform
program. Making use of the Landbank valuation, the DAR makes an offer to the landowner
by way of a notice sent to the latter, pursuant to Section 16(a) of Republic
Act No. 6657. In case the landowner
rejects the offer, a summary administrative proceeding is held and afterward
the Provincial Agrarian Reform Adjudicator (PARAD), the Regional Agrarian
Reform Adjudicator (RARAD) or the Department of Agrarian Reform Adjudication
Board (DARAB) adjudicator as the case may be, depending on the value of the
land, fixes the price to be paid for the land. If the landowner does not agree
to the price fixed, he may bring the matter to the RTC acting as
In the process of determining the just
compensation due to landowners, it is a necessity that the RTC must take into
account several factors enumerated in Section 17 of Republic Act No. 6657, as
amended, thus:
Sec. 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.
Being the government agency primarily
charged with the implementation of the agrarian reform program, DAR issued DAO
No. 6 to fill out the details necessary for the implementation of Section 17 of
Republic Act No. 6657. DAR converted these
factors specified in Section 17 into a basic formula in DAO No. 6, as amended,
in this wise:
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration
The above formula shall be used if all the three
factors are present, relevant and applicable.
A.1 When the
CS factor is not present and CNI and MV are applicable, the formula shall be:
A.2 When the
CNI factor is not present, and CS and MV are applicable, the formula shall be:
A.3 When
both the CS and CNI are not present and only MV is applicable, the formula
shall be:
The pivotal issue at hand is whether
the RTC, acting as a special agrarian court, can disregard the factors
mentioned under Section 17 of the agrarian law, detailed by DAO No. 6, and
adopt the market data approach submitted by a court-appointed commissioner.
While the determination of just
compensation is essentially a judicial function which is vested in the RTC
acting as Special Agrarian Court,[12] nevertheless, this Court disregarded the
determination of just compensation made by the RTC in Land Bank of the Philippines v. Spouses Banal,[13] Land
Bank of the Philippines v. Celada,[14]
and in Land Bank of the Philippines v.
Lim,[15]
when, as in this case, the judge gravely abused his discretion by not taking
into full consideration the factors enumerated in the agrarian law and further
detailed by the DAR administrative order implementing the same.
Jurisprudence has not been wanting in
reminding special agrarian courts to resolve just determination cases
judiciously and with utmost observance of Section 17 of the agrarian law and
the administrative orders issued by the DAR implementing the said provision.
In Land Bank of the Philippines v. Spouses Banal[16] this
Court pointed out that factors spelled out in Section 17 of Republic Act No.
6657 and the formula stated in DAO No. 6 must be adhered to by the RTC in
fixing the valuation of lands subjected to agrarian reform, thus:
In determining just compensation, the RTC is required to consider
several factors enumerated in Section 17 of R.A. 6657, as amended, thus:
"Sec. 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."
These factors have been translated into a basic
formula in [DAR AO 6-92], as amended
by [DAR AO 11-94], issued pursuant to the DAR's rule-making power to carry out
the object and purposes of R.A. 6657, as amended.
The formula stated in [DAR AO 6-92], as amended, is as
follows:
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration
The above formula shall be used if all the three
factors are present, relevant and applicable.
A.1 When the
CS factor is not present and CNI and MV are applicable, the formula shall be:
x x x x
While the determination of just compensation involves the
exercise of judicial discretion, however, such discretion must be discharged
within the bounds of the law. Here, the RTC wantonly disregarded R.A. 6657, as
amended, and its implementing rules and regulations. ([DAR AO 6-92], as amended
by [DAR AO 11-94]).
x x x x
WHEREFORE, x x x. The trial judge is directed to observe strictly the procedures
specified above in determining the proper valuation of the subject
property. (Emphasis supplied.)
Again, in Land Bank of the
While SAC 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 RA 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. DAR AO No. 5, s. of 1998 precisely “filled in the
details” of Section 17, RA No. 6657 by providing a basic formula by which the
factors mentioned therein may be taken into account. The SAC was at no liberty to disregard the formula which was devised
to implement the said provision.
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.
Instead, it upheld the valuation made
by Landbank which was patterned after the applicable administrative order
issued by the DAR, viz:
[Landbank] arrived at its valuation by using available
factors culled from the Department of Agriculture and Philippine Coconut
Authority, and by computing the same in accordance with the formula provided,
thus –
COMPUTATION (Applicable Formula):
Comparable Land
Transactions (P x x x x ____ ) = P
x-x-x
Capitalized Net
Income: Cassava 16,666.67
x 0.90 = 15,000.00
Corn/Coco 26,571.70
= 23,914.53
Market Value Cassava 8,963.78
x 0.10 = 896.38
per Tax
Declaration:
Corn/Coco 10,053.93
= 1,005.39
Computed Value per
Hectare: Cassava 15,896.38; Corn/Coco – 24,919.92
x x x x
Value per
hectare used: Cassava 15,896.38 x 6.0000
has. = 95,378.28
Corn/
Payment due to
LO :
P299, 569.61
The above computation was explained by Antero M.
Gablines, Chief of the Claims, Processing, Valuation and Payment Division of
the
ATTY.
CABANGBANG: (On direct):
x x x x
q. What are the items needed for the Land Bank
to compute?
a. In accordance with Administrative Order
No. 5, series of 1998, the value of the land should be computed using the
capitalized net income plus the market value. We need the gross production of
the land and its output and the net income of the property.
q. You
said “gross production.” How would you
fix the gross production of the property?
a.
In that Administrative Order No. 5, if the owner of the land is cooperative, he
is required to submit the net income. Without submitting all his sworn
statements, we will get the data from the DA (Agriculture) or from the coconut
authorities.
x x x x
q. In
this recommended amount which you approved, how did you arrive at this figure?
a. We
used the data from the Philippine (Coconut) Authority and the Agriculture and
the data stated that Cassava production was only 10,000 kilos per hectare;
corn, 2,000 kilos; and coconuts, 15.38 kilos per hectare. The data stated that
in the first cropping of 1986, the price of cassava was P1.00 per kilo;
corn was sold at P7.75 per kilo; and the Philippine Coconut Authority
stated that during that time, the selling price of coconuts was P8.23
per kilo.
q.
After these Production data and selling price, there is here a “cost of
operation,” what is this?
a. It
is the expenses of the land owner or farmer. From day one of the cultivation
until production. Without the land owner’s submission of the sworn statement of
the income, production and the cost, x x x Administrative Order No. 5 states
that x x x we will use 20% as the net income, meaning 80% of the production in
peso. This is the cost of valuation.
q. 80
% for what crops?
a. All
crops except for coconuts where the cost of expenses is only 20%.
q.
Summing all these data, what is the value per hectare of the cassava?
a. The
cassava is P15,896.38.
q. How
about the corn x x x intercropped with coconuts?
a. P24,919.92.
Under the circumstances, we find the explanation and computation of [Landbank] to be sufficient
and in accordance with applicable laws. [Landbank’s] valuation must thus be
upheld.[18]
Apo Fruits Corporation v. Court of Appeals[19] yet again accentuated the necessity
of giving paramount importance to the criteria found in Section 17 of the
agrarian law and the pertinent DAR administrative order. In affirming therein the special agrarian
court’s valuation, it reasoned in this fashion:
[T]he Court
affirmed the due consideration given by the RTC of the factors specified in
Section 17, Republic Act No. 6657. Again, the proper valuation of the
subject premises was reached with clear regard for the acquisition cost of the
land, current market value of the properties, its nature, actual use and
income, inter alia — factors that are material and relevant in determining just
compensation. These are the very same
factors laid down in a formula by DAR A.O. No. 5. Due regard was thus given by
the RTC to Republic Act No. 6657, DAR A.O. No. 5 and prevailing
jurisprudence when it arrived at the value of just compensation due to AFC and
HPI in this case.
The Court En Banc in Land Bank of the
Philippines v. Lim[20]
was confronted with the question whether the RTC can resort to any other means
of determining just compensation apart from Section 17 of Republic Act No. 6657
and DAO No. 6. The Court resolved the
issue in the negative and pronounced therein that Section 17 of Republic Act No.
6657 and DAO No. 6 are mandatory and are not mere guides that the RTC may
disregard. Basing its ruling on the pronouncements of Land Bank of the Philippines v. Spouses Banal and Land Bank of the Philippines v. Celada,
the Court enunciated:
In Land Bank of
the Philippines v. Spouses Banal, this
Court underscored the mandatory nature of Section 17 of RA 6657 and DAR AO
6-92, as amended by DAR AO 11-94, viz:
In determining just compensation, the RTC is required
to consider several factors enumerated in Section 17 of R.A. 6657, as amended,
thus:
"Sec. 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."
These factors have been translated into a basic
formula in [DAR AO 6-92], as amended by [DAR AO 11-94], issued pursuant to the
DAR's rule-making power to carry out the object and purposes of R.A. 6657, as
amended.
x x x x
While the determination of just compensation involves
the exercise of judicial discretion, however, such discretion must be
discharged within the bounds of the law. Here, the RTC wantonly disregarded
R.A. 6657, as amended, and its implementing rules and regulations. ([DAR AO
6-92], as amended by [DAR AO 11-94]).
x x x x
WHEREFORE, x x x Civil Case No. 6806 is REMANDED to
the RTC x x x. The trial judge is
directed to observe strictly the procedures specified above in determining the
proper valuation of the subject property.
x x x.
And in LBP v.
Celada, this Court set aside the valuation fixed by the RTC of Tagbilaran,
which was based solely on the valuation of neighboring properties, because it
did not apply the DAR valuation formula. The Court explained:
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.
x x x x
Consequently, as the amount of P2,232,868
adopted by the RTC in its December 21, 2001 Order was not based on any of
the mandatory formulas prescribed in DAR AO 6-92, as amended by DAR AO 11-94,
the Court of Appeals erred when it affirmed the valuation adopted by the
RTC. (Emphases supplied.)
In the instant case, the RTC did not
consider Section 17 of Republic Act No. 6657 as well as DAO No. 6 and instead
adopted, hook line and sinker, the market data approach introduced by the
commissioner nominated by Allied. This undoubtedly
constitutes a glaring departure from the established tenet discussed above on
the mandatory nature of Section 17 of Republic Act No. 6657 and DAO No. 6, as
amended. It is worthy to note that
Allied did not provide any evidence that the market data approach, which based
the value of the land in question on sales and listings of similar properties
situated within the area, conformed to the subject administrative order, and it
is not also clear if same approach took into consideration the said
administrative order. Such being the
case, the market data approach espoused by Allied cannot be a valuation that
complies with the requirements under the agrarian law. Besides, this Court has once refused to accept
the market data approach as a method of valuation compliant with the agrarian
law and enforced by the DAR:
We find that
the factors required by the law and enforced by the DAR Administrative Order
were not observed by the SAC when it adopted wholeheartedly the valuation
arrived at in the appraisal report.
According to the appraisal company, it "personally inspected the property,
investigated local market conditions, and have given consideration to the
extent, character and utility of the property; sales and holding prices of
similar land; and highest and best use of the property." The value of
the land was arrived at using the
market data approach, which bases the value of the land on sales and
listings of comparable property registered within the vicinity. In fact, as
noted by the Court of Appeals, a representative of the company admitted that it
did not consider the CARP valuation to be applicable.[21] (Emphases supplied.)
In fine, this Court defers to the
findings of the Court of Appeals, there being no cogent reason to veer away
from such findings.
Lastly, since Landbank and the DAR
failed to submit their respective reports and have them substantiated during
the hearings, and since the valuation of Landbank remains unsubstantiated, the
Court is left with no recourse but to remand the case to the RTC.
WHEREFORE, premises
considered, the instant petition is hereby DENIED. The Decision of the Court of Appeals dated 29
June 2006 and its Resolution dated 7 November 2006 annulling the 14 January
2002 Decision of the Regional Trial Court of Balanga City, Bataan, Branch 1,
and remanding the case to the same trial court are hereby AFFIRMED. Costs against
petitioner.
|
|
MINITA V. CHICO-NAZARIOAssociate Justice |
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson
Associate Justice
Associate Justice
DIOSDADO M. PERALTA
Associate Justice
ATTESTATION
I attest that the conclusions in the above
Decision were reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII
of the Constitution, and the Division Chairperson’s Attestation, it is hereby
certified that the conclusions in the above Decision were reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
LEONARDO
A. QUISUMBING
Acting Chief Justice
[1] Penned by Associate Justice Estela M. Perlas-Bernabe with Associate Justices Andres B. Reyes, Jr. and Hakim S. Abdulwahid, concurring. Rollo, pp. 60-69.
[2] Rollo, p. 71.
[3] 1 hectare of the 21.3835 hectares
was valued at P113,746.20; 3 hectares were valued at P56,873.10;
11.4506 hectares at P71,877.90; 5.9329 hectares at P53,872.50.
[4] 8.0830 hectares was valued at P53,872.50
per hectare, while the 12.4010 hectares were valued at P59,371.25.
[5] Records, pp. 208-209.
[6]
[7]
[8] Rollo, p. 49.
[9]
[10] Sec. 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.
[11] Land
Bank of the
[12] Land
Bank of the
[13] Supra note 11.
[14] G.R. No. 164876,
[15] G.R. No. 171941,
[16] Supra note 11 at 549-554.
[17] Supra note 14 at 506-507.
[18]
[19] G.R. No. 164195,
[20] Supra note 15 at 134-136.
[21] Lee v. Land Bank of the Philippines, G.R. No. 170422, 7 March 2008, 548 SCRA 52, 61.