gr_203242_2019

LEONEN, J.:

The final determination of just compensation is vested in courts. In the recent case of Alfonso v. Land Bank ,1 this Court, through Associate Justice Francis H. Jardeleza, ruled that courts may deviate from the basic formula provided by administrative agencies if it finds, in its discretion, that other factors must be taken into account in the determination of just compensation. Deviation, however, must be grounded on a reasoned explanation based on the evidence on record.

Absent this, the deviation will be considered as grave abuse of discretion.2 For this Court's resolution is a Petition for Review on Certiorari3 assailing the Court of Appeals January 20, 2011 Decision4 and August 8, 2012 Resolution5 in CA-G.R. SP No. 03225. The Court of Appeals affirmed the September 18, 2007 Decision6 of the Special Agrarian Court, which fixed the value of just compensation for the lands appropriated at ₱1,024,115.49. Lucy Grace Franco and Elma Gloria Franco (the Francos) were the registered owners of parcels of agricultural land in Barangay Maquina, Dumangas, Iloilo, covered by Transfer Certificate of Title Nos. T-62209, T-62210, T-62212, and T-51316.7 The Francos offered the parcels of land for sale to the Department of Agrarian Reform under the Voluntary Offer to Sell of the Comprehensive Agrarian Reform Program in 1995.8 Of the 14.444 hectares of the property, 12.5977 hectares were acquired and distributed to qualified agrarian reform beneficiaries.9 During the summary proceedings before the Department of Agrarian Reform, the parcels of land were valued at ₱714,713.78.10 The Francos did not agree with the initial valuation.

Upon a Petition for Review, the Department of Agrarian Reform Adjudication Board raised the amount to ₱739,461.43,11which the Francos then withdrew from the Land Bank of the Philippines (Land Bank).12 Still dissatisfied with the amount, the Francos on August 3, 2000 filed before the Regional Trial Court, sitting as the Special Agrarian Court, a Complaint for the determination of just compensation.13 Subsequently, they filed an Amended Petition against Land Bank, the Secretary of Agrarian Reform, and other tenant-beneficiaries who were not included in the original Complaint. In its September 18, 2007 Decision,14 the Special Agrarian Court fixed the just compensation for the 12.5977 hectares of land area actually taken by the government in the amount of ₱1,024,115.49.15 It ordered Land Bank to pay the remaining balance of ₱288,115.49 with legal interest at 12% per annum from April 25, 1996 until full payment.16 Moreover, it held that under Section 1917 of Republic Act No. 6657, or the Comprehensive Agrarian Reform Law, the Francos were also entitled to an additional five percent (5%) cash payment by way of incentive for voluntarily offering their lots for sale.18 In arriving at the amount, the Special Agrarian Court reasoned that: [T]he Court finds the total valuation by the LBP and the DAR in the amount of P739,461.43 to be unrealistically low and therefore is not the just compensation of the subject lot.

On the other hand, the valuation of the petitioners is likewise cumbersomely high for the government and the farmer-beneficiaries considering that the valuation of P300,000.00 per hectare they initially asked in 1998 were based only on assumptions of facts unsupported by credible evidence. This offer of P300,000.00 was reiterated by Mr. Gustilo during the hearing and clearly, this offer is based on his own declarations but this was not adequately substantiated and therefore inconclusive.

Thus, the Court in the exercise of its judicial prerogatives, must consider the needs of both parties and should be guided by several factors in order to arrive at a just compensation which is fair, reasonable and acceptable to the parties. . .

. . The Supreme Court has ruled that (sic) in several cases that the determination of just compensation is a function addressed to the Courts.

It may not be usurped by any other branch or official of the government. The Courts are unanimous in decrying mathematical formulas or method "where even a grade school pupil could substitute for a judge for fixing just compensation. These methods are considered impermissible encroachments on judicial prerogatives.

They tend to render the court inutile in a matter which under the [Constitution is reserved to the courts for final determination". Thus, pure mathematical approaches to valuation will not be tolerated by the courts, whose hands remain free and untied in arriving at just compensation. Thus, in determining just compensation, the Court will take into consideration the factors, like the price set by the plaintiffs when they first offered the subject land for voluntary acquisition (P300,000.00 per hectare; Date of Offer - January 30, 1995) and those provided under Section 17 of R.A. 6657, to wit: a) the cost of acquisition of the land; b) the current value of like properties; c) the sworn valuation by the owner; d) the tax declarations and assessments; e) the assessments made by government assessors; f) the social and economic benefits contributed by the farmers and the farm workers and by the government to the property; and g) the non-payment of taxes or loans secure from any government financing institution on the said land.

The petitioners herein presented the four (4) Tax Declarations for 1996 of the subject lots wherein the assessor fixed the market value per hectare of the bamboo land at P45,200.00 (total area - 0.5000 Has.); for rice land irrigated at P60,830.00 (total area - 1.5716 hectares); for coconut land at P45,000.00 (total area - 0.2000 hectares); and for sugar land at P122,000.00 (total area - 8.2318 hectares) or a total market value of P1,131,479.60. Although the market value appearing in the tax declaration is usually lower than the actual value of the property, the court will consider the said amount since no evidence was presented by the plaintiffs to prove a higher amount. In evaluating the subject lot in the case at bar, the Court will take into account the amount of P31,789.80 per hectare of bamboo land consisting of 0.4855 hectares; P59,871.97 per hectare of rice unirrigated consisting of 8.9920 hectare[s]; and P59,502.19 per hectare of rice unirrigated consisting of 3.1202 hectares, which was arrived at using the mathematical formula provided under DAR Administrative Order No. 5, Series of 1998 and the market value of the property as shown in the tax declarations which are as follows: for bamboo land consisting of 0.5000 hectares, the market value is P22,600.00; for coconut land consisting of 0.2000 hectares, the market value is P9,000.00; for rice irrigated consisting of 1.5716 hectares, the market value is P95,600.00 per hectare; and for sugar land consisting of 8.2318 hectares, the market value is P1,004,279.60 or a total market value of P1,131,479.60.

The average of these amounts will be considered the just compensation of the subject lot. Such method of valuation is intended to take into account all the factors previously discussed. Therefore, the average of these two figures will result in the following valuation per hectare: Per Hectare Area Actually Taken Value Bambooland P38,494.50 0.4855 Has.

P18,689.08 Rice unirrigated P90,935.96 8.9920 Has. 817,696.15 Rice unirrigated P60,166.10 3.1202 Has. 187,730.26 [12.5977] has.

P1,024,118.49 From the foregoing computations, this Court finds and so hold (sic) that the just compensation or land value of the subject lot located at Brgy.

Maquina, Dumangas, Iloilo covered by TCT Nos. T-62209, T-622010, T-62212 and T-51376 and registered in the name of Lucy Grace Franco married to Jose Mandoriao, Jr. and Elma Gloria Franco is P1,024,115.40 for the 12.5977 hectares actually taken by the government and transferred in favor of the qualified farmer-beneficiaries. . .

. . The concept of just compensation embraces not only the correct determination of the amount to be paid to the owners of the land, but also the payment of the land within a reasonable time from its taking.

Without prompt payment, compensation cannot be considered "just" for the property owner is made to suffer the consequence of being immediately deprived of his land while being made to wait for a decade or more before actually receiving the amount necessary to cope with his loss.19 (Emphasis supplied) Land Bank filed a Motion for Reconsideration, but it was denied by the Special Agrarian Court in a November 14, 2007 Order.20 Land Bank filed before the Court of Appeals a Petition for Review under Rule 42 of the Rules of Court, arguing that the Special Agrarian Court's determination of just compensation was inconsistent with Department of Agrarian Reform Administrative Order No. 5, series of 1998 (Administrative Order No. 5).21 In its January 20, 2011 Decision,22 the Court of Appeals, citing Heirs of Lorenzo and Carmen Vidad v. Land Bank of the Philippines ,23 affirmed the ruling of the Special Agrarian Court and held that the determination of just compensation is judicial in nature: Settled is the principle that the determination of just compensation is judicial in nature.

Hence, contrary to petitioner's assertion, the court a quo may properly determine for itself the amount of just compensation to be awarded to private respondents. . .

. The transaction involved the taking of the property of private respondents under R.A. 6657 which was an exercise of the State's power of eminent domain. As such, the valuation of property or determination of just compensation is vested with the courts and not with administrative agencies.

Thus, even though there might have been an acceptance by the landowner of the valuation of the DAR, this acceptance does not bar resort to the courts for the final determination of just compensation. "R.A. 6657 does not make DAR's valuation absolutely binding as the amount payable by petitioner. A reading of Section 18 of R.A. 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." Moreover, to sustain petitioner's position that the court a quo cannot re-evaluate the DAR's valuation, would modify the Special Agrarian Court's function to determine just compensation to an appellate one, instead of the original and exclusive jurisdiction vested upon it by R.A. 6657.

Admittedly, certain factors have to be considered in the determination of just compensation. As opposed to petitioner's claim, however, it appeared that the court a quo considered these factors when it awarded the sum of P1,024,115.49 to private respondents as compensation for their property taken under the CARP. Aside from the evidence submitted by petitioner, the court a quo likewise gave due consideration to private respondents' evidence, particularly as to the market value of the subject parcels of land.

In fact, the court a quo utilized the same values as determined by DAR using the mathematical formula provided under DAR Administrative Order No. 5, Series of 1998 which embodied the criteria laid down in Section 17 of R.A.

6657. Thus, it cannot be said that the court a quo disregarded the rules and principles established by law and jurisprudence on the fixing of just compensation.24 (Emphasis supplied, citations omitted) The Court of Appeals, however, modified the Special Agrarian Court Decision by deleting the imposition of the 12% legal interest on the outstanding amount. In doing so, it explained that the delay in the delivery of payment has not been established.25 Land Bank filed a Motion for Partial Reconsideration, but it was denied by the Court of Appeals in its August 8, 2012 Resolution.26 Hence, this Petition for Review on Certiorari27 was filed.

Petitioner argues that in determining just compensation, the Special Agrarian Court expanded the basic general formula in Administrative Order No. 5 by taking the average between its valuation and the market value of the properties based on its respective tax declarations.28 For reference, the basic general formula is: LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1) Where: LV = Land Value CNI = Capitalized Net Income CS = Comparable Sales MV = Market Value per Tax Declaration29 Petitioner contends that the Special Agrarian Court expanded the formula to LV = [(CNI x 0.6) + (CS x 0.3) + (MV x 0.1)] + 1996 tax declaration) / 2 x area, which it claims was contrary to Administrative Order No. 5.30 It argues that in a long line of cases, this Court "has demonstrated judicial fealty to the applicable formula and guidelines which [the Department of Agrarian Reform] issued through several administrative orders."31 It cites Land Bank of the Philippines v. Spouses Banal ,32 where the Special Agrarian Court was reminded that "the exercise of judicial discretion in fixing just compensation must be made within the bounds of [Republic Act] No. 6657 and the administrative rules issued by [the Department of Agrarian Reform]."33 Petitioner posits that the five percent (5%) cash incentive under Section 1934 in relation to Section 1835 of Republic Act No. 6657 refers to the mode of payment on the cash portion, but not to an additional award of five percent (5%) on top of the full amount of just compensation.

It submits that considering that the properties acquired were below 24 hectares and were voluntarily offered for sale, the landowner, instead of receiving 35% in cash and 65% in agrarian reform bonds, should receive 40% in cash and 60% in agrarian reform bonds as just compensation.36 Respondents, on the other hand, counter that the Special Agrarian Court has original and exclusive jurisdiction over all petitions for the determination of just compensation. They emphasize that this Court has already ruled that determination of just compensation is a judicial prerogative.37 Respondents likewise assert that the five percent (5%) cash incentive in Republic Act No. 6657, Section 19 refers to an additional monetary award on the entire amount of just compensation in favor of the land owners who voluntarily offered their lands for sale.38 They argue that the "cash incentive entices or stimulates landowners to voluntarily sell their lands subject of eminent domain in favor of the government."39 This Court is asked to resolve the following issues: First, whether or not the Court of Appeals erred in affirming the Special Agrarian Court's valuation of just compensation using a variation of the basic general formula provided for in Department of Agrarian Reform Administrative Order No. 5, series of 1998; and Second, whether or not the five percent (5%) cash incentive under Section 19 of the Comprehensive Agrarian Reform Law refers only to the mode of payment of the cash portion, not to an increase in the total amount of just compensation.

I Agrarian Reform, as subsumed under social justice in this jurisdiction, is enshrined in the Constitution: AGRARIAN AND NATURAL RESOURCES REFORM SECTION 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.40 (Emphasis supplied) Several laws were enacted to ensure that the State's policy toward agrarian reform is properly carried out. These laws are outlined in Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform :41 R.A. No. 3844, otherwise known as the Agricultural Land Reform Code, had already been enacted by the Congress of the Philippines on August 8, 1963, in line with the above-stated principles. This was substantially superseded almost a decade later by P.D. No. 27, which was promulgated on October 21, 1972, along with martial law, to provide for the compulsory acquisition of private lands for distribution among tenant-farmers and to specify maximum retention limits for landowners.

The people power revolution of 1986 did not change and indeed even energized the thrust for agrarian reform. Thus, on July 17, 1987, President Corazon C. Aquino issued E.O. No. 228, declaring full land ownership in favor of the beneficiaries of P.D. No. 27 and providing for the valuation of still unvalued lands covered by the decree as well as the manner of their payment. This was followed on July 22, 1987 by Presidential Proclamation No. 131, instituting a comprehensive agrarian reform program (CARP), and E.O. No. 229, providing the mechanics for its implementation.42 In 1988, the Congress enacted the Comprehensive Agrarian Reform Law, which further strengthened the State's policy toward agrarian reform.43 The law provided an exact definition of the phrase "agrarian reform,"

thus: Agrarian Reform means the redistribution of lands, regardless of crops or fruits produced to farmers and regular farmworkers 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 stocks, which will allow beneficiaries to receive a just share of the fruits of the lands they work.44 In light of these developments, Batas Pambansa Blg. 129, or the Judiciary Reorganization Act of 1980, vested in regional trial courts exclusive and original jurisdiction of civil actions and special proceedings under the exclusive and original jurisdiction of the courts of agrarian relations.45 Section 56,46 in relation to Section 5747 of the Comprehensive Agrarian Reform Law, confers "special jurisdiction"

on special agrarian courts.

Regional trial courts, sitting as special agrarian courts, have original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners, as well as the prosecution of all criminal offenses under the Comprehensive Agrarian Reform Law.48 In contrast to the special agrarian courts, the Department of Agrarian Reform Adjudication Board only has preliminary administrative determination of just compensation.49 Just compensation is "the full and fair equivalent of the property taken from its owner by the expropriator."50 The measure of the taking "is not the taker's gain but the owner's loss."51 The term "just" intensifies the term "compensation" to obtain a real, substantial, full, and ample equivalent for the property taken.52 The jurisdiction of the trial courts, sitting as special agrarian courts, is "not any less 'original' and 'exclusive'"53 because the Department of Agrarian Reform passes upon the question of just compensation first.54 "[judicial proceedings are not a continuation of the administrative determination ...

the law may provide that the decision of the [Department of Agrarian Reform] is final and unappealable. Nevertheless, resort to the courts cannot be foreclosed on the theory that courts are the guarantors of the legality of administrative action."55 This Court has long held that settlement of the value of just compensation is judicial in nature. In Export Processing Zone Authority v. Dulay ,56 this Court categorically held that the determination of just compensation is a judicial function: The determination of "just compensation"

in eminent domain cases is a judicial function. The executive department or the legislature may make the initial determinations but when a party claims a violation of the guarantee in the Bill of Rights that private property may not be taken for public use without just compensation, no statute, decree, or executive order can mandate that its own determination shall prevail over the court's findings. Much less can the courts be precluded from looking into the "just-ness"

of the decreed compensation.57 In Heirs of Lorenzo and Carmen Vidad ,58 this Court reaffirmed the judicial determination of just compensation: LBP's valuation of lands covered by the CARP Law is considered only as an initial determination, which is not conclusive, as it is the RTC, sitting as a SAC, that could make the final determination of just compensation, taking into consideration the factors enumerated in Section 17 of RA 6657 and the applicable DAR regulations. LBP's valuation has to be substantiated during an appropriate hearing before it could be considered sufficient in accordance with Section 17 of RA 6657 and the DAR regulations.59 (Citation omitted) Moreover, in Land Bank of the Philippines v. Montalvan ,60 this Court ruled on the finality of the Special Agrarian Court's jurisdiction as provided for under Section 57 of Republic Act No. 6657: It is clear from Sec. 57 that the RTC, sitting as a Special Agrarian Court, has "original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners."

This "original and exclusive" jurisdiction of the RTC would be undermined if the DAR would vest in administrative officials (sic) original jurisdiction in compensation cases and make the RTC an appellate court for the review of administrative decisions. Thus, although the new rules speak of directly appealing the decision of adjudicators to the RTCs sitting as Special Agrarian Courts, it is clear from Sec. 57 that the original and exclusive jurisdiction to determine such cases is in the RTCs.

Any effort to transfer such jurisdiction to the adjudicators and to convert the original jurisdiction of the RTCs into appellate jurisdiction would be contrary to Sec.

57 and therefore would be void.61 (Emphasis omitted) A statute's provisions should be read in its entirety.62 Section 57 of the Comprehensive Agrarian Reform Law, on the exclusive and original jurisdiction of special agrarian courts, must be read with Section 16(f), which provides that: 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.

(Emphasis supplied) The use of the word "final " makes the intent of the law clear. Special agrarian courts are not merely given appellate jurisdiction over the findings of administrative agencies.

The law has explicitly vested them with jurisdiction to make a final and binding determination of just compensation.63 The previous Section 1764 of Republic Act No. 6657 identifies the factors to be considered for the determination of just compensation: 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. (Emphasis supplied) To implement Section 17, Administrative Order No. 565 provided the following formula: There shall be one basic formula for the valuation of lands covered by VOS66 or CA:67 LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1) Where: LV = Land Value 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: LV = (CNI x 0.9) + (MV x 0.1) A.2 When the CNI factor is not present, and CS and MV are applicable, the formula shall be: LV = (CS x 0.9) + (MV x 0.1) A.3 When both the CS and CNI are not present and only MV is applicable, the formula shall be: LV = MV x 2 In no case shall the value of idle land using the formula MV x 2 exceed the lowest value of land within the same estate under consideration or within the same barangay or municipality (in that order) approved by LBP within one (1) year from receipt of claimfolder.

A.4 When the land planted to permanent crops is not yet productive or not yet fruit-bearing at the time of Field Investigation (FI), the land value shall be equivalent to the value of the land plus the cumulative development cost (CDC) of the crop from land preparation up to the time of FI. In equation form: LV = (MV x 2) + CDC where: 1. MV to be used shall be the applicable UMV classification of idle land.

2. CDC shall be grossed-up from the date of FI up to the date of LBP Claim Folder (CF) receipt for processing but in no case shall the grossed-up CDC exceed the current CDC data based on industry. In case the CDC data provided by the landowner could not be verified, DAR and LBP shall secure the said data from concerned agency/ies or, in the absence thereof, shall establish the same.

In no case, however, shall the resulting land value exceed the value of productive land similar in terms of crop and plant density within the estate under consideration or within the same barangay or municipality (in that order) approved by LBP within one (1) year from receipt of CF. In case where CS is relevant or applicable, the land value shall be computed in accordance with Item II.A.2 where MV shall be based on the lowest productivity classification of the land. A.5 When the land is planted to permanent crops introduced by the farmer-beneficiaries (FBs) which are not yet productive or not yet fruit-bearing, the land value shall be computed by using the applicable UMV classification of idle land.

In equation form: LV = MV x 2 In no case, however, shall the resulting land value exceed the value of productive land similar in terms of crop and plant density within the estate under consideration or within the same barangay or municipality (in that order) approved by LBP within one (1) year from receipt of CF. In case where CS is relevant or applicable, the land value shall be computed in accordance with Item II.A.2 where MV shall be based on the applicable classification of idle land. A. 6 The value of lands planted to permanent crops which are no longer productive or ready for cutting shall be determined by using the applicable UMV classification of idle land plus the salvage value of the standing trees at the time of the FI.

In equation form: LV = (MV x 2) + Salvage Value In no case, however, shall the resulting land value exceed the value of productive land similar in terms of crop and plant density within the estate under consideration or within the same barangay or municipality (in that order) approved by LBP within one (1) year from receipt of CF. In case where CS is relevant or applicable, the land value shall be computed in accordance with Item II.A.2 where MV shall be based on the lowest productivity classification of the land. A. 7 In all of the above, the computed value using the applicable formula shall in no case exceed the LO's offer in case of VOS.

The LO's offer shall be grossed up from the date of the offer up to the date of receipt of CF by LBP from DAR for processing. A.

8 For purposes of this Administrative Order, the date of receipt of CF by LBP from DAR shall mean the date when the CF is determined by the LBP-LVLCO to be complete with all the required documents and valuation inputs duly verified and validated, and ready for final computation/processing. Should LBP need any of the documents listed under Paragraph C, Annex B of DAR Administrative Order No. 1, Series of 1993, as amended by DAR Administrative Order No. 2, Series of 1996, to facilitate processing under Paragraph IV, Step 14 to 17, of the same Order, the DAR shall assist the LBP in securing the same. A.9 The basic formula in the grossing-up of valuation inputs such as LO's Offer, Sales Transaction (ST), Acquisition Cost (AC), Market Value Based on Mortgage (MVM) and Market Value per Tax Declaration (MV) shall be: Grossed-up Valuation Input = Valuation Input x Regional Consumer Price Index (RCPI) Adjustment Factor The RCPI Adjustment Factor shall refer to the ratio of the most recent available RCPI for the month issued by the National Statistics Office as of the date when the CF was received by LBP from DAR for processing and the RCPI for the month as of the date/effectivity/registration of the valuation input.

Expressed in equation form: RCPI Adjustment Factor = Most Recent RCPI for the Month as of the Date of Receipt of CF by LBP from DAR