Land Bank Of The Philippines v. Cortez

GAERLAN, J.:

This is a Petition for Review on Certiorari1 dated January 17, 2014 filed by petitioner Land Bank of the Philippines (LBP) assailing the Decision2 dated July 9, 2013 and the Resolution3 dated December 16, 2013 promulgated by the Court of Appeals (CA) in CA-G.R. SP. No. 123233, which affirmed the Decision4 dated December 21, 2011 of the Regional Trial Court (RTC) of Legazpi City, Branch 3, acting as a Special Agrarian Court. In its decision, the RTC fixed the amount of just compensation for the expropriated 6.0004 hectare land owned by respondent spouses Lydia and Carlos Cortez (spouses Cortez) in the amount of P397,958.41.5 In fixing the amount, the RTC made use of the formula prescribed in the Department of Agrarian Reform (DAR) Administrative Order (AO) No. 5, Series of 1998.6 However, instead of using the respective reckoning dates provided in AO No. 5, Series of 1998 in determining the Annual Gross Production (AGP) and Selling Prices (SP), the RTC made use of June 30, 2009, as provided for in AO No. 1, Series of 2010,7 as the supposed presumptive date of taking from whence the production data or values should be reckoned with.

Facts Spouses Cortez are the owners of a coconut land, identified as Lot 181893, Cad. 56, located at Villahermosa, Daraga, Albay, with an area of approximately 16.5415 hectares and covered by Transfer Certificate of Title (TCT) No. T-45714.8 On January 5, 2000, spouses Cortez offered the aforesaid property for acquisition under the Comprehensive Agrarian Reform Program.9 Thus, sometime in April 2000, the necessary notice of coverage was issued by DAR. Thereafter, on April 24, 2000, LBP together with the DAR representative, the Municipal Agrarian Reform Officer of Daraga, Albay, and the Barangay Agrarian Reform Council representative, conducted a field investigation of spouses Cortez' property.10 The field investigation revealed that only 6.004 hectares of the 16.5415 hectares are fit for acquisition under the agrarian reform program.11 On September 26, 2001, the DAR issued a Memorandum Request to Value Land12 addressed to LBP.

LBP received the claims folder on September 27, 2001.13 Thus, on January 15, 2002, the Register of Deeds of Albay partially cancelled TCT No. 45715 and issued TCT No. T-127132 in the name of the Republic of the Philippines, represented by the DAR covering the 6.0004-hectare area (subject property) of the property subject of agrarian reform.14 LBP conducted the land valuation for the subject property using the two­-factor formula prescribed under AO No. 5, Series of 1998 and arrived at the amount of P106,542.98 or P17,755.98 per hectare as the initial determination of the Subject Property's valuation. LBP computed its preliminary valuation using the following formula and values:15 Computation of Land Value of acquired area of 6.0004 hectares coconut land: Land Value = (CNI16 x 0.9) + (MV17 x 0.1) CNI =(AGP18 x SP19 x NIR20) 0.12 = 480 kg./ha. x P6.44/kg.

x 70% 0.12 = P18,032.00 /hectare MV for Land = UMV21 x Location Adj. Factor x RCPI22 Adj. Factor = (P9,800/ha.

x 87% x 172.7/155.5) = P9,472.39/ha MV for Trees = No. of Trees/ha. x UMV x Location Adj. Factor x RCPI Adj.

Factor x = (60 T/ha. x P100/tree x 90% x 172.7/155.5) = (60 T/ha. x P100/tree x 90% x 1.11) = P5,799.42/hectare MV = MV for land + MV for Trees Land Value per hectare = (CNI x 0.9) + (MV x 0.1) = (P18,032.00/ hectare x 90%) + (P1,527.18/ hectare x 10%) = P16,228.80 /hectare + P1,527.18 / hectare = P17,755.98/hectare Total Land Value = Land Value/hectare x Acquisition Area = P17,755.98/hectare x 6.0004 hectares = P106,542.0023 (Emphases omitted; citations supplied) However, spouses Cortez refused to accept the amount of P106,542.98 as preliminary determination of compensation by LBP.24 Because of their rejection of LBP's offer, the amount was deposited in the names of spouses Cortez as provisional compensation on December 20, 2001 in accordance with Section 16(e) of Republic Act (R.A.) No. 6657.25 Thus, the matter was elevated to the Department of Agrarian Reform Adjudication Board (DARAB), which eventually rendered a decision fixing the compensation for the acquired subject property at P183,273.93.26 LBP rejected the determination made by the DARAB, as the decision did not include the computation on how the amount was arrived at and its basis.27 Accordingly, LBP filed a Petition for Determination of Just Compensation28 before the RTC docketed as Agrarian Case No. 07-02, arguing that the preliminary determination of valuation of the subject property made by LBP was in accordance with Section 17 of R.A. No. 6657.29 Ruling of the RTC In its Decision30 dated December 21, 2011, the RTC, acting as a Special Agrarian Court, fixed the amount of compensation for the acquired subject property at P397,958.41 based on the report prepared by the court appointed commissioner.

The dispositive portion of the decision reads:

WHEREFORE, the Court hereby renders judgment and declares, as follow, to wit: a) The just compensation for the 6.0004 hectares of coconut land owned by the private respondents, Spouses Lydia and Carlos Cortez, is hereby fixed in the amount of PhP397,958.41. b) The petitioner is hereby directed to compensate the private respondents in the afore-said sum minus the amount actually received in cash by the private respondents, 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 is fully satisfied or received by the private respondents.31 (Emphases in the original) In computing for the foregoing amount of compensation, the RTC directed the commissioner to make use of the formula prescribed under AO No. 5, Series of 1998, which was similarly used by LBP with a modification that the production values and other relevant data be reckoned with the presumptive date of taking on June 30, 2009, in accordance with AO No. 1, Series of 2010.32 In arriving at the foregoing ruling, the RTC ratiocinated that fixing the amount of compensation due to spouses Cortez based on the market prices and production data at that time may do injustice to them.33 The RTC recognized that AO No. 5, Series of 1998 provides for two reckoning dates in determining the production data or values necessary in arriving at the compensation due to spouses Cortez. First, the AGP shall be determined based on the latest available 12-month gross production quantity immediately preceding the date of the field investigation, which was conducted on April 24, 2000. Second, the SP shall be determined based on the average selling prices of production within the 12-month period preceding the date of receipt of the claims folder by LBP, which was on September 27, 2001.34 The RTC held that strictly observing the foregoing parameters under AO No. 5, Series of 1998 would severely diminish the purchasing power of the payment due to spouses Cortez given the annual inflation rates.35 Accordingly, to address the "undeserved diminution of value" of compensation - if the RTC were to adhere to the reckoning periods for production value under AO No. 5, Series of 1998 - the RTC proposed to "currentize" the bases for the production data and values and do away with the payment of interest by adopting the new presumptive date of taking of June 30, 2009 as set forth in AO No. 1, Series of 2010.36 Thus, the commissioner using the same two-factor formula used by LBP in arriving at its preliminary determination of compensation recomputed the valuation of the subject property, using the production data and values within the 12-month period reckoned from the presumptive date of taking of June 30, 2009.37 The computation of the amount of P397,958.41 fixed by the RTC is as follows: Relevant Data: Average Farm Gate Prices of Copra per 100 kilos in the Province of Albay from July to December 2008 and January to June 2009 or the 12-month period preceding 30 June 2009: 2008 July - - - - - - - - - - - - - - - - - - - - - - - - - Php 3,600.00 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