G.R. No.

164876

January 23, 2006

LAND BANK OF THE PHILIPPINES, Petitioner, vs. LEONILA P. CELADA, Respondent. DECISION YNARES-SANTIAGO, J.: Respondent Leonila P. Celada owns 22.3167 hectares of agricultural land situated in Calatrava, Carmen, Bohol registered under TCT No. 16436,1 of which 14.1939 hectares was identified in 1998 by the Department of Agrarian Reform (DAR) as suitable for compulsory acquisition under the Comprehensive Agrarian Reform Program (CARP). The matter was then indorsed to petitioner Land Bank of the Philippines (LBP) for field investigation and land valuation. In due course, LBP valued respondents land at P2.1105517 per square meter for an aggregate value of P299,569.61.2 The DAR offered the same amount to respondent as just compensation, but it was rejected. Nonetheless, on August 27, 1999, LBP deposited the said sum in cash and bonds in the name of respondent.3 Pursuant to Section 16(d) of Republic Act (RA) No. 6657 or the Comprehensive Agrarian Reform Law of 1988, the matter was referred to the DAR Adjudication Board (DARAB), Region VII-Cebu City, for summary administrative hearing on determination of just compensation. The case was docketed as DARAB Case No. VII-4767-B990. While the DARAB case was pending, respondent filed, on February 10, 2000, a petition4 for judicial determination of just compensation against LBP, the DAR and the Municipal Agrarian Reform Officer (MARO) of Carmen, Bohol, before the Regional Trial Court of Tagbilaran City. The same was docketed as Civil Case No. 6462 and raffled to Branch 3, the designated Special Agrarian Court (SAC). Respondent alleged that the current market value of her land is at least P150,000.00 per hectare based on the following factors: 14.1. The land in question has been mortgaged to the defunct Rural Bank of San Miguel (Bohol), Inc., for P1,220,000.00 on July 23, 1998 since it was appraised at P15.00 per square meter; 14.2. Agricultural lands in said barangay are priced ranging from P140,000.00 to P150,000.00 per hectare and current land transactions reveal said price range; 14.3. The land in question is titled or registered property, cultivated and fully developed with rice5 and corn occupying the greater portion thereof; 14.4. The topography of the land, its soil condition, climate and productivity of surrounding lots justify the just compensation requested or asked for; 14.5. Even the class and base unit market value for agricultural lands in Bohol is about thirty (30) times higher than the price offered per hectare by DAR/LBP.6 On April 27, 2000, LBP filed its Answer7 raising non-exhaustion of administrative remedies as well as forum-shopping as affirmative defense. According to petitioner, respondent must first await the outcome of the DARAB case before taking any judicial recourse; that its valuation was arrived at by applying the formula prescribed by law whereas respondents was based only on the "current value of like properties". The DAR and the MARO likewise filed an Answer8 averring that the determination of just compensation rests exclusively with the LBP. Thus, they are not liable to respondent and are merely nominal parties in the case. Meanwhile, the DARAB Provincial Adjudicator (PARAD) issued an Order9 dated April 12, 2000 affirming the valuation made by LBP. Respondent failed to appear in the DARAB case despite due notice. On June 4, 2001, the SAC issued an order resolving petitioners affirmative defense in this wise: WHEREFORE, the Affirmative Defense of x x x Land Bank is hereby denied. Besides, in the mind of the court, the recourse to the DARAB is x x x of no moment since it is only conciliatory to the parties. Upon agreement of the parties, the pre-trial is reset to June 11, 2001 at 9:00 in the morning. SO ORDERED.10 Thereafter, a pre-trial conference was conducted11 and trial on the merits ensued. On March 1, 2003, the SAC rendered judgment as follows: WHEREFORE, in view of all the foregoing, the Court hereby fixes the compensation of the land of petitioner at P2.50 per square meter or a total of P354,847.50 for the portion of 14.1939 hectares subject of compulsory acquisition under the CARP which it believes just, fair and equitable under the present circumstances and which shall earn legal interest of twelve percent (12%) per annum from the time of its taking by the DAR. Furthermore, respondent Land Bank is hereby ordered to indemnify petitioner the amount of P10,000.00 for attorneys fee and incidental expenses of P5,000.00 and costs.

SO ORDERED.12 LBP elevated the matter to the Court of Appeals which, however, dismissed the appeal outright on the following grounds: 1. The petition is not accompanied with an affidavit of service, although there is an explanation that respondent, respondents counsel and Judge Venancio J. Amila were furnished with copies of the petition by registered mail x x x. 2. Petitioners counsel indicated his IBP and PTR but not his Roll of Attorneys Number x x x. 3. Copies of (a) PARAD Decision x x x adverted to in the petition which fixed the land valuation for just compensation at P299,569.11 and (b) petitioners Petition for Judicial Determination of Just Compensation filed with the Regional Trial Court of Tagbilaran City, Branch 3, were not attached as annexes, x x x.13 Upon denial of its motion for reconsideration,14 LBP filed the instant petition under Rule 45 of the Rules of Court, alleging that: A THE COURT OF APPEALS ERRED IN X X X RIGIDLY OR STRICTLY APPLYING PROCEDURAL LAW AT THE EXPENSE OF SUBSTANTIAL JUSTICE AND THE RIGHT TO APPEAL. B THE SAC A QUO ERRED IN ASSUMING JURISDICTION OVER THE PETITION FOR DETERMINATION OF JUST COMPENSATION WHILE ADMINISTRATIVE PROCEEDINGS IS ON-GOING BEFORE THE DARAB, REGION VII, CEBU CITY. C THE SAC A QUO ERRED IN FIXING THE JUST COMPENSATION OF THE LAND BASED NOT ON ITS ACTUAL LAND USE BUT ON THE VALUATION OF NEIGHBORING LANDS. D THE SAC A QUO ERRED IN AWARDING ATTORNEYS FEES AND INCIDENTAL EXPENSES X X X.15 On the first assigned error, petitioner asserts that the Court of Appeals should have liberally construed the rules of procedure and not dismissed its appeal on technical grounds. We agree with petitioner. The Court of Appeals dismissed petitioners appeal on three technical grounds, namely: (a) lack of affidavit of service; (b) failure of counsel to indicate his Roll of Attorneys number; and (c) failure to attach material portions of the records. However, the lack of affidavit of service is not deemed fatal where the petition filed below is accompanied by the original registry receipts showing that the petition and its annexes were served upon the parties.16 On the other hand, the failure of counsel to indicate his Roll of Attorneys number would not affect respondents substantive rights, such that petitioners counsel could have been directed to comply with the latter requirement rather than dismiss the petition on purely technical grounds. As for petitioners failure to attach material portions of the records, we held in Donato v. Court of Appeals17 that: [T]he failure of the petitioner to x x x append to his petition copies of the pleadings and other material portions of the records as would support the petition, does not justify the outright dismissal of the petition. It must be emphasized that the RIRCA (Revised Internal Rules of the Court of Appeals) gives the appellate court a certain leeway to require parties to submit additional documents as may be necessary in the interest of substantial justice. Under Section 3, paragraph d of Rule 3 of the RIRCA, the CA may require the parties to complete the annexes as the court deems necessary, and if the petition is given due course, the CA may require the elevation of a complete record of the case as provided for under Section 3(d)(5) of Rule 6 of the RIRCA x x x.18 An examination of the records and pleadings filed before the Court of Appeals reveals that there was substantial compliance with procedural requirements. Moreover, we have held time and again that cases should, as much as possible, be determined on the merits after the parties have been given full opportunity to ventilate their causes and defenses, rather than on technicality or some procedural imperfection.19 After all, technical rules of procedure are not ends in themselves but are primarily devised to help in the proper and expedient dispensation of justice. In appropriate cases, therefore, the rules may be construed liberally in order to meet and advance the cause of substantial justice.20 While a remand of the case to the appellate court would seem to be in order, we deem it proper to resolve the case on the merits if only to write finis to the present controversy. We do not agree with petitioners submission that the SAC erred in assuming jurisdiction over respondents petition for determination of just compensation despite the pendency of the administrative proceedings before the DARAB. In Land Bank of the Philippines v. Court of Appeals,21 the landowner filed an action for determination of just compensation without waiting for the completion of the DARABs re-evaluation of the land. The Court nonetheless held therein that the SAC acquired jurisdiction over the action for the following reason:

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 original jurisdiction in compensation cases and make the RTC an appellate court for the review of administrative decision. 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. Thus, direct resort to the SAC by private respondent is valid.22 It would be well to emphasize that the taking of property under RA No. 6657 is an exercise of the power of eminent domain by the State.23 The valuation of property or determination of just compensation in eminent domain proceedings is essentially a judicial function which is vested with the courts and not with administrative agencies.24 Consequently, the SAC properly took cognizance of respondents petition for determination of just compensation. In the same vein, there is no merit to petitioners contention that respondent failed to exhaust administrative remedies when she directly filed the petition for determination of just compensation with the SAC even before the DARAB case could be resolved. The issue is now moot considering that the valuation made by petitioner had long been affirmed by the DARAB in its order dated April 12, 2000. As held in Land Bank of the Philippines v. Wycoco,25 the doctrine of exhaustion of administrative remedies is inapplicable when the issue is rendered moot and academic, as in the instant case. With regard to the third assigned error, however, we agree with petitioner that the SAC erred in setting aside petitioners valuation of respondents land on the sole basis of the higher valuation given for neighboring properties. In this regard, the SAC held: It appears from the evidence of petitioner that the neighboring lands of similar classification were paid higher than what was quoted to her land by respondent Land Bank as the value per square meter to her land was only quoted at P2.1105517 while the others which were of the same classification were paid by respondent Bank at P2.42 more or less, per square meter referring to the land of Consuelito Borja (Exh. D) and Cesar Borja (Exh. F). Furthermore, the land of petitioner was allegedly mortgaged for a loan of P1,200,000.00 before the Rural Bank of San Miguel, Bohol and that it was purchased by her from a certain Felipe Dungog for P450,000.00 although no documents therefor were shown to support her claim. Nevertheless, the Court finds a patent disparity in the price quotations by respondent Land Bank for the land of petitioner and that of the other landowners brought under CARP which could be caused by deficient or erroneous references due to the petitioners indifference and stubborn attitude in not cooperating with respondent bank in submitting the data needed for the evaluation of the property. x x x At any rate, the price quotation by respondent Land Bank on the land of the petitioner is low more so that it was done some four years ago, particularly, on June 22, 1998 (Exh. 1) and the same has become irrelevant in the course of time due to the devaluation of the peso brought about by our staggering economy. 26 As can be gleaned from above ruling, the SAC based its valuation solely on the observation that there was a "patent disparity" between the price given to respondent and the other landowners. We note that it did not apply the DAR valuation formula since according to the SAC, it is Section 17 of RA No. 6657 that "should be the principal basis of computation as it is the law governing the matter".27 The SAC further held that said Section 17 "cannot be superseded by any administrative order of a government agency",28 thereby implying that the valuation formula under DAR Administrative Order No. 5, Series of 1998 (DAR AO No. 5, s. of 1998),29 is invalid and of no effect. 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 assessors30 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. 6657.31 As the government agency principally tasked to implement the agrarian reform program, it is the DARs 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.32 Administrative issuances partake of the nature of a statute33 and have in their favor a presumption of legality.34 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. Thus, Section 17 of RA No. 6657 states: 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 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. As stated earlier, the above provision is implemented through DAR AO No. 5, s. of 1998, which provides that: A. There shall be one basic formula for the valuation of lands covered by VOS or CA: 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 three factors are present, relevant, and applicable. A1. 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) A2. 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) A3. 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. Accordingly, petitioner applied the formula under A1 above since the comparable sales factor ("CS factor") was not present. As observed by the SAC itself, respondent refused to cooperate with the local valuation office of petitioner and did not provide the necessary data to arrive at a proper "CS factor". DAR AO No. 5, s. of 1998 defines "CS factor" as follows: C. CS shall refer to any one or the average of all the applicable sub-factors, namely ST, AC and MVM: Where: ST = Peso Value of Sales Transactions as defined under Item C.2 AC = Acquisition Cost as defined under Item C.3 MVM = Market Value Based on Mortgage as defined under Item C.4 xxxx C.2. The criteria in the selection of the comparable sales transaction (ST) shall be as follows: a. When the required number of STs is not available at the barangay level, additional STs may be secured from the municipality where the land being offered/covered is situated to complete the required three comparable STs. In case there are more STs available than what is required at the municipal level, the most recent transactions shall be considered. The same rule shall apply at the provincial level when no STs are available at the municipal level. In all cases, the combination of STs sourced from the barangay, municipality and province shall not exceed three transactions. b. The land subject of acquisition as well as those subject of comparable sales transactions should be similar in topography, land use, i.e., planted to the same crop. Furthermore, in case of permanent crops, the subject properties should be more or less comparable in terms of their stages of productivity and plant density. c. The comparable sales transactions should have been executed within the period January 1, 1985 to June 15, 1988, and registered within the period January 1, 1985, to September 13, 1988. xxxx C.3. Acquisition Cost (AC) AC shall be deemed relevant when the property subject of acquisition was acquired through purchase or exchange with another property within the period January 1, 1985 to June 15, 1988 and registered within the period January 1, 1985 to September 13, 1988, and the condition of said property is still substantially similar from the date of purchase or exchange to the date of FI. xxxx C.4. Market Value Based on Mortgage (MVM) For MVM to be relevant or applicable, the property subject of acquisition should have been mortgaged as of June 15, 1988 and the condition of the property is still substantially similar up to the date of FI. MVM shall refer to the latest available appraised value of the property. In the case at bar, while respondent attempted to prove during the hearings before the SAC, comparable sales transactions, the acquisition cost of the property as well as its mortgage value, she failed to submit adequate documentary evidence to support the same. Consequently, there was nothing from which the "CS factor" could be determined. In contrast, petitioner arrived at its valuation by using available factors culled from the Department of Agriculture and Philippine Coconut Authority,35 and by computing the same in accordance with the formula provided, thus

COMPUTATION (Applicable Formula) : LV = 0.90 CNI + 0.10 MV 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 xxx Value per hectare used: Cassava 15,896.38 x 6.0000 has. = 95,378.28 Corn/Coco 24,919.92 x 8.1939 has. = 204,191.33 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 Agrarian Operations Center of the Land Bank, to wit: ATTY. CABANGBANG: (On direct): xxxx 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. xxxx 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 owners 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. P24,919.92.36 Under the circumstances, we find the explanation and computation of petitioner to be sufficient and in accordance with applicable laws. Petitioners valuation must thus be upheld. Finally, there is no basis for the SACs award of 12% interest per annum in favor of respondent. Although in some expropriation cases, the Court allowed the imposition of said interest, the same was in the nature of damages for delay in payment which in effect makes the obligation on the part of the government one of forbearance.37 In this case, there is no delay that would justify the payment of interest since the just compensation due to respondent has been promptly and validly deposited in her name in cash and LBP bonds. Neither is there factual or legal justification for the award of attorneys fees and costs of litigation in favor of respondent. WHEREFORE, the instant petition is GRANTED. The Decision of the Regional Trial Court, Tagbilaran City, Branch 3 in Civil Case No. 6462 dated March 1, 2003 is REVERSED and SET ASIDE. A new judgment is entered fixing the just compensation for respondents land at P2.1105517 per square meter or a total of P299,569.61. SO ORDERED.

G.R. No. 171941

August 2, 2007

LAND BANK OF THE PHILIPPINES, Petitioner, vs. LUZ LIM and PURITA LIM CABOCHAN, Respondents. DECISION CARPIO MORALES, J.: Assailed by petition for review on certiorari are the Court of Appeals Decision of November 11, 20051 affirming the December 21, 2001 Order of the Regional Trial Court (RTC) of Sorsogon, Branch 52 fixing the valuation for purposes of just compensation of respondents property, and Resolution of March 13, 20062 denying petitioners motion for reconsideration of said decision. Pursuant to the Comprehensive Agrarian Reform Law of 1988 (RA 6657, as amended), the Department of Agrarian Reform (DAR) compulsorily acquired 32.8363 hectares of agricultural land situated in Patag, Irosin, Sorsogon (the property) owned by respondents Luz Lim and Purita Lim Cabochan.3 Petitioner Land Bank of the Philippines (LBP)4 computed the value of the property at P725,804.21.5 Respondents rejected petitioners valuation. Thus, pursuant to Section 16(d) of RA 6657, as amended, a summary administrative proceeding was conducted before the Provincial Agrarian Reform Adjudicator (PARAD) to determine the valuation of the property. 6 The PARAD initially valued it at P1,174,659.60 but later reduced the amount to P725,804.21 upon motion of petitioner.7 Dissatisfied with the PARADs decision, respondents filed on January 26, 1998 a petition for determination of just compensation with the RTC of Sorsogon where they prayed for a compensation of at least P150,000 per hectare, or an aggregate amount of P4,925,445.8 The case proceeded to trial, with the RTC appointing each partys nominee as commissioner.9 By Report submitted on December 9, 1998, Commissioner Florencio C. Dino II, respondents nominee, valued the property at P1,548,000.10 Commissioner Jesus D. Empleo, petitioners nominee, submitted his own report on February 8, 1999, valuing the property at P947,956.68.11 By September 14, 2001 Decision,12 Branch 52 of the Sorsogon RTC adopted the valuation submitted by respondents commissioner (P1,548,000). Both parties moved for reconsideration, and by December 21, 2001 Order,13 the RTC reconsidered its earlier decision and increased the valuation to P2,232,868.40, ratiocinating as follows: The ground relied upon by the Plaintiff[s] is that the Award was based on the Report only of [Commissioner Dino] premised on taxation purposes and it did not consider the fact that in 1986 the same land or part of it was paid by the defendant Land Bank the amount of P68,549.00 per hectare when the rate of exchange between the peso and a dollar was only 22 pesos per dollar. xxxx x x x [T]his Court finds that indeed the decision x x x did not take into consideration the comparable selling price of the adjoining land, which according to the plaintiff during Pre-trial, it was admitted by the defendants Land Bank and the DAR and the same was already stated in the findings of fact of the Court in its decision x x x, that the property subject of the acquisition is situated at Patag, Irosin, Sorsogon like the property of Roger Lim, brother of the plaintiff and the same was acquired by the defendant Land Bank and paid as just compensation in the amount of P68,549.01 per hectare. These facts were admitted by the defendants Land Bank and DAR x x x. xxxx After due consideration of the Motion for Reconsideration, and taking into consideration the Plaintiffs *sic+ Commissioners Report submitted to the Court as well as his testimony and the admission of the defendants x x x, and also other factors such as location, neighborhood, utility, size and the time element involved, the price paid by the defendant Land Bank of the property of Roger Lim, brother of the herein plaintiffs in the amount of P68,000.00 per hectare is adopted which should be the basis for the full and fair equivalent of the property taken from the owner, so that for the area of 32.8363 hectares subject of acquisition, the Court hereby fixes the total price in the amount of P2,232,868.40. (Underscoring supplied) By Decision14 of November 11, 2005, the Court of Appeals denied petitioners appeal and ruled that: The decision of the trial court should be affirmed because the appeal of the defendant appellant Land Bank is frivolous. The compensation fixed at P68,000 per hectare or Php2,232,868.40 for the entire 32.8363 hectares is not reasonable nor just considering the evidence presented with respect to sales in the surrounding nearby areas and the trial court did not even consider other factors such as location, neighborhood, utility, size and time element. The compensation should have been higher but the plaintiffs-appellees chose no longer to appeal because they alleged that they were too old to further any appeals and they wanted the money as soon as possible and they wanted an end to the litigation as soon as possible a wish thwarted by the appeal by the Land Bank. xxxx When the evidence pointed preponderantly to the fact that the trial courts computation of just compensation had already been regarded by the parties as drastically low, any appeal by the Land Bank to such already drastically low figures would be suspect. (Underscoring supplied)

The appellate court in fact ordered petitioner to pay legal interest of 12% on the P2,232,868.40 from the time of the taking of the property until actual payment, and double costs. Petitioners Motion for Reconsideration was denied by Resolution of March 13, 2006,15 hence, this petition,16 petitioner contending that: A. The amount of P2,232,868.40 which the Court of Appeals fixed as the just compensation of the acquired property consisting of 32.8363 hectares, is in clear violation of Section 17 of RA 6657, DAR AO No. 11, series of 1994, and the Supreme Court ruling in Land Bank of the Philippines vs. Spouses Vicente Banal and Leonidas Arenas-Banal.17 B. The Court of Appeals seriously erred in ordering the payment of interest on the compensation, at 12% per annum reckoned from the time of taking up to the time of actual payment.18 C. The Court of Appeals likewise erred in ordering LBP to pay double costs.19 (Underscoring supplied) The threshold issue is whether the RTC erred in simply adopting the price previously paid by petitioner for the land of respondents brother, and dispensing with the formula prescribed by DAR Administrative Order No. 6, series of 1992 (DAR AO 6-92), as amended by DAR Administrative Order No. 11, series of 1994 (DAR AO 1194). Petitioner answers the issue in the affirmative, contending that consideration of the valuation factors under Section 17 of RA 6657 and the formula under DAR AO 1194 is mandatory insofar as lands acquired under RA 6657 are concerned.20 On the other hand, respondents opine otherwise, contending that Section 17 is merely a guide, the courts having recourse to other means of determining just compensation, it being a judicial function. 21 Petitioners position impresses. In Land Bank of the Philippines v. Spouses Banal,22 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. The formula stated in [DAR AO 6-92], as amended, is as follows: "LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1) 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) xxxx 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]). xxxx

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. (Emphasis and underscoring supplied; citations omitted) And in LBP v. Celada,23 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. 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. (Emphasis and underscoring supplied; citations omitted) 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. The second and more important issue is the correct valuation of the property. Petitioner asserts that the valuation of P947,956.68 computed by Commissioner Empleo is based on DAR AO 6-92, as amended by DAR AO 11-94, and should, therefore, be upheld.24 On this score, the petition fails. The pertinent portions of Item II of DAR AO 6-92, as amended by DAR AO 11-94, provide: A. There shall be one basic formula for the valuation of lands covered by [Voluntary Offer to Sell] or [Compulsory Acquisition] regardless of the date of offer or coverage of the claim: 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 25 and CNI and MV are applicable, the formula shall be: LV = (CNI x 0.9) + (MV x 0.1) xxxx A.5 For purposes of this Administrative Order, the date of receipt of claimfolder by LBP from DAR shall mean the date when the claimfolder is determined by the LBP to be complete with all the required documents and valuation inputs duly verified and validated, and is ready for final computation/processing. A.6 The basic formula in the grossing-up of valuation inputs such as x x x 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 RCPI for the month issued by the National Statistics Office as of the date when the claimfolder (CF) was received by LBP from DAR for processing or, in its absence, the most recent available RCPI for the month issued prior to the date of receipt of CF from DAR and the RCPI for the month as of the date/effectivity/registration of the valuation input. Expressed in equation form:

RCPI

RCPI for the Month as of the Date of Receipt of Claimfolder

Adjustment Factor

by LBP from DAR or the Most recent RCPI for the Month Issued Prior to the Date of Receipt of CF RCPI for the Month Issued as of the Date / Effectivity / Registration of the Valuation Input

B. Capitalized Net Income (CNI) This shall refer to the difference between the gross sales (AGP x SP) and total cost of operations (CO) capitalized at 12%. expressed in equation form:

(agp x sp) co cni = .12

where: cni = capitalized net income AGP = Latest available 12-months 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-months selling prices prior to the date of receipt of the claimfolder by LBP for processing, such prices to be secured from the Department of Agriculture (DA) and other appropriate regulatory bodies or, in their absence, from the Bureau of Agricultural Statistics. If possible, SP data shall be gathered from the barangay or municipality where the property is located. In the absence thereof, SP may be secured within the province or region. CO = Cost of Operations Whenever the cost of operations could not be obtained or verified, an assumed net income rate (NIR) of 20% shall be used. Landholdings planted to coconut which are productive at the time of offer/coverage shall continue to use the 70% NIR. DAR and LBP shall continue to conduct joint industry studies to establish the applicable NIR for each crop covered under CARP. .12 = Capitalization Rate xxxx D. In the computation of Market Value per Tax Declaration (MV), the most recent Tax Declaration (TD) and Schedule of Unit Market Value (SMV) issued prior to receipt of claimfolder by LBP shall be considered. The Unit Market Value (UMV) shall be grossed up from the date of its effectivity up to the date of receipt of claimfolder by LBP from DAR for processing, in accordance with item II.A.A.6. (Emphasis and underscoring supplied) Thus, in computing Capitalized Net Income (CNI), the Average Gross Production (AGP) of the latest available 12 months immediately preceding the date of notice of coverage, and the average Selling Price (SP) of the latest available 12 months prior to the date of receipt of the claimfolder by LBP for processing, should be used. While both dates are not indicated in the records, the date of notice of coverage would have to be sometime prior to February 1994, which is the date of the Field Investigation Report,26 because under DAR Administrative Order No. 9, series of 1990, 27 as amended by DAR Administrative Order No. 1, series of 1993, the field investigation is conducted after the notice of coverage is issued to the landowner. Also, the claimfolder would have been received by LBP on or before 1996, the year the property was distributed to the agrarian reform beneficiaries,28 because land distribution is the last step in the procedure prescribed by the said administrative orders. Thus, the data for the AGP should pertain to a period prior to February 1994, while the data for the SP should pertain to 1996 or earlier. However, Commissioner Empleo instead used the "available data prior to [January 1999, the] date of [his ocular inspection]" 29 for the AGP, and the "[a]verage selling price for the period January 1998 to December 1998"30 for the SP, contrary to DAR AO 6-92, as amended by DAR AO 11-94. Secondly, the Regional Consumer Price Index (RCPI) Adjustment Factor, which is used in computing the market value of the property, is the ratio of the RCPI for the month when the claimfolder was received by LBP, to the RCPI for the month of the registration of the most recent Tax Declaration and Schedule of Unit Market Value31 issued prior to receipt of claimfolder by LBP. Consistent with the earlier discussion, the applicable RCPIs should therefore be dated on or before 1996. However, Commissioner Empleo instead used the RCPIs for December 1998 and January 1997 in computing the RCPI Adjustment Factor,32 again, contrary to DAR AO 6-92, as amended by DAR AO 11-94. Parenthetically, Commissioner Empleo testified33 that his computations were based on DAR Administrative Order No. 5, series of 1998. 34 However, as this administrative order took effect only on May 11, 1998, the applicable valuation rules in this case remain to be those prescribed by DAR AO 6-92, as amended by DAR AO 11-94.

In any event, even if the 1998 valuation rules were applied, the data for the AGP would still pertain to a period prior to February 1994,35 the revised reference date being the date of the field investigation, while the data for the SP and the RCPIs would still pertain to 1996 or earlier, there being no substantial revisions in their reference dates. Finally, while the Field Investigation Report36 shows that the representatives of petitioner, the DAR, and the Barangay Agrarian Reform Committee, all observed that, except for seven hectares, the whole area of the property was planted with coconut intercropped with abaca or vice-versa, Commissioner Empleo did not take this into account in his computation, contrary to DAR AO 6-92, as amended by DAR AO 11-94 which provides that the "[t]otal income shall be computed from the combination of crops actually produced on the covered land whether seasonal or permanent."37 For all the above reasons, the valuation asserted by petitioner must be rejected. The Court notes that this case has been pending for almost a decade, and commiserates with respondents. However, while the Court wants to write finis to this case by computing the just compensation due to respondents, the evidence on record is not sufficient for the Court to do so in accordance with DAR AO 6-92, as amended by DAR AO 11-94.1avvphi1 The Court is thus compelled to remand the case for determination of the valuation of the property by the RTC which is mandated to consider the factors provided under above quoted Section 17 of RA 6657, as amended, as translated into the formula prescribed in DAR AO 6-92, as amended by DAR AO 11-94.38 Furthermore, upon its own initiative, or at the instance of any of the parties, the RTC may again appoint one or more commissioners to examine, investigate and ascertain facts relevant to the dispute including the valuation of properties, and to file a written report thereof with the RTC.39 The amount determined by the RTC would be the basis of the interest income on the cash and bond deposits due respondents from the time of the taking of the property up to the time of actual payment of just compensation.40 WHEREFORE, the November 11, 2005 Decision and March 13, 2006 Resolution of the Court of Appeals in CA-G.R. CV No. 73881 are REVERSED and SET ASIDE. Civil Case No. 98-6432 is REMANDED to the court of origin, Branch 52 of the Regional Trial Court of Sorsogon, Sorsogon, which is directed to determine with dispatch the just compensation due respondents strictly in accordance with the procedures specified above. SO ORDERED.

G.R. No. 164195

February 6, 2007

APO FRUITS CORPORATION and HIJO PLANTATION, INC., Petitioners, vs. THE HON. COURT OF APPEALS and LAND BANK OF THE PHILIPPINES, Respondents. DECISION CHICO-NAZARIO, J.: Apo Fruits Corporation (AFC) and Hijo Plantation, Inc. (HPI) are the registered owners of five parcels of agricultural lands located in San Isidro, Tagum, Davao Province, to wit: Apo Fruits Corporation

Transfer Certificate of Title (TCT)1 No. T-1133592

Area (Ha.)

115.2179

T-1133663 Hijo Plantation, Inc.4

525.1304

TCT No. T-10361

Area (Ha.) 155.8408

T-10362

170.7980

T-10363

478.89205

On 12 October 1995, AFC and HPI voluntarily offered to sell the above parcels of land to the government.6 After the initial processing at the Department of Agrarian Reform (DAR) of the Voluntary Offer to Sell (VOS)7 application of AFC and HPI, it was referred to the Land Bank of the Philippines (LBP) for initial valuation. On 16 October 1996, AFC and HPI received separately from the DARs Provincial Agrarian Reform Officer (PARO) of Davao province a notice of land acquisition and valuation, informing AFC that the value of the properties has been placed at P86,900,925.88 or P165,484.47 per hectare8 while HPIs properties were valued at P164,478,178.14.9 1awphi1.net Both AFC and HPI considered the valuations unreasonably low and inadequate as just compensation for the properties. On 5 November 1996, AFC rejected the valuation for both TCTs No. T-113366 and No.113359.10 AFC applied for the shifting of the mode of acquisition for TCT No. 11335911 from VOS to Voluntary Land Transfer/Direct Payment Scheme.12 HPI also rejected the valuation of its three parcels of land covered by TCTs No. T-10361, No. T-10362 and No. T-10363. 13 Owing to the rejection by both AFC and HPI of LBPs valuation, the DAR requested LBP to deposit the amounts equivalent to their valuations in the names and for the accounts of AFC and HPI.14 AFC thereafter withdrew the amount of P26,409,549.86, while HPI withdrew the amount of P45,481,706.76, both in cash from LBP. The DAR PARO then directed the Register of Deeds of Davao to cancel the TCTs of AFC and HPI to the said properties and to issue a new one in the name of the Republic of the Philippines. After the issuance of the certificate of title in the name of the Republic of the Philippines, the Register of Deeds of Davao, upon the request of the DAR, issued TCTs and Certificates of Land Ownership Award to qualified farmer-beneficiaries. On 14 February 1997, AFC and HPI filed separate complaints for determination of just compensation with the DAR Adjudication Board (DARAB). Despite the lapse of more than three years from the filing of the complaints, the DARAB failed and refused to render a decision on the valuation of the land. Hence, two complaints15 for determination and payment of just compensation were filed by AFC and HPI before Branch 2 of the Regional Trial Court (RTC) of Tagum City (acting as a Special Agrarian Court), which were subsequently consolidated. Agrarian Case No. 54-200016 filed by AFC covers two parcels of land in San Isidro, Tagum, Davao, with an aggregate area of 640.3483 hectares previously assessed by LBP with a valuation of P86,900,925.88.

On the other hand, Agrarian Case No. 55-200017 filed by HPI relates to the other three parcels of land in Tagum City, with a total area of 814.5308 hectares, likewise, previously assessed by LBP with a valuation of P164,478,178.14. Summons was served on 23 May 2000 to defendants DAR and LBP. The trial court appointed as Commissioners 18 persons it considered competent, qualified and disinterested to determine the proper valuation of the properties. LBP submitted its Answer on 26 July 2000,19 while the DAR Secretary, represented by PARO Pedro P. Gumabao, filed its Answer20 on 18 August 2000. The pre-trial order issued by the trial court reads: This Court will determine the all-embracing concept of Just Compensation, and whether the plaintiff is entitled to damages, and also whether the value of the land and improvements as determined by the Land Valuation of Land Bank for the determination of just compensation, and whether the plaintiff has violated Section 13 of DARAB new rules and procedure.21 The commissioners, together with all the representatives of the parties, conducted an ocular inspection first on 25 August 200022 and again on 16 December 2000.23 On 21 May 2001, the court-appointed commissioners submitted their appraisal report.24 On 14 September 2001, the case was considered submitted for decision.25 After hearing, the trial court rendered a decision26 dated 25 September 2001, the fallo thereof reads: WHEREFORE, consistent with all the foregoing premises, judgment is hereby rendered by this Special Agrarian Court where it has determined judiciously and now hereby fixed the just compensation for the 1,388.6027 hectares of lands and its improvements owned by the plaintiffs: APO FRUITS CORPORATION and HIJO PLANTATION, INC., as follows: First Hereby ordering after having determined and fixed the fair, reasonable and just compensation of the 1,338.6027 hectares of land and standing crops owned by plaintiffs APO FRUITS CORPORATION and HIJO PLANTATION, INC., based at only P103.33 per sq. meter, ONE BILLION THREE HUNDRED EIGHTY-THREE MILLION ONE HUNDRED SEVENTY-NINE THOUSAND PESOS (P1,383,179,000.00), Philippine Currency, under the current value of the Philippine Peso, to be paid jointly and severally to the herein PLAINTIFFS by the Defendants-Department of Agrarian Reform and its financial intermediary and co-defendant Land Bank of the Philippines, thru its Land Valuation Office; Second Hereby ordering Defendants DEPARTMENT OF AGRARIAN REFORM and/or LAND BANK OF THE PHILIPPINES, thru its Land Valuation Office, to pay plaintiffs-APO FRUITS CORPORATION and HIJO PLANTATION, INC., interests on the above-fixed amount of fair, reasonable and just compensation equivalent to the market interest rates aligned with 91-day Treasury Bills, from the date of the taking in December 9, 1996, until fully paid, deducting the amount of the previous payment which plaintiffs received as/and from the initial valuation; Third Hereby ordering Defendants DEPARTMENT OF AGRARIAN REFORM and/or LAND BANK OF THE PHILIPPINES, thru its Land Valuation Office, to pay jointly and severally the Commissioners fees herein taxed as part of the costs pursuant to Section 12, Rule 67 of the 1997 Rules of Civil Procedure, equivalent to, and computed at Two and One-Half (2 ) percent of the determined and fixed amount as the fair, reasonable and just compensation of plaintiffs land and standing crops plus interest equivalent to the interest of the 91-Day Treasury Bills from date of taking until full payment; Fourth - Hereby ordering Defendants DEPARTMENT OF AGRARIAN REFORM and/or LAND BANK OF THE PHILIPPINES, thru its Land Valuation Office, to pay jointly and severally the attorneys fees to plaintiffs equivalent to, and computed at ten (10%) Percent of the determined and fixed amount as the fair, reasonable and just compensation of plaintiffs land and standing crops, plus interest equivalent to the 91-Day Treasury Bills from date of taking until the full amount is fully paid; Fifth - Hereby ordering Defendants DEPARTMENT OF AGRARIAN REFORM and/or LAND BANK OF THE PHILIPPINES, thru its Land Valuation Office to deduct from the total amount fixed as fair, reasonable and just compensation of plaintiffs properties the initial payment paid to the plaintiffs; Sixth - Hereby ordering Defendants DEPARTMENT OF AGRARIAN REFORM and/or LAND BANK OF THE PHILIPPINES, thru its Land Valuation Office, to pay the costs of the suit; and Seventh - Hereby ordering Defendants DEPARTMENT OF AGRARIAN REFORM and/or LAND BANK OF THE PHILIPPINES, thru its Land Valuation Office, to pay all the aforementioned amounts thru The Clerk of Court of this Court, in order that said Court Officer could collect for payment any docket fee deficiency, should there be any, from the plaintiffs.27 LBP filed a Motion for Reconsideration28 on 5 October 2001 mainly on the ground that the trial court based its valuation on the value of residential and industrial lands in the area forgetting that the lands involved are agricultural. LBP also sought a reconsideration of the award of attorneys fees, the interest on the compensation over the lands and the order of the trial court regarding the payment of commissioners fees. In an Order dated 5 December 2001,29 the trial court modified its decision as follows: WHEREFORE, premises considered, IT IS HEREBY ORDERED that the following modifications as they are hereby made on the dispositive portion of this Courts consolidated decision be made and entered in the following manner, to wit:

On the Second Paragraph of the Dispositive Portion which now reads as follows, as modified: Second - Hereby ordering Defendants DEPARTMENT OF AGRARIAN REFORM and/or LAND BANK OF THE PHILIPPINES, thru its Land Valuation Office, to pay plaintiffsAPO FRUITS CORPORATION and HIJO PLANTATION, INC., interest at the rate of Twelve (12%) Percent per annum on the above-fixed amount of fair, reasonable and just compensation computed from the time the complaint was filed until the finality of this decision. After this decision becomes final and executory, the rate of TWELVE (12%) PERCENT per annum shall be additionally imposed on the total obligation until payment thereof is satisfied, deducting the amounts of the previous payments by Defendant-LBP received as initial valuation; On the Third Paragraph of the Dispositive Portion which Now Reads As Follows, As Modified: Third - Hereby ordering Defendants DEPARTMENT OF AGRARIAN REFORM and/or LAND BANK OF THE PHILIPPINES, thru its Land Valuation Office, to pay jointly and severally the Commissioners fees herein taxed as part of the costs pursuant to Section 12, Rule 67 of the 1997 Rules of Civil Procedure, equivalent to, and computed at Two and One-Half (2 ) percent of the determined and fixed amount as the fair, reasonable and just compensation of plaintiffs land and standing crops and improvements; On the Fourth Paragraph of the Dispositive Portion which Now Reads As follows, As Modified: Fourth - Hereby ordering Defendants DEPARTMENT OF AGRARIAN REFORM and/or LAND BANK OF THE PHILIPPINES, thru its Land Valuation Office, to pay jointly and severally the attorneys fees to plaintiffs equivalent to, and computed at ten (10%) Percent of the determined and fixed amount as the fair, reasonable and just compensation of plaintiffs land and standing crops and improvements. Except for the above-stated modifications, the consolidated decision stands and shall remain in full force and effect in all other respects thereof.30 From this Order, LBP filed a Notice of Appeal dated 27 December 2001.31 The same was given due course in the Order of the RTC dated 15 May 2002.32 In the same Order, the RTC set aside its Order dated 5 December 2001 granting execution pending appeal. Subsequently, the trial court, citing this Courts ruling in the case of "Land Bank of the Philippines v. De Leon," 33 that a petition for review, not an ordinary appeal, is the proper mode of appeal from a decision on the determination of just compensation rendered by a special agrarian court, issued an Order dated 4 November 200234 recalling its Order dated 15 May 2002 and directed LBP to file a Petition for Review within the reglementary period. LBP filed a Motion for Reconsideration35 claiming that the case of Land Bank of the Philippines v. De Leon was not yet final at that time; hence, it is not certain whether the decision in that case would have a retroactive effect and that appeal is the appropriate remedy. This was denied by the trial court in its Order dated 12 February 2003.36 On 28 March 2003, LBP filed a Petition for Certiorari37 before the Court of Appeals assailing the 4 November 2002 and 12 February 2003 orders of the trial court. The Court of Appeals found the petition of LBP meritorious. In a decision38 dated 12 February 2004, the Court of Appeals held: WHEREFORE, the petition is GRANTED and the assailed orders dated November 4, 2002 and February 12, 2003 are NULLIFIED and, accordingly, SET ASIDE.39 AFC and HPI filed a joint Motion for Reconsideration40 which the Court of Appeals denied in its Resolution dated 21 June 2004.41 Earlier, on 23 January 2003, DAR filed its own separate petition before the Court of Appeals by way of a Petition for Review. 42 In a Resolution43 dated 2 April 2003, the Court of Appeals dismissed the petition of the DAR for failure to state the material dates under Rule 42, Section 2, 44 of the Rules of Court. The appellate court held: The importance of stating the material dates cannot be overemphasized. It is only through a statement thereof in the petition can it be determined whether or not the petition was filed on time. For its failure to state the material dates, the petition can and should be outrightly dismissed. xxxx The petition is also defective in that it failed to attach material portions of the record as would support the allegations in the petition. More specifically, copies of the alleged motion for reconsideration filed by the DAR, the order denying it, and the notice of appeal were not attached to the petition. For all the foregoing, the court has no alternative but to dismiss the petition. WHEREFORE, the petition is DISMISSED.45 The Decision of the Court of Appeals in the Petition filed by the DAR in CA-G.R. SP No. 74879 became final and executory and entry of judgment was issued by the appellate court on 7 May 2003.46 On the other hand, from the decision of the Court of Appeals in the Petition filed by LBP in CA-G.R. SP No. 76222, AFC and HPI filed the present Petition for Review on Certiorari raising the following issues: I. WHETHER OR NOT THE QUESTIONED DECISION AND RESOLUTION ARE IN ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF THE SUPREME COURT?

II. WHETHER OR NOT RESPONDENT LBP IS BOUND BY THE DECISION OF COURT OF APPEALS IN CA-G.R. SP NO. 74879 AND IS THEREFORE PRECLUDED FROM FILING CAG.R. SP NO. 76222? III. WHETHER OR NOT THE FILING BY RESPONDENT LBP OF CA-G.R. SP NO. 76222 IS ALREADY BARRED BY RES JUDICATA? IV. WHETHER OR NOT THE RULING OF THE SUPREME COURT IN THE ARLENE DE LEON CASE, GIVING ONLY PROSPECTIVE EFFECT TO ITS EARLIER RESOLUTION AS TO THE PROPER MODE OF APPEAL FROM DECISIONS OF SPECIAL AGRARIAN COURTS IS APPLICABLE IN THE INSTANT CASE? V. WHETHER OR NOT RESPONDENT LBP WAS DEPRIVED OF DUE PROCESS AND/OR OF ITS RIGHT TO APPEAL? VI. WHETHER OR NOT THE SUBJECT PETITION (CA-G.R. SP NO. 76222) WAS MERELY INTERPOSED TO DELAY THE EXECUTION OF SPECIAL AGRARIAN COURTS "DECISION" WHICH IS BASED ON EVIDENCE DULY PRESENTED AND PROVED?47 AFC and HPI pray that the Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 76222 be reversed and set aside and that the Decision of the RTC dated 25 September 2001 in Agrarian Cases No. 54-2000 and No. 55-2000 be declared as final and executory.48 In the case of Land Bank of the Philippines v. De Leon, decided on 10 September 2002, respondents are the registered owners of a parcel of land. They voluntarily offered the subject property for sale to the government pursuant to Republic Act No. 6657. Unable to agree on the valuation of the property offered by the DAR, respondents filed a petition with the RTC (acting as a Special Agrarian Court) to fix the just compensation of the property. In due time, the RTC rendered judgment fixing the compensation of the property. Before the Court of Appeals, the DAR and LBP filed separate petitions. The DAR filed a Petition for Review of the decision of the RTC which was assigned to the Special 3rd Division of the appellate court. LBP, on the other hand, raised the case on appeal to the Court of Appeals by way of ordinary appeal. The same was assigned to the 4th Division of the Court of Appeals. The petition of the DAR was given due course. On the other hand, the Court of Appeals dismissed LBPs ordinary appeal on the ground that the same was erroneous. LBP filed a petition for review before this Court. In Land Bank, we explained: A petition for review, not an ordinary appeal, is the proper procedure in effecting an appeal from decisions of the Regional Trial Courts acting as Special Agrarian Courts in cases involving the determination of just compensation to the landowners concerned. Section 60 of RA 6657 clearly and categorically states that the said mode of appeal should be adopted. There is no room for a contrary interpretation. Where the law is clear and categorical, there is no room for construction, but only application.49 LBP filed a Motion for Reconsideration. In a Resolution of this Court dated 20 March 2003, this Court emphasized the prospective application of the Decision dated 10 September 2002. WHEREFORE, the motion for reconsideration dated October 16, 2002 and the supplement to the motion for reconsideration dated November 11, 2002 are PARTIALLY GRANTED. While we clarify that the Decision of this Court dated September 10, 2002 stands, our ruling therein that a petition for review is the correct mode of appeal from decisions of Special Agrarian Courts shall apply only to cases appealed after the finality of this Resolution.50 (Emphasis supplied.) Essentially therefore, the rule is that a decision of the RTC acting as a Special Agrarian Court should be brought to the Court of Appeals via a Petition for Review. The Court of Appeals will no longer entertain ordinary appeals thereon. However, this rule applies only after the finality of the Resolution of this Court in Land Bank of the Philippines v. De Leon dated 20 March 2003. In this case, the Court of Appeals correctly ruled when it gave due course to the appeal of LBP. LBPs Notice of Appeal was filed on 27 December 2001. This was given due course by the RTC in an Order dated 15 May 2002. LBPs appeal was, thus, perfected before this Courts Resolution in the aforementioned Land Bank of the Philippines v. De Leon case. Hence, the Court of Appeals could give due course to LBPs petition. Next we proceed to determine the issue of whether or not the petition of LBP before the Court of Appeals is barred by the disposition of the Petition for Review filed by the DAR in CA-G.R. SP No. 74879 on the ground of res judicata. The following are the elements of res judicata: (a) The former judgment must be final; (b) The court which rendered judgment must have jurisdiction over the parties and the subject matter; (c) It must be a judgment on the merits; and

(d) There must be between the first and second actions identity of parties, subject matter, and cause of action.51 In this case, the third element of res judicata, i.e., that the former judgment must be on the merits, is not present. It must be remembered that the dismissal of CAG.R. SP No. 74879 was based on technicality, that is, for failure on the part of the DAR to state material dates required by the rules. Having been dismissed based on a technicality and not on the merits, the principle of res judicata does not apply. Res judicata applies only where judgment on the merits is finally rendered on the first.52 Having disposed of the procedural issues involved herein, we shall now proceed to resolve the substantive questions in this case. This Court is aware that in the instant case, since LBPs appeal before the Court of Appeals is to be given due course, the normal procedure is for us to remand the case to the appellate court for further proceedings. However, when there is enough basis on which a proper evaluation of the merits of petitioners case may be had, the Court may dispense with the time-consuming procedure in order to prevent further delays in the disposition of the case.53 Indeed, remand of the case to the lower court for further reception of evidence is not conducive to the speedy administration of justice and it becomes unnecessary where the Court is in a position to resolve the dispute based on the records before it. On many occasions, the Court, in the public interest and expeditious administration of justice, has resolved action on the merits, instead of remanding them for further proceedings, as where the ends of justice would not be subserved by the remand of the case54 or where the trial court had already received all the evidence of the parties.55 Briefly stated, a remand of the instant case to the Court of Appeals would serve no purpose save to further delay its disposition contrary to the spirit of fair play. It is already an accepted rule of procedure for us to strive to settle the entire controversy in a single proceeding, 56 leaving no root or branch to bear the seeds of future litigation. If, based on the records, the pleadings, and other evidence, the dispute can be resolved by us, we will do so to serve the ends of justice instead of remanding the case to the lower court for further proceedings.57 The complete records of this case have already been elevated to this Court. The pleadings on record will fully support this adjudication. We have painstakingly gone over all of LBPs representations and arguments, and we found that the material and decisive facts are hardly disputable. From another perspective, due consideration should also be given to AFC and HPI for having voluntarily offered to sell their properties, a clear indication of AFC and HPIs willingness to participate in the agrarian reform program of the government. In turn, they must be given compensation that is just and timely. Records indicate that the case has been dragging on for more than ten years now without the landowners having been fully compensated. We cannot countenance such a glaring indifference to AFC and HPIs rights as land owners they should be afforded all that is just and due them. To be sure, they deserve nothing less than full compensation to give effect to their substantive rights. While eminent domain lies as one of the inherent powers of the state, there is no requirement that it undertake a prolonged procedure, or that the payment of the private owner be protracted as far as practicable.58 It is not controverted that this case started way back on 12 October 1995, when AFC and HPI voluntarily offered to sell the properties to the DAR. In view of the failure of the parties to agree on the valuation of the properties, the Complaint for Determination of Just Compensation was filed before the DARAB on 14 February 1997. Despite the lapse of more than three years from the filing of the complaint, the DARAB failed to render a decision on the valuation of the land. Meantime, the titles over the properties of AFC and HPI had already been cancelled and in their place a new certificate of title was issued in the name of the Republic of the Philippines, even as far back as 9 December 1996. A period of almost 10 years has lapsed. For this reason, there is no dispute that this case has truly languished for a long period of time, the delay being mainly attributable to both official inaction and indecision, 59 particularly on the determination of the amount of just compensation, to the detriment of AFC and HPI, which to date, have yet to be fully compensated for the properties which are already in the hands of farmerbeneficiaries, who, due to the lapse of time, may have already converted or sold the land awarded to them. Verily, these two cases could have been disposed with dispatch were it not for LBPs counsel causing unnecessary delay. At the inception of this case, DARAB, an agency of the DAR which was commissioned by law to determine just compensation, sat on the cases for three years, which was the reason that AFC and HPI filed the cases before the RTC. We underscore the pronouncement of the RTC that "the delay by DARAB in the determination of just compensation could only mean the reluctance of the Department of Agrarian Reform and the Land Bank of the Philippines to pay the claim of just compensation by corporate landowners." 60 To allow the taking of landowners properties, and to leave them empty-handed while government withholds compensation is undoubtedly oppressive.61 It is in light of the foregoing that this Court will now undertake the final resolution of the present controversy which, as already elucidated, is within the power of this Court to do. 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" inasmuch as the property owner is being made to suffer the consequences 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.62 Just compensation is defined as the full and fair equivalent of the property taken from its owner by the expropriator. 63 It has been repeatedly stressed by this Court that the measure is not the takers gain but the owners loss.64 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. 65 The two main issues, thus, for determination of this Court are the date of the taking of the property and the amount of just compensation.66 First, it is settled that the property was taken on 9 December 1996, when a Certificate of Title was issued in favor of the Republic of the Philippines, and the Certificates of Title of AFC and HPI were cancelled. The farmer-beneficiaries themselves took possession of the subject properties on 2 January 1997.67 Second, on payment of just compensation, we have previously held:

Eminent domain is an inherent power of the State that enables it to forcibly acquire private lands intended for public use upon payment of just compensation to the owner. Obviously, there is no need to expropriate where the owner is willing to sell under terms also acceptable to the purchaser, in which case an ordinary deed of sale may be agreed upon by the parties. It is only where the owner is unwilling to sell, or cannot accept the price or other conditions offered by the vendee, that the power of eminent domain will come into play to assert the paramount authority of the State over the interests of the property owner. Private rights must then yield to the irresistible demands of the public interest on the time-honored justification, as in the case of the police power, that the welfare of the people is the supreme law. But for all its primacy and urgency, the power of expropriation is by no means absolute (as indeed no power is absolute). The limitation is found in the constitutional injunction that "private property shall not be taken for public use without just compensation" and in the abundant jurisprudence that has evolved from the interpretation of this principle. Basically, the requirements for a proper exercise of the power are: (1) public use and (2) just compensation.68 (Emphases supplied.) Section 57 of Republic Act No. 6657 (Comprehensive Agrarian Reform Law) provides: SEC. 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. The Special Agrarian Courts shall decide all appropriate cases under their special jurisdiction within thirty (30) days from submission of the case for decision. To implement the provisions of Republic Act No. 6657, Rule XIII, Section 11 of the DARAB Rules of Procedure, provides: Land Valuation and Preliminary Determination and Payment of Just Compensation. The decision of the Adjudicator on land valuation and preliminary determination and payment of just compensation shall not be appealable to the Board but shall be brought directly to the Regional Trial Courts designated as Special Agrarian Courts within fifteen (15) days from receipt of the notice thereof. Any party shall be entitled to only one motion for reconsideration. (Emphasis supplied.) The next question now crops up, who shall determine just compensation? It is now settled that the valuation of property in eminent domain is essentially a judicial function which is vested with the RTC acting as Special Agrarian Court. The same cannot be lodged with administrative agencies69 and may not be usurped by any other branch or official of the government.70 We now come to the issue of just compensation. LBP argues that the trial courts valuation of the subject landholdings has incorporated irrelevant and/or immaterial factors such as the schedule of market values given by the City Assessor of Tagum, the comparative sales of adjacent lands and the commissioners report.71 Section 17 of Republic Act No. 6657, which is particularly relevant, providing as it does the guideposts for the determination of just compensation, reads, as follows: 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 farm-workers 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.72 The RTC provided the following elucidation in its assailed decision: The recommendation of the Commissioners Report for a value of P85.00 per sq.m. or P850,000.00 per hectare (sic) is founded on evidence. The schedule of market values of the City of Tagum as per its 1993 and 1994 Revision of Assessment and Property Classification (Exhibit "J-6" and "CC-6") give the lowest value for residential land at P100/sq.m. for 4th class residential land in 1993. In 1994, it gave the lowest value of P80.00/sq.m. for barangay residential lot. It appears that certain portions of the land in question have been classified as Medium Industrial District (Exhibit "J-4" and "CC-4"). The lowest value as for industrial land, 3rd class in a barangay is P130.00 sq.m. The average of these figures, using the lowest values in Exhibit "6" and "CC-6" yields the figure of P103.33 which is even higher by 22.2% than that recommended by the Commissioners. It is even of judicial notice that assessments made by local governments are much lower than real market value. Likewise, the value of the improvements thereon, not even considered in the average of P103.33. If considered, this will necessarily result in a higher average value. In said Appraisal Report, mention has been made on "improvements," and our Supreme Court in Republic vs. Gonzales, 50 O.G. 2461, decreed the rule, as follows: If such improvements are permanent in character, consisting of good paved road, playgrounds, water system, sewerage and general leveling of the land suitable for residential lots together with electric installations and buildings, the same are important factors to consider in determining the value of the land. The original cost of such improvements may be considered, with due regard to the corresponding depreciation. (Davao vs. Dacudao, L-3741, May 8, 1952). Note should be taken that in said Appraisal Report, permanent improvements on plaintiffs lands have been introduced and found existing, e.g., all weather-road network, airstrip, pier, irrigation system, packing houses, among others, wherein substantial amount of capital funding have been invested in putting them up. This Court, however, notes that the comparative sales (Exhibits "A" to "F") referred to in the Appraisal Report are sales made after the taking of the land in 1996. However, in the offer of evidence, the plaintiff offered additional comparative sales of adjacent land from late 1995 to early 1997, ranging from a high of P580.00/sq.meter in September 1996 (Exhibit "L-4" for plaintiff Apo and "EE-4" for plaintiff Hijo) to a low of P146.02/sq.meter in October 1997 (Exhibits "L-2" and "EE-2"). The other sales in 1996 were in January 1996 for P530.00/sq.meter ( Exhs. "L-3" and "EE-3") and in December 1996 for P148.64/sq.meter (Exhs. "L-2" and "EE-1"). On the other hand, the sale in December 1995 (Exhs. "L-5" and "EE-5") was made for P530.00/sq.meter." The average selling price based on the foregoing transaction is P386.93/sq.meter. The same is even higher by around 350% than the recommended value of P85.00, as per the Commissioners Report.

The Cuervo Appraisal Report, on the other hand, gave a value of P84.53/sq. meter based on the Capitalized Income Approach. The said approach considered only the use of the land and the income generated from such use. The just compensation for the parcels of land under consideration, taking into account the Schedule of Market Values given by the City Assessor of Tagum (Exhs. "J-6" for Apo "CC-6" for Hijo), the comparative sales covering adjacent lands at the time of taking of subject land, the Cuervo Report, and the Appraisal Report is hereby fixed at P103.33/sq.meter. The valuation given by Cuervo and the Appraisal Report of P84.53 and P85.00, respectively, in this Courts judgment, is the minimum value of the subject landholdings and definitely cannot in anyway be the price at which plaintiffs APO and/or HIJO might be willing to sell, considering that the parcels of land adjacent thereto were sold at much higher prices, specifically from a low of P146.02/sq.meter to a high of P580.00. The average of the lowest value under the 1993 and 1994 Revision of Assessment and Property Classification (Exhibits "J-6" and "CC-6") were already at P103.33/sq.meter, even without considering the improvements introduced on the subject landholdings. Moreover, the Commission made the findings that "portions of the land subject of th(e) report may x x x increase to P330.00/sq.meter, specifically th(e) strips of land surrounding the provincial roads" and made the conclusion that "(c)learly, the value recommended by th(e) Commission, which is only about P85.00/sq.meter is way below the x x x assessed values, which effectively was fixed (as early as) 1994 or earlier than the Voluntary Offer to Sell of the above plaintiffs properties." In the absence of any evidence to the contrary, the said assessed values are presumed to be prevailing [in] December 1996, the time of taking of plaintiffs landholdings. The Commission further stated that the average of the said "assessed values as submitted by the City Assessor of Tagum City (is) P265.00/sq.meter." This Court, therefore, finds it unfair that the just compensation for the subject landholdings should only be fixed at P85.00/sq.meter. It is similarly true, however, that the determination of just compensation cannot be made to the prejudice of defendants or the government for that matter. Thus, the selling price of P580.00/sq. meter nor the average selling price of P386.93/sq. meter or the average assessed value of P265.00/sq. meter cannot be said to be the value at which defendants might be willing to buy the subject landholdings. This Court, therefore, finds the price of P103.33/sq. meter for the subject landholdings fair and reasonable for all the parties. Said value is even lower than the lowest selling price of P148.64 for sale of adjacent land at the time of the taking of the subject landholdings [in] December 1996. It approximates, however, the average of the lowest values under the 1993 and 1994 Revision of Assessment and Property Clarification (Exhs. "J-6" and "CC-6") of P103.33. The said figure will further increase, if the Court will further consider the improvements introduced by plaintiffs, which should be the case. Moreover, the said value of P103.33/sq. meter is more realistic as it does not depart from the government recognized values as specified in the 1993 and 1994 Revised Assessment and Property Classification of Tagum City. This Court finds the evidence of the plaintiffs sufficient and preponderant to establish the value of P103.33/sq. meter.73 The trial court further rationalized its award thus: It may be admitted that plaintiffs properties are agricultural; however, it is simply beyond dispute that in going about the task of appraising real properties, as in the instant cases, "all the facts as to the condition of the property and its surroundings, its improvements and capabilities, may be shown and considered in estimating its value." (Manila Railroad Company vs. Velasquez, 32 Phil. 287, 314). It is undeniable that plaintiffs agricultural lands as borne out from the records hereof, and remaining unrebutted, shows that all weather-roads network, airstrip, pier, irrigation system, packing houses, and among numerous other improvements are permanently in place and not just a measly, but substantial amounts investments have been infused. To exclude these permanent improvements in rendering its valuation of said properties would certainly be less than fair. x x x. xxxx The plaintiffs agricultural properties are just a stones throw from the residential and/or industrial sections of Tagum City, a fact defendants-DAR and LBP should never ignore. The market value of the property (plus the consequential damages less consequential benefits) is determined by such factors as the value of like properties, its actual or potential use, its size, shape and location as enunciated in B.H. Berkenkotter & Co. vs. Court of Appeals, 216 SCRA 584 (1992). To follow Defendants-DAR and LBP logic, therefore, would in effect restrict and delimit the broad judicial prerogatives of this Court in determining and fixing just compensation of properties taken by the State. Proceedings before the Panel of Commissioners revealed that permanent improvements as mentioned above exist inside the lands subject of this complaints. It was also established during the trial proper upon reception of the evidence of the plaintiffs which clearly revealed the character, use and valuation of the lands surrounding the properties involved in these cases, indicating the strategic location of the properties subject of these cases. The findings being that surrounding properties have been classified as residential, commercial or industrial. And yet defendant-LBP refused to acknowledge the factual basis of the findings of the Panel of Commissioners and insisted on its guideline in determining just compensation. x x x.74 In arriving at its valuation of the subject properties, the RTC conducted a thorough and meticulous examination of all determining factors. It did not rely merely on the report of Commissioners nor on the Cuervo appraisers report. It took into consideration the schedule of market values of the City of Tagum per its 1993 and 1994 Revision of Assessment and Property Clasisification, value of the permanent improvements thereon, as well as comparative sales of adjacent lands from early 1995 to early 1997, among other factors. Contrary to LBPs claim, the above factors are neither irrelevant nor immaterial. When the trial court arrived at the valuation of a landowners property taking into account its nature as irrigated land, location along the highway, market value, assessors value and the volume and value of its produce, such valuation is considered in accordance with Republic Act No. 6657.75 Even the Commissioners report which the trial court took into consideration may not be dismissed as irrelevant. In the first place the trial court acting as a special agrarian court is authorized to appoint commissioners to assist in the determination of just compensation.76 In this case the Commissioners report was submitted only after ocular inspections were conducted on the landholdings to give them a better idea of their real value.77

Conspicuously, the trial court did not merely rely solely on the appraisal report submitted by the Commissioners. The trial court conducted hearings for the purpose of receiving the parties evidence. Clearly evident from the records of this case is that in the proceedings before the Commission constituted by the RTC of Tagum City, Branch 2, to fix the just compensation for the properties, the LBP and the DAR were given all the opportunities to justify their stances. Thus: [T]he Commission set another hearing on February 23, 2001 at 9:00 a.m. at the Function Room, Marbella mansion, Rizal Street, Davao City, to give the LBP the opportunity to present evidence. The LBP counsels, Attys. Batingana and Sembrano, instead of presenting witnesses and other evidence, manifested that they will submit a position paper within fifteen (15) days from the date of the hearing. This was granted by the Chairman of the Commission, who also gave the plaintiff the opportunity to submit within five (5) days, if they so desire, their rejoinder. Inspite of the lapse of the period, the LBP failed to file its position paper. xxxx The plaintiffs have presented evidence to establish the value of their properties before the Court-appointed Commissioners, as well as before this Court. The Commissioners who acted and performed their assigned tasks under their Oaths of Office are deemed a surrogate or extension of the Court itself. (Secs. 3 and 4, Rule 32 of the 1997 Rules of Civil Procedure). Defendant-DAR and Defendant-LBP failed to present evidence during the hearings set by the Commissioners on February 5, 2001, and February 23, 2001, for the presentation of their evidence. This Court gave Defendant Land Bank and Defendant DAR additional opportunities to present evidence. Defendant Land Bank and DAR asked for extensions to submit their evidence in its motion dated July 27, 2001, which was granted by the Court. All exhibits and other documents offered in evidence were admitted, after which this Court issued an order that these two cases were submitted for resolution.78 Given the already exhaustive analysis made by the RTC, this Court is convinced that the trial court correctly determined the amount of just compensation due to AFC and HPI. WHEREFORE, premises considered, the instant Petition is PARTIALLY GRANTED. While the Decision, dated 12 February 2004, and Resolution, dated 21 June 2004, of the Court of Appeals in CA-G.R. SP No. 76222, giving due course to LBPs appeal, are hereby AFFIRMED, this Court, nonetheless, RESOLVES, in consideration of public interest, the speedy administration of justice, and the peculiar circumstances of the case, to give DUE COURSE to the present Petition and decide the same on its merits. Thus, the Decision, dated 25 September 2001, as modified by the Decision, dated 5 December 2001, of the Regional Trial Court of Tagum City, Branch 2, in Agrarian Cases No. 54-2000 and No. 55-2000 is AFFIRMED. No costs. SO ORDERED.