LEONEN, SAJ.:
WHEREFORE, in view of all the foregoing, it is hereby decided and declared that ONE MILLION ONE HUNDRED NINETY THREE THOUSAND THREE HUNDRED TWENTY SEVEN (P1,193,327.00) PESOS is the just compensation for the entire 75 hectares subject land of this case.Both Land Bank and Paramount Finance moved for reconsideration of the Decision, but were both denied.[23] Thus, both parties appealed the Special Agrarian Court's Decision and insisted on their respective methods of valuing the Tagabukud property for just compensation.
SO ORDERED.[22]
WHEREFORE, the instant Petition for Review is DENIED. The 26 April 2010 Order and the 12 August 2010 Resolution of the Regional Trial Court of Mati City, Davao Oriental, Branch 5 sitting as a Special Agrarian Court (SAC) are hereby AFFIRMED in toto.[26] (Emphasis in the original)Land Bank moved for reconsideration of the Court of Appeals' Decision, but was denied relief.[27] Thus, it filed a Petition for Review under Rule 45 of the Rules of Court before this Court.
SECTION 10. Exemptions and Exclusions. – Lands actually, directly and exclusively used and found to be necessary for parks, wildlife, forest reserves, reforestation, fish sanctuaries and breeding grounds, watersheds, and mangroves, national defense, school sites and campuses including experimental farm stations operated by public or private schools for educational purposes, seeds and seedlings research and pilot production centers, church sites and convents appurtenant thereto, mosque sites and Islamic centers appurtenant thereto, communal burial grounds and cemeteries, penal colonies and penal farms actually worked by the inmates, government and private research and quarantine centers and all lands with eighteen percent (18%) slope and over, except those already developed shall be exempt from the coverage of this Act. (Emphasis supplied)Thus, a parcel of land having a slope of 18% or more shall be excluded from the compulsory coverage of Republic Act No. 6657. Here, both of the lower courts recognized that 15 hectares of the 75-hectare Tagabukud property had an 18-degree slope.[35] Thus, this 15 hectare portion falls within the law's exemption from compulsory coverage.
Clearly, it was a mistake on the part of the Republic to transfer the title of respondents Montalvan over the entire 147.6913-hectare land. In its Field Investigation Report, the DAR established its intent to acquire only 72 hectares, which was suitable for agricultural purposes under the CARP. But instead of dividing the lands and issuing two titles over the two portions (one, subject of the CARP; and the other, excluded therefrom), the DAR simply caused the transfer of the entire title to the name of the Republic, without distinction between the expropriated and the excluded portions.We apply the same remedy of re-titling and return here. The lower courts should have ordered the re-titling and return of the 15-hectare portion of the Tagabukud property to respondent pursuant to the Department of Agrarian Reform's findings that the same 15-hectare portion was excluded under Section 10(c) of Republic Act No. 6657. Any costs for the re-titling and return of the excluded portion shall be for the account of the Department of Agrarian Reform, together with any damages that may be proven by respondent in the proper proceedings.
Hence, the DAR unjustly enriched itself when it appropriated the entire 147.6913-hectare real property of respondents Montalvan, because the entire lot was decidedly beyond the area it had intended to subject to agrarian reform under the VOS arrangement. Even the Field Investigation Report issued by the DAR found that the excluded portion together with the five-hectare retention limit was not to be the subject of agrarian reform expropriation. Under the Civil Code, there is unjust enrichment when a person retains the property of another without just or legal ground and against the fundamental principles of justice, equity and good conscience. Hence, although the Court affirms the award of just compensation for the expropriated portion owned by respondents, the Republic cannot hold on to the excluded portion consisting of 75.6913 hectares, despite both portions being included under one new title issued in its favor.
The consequence of our finding of unjust and improper titling of the entire property by the Republic is that the title over the excluded portion shall be returned or transferred back to respondents Montalvan, with damages. The costs of the cancellation of the present title and the issuance of two new titles over the divided portions of the property (the expropriated portion to be retained by the Republic under the VOS arrangement in the CARP, and the excluded portion to revert to respondents) shall be borne by DAR, without prejudice to the right of respondents to seek damages in a proper court.[38] (Emphasis supplied, citations omitted)
This Court's ruling in Lim is crucial: the Special Agrarian Court is "required to consider" the factors in Republic Act No. 6657 and the formula in the administrative issuances. This must be construed to mean that the Special Agrarian Court is legally mandated to take due consideration of these legislative and administrative guidelines to arrive at the amount of just compensation. Consideration of these guidelines, however, does not mean that these are the sole bases for arriving at the just compensation.Land Bank v. Garcia[42] further provides that since determining just compensation is a judicial function, which involves the appreciation of facts "specific and peculiar for each case," the courts cannot be bound by a particular method or formula in doing so.
In Apo Fruits Corporation v. Land Bank, this Court ruled that Republic Act No. 6657, Section 17 merely provides for guideposts in ascertaining the valuations for the properties, but the courts are not precluded from considering other factors.
In Land Bank of the Philippines v. Obias:[A]dministrative issuances or orders, though they enjoy the presumption of legalities, are still subject to the interpretation by the Supreme Court pursuant to its power to interpret the law. While rules and regulations issued by the administrative bodies have the force and effect of law and are entitled to great respect, courts interpret administrative regulations in harmony with the law that authorized them and avoid as much as possible any construction that would annul them as invalid exercise of legislative power.Thus, while Section 17 requires due consideration of the formula prescribed by DAR, the determination of just compensation is still subject to the final decision of the proper court. In the recent case of Alfonso v. Land Bank, this Court reiterated:Out of regard for the DAR's expertise as the concerned implementing agency, courts should henceforth consider the factors stated in Section 17 of RA 6657, as amended, as translated into the applicable DAR formulas in their determination of just compensation for the properties covered by the said law. If, in the exercise of their judicial discretion, courts find that a strict application of said formulas is not warranted under the specific circumstances of the case before them, they may deviate or depart therefrom, provided that this departure or deviation is supported by a reasoned explanation grounded on the evidence on record. In other words, courts of law possess the power to make a final determination of just compensation.Taking into consideration the totality of these principles, this Court rules that the Court of Appeals correctly affirmed the findings of the Special Agrarian Court. Petitioner's argument on mandatory adherence to the provisions of the law and the administrative orders must fail. The Regional Trial Court's judgment must be given due credence as an exercise of its legal duty to arrive at a final determination of just compensation.[41] (Emphasis supplied, citations omitted)
In the exercise of this judicial function, the Special Agrarian Court's determination may not be dictated and curtailed by a legislative or executive issuance. At most, the formula prescribed by the Department of Agrarian Reform is only recommendatory.The "basic formula" aimed to standardize the determination of just compensation by incorporating all of the factors mentioned in Section 17 of Republic Act No. 6657. However, the lower courts have recourse to alternative computation methods when required by the circumstances, provided that any deviation is substantiated by evidence on record.[44]
The determination of just compensation involves the appreciation of facts and evidence which may be specific and peculiar for each case. Thus, the factors which may be considered by a Special Agrarian Court cannot be limited, especially if the available evidence will aid the court to come up with a more precise valuation. Agrarian courts should be given independence to use a wide range of factors in determining land value.[43] (Emphasis supplied, citation omitted)
Notably, DAR AO No. 5, Series of 1998, itself prescribes that the basic formula for just compensation shall only be used if all the three factors are present, relevant and applicable. The three factors are: 1) capitalized net income; 2) comparable sales; and 3) market value per tax declaration. DAR AO No. 5, Series of 1998, II A, underscores that the above formula as therein indicated, i.e., LV = (CNI x.06) + (CS x 0.3) + (MV x 0.1), shall be used if all three factors are "present, relevant, and applicable." What is explicit in said AO, therefore, is the qualification that for the aforesaid basic formula to be utilized in arriving at the land value, the three factors, i.e., capitalized net income; comparable sales; and market value per tax declaration must be determined by the RTC acting as SAC to be "present, relevant, and applicable." Hence, it is within its duty to: 1) identify the presence of the three factors; 2) determine if the factors are relevant to the valuation; and 3) judge their applicability. The very same DAR AO, therefore, recognizes that there are circumstances when, to the mind of the court; any of the three factors are not present; relevant or applicable; and the basic formula cannot be used. In such cases, alternative formulae are made available.[47] (Emphasis supplied)Since two of the three factors were absent, the Special Agrarian Court undertook its own computation of the subject property's value based on other available factors.
In arriving at the just compensation, this Court considered the Petitioner's acceptable price based on its amended Petition, i.e. EIGHT HUNDRED FIFTY SEVEN THOUSAND TWO HUNDRED TWENTY NINE 90/100 PESOS (P 857,229.90). The findings of the Commissioners were also taken into account....This recourse to an alternative computation method is consistent with the discussion in Apo Fruits Corporation regarding the Special Agrarian Court's discretion in evaluating land value.
This Court also finds, and it is not disputed by the parties, that the subject property is an agricultural land planted to (sic) coconuts, corn and cogon and these plants are productive during the time when the land was taken for CARP. To emphasize, the parties do not dispute these facts. It is also undisputed that these plants have commercial values. The coconuts alone produce an average annual production of 1,200 kilos per hectare at P5.00 per kilo. Add (sic) to that is the production of corn and cogon.[48]
What is clearly implicit, thus, is that the basic formula and its alternatives — administratively determined (as it is not found in Republic Act No. 6657, but merely set forth in DAR AO No. 5, Series of 1998) — although referred to and even applied by the courts in certain instances, does not and cannot strictly bind the courts. To insist that the formula must be applied with utmost rigidity whereby the valuation is drawn following a strict mathematical computation goes beyond the intent and spirit of the law. The suggested interpretation is strained and would render the law inutile. Statutory construction should not kill but give life to the law. As we have established in earlier jurisprudence, the valuation of property in eminent domain is essentially a judicial function which is vested in the regional trial court acting as a SAC, and not in administrative agencies. The SAC, therefore, must still be able to reasonably exercise its judicial discretion in the evaluation of the factors for just compensation, which cannot be arbitrarily restricted by a formula dictated by the DAR, an administrative agency. Surely, DAR AO No. 5 did not intend to straightjacket the hands of the court in the computation of the land valuation. While it provides a formula, it could not have been its intention to shackle the courts into applying the formula in every instance. The court shall apply the formula after an evaluation of the three factors, or it may proceed to make its own computation based on the extended list in Section 17 of Republic Act No. 6657, which includes other factors, like the cost of acquisition of the land; the current valuation of like properties; its nature, actual use and income; the sworn valuation by the owner; the tax declarations; and the assessment made by the government assessors.After examining the Commissioners' reports, the Special Agrarian Court found that Commissioner Rubia's computation substantially corresponded to its own and, thus, adopted the same.
The argument of LBP that the real properties of AFC and HPI must have a lower valuation, since they are agricultural, conveniently disregards our repeated pronouncement that in determining the just compensation to be paid to the landowner, all the facts as to the condition of the property and its surroundings, as well as its improvements and capabilities, should be considered.[49] (Emphasis supplied, citations omitted)
On a final note, although Commissioner Rubia's valuation appears that it is based on the present situation of the property for the entire 75 hectares, this Court rules that the valuation thus mentioned substantially corresponds with the findings of this Court enumerated above since there were standing crops of coconut, corns and cogons during their ocular inspection and that the standing crops are productive. Moreover, the parties do not dispute these facts. Finally, the valuation of Commissioner Rubia is in fact, more than the acceptable valuation being asked by the Petitioner based on its amended Petition.[50] (Emphasis supplied)On appeal, the Court of Appeals affirmed the Special Agrarian Court's findings on the sufficiency of just compensation awarded.
Given the analysis already made by the RTC, this Court is convinced that the trial court correctly determined the amount of just compensation due to PFC. Therefore, We find no reason to disturb the finding that the proper valuation as just compensation for the entire 75-hectare subject property amounts to P1,193,327.00.[51]Thus, there was sufficient basis for the Special Agrarian Court's recourse to alternative means of computing just compensation and its subsequent adoption of Commissioner Rubia's similar methodology.
Just compensation is defined as the full and fair equivalent of the property taken from its owner by the expropriator. For purposes of determining just compensation, the fair market value of an expropriated property is determined by its character and its price at the time of taking. In addition, the factors enumerated under Section 17 of RA 6657, as amended, i.e., (a) the acquisition cost of the land, (b) the current value of like properties, (c) the nature and actual use of the property and the income therefrom, (d) the owner's sworn valuation, (e) the tax declarations, (f) the assessment made by government assessors, (g) the social and economic benefits contributed by the farmers and the farmworkers, and by the government to the property, and (h) the nonpayment of taxes or loans secured from any government financing institution on the said land, if any, must be equally considered.The comprehensiveness of the quoted guidelines notwithstanding, we note that this Petition was filed after the effectivity of the amendments to Section 17 of Republic Act No. 6657, pursuant to Republic Act No. 9700. Thus, the amended Section 17 shall control in the Special Agrarian Court's, further computation of land value for just compensation.
The Court has gone over the records and observed that none of the aforementioned factors were even considered and found inapplicable by the RTC and the CA. As such, the Court is led to conclude that the valuation arrived at was not in accordance with the factors enumerated under Section 17 of RA 6657, as amended, thus, necessitating the remand as aforementioned. To this end, the RTC is hereby directed to observe the following guidelines in the remand of the case:
1. Compensation must be valued at the time of taking, or the time when the landowner was deprived of the use and benefit of his property, such as when title is transferred in the name of the Republic of the Philippines. Hence, the evidence to be presented by the parties before the trial court for the valuation of the subject portion must be based on the values prevalent at such time of taking for like agricultural lands.
2. The evidence must conform with Section 17 of RA 6657, as amended, prior to its amendment by RA 9700. It bears pointing out that while Congress passed RA 9700 on July 1, 2009, further amending certain provisions of RA 6657, as amended, among them, Section 17, and declaring "(t)hat all previously acquired lands wherein valuation is subject to challenge by landowners shall be completed and finally resolved pursuant to Section 17 of [RA 6657], as amended," the law should not be retroactively applied to pending claims/cases.
With this in mind, the Court, cognizant of the fact that the instant consolidated petitions for review on certiorari were filed in August 2008, or long before the passage of RA 9700, finds that Section 17 of RA 6657, as amended, prior to its further amendment by RA No. 9700, should control the challenged valuation.
3. The Regional Trial Court may impose interest on the just compensation as may be warranted by the circumstances of the case and based on prevailing jurisprudence. In previous cases, the Court has allowed the grant of legal interest in expropriation cases where there is delay in the payment since the just compensation due to the landowners was deemed to be an effective forbearance on the part of the State. Legal interest shall be pegged at the rate of 12% p.a. from the time of taking until June 30, 2013 only. Thereafter, or beginning July 1, 2013, until fully paid, the just compensation due the landowners shall earn interest at the new legal rate of 6% p.a. in line with the amendment introduced by BSP-MB Circular No. 799, series of 2013.
4. The Regional Trial Court is reminded, however, that while it should take into account the different formula created by the DAR in arriving at the just compensation for the subject portion, it is not strictly bound thereto if the situations before it do not warrant their application.[54] (Emphasis in the original, citations omitted)
SECTION 7. Section 17 of Republic Act No. 6657, as amended, is hereby further amended to read as follows: CSIn any event, we stress the importance of the Special Agrarian Court's discretion in computing just compensation, as provided in paragraph 4 of the quoted guidelines from Department of Agrarian Reform. v. Beriña:[56]"[SECTION] 17. Determination of Just Compensation. — In determining just compensation, the cost of acquisition of the land, the value of the standing crop, the current value of like properties, its nature, actual use and income, the sworn valuation by the owner, the tax declarations, the assessment made by government assessors, and seventy percent (70%) of the zonal valuation of the Bureau of Internal Revenue (BIR), translated into a basic formula by the DAR shall be considered, subject to the final decision of the proper court. The social and economic benefits contributed by the farmers and the farmworkers and by the Government to the property as well as the nonpayment of taxes or loans secured from any government financing institution on the said land shall be considered as additional factors to determine its valuation."[55]
4. The Regional Trial Court is reminded, however, that while it should take into account the different formula created by the DAR in arriving at the just compensation for the subject portion, it is not strictly bound thereto if the situations before it do not warrant their application.[57] (Emphasis in the original, citation omitted)Thus, the Special Agrarian Court may continue to exercise its discretion in using alternative formulae should the evidence adduced by the parties be insufficient, irrelevant, or inapplicable to the "basic formula" and its derivatives. However, any such deviation must be substantiated and should remain consistent with the factors required by Section 17 of Republic Act No. 6657, as amended.