Land Bank v. Nasser
REITERATIONFacts
The Antecedents: Spouses Juancho and Myrna Nasser owned a 3.8885-hectare parcel of land in San Jose, Lupon, Davao Oriental, planted with coconut and mahogany trees. This property was placed under the Comprehensive Agrarian Reform Program (CARP) on May 10, 1999, and the owners voluntarily offered it for sale. The Land Bank of the Philippines (LBP) initially valued the property at P181,177.04, a valuation the respondents rejected. Procedural History: The dispute over the land's valuation proceeded to the Department of Agrarian Reform Adjudication Board (DARAB). Initially, the DARAB Regional Adjudicator adopted the LBP's valuation. However, in a subsequent decision, the Regional Adjudicator adjusted the just compensation to P1,645,586.89, considering both the coconut and mahogany trees. This valuation was referred to the Regional Trial Court-Special Agrarian Court (RTC-SAC), which affirmed the adjusted amount. The Court of Appeals (CA) also upheld the RTC-SAC's decision, specifically agreeing with the use of Capitalized Net Income (CNI) over Cumulative Development Cost (CDC) for valuing the mahogany trees and affirming the application of specific DAR formulas. The Petition: The Land Bank of the Philippines filed a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the CA's decision and resolution. The petitioner argued that the CA erred in its valuation of just compensation, particularly questioning the use of the CNI variable instead of the CDC variable for the mahogany trees. The petitioner also contended that a Joint Memorandum Circular (JMC) No. 11, series of 2003, should have been applied. The Supreme Court, however, denied the petition, affirming the CA's ruling that the formulas used were in line with DAR A.O. No. 5 (1998) and that JMC No. 11 (2003) was inapplicable to this case.
Issue(s)
Whether the Court of Appeals properly affirmed the valuation of just compensation by the RTC-SAC. Whether the formula used by the RTC-SAC and CA for determining just compensation, particularly concerning the valuation of mahogany trees, is proper under DAR Administrative Order No. 5, series of 1998.
Ruling
The petition is DENIED. The Decision dated March 27, 2014 and Resolution dated October 20, 2014 of the Court of Appeals-Cagayan de Oro City in CA-G.R. SP No. 03800-MIN are AFFIRMED. The just compensation as determined by the Regional Trial Court of Mati City, Davao Oriental, Branch 5 sitting as Special Agrarian Court shall earn legal interest from the time of taking at the rate of 12% per annum until June 30, 2013 and 6% per annum until full payment.
Ratio Decidendi
On the propriety of the valuation of just compensation by the CA: The Court affirmed the CA's ruling, which upheld the RTC-SAC's valuation. The determination of just compensation is fundamentally a judicial function, guided by Section 17 of Republic Act No. 6657. The Court reiterated that the true measure of just compensation is the owner's loss, not the taker's gain. The parameters set by law and administrative issuances must be followed. The CA correctly applied these principles in affirming the RTC-SAC's decision. On the proper formulae for determining just compensation: The Court found that petitioner LBP's insistence on using the Cumulative Development Cost (CDC) variable for mahogany trees was not sanctioned by DAR Administrative Order No. 5, series of 1998 (DAR A.O. No. 5). The said AO does not provide for the formula LV = (CNI x 0.1) + (MV x 0.9) + CDC as claimed by LBP. Furthermore, factoring in CDC as representative of mahogany trees' valuation was insufficient as it disregarded the value of the land itself, which is contrary to the guidelines. The Court agreed with the RTC-SAC and CA that the appropriate formulae, in the absence of Comparable Sales (CS), were LV = (CNI x 0.90) + (MV x 0.10) for the coconut land and LV = (CNI x 0.90) + (MV x 0.10) for the property with standing mahogany trees, aligning with DAR A.O. No. 5 (1998). The Court also clarified that the CDC factor is applicable to permanent crops that are not yet productive or fruit-bearing, which does not apply to established mahogany trees. The Court also dismissed LBP's argument regarding Joint Memorandum Circular No. 11, series of 2003 (JMC No. 11), finding it inapplicable as the Memorandum of Valuation was accomplished and forwarded to DAR prior to the circular's effectivity.
Main Doctrine
The determination of just compensation for lands under the Comprehensive Agrarian Reform Program (CARP) is a judicial function. Valuation must adhere to the parameters set by Section 17 of Republic Act No. 6657 and DAR Administrative Order No. 5, series of 1998, utilizing the prescribed formulae. The Cumulative Development Cost (CDC) factor is applicable to permanent crops not yet productive, not to established trees like mahogany, and the land value itself must not be disregarded in the valuation process.