Land Bank v. Tayko
REITERATIONFacts
The Antecedents: Respondents, heirs of the late spouses Josefa Tayko Guingona and Mauro Tayko, owned an estate planted with sugar, corn, rice, and coconut. On January 15, 1995, they offered a portion of their estate, totaling 481.0932 hectares, for voluntary coverage under the Comprehensive Agrarian Reform Program (CARP) with an offer price of ₱150,000.00 per hectare. An ocular inspection recommended the exclusion of 121 hectares, leaving 360.0932 hectares for CARP coverage (295.5 hectares sugar land, 60.0932 hectares corn land, and 4.5 hectares coco land). Land Bank of the Philippines (LBP) received the claim folders on November 26, 1997, but the Claims Valuation and Processing Form was prepared on May 19, 2003. LBP valued the properties at ₱32,804,751.62 in a Memorandum of Valuation dated November 25, 2003. Preliminary payment was deposited on December 18, 2003, and transfer certificates of title were issued in the name of the Republic of the Philippines on December 30, 2003. Respondents rejected LBP's valuation. Procedural History: Respondents filed a petition before the Regional Agrarian Reform Adjudicator (RARAD) for the determination of just compensation, claiming the valuation should be based on 2003 data, not 1997, and asserting a just compensation of ₱63,738,314.29. The RARAD agreed with the landowners. LBP appealed to the Department of Agrarian Reform Adjudication Board (DARAB), which affirmed the RARAD's ruling. LBP then filed a petition before the Regional Trial Court, acting as a Special Agrarian Court (RTC-SAC). The RTC-SAC ruled in favor of respondents, fixing the compensation at ₱143,774,384.67. LBP appealed to the Court of Appeals (CA). The CA reversed the RTC-SAC decision, affirming the DARAB's valuation for the corn lands but remanding the case for reception of evidence on the Annual Gross Production (AGP) and Capitalized Net Income (CNI) for the sugarcane portion. LBP filed a motion for reconsideration, which was denied. The Petition: LBP filed a Petition for Review on Certiorari before the Supreme Court, questioning the CA's affirmation of the DARAB valuation for the corn lands, arguing it used the formula under Presidential Decree (P.D.) No. 27 instead of Republic Act (R.A.) No. 6657. LBP did not assail the remand for sugar land valuation or the imposition of commissioners' fees.
Issue(s)
Whether the Court of Appeals erred in affirming the Department of Agrarian Reform Adjudication Board's valuation of the land planted to corn, and whether the valuation of the subject corn land should be determined under Republic Act No. 6657 or Presidential Decree No. 27. Whether the time of taking for the purpose of determining just compensation was correctly determined. Whether a remand to the RTC-SAC is necessary given the incorrect valuation formula used. Whether the imposition of legal interest on the unpaid balance of just compensation is proper.
Ruling
The Supreme Court PARTIALLY GRANTED the Petition for Review on Certiorari. The Court AFFIRMED with MODIFICATIONS the Decision and Resolution of the Court of Appeals. The award fixing just compensation for the 60.0932-hectare land planted to corn was DELETED, and the case was REMANDED to the RTC-SAC for reception of evidence to determine just compensation strictly in accordance with R.A. No. 6657 and DAR A.O. No. 5, Series of 1998. The Court ordered LBP to pay legal interest on the unpaid balance of just compensation at 12% per annum from December 30, 2003, until June 30, 2013, and 6% per annum from July 1, 2013, until finality of the Resolution, and thereafter at 6% per annum until full payment.
Ratio Decidendi
On the valuation of the land planted to corn and the applicable law for valuation: The Court found merit in LBP's argument that the Court of Appeals erred in affirming the valuation made by the RARAD and DARAB for the corn land. It was undisputed that the subject properties were acquired under a voluntary offer to sell made by the owners pursuant to CARP. The Court reiterated that the valuation of lands acquired under CARP must be determined pursuant to the valuation factors provided by R.A. No. 6657 and its relevant implementing guidelines and formula, and not under P.D. No. 27. The RARAD/DARAB improperly used the formula under P.D. No. 27 for acquisitions made under R.A. No. 6657, which is contrary to established jurisprudence. Therefore, the CA erred in affirming this valuation as it was not in accordance with the valuation factors set forth in R.A. No. 6657. The Court emphasized that for lands acquired under CARP, the valuation must be based on R.A. No. 6657. Section 17 of R.A. No. 6657 enumerates the factors to be considered, including the cost of acquisition, current value of like properties, nature, actual use and income, sworn valuation by the owner, tax declarations, and assessments. The DAR issued A.O. No. 5, Series of 1998, to operationalize these factors by providing a basic formula for land valuation. The use of the P.D. No. 27 formula, which was specific to land valuation under that decree, was deemed improper for acquisitions under R.A. No. 6657. On the time of taking: The Court clarified that the time of taking is when the owner is deprived of the use and benefit of the property, such as when the title is transferred to the Republic of the Philippines. In this case, the certificates of title in the landowners' names were cancelled, and new transfer certificates of title were issued in the name of the Republic of the Philippines on December 30, 2003. Therefore, the just compensation for both sugar and corn lands should be valued as of December 30, 2003. This date also determines the applicable DAR administrative order to be used as a guideline. On the necessity of remand: Given that the valuation of the corn land was based on an incorrect formula and that the Court could not determine just compensation based on the factors in R.A. No. 6657 and DAR A.O. No. 5, Series of 1998, a remand to the RTC-SAC was necessary. The RTC-SAC is tasked to receive evidence and determine just compensation strictly in accordance with Section 17 of R.A. No. 6657 and applicable DAR regulations, using production data and values as of the time of taking on December 30, 2003. On the imposition of legal interest: The Court affirmed the imposition of legal interest on the unpaid balance of just compensation. This is to compensate the owner for the loss of income due to the delay in payment and to account for the variability of currency value over time. The interest rate is set at 12% per annum from the time of taking (December 30, 2003) until June 30, 2013, and 6% per annum from July 1, 2013, until finality of the Resolution, and thereafter at 6% per annum until full payment, in line with prevailing jurisprudence and BSP-MB Circular No. 799.
Main Doctrine
The valuation of lands acquired under the Comprehensive Agrarian Reform Program (CARP) must strictly adhere to the factors enumerated in Section 17 of Republic Act No. 6657 and its implementing guidelines, such as DAR Administrative Order No. 5, Series of 1998, and not the formula under Presidential Decree No. 27, when the acquisition is made under R.A. No. 6657. The time of taking, which determines the applicable valuation, is reckoned from the cancellation of the original titles and the issuance of new titles in the name of the Republic of the Philippines.