Land Bank of the Philippines v. Prado Verde Corporation
REITERATIONFacts
The Antecedents: Prado Verde Corporation, formerly United Plaza Properties, Inc., acquired in 1979 an agricultural riceland (Lot 5834-A, TCT No. 4141 originally in Legazpi Oil's name) though unregistered until deed presented July 9, 1980; 2.4975 hectares placed under Operation Land Transfer per P.D. No. 27 on December 4, 1995, with Emancipation Patents leading to TCT Nos. 58 (Salustiano Arcinue) and 59 (Agapito Azupardo) registered April 21, 1988, partially cancelling mother title. Prado received claims folder January 24, 1996; no compensation paid by August 2010. Land Bank initially valued at P38,885.04 (1996), revalued to P59,457.05 (unreceived), then to P214,026.38 using A.O. No. 1-2010 two-factor formula post-challenge during suit. Prado rejected all, filing Agrarian Case No. 08-04 for just compensation. SAC computed P294,495.20 using three-factor formula from A.O. Nos. 5-98/2-09/1-10, reckoning June 30, 2009: CNI P88,500 (AGP 5,900kg x SP P9 x 20%/0.12), CS P200,000 (P20/sq.m. x 10,000sq.m. zonal), MV P48,160 (P30,100 x 100% x 1.60), LV P117,916/ha x 2.4975ha. Prado argued residential zonal P2,500/sq.m.; Land Bank insisted two-factor for distributed/challenged PD 27 claim. Procedural History: RTC-SAC (Legazpi Br. 3) March 21, 2012 Decision fixed P294,495.20, denied MFRs June 11, 2012. Separate CA petitions: Prado CA-G.R. SP 125525 (6th Div.), Land Bank 125471 (1st Div.); consolidation sought but 6th Div. affirmed RTC Jan. 31, 2013/July 8, 2013 Res.; 1st Div. dismissed Land Bank Dec. 4, 2013 as moot. Consolidated SC petitions G.R. 208004 (Land Bank), 208112 (Prado), 210243 (Land Bank). The Petition: Land Bank: SAC erred using three-factor (for RA 9700 Phase 1) not two-factor (IV.1 AO 1-2010) for distributed PD 27 challenged valuation; no immediate 12% interest pre-finality (only initial deposit per Sec. 16 RA 6657; rate now 6% per Nacar/MB 799-13). Prado: Use fair market/residential zonal (Hacienda Luisita); Land Bank revalutation iniquitous (adj. 1ha mortgaged P21.5M); remand for Sec. 17 RA 6657; alt. repossess with homelots/disturbance comp.
Issue(s)
Whether or not the Court of Appeals erred in affirming the SAC's determination of just compensation using the three-factor formula. Whether or not the Court of Appeals erred in affirming the SAC's order for immediate payment of adjudged compensation with 12% interest even if not yet final and executory.
Ruling
Petitions partly meritorious; CA Decisions/Resolutions SET ASIDE; REMANDED to SAC to compute using two-factor LV = (CNI x 0.90) + (MV x 0.10) per DAR A.O. No. 1-2010 IV.1, considering Sec. 17 RA 6657 factors/guidelines; just compensation earns 12% p.a. from taking to June 30, 2013, 6% thereafter to full payment.
Ratio Decidendi
On Issue 1 (Just Compensation Formula): SAC/CA erred applying three-factor LV = (CNI x 0.60) + (CS x 0.30) + (MV x 0.10) (AO 1-2010 IV.2 for RA 9700 Phase 1); for PD 27 riceland distributed 1988 (TCTs issued), claims folder 1996, landowner-rejected valuation in court suit, correct is IV.1 two-factor LV = (CNI x 0.90) + (MV x 0.10): CNI=(AGP 5,900kg x SP P9 x 0.20)/0.12=P88,500; MV=P60,462.50 (43,750 x 100% x 1.382 RCPI)=P85,696.25/ha x 2.4975=P214,026.38. SAC invalidated AO 2-2009 distinctions as 'void' (equal protection, vs. LBP v. Dumlao harmonization)—error, as provisos harmonize PD 27/EO 228 with RA 6657/9700. Per Alfonso v. LBP, SACs must apply DAR formulas (Sec. 17 RA 6657/9700) unless evidenced/reasoned deviation; no CS sales transactions (AO 05-98 req. 3 STs min., alt. MVM/AC averages)—cannot substitute zonal P20/sq.m. x10,000sq.m.=P200,000 without justification, revert to two-factor. Prado's unsubstantiated FMV/homelot claims meritless; state expropriation mandates compensation, not reversion. Remand for proper computation. On Issue 2 (Interest): Proper despite non-finality; delay from taking (1995 coverage, 1988 distribution) to payment is forbearance entitling interest to make 'just' (LBP v. Phil-Agro: compensate foregone income, place in pre-taking position). Sec. 16 RA 6657 initial deposit allows possession but not full; 12% from taking-Nacar cut-off June 30, 2013; 6% July 1, 2013-finality, then 6% to full payment (Evergreen, Nacar v. Gallery Frames, LBP v. Avanceña).
Main Doctrine
Regional Trial Courts acting as Special Agrarian Courts (SACs) must consider the factors in Section 17 of R.A. No. 6657, as amended by R.A. No. 9700, translated into applicable DAR formulas, with deviation allowed only if supported by reasoned explanation grounded on evidence. For tenanted rice and corn lands under P.D. No. 27 that have been distributed to farmer-beneficiaries (DNYD claims) or where DAR valuation is rejected and just compensation is litigated in court, DAR A.O. No. 1, Series of 2010, mandates the two-factor formula LV = (CNI x 0.90) + (MV x 0.10), using AGP/SP data for the 12 months preceding June 30, 2009, and MV grossed-up to that date. The three-factor formula LV = (CNI x 0.60) + (CS x 0.30) + (MV x 0.10) applies only to PD 27 lands falling under Phase 1 of R.A. No. 9700, with reckoning date July 1, 2009. CS cannot be arbitrarily derived from zonal values without comparable sales transactions per A.O. No. 05-98 guidelines requiring at least three STs or alternatives with MVM/AC; absent CS, revert to two-factor formula. Just compensation earns 12% interest per annum from taking until June 30, 2013, then 6% until full payment, to compensate for delay as forbearance of money, placing landowner in pre-taking position.