Development Bank v. Land Bank

G.R. Nos. 229274 & 229289 · 2021-06-16 · J. LOPEZ, J.: · Civil Law

REITERATION

Facts

The Antecedents: The subject property is a 2,225 sq.m. parcel in Barangay Duhat, Bocaue, Bulacan, originally owned by Spouses Angel and Remedios Martin under TCT No. 39413(M), mortgaged to Development Bank of the Philippines (DBP) in 1979 for P400,000 loans, foreclosed in 1990 upon default with DBP as highest bidder, and title consolidated in DBP's name (TCT No. T-144547) on January 13, 1992 after failure to redeem. In 1998, a 1,567 sq.m. portion was placed under CARP coverage pursuant to RA 6657, prompting DAR PARO Bulacan to request LBP on May 13, 1998, to value it for just compensation. LBP, via Claims Valuation Form 03-CA-98-0066, offered P11,922.32 (P7.61/sq.m.) using DAR AO 5-98 alternative formula LV=(CNI x 0.9)+(MV x 0.1), relying on industry data: AGP 4,500 kg/ha (90 cavans at 50kg/cavan), SP P8.33/kg from BAS, CO P29,988/ha (20% net income rate), yielding CNI P62,475/ha; MV P198,562/ha (base P200,000/ha x 91% location x 1.091 RCPI). DBP rejected this as grossly low, arguing the land was non-agricultural/residential, not tenanted. DBP's 1979 appraisal valued it at P133,500 total; 2009 appraisal at P2,100/sq.m. (P3,290,700 for CARP portion). Procedural History: DBP contested before PARAD, which sustained LBP (Dec. 29, 2003), MR denied (Jan. 24, 2005); DARAB affirmed (Dec. 10, 2007). DBP filed RTC-Malolos SAC petition for just compensation (Civil Case 368-M-2008), presenting witnesses Simangan (2009 appraisal P2,100/sq.m.) and Lora (1979 value), photos. LBP's Francisco testified on formula details, offered docs like Field Report, Valuation Worksheet. RTC sustained LBP/DARAB (Dec. 10, 2013), binding by DAR AO unless invalidated; MR denied (Jul. 10, 2014). CA affirmed with mod (Aug. 11, 2016): corrected AGP to 13,500 kg/ha (270 cavans/yr, 3 crops x 90 cavans), yielding P29,544.01 (P18.85/sq.m.) + interest (12% until Jun. 30, 2013; 6% after); MRs denied (Jan. 11, 2017). The Petition: DBP (G.R. 229274): CA erred in binding courts to DAR AO 5-98 (mere guideline); urged Market Data Approach akin to CS factor, P2,100/sq.m. LBP (G.R. 229289): Defended CNI/AGP computation, no interest due to prompt deposit of initial valuation.

Issue(s)

Whether the CA erred in upholding RTC's valuation (with modification) fixing just compensation at P29,544.01 + interest, relying solely on DAR AO 5-98 without independent judicial determination under Sec. 17, RA 6657. Whether legal interest is imposable despite provisional LBP payment.

Ruling

Petition in G.R. No. 229274 partly granted; G.R. No. 229289 denied. CA Decision (Aug. 11, 2016) and Resolution (Jan. 11, 2017) reversed. Case remanded to RTC-Malolos Br. 81 for proper just compensation determination per guidelines: value at 1998 taking using Sec. 17 factors/DAR AO 5-98 (pre-RA 9700), verify evidence, consider interest if delay.

Ratio Decidendi

On Just Compensation Determination: The SC emphasized that just compensation is a judicial function of the RTC-SAC, not administrative agencies like LBP/DAR, requiring consideration of Sec. 17, RA 6657 factors (cost of acquisition, like properties' value, nature/use/income, owner's valuation, tax declarations, assessments, plus farmer/gov't benefits, non-payment of taxes/loans) without unjust disregard. DAR AO 5-98 formulas (LV=(CNIx0.6)+(CSx0.3)+(MVx0.1) or alt. (CNIx0.9)+(MVx0.1)) are guides from DAR's expertise but not rigid; courts may relax/deviate with explanation, as 'justness' of factors/weights is judicial (citing LBP v. Rural Bank of Hermosa, 814 Phil. 157; LBP v. Briones-Blanco, G.R. 213199). Here, RTC/CA erred by mechanically upholding LBP's P11,922.32/P29,544.01 solely for formula compliance, without verifying LBP's unproven industry data (AGP/SP/CO from DA/BAS; RCPI from NSO)—no certifications adduced, despite DAR AO allowing such but requiring court scrutiny to avoid derogating to 'bureaucratic inputting' (LBP v. Puyat, 689 Phil. 505). DBP's 2009 valuations rejected as post-1998 taking; valuation must use time-of-taking (deprivation) values for similar lands (LBP v. Omengan, 813 Phil. 901). For pre-Jul. 1, 2009 Claim Folders, use pre-RA 9700 Sec. 17/DAR AO 5-98 per DAR AO 02-09. Remand ordered for evidence reception/verification. On Legal Interest: Just compensation demands fair value plus timely full payment; provisional LBP deposit does not negate interest on unpaid balance, as delay constitutes State forbearance, compensating currency variability/opportunity loss (LBP v. Estate of Venaracion, G.R. 233401; Nacar v. Gallery Frames, 716 Phil. 267). Consistent jurisprudence imposes interest (12% until Jun. 30, 2013; 6% after per BSP-MB Cir. 799) from taking until full payment, even under DAR formulas if delay proven (LBP v. Barrameda, G.R. 221216). RTC to assess circumstances post-remand.

Main Doctrine

The determination of just compensation under the Comprehensive Agrarian Reform Program (CARP) is a judicial function exclusively vested in the Regional Trial Court sitting as a Special Agrarian Court (SAC), and not merely a review or continuation of administrative valuations by the Land Bank of the Philippines (LBP) or Department of Agrarian Reform (DAR). While courts must consider the factors enumerated in Section 17 of RA No. 6657—such as cost of acquisition, current value of like properties, nature, actual use, income, sworn valuation by owner, tax declarations, and government assessments—and the guidelines/formulas in DAR AO No. 5-98, they are not strictly bound by the latter and may deviate upon reasoned explanation based on case circumstances. Courts cannot rely solely on unverified LBP/DAR data, including industry averages from DA/BAS/NSO, without competent evidence like agency certifications, as this derogates judicial prerogative to a bureaucratic exercise. Just compensation must be computed at the time of taking (when landowner is deprived of use/benefit), using evidence of prevalent values for similar lands then, not later appraisals. Legal interest may be imposed on unpaid balances from taking date until full payment, as effective forbearance by the State, even with provisional deposits, to account for currency devaluation and opportunity loss; for pre-RA 9700 claims (Claim Folders received by LBP before July 1, 2009), valuation follows pre-amendment Section 17 and DAR AO 5-98. Remand to SAC is warranted for further reception of evidence where lower courts fail to independently verify facts and apply factors judiciously.