Land Bank of the Philippines v. Del Prado Ledesma, Inc.

THIRD DIVISION

[G.R. No. 229079. June 30, 2021.]

LAND BANK OF THE PHILIPPINES, petitioner,vs. DEL PRADO LEDESMA, INC., respondent.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, Third Division, issued a Resolution dated June 30, 2021, which reads as follows:

"G.R. No. 229079 (LAND BANK OF THE PHILIPPINES, petitioner, v. DEL PRADO LEDESMA, INC., respondent). — The Court resolves to NOTE the Entry of Appearance dated January 19, 2021 filed by the Office of the Government Corporate Counsel as counsel for petitioner, and to GRANT its request that it be furnished with copies of all pleadings, notices and other court processes in this case at 3rd Floor, MWSS Administration Building, Katipunan Road, Diliman, Quezon City.

This Court resolves a Petition for Review on Certiorari1 questioning the Decision 2 and Resolution 3 of the Court of Appeals, which affirmed with modification 4 the P21,300,242.95 valuation made by the Regional Trial Court, sitting as the Special Agrarian Court, on Lot No. 285-C4's just compensation. It also imposed legal interest on the just compensation not yet paid and ordered the payment of commissioner's fee.

Del Prado Ledesma, Inc. (DPLI) is a sugarcane company 5 that owns Lot No. 285-C4 in Tangculogan, Bais, Negros Oriental. Covered by Transfer Certificate of Title No. 814, the lot includes 37.7173 hectares of land area allotted to cane production. 6

In view of Republic Act No. 6657, 7 the Department of Agrarian Reform subjected the lot to compulsory acquisition. 8

Land Bank of the Philippines (Land Bank) 9 initially valued the property at P6,637,451.72. It consequently sent the needed Claims Valuation and Processing Form to the Agrarian Reform Secretary, who then sent a Notice of Land Valuation and Acquisition to DPLI, offering the amount as just compensation for the property. 10

DPLI rejected this valuation. In any case, on September 23, 2002, Land Bank deposited the amount of P6,637,451.72 "in cash and in bonds in the name of DPLI as just compensation" for the lot. 11 DPLI later withdrew the entire amount. 12

On October 10, 2002, DPLI's Transfer Certificate of Title was canceled in favor of the Republic of the Philippines. On October 25, 2002, the farmer-beneficiaries were awarded their Certificates of Land Ownership. 13

The Regional Agrarian Reform Adjudicator later conducted a summary administrative proceeding and, on September 27, 2006, resolved to increase the just compensation to P13,733,228.03. 14 The Department of Agrarian Reform Adjudication Board affirmed this ruling in a December 4, 2009 Decision. 15

Land Bank moved for reconsideration, claiming that the P13,733,228.03 valuation had been "arrived at without identifying the title and lot numbers of the property covered by the production data report/certification which was used as the basis in arriving at the assailed valuation." 16 CAIHTE

Land Bank also claimed that DPLI did not submit "the necessary source documents of its production data particularly for the plant and ratoon crops in the area as provided under Section III-A.1a of Department of Agrarian Reform-Land Bank of the Philippines Joint Memorandum Circular No. 15, [s]eries of 1999." 17

On April 26, 2010, the Department of Agrarian Reform Adjudication Board denied Land Bank's Motion for Reconsideration. 18 DPLI soon moved to have a writ of execution issued to implement the December 4, 2009 Decision, though this was denied. 19

On May 27, 2010, Land Bank filed a Petition for Fixing of Just Compensation before the Regional Trial Court, sitting as the Special Agrarian Court. It prayed that their initial valuation of P6,637,451.72 be upheld since it was determined in accordance with Department of Agrarian Reform Administrative Order No. 05-1998, and Joint Memorandum Circular No. 15-1999. 20

In a Commissioner's Report, the court-appointed commissioner computed the just compensation based on the following data:

VII. Valuation

Since the best use of the property is agricultural, (by virtue of the fact that it [is] inside a "hacienda" and the land is conclusive to sugar cane farming than any other type of agricultural development) and now that the subject property has already been covered under the Comprehensive Agrarian Reform Program (CARP) of the Government, our valuation, therefore shall be based solely on Sec. 17 of RA 6657 as amended by R.A. 9700; DAR-LBP Joint Memorandum Circular (JMC) No. 15, Series of 1999 (JMC 15, for short); and DAR Administrative Order No. 2, Series of 2009. (Please refer to Annexes "I" and "J").

The major factors in the determination of "Just Compensation" under RA 6657 as amended by RA 9700 and its implementing rules and valuation guidelines under JMC 15 and DAR Administrative Order No. 2, Series of 2009, are as follows:

1. Cost of Acquisition

2. Productivity of the land

3. The current value of like properties

4. Its nature, actual use and income of the land

5. The sworn valuation of the owner

6. The tax declaration

7. The assessment made by the government assessor

8. The latest zonal valuation of the BIR

The fair market value of the land was arrived at using the Capitalize (sic) Net Income (CNI) approach as prescribed under JMC 15, the BIR Zonal Value and Assessor's Market Value. The CNI Approach is a method of valuation based on the principle of anticipation, which implies that the value of the property is dependent o[n] the potential net benefit that may be derived from its ownership. It requires a preparation of an estimate of the average annual gross farm revenue that will be derived from the produce of the crops. From this amount, the typical farm operating expenses, cultivation, milling and other direct crop costs and inputs are deducted in order to arrive at the net income. This net income which attributed to the land and its standing crops is then capitalized in accordance with the prevailing rate of return on property or investment.

Value of Land and its standing crops

We have adopted the Capitalized Net Income (CNI) Approach for the valuation of the subject sugarland pursuant to the valuation formula prescribed under DAR-LBP Joint Memo Circular (JMC) No. 15, Series of 1999. To compute the Capitalized Net Income for [the] subject sugarland, we relied heavily on the Average Annual Gross sugar and molasses production for the past three (3) Crop years as certified by the URSUMCO Sugar Mill for [the] subject sugarland.

Our valuation process was based on the following duly verifies (sic) data pursuant to JMC 15:

1. Under JMC 15, the capitalization rate is fixed at 12% per annum, the rate interest that typical sellers/owners are willing to accept on their sugarland properties. Although the prevailing capitalization rate is 6% per annum, we adopted the 12% capitalization rate mainly because the subject property is already covered under CARP.

2. The latest available selling price of sugar as of September 25, 2010 (date of ocular inspection) is P2,352.25 per LKG according to a press release by the Sugar Regulatory Administration (SRA) Head Hon. Regina Martin (see attached Visayan Daily Star Newspaper press release dated September 24, 2010 per Annex "H").

3. The latest available selling price of molasses was obtained from the Sugar Regulatory Administration at P7,500.00 per metric ton (please refer to attached SRA Certification dated September 22, 2010 duly marked as Annex "G").

4. The average Annual Gross Production (AGP) and molasses per hectare yield for [the] subject sugarland as certified to by URSUMCO Sugar Mill is computed as follows:

 

Per URSUMCO Mill Certification

Average

Type of Crop	Average Annual Gross Production (AGP)	AGP
CY2007-08	CY2008-09	CY2009-10	3 Yrs Total	For 3 Crop Years
Sugar Cane (in LKG)	15,942	12,933	12,472	41,347/3	13,782 LKG/yr.
Molasses (in Metric Tons)	364	243	217	824/3	274 MT/yr.

 

To compute the Average Gross Production per Hectare, the total actual planted area (planted to sugarcane) for the entire Tangculogan hacienda sugar farm must first be established as follows:

 

Title	Lot No.	Actual Land Use as of 9/24/10	Actual Planted Area (Hectares)	Tax Declaration No. (Annex M)
T-84	285-C-4	Sugar Farm w/ Railroad	37.7175 Ha	2003-34-039 (Part)
T-10941	286	Sugar Farm	49.5448 Ha	2003-34-038
T-812	285-A	Prawn Farm	-NA-	2003-34-038
T-813	285-B	Prawn Farm	-NA-	2003-34-036

Total Area Planted to Sugar Cane

87.2633 Has.

(See URSUMCO Mill Certification dated July 22, 2003 in Annex "E" and DPLI Parcellary Cultivation Plan in Annex "L" to establish the total planted area of 87 hectares in Tangculogan, Bais City).

 

Based on the above computation, the Average Gross Sugar and Molasses Production Per Hectare is as follows:

 

Crop	Average AGP	Divide by Planted Area	AGP Per Hectare
Sugar Cane	13,782 LKG	87.2633 Has.	157.94 LKG/Ha.
Molasses	274 MT	87.2633 Has.	3.13 MT/Ha.

 

Computation of Capitalized Net Income (CNI) Pursuant to the Sugarland Valuation Formula Prescribed under Section IIIA.2e of DAR-LBP Joint Memo Circular No. 15, Series of 1999 ("JMC 15" for short) (Please refer to Annex "I" for a copy of JMC)

CNI (Sugar) = AGP Ha. (Sugar) x Selling Price (sugar) x Net Income Rate (sugar) .12 capitalization rate

CNI (Sugar)= AGP Ha. (molasses) x Selling Price (molasses) x Net Income Rate (molasses) .12 capitalization rate

Based on the foregoing CNI Valuation formula as prescribed under JMC 15, the fair market value of the said subject property using the CNI approach is as follows:

CNI Sugar

AGP per Hectare = 157.94 LKG/Hectare

Sugar Selling Price as of 9/24/2010 = P2,352.25 LKG

Net Income Rate (NIR) for Sugar under JMC 15 = 24%

 

CNI (Sugar)	=	12
		157.94 x P2,352 x 24
CNI (Sugar)	=	P743,028.73/hectare

 

CNI Molasses

AGP per Hectare = 3.13 MT/hectare

Molasses Selling Price = P7,500.00/MT

Net Income Rate (NIR) for molasses under JMC 15 = 67%

 

CNI (Molasses)	=	12
		3.13 MT/ha x P7,500 x 67
CNI (Molasses)	=	P131,068.75/hectare

 

Value of 37.7175 Hectares sugarland using CNI Approach under JMC 15

 

CNI (Sugar) Value per hectare	P743,028.73
CNI (Molasses) Value per hectare	P131,068.75
Total CNI Value per hectare	P874,097.48
Multiply by area	37.7175 Has.
Gross CNI Valuation under JMC 15	P32,968,772.00

 

BIR ZONAL VALUE/COMPARABLE SALE

The latest zonal value of subject property as approved by the Bureau of Internal Revenue (BIR) effective August 25, 2010 is P17.00 per square meter (or P170,000.00 per hectare) or P6,411,975 for 37.7175 hectares sugarland.

xxx xxx xxx

ASSESSORS MARKET VALUE

The fair market value of subject property per 2008 Tax Declaration is P1,724,650.00 (See attached 2008 tax declaration per Annex "C").

FAIR MARKET VALUATION COMPUTATION OF 37.7175 HECTARES SUGARLAND AND UNDER DAR ADMINISTRATIVE ORDER NO. 2, SERIES OF 2009 (Annex J)

Utilizing the latest land valuation formula under Article IV.D.1 of DAR Administrative Order No. 2, Series of 2009, the fair market value (FMV) for the subject property is as follows:

FMV = (CNI x .60) + BIR Zonal Value x .70 x .30) + (Market Value per Tax Declaration x .10)

FMV = (P32,968,772 x .60) + (P6,411,975.0[0] x .70 x .30) + (P1,724,650 X.10)

FMV = P21,300,242.9521 (Emphasis supplied)

On February 25, 2011, the Special Agrarian Court affirmed the commissioner's valuation and increased the amount of just compensation from P13,733,228.03 to P21,300,242.95. 22 The dispositive portion of its Decision reads:

WHEREFORE, premises considered, the Court finds for the Respondent [DPLI], and hereby DIRECTS the Petitioner Land Bank to pay the following: (1) the remaining balance of the just compensation to the Petitioner in the amount of P14,662,791.23, 23 with legal interest of 6% per annum reckoned from September 23, 2002 24 up to the time when the whole amount is actually paid; (2) unpaid Commissioner's fees in the amount of P40,000.00; 25 and (3) cost of suit.

SO ORDERED. 26

On April 13, 2011, the Special Agrarian Court denied Land Bank's Motion for Reconsideration. However, it modified its February 25, 2011 Decision by increasing the legal interest rate from 6% to 12% and changing the time of taking from September 23, 2002 to October 10, 2002, or when the title was transferred to the Republic. It also deleted the costs of the suit because Land Bank was a government instrumentality. 27 The dispositive portion of its Order reads:

WHEREFORE, premises considered, the Court finds for the Respondent, and hereby DIRECTS the Petitioner Land Bank to pay the following: (1) the remaining balance of the just compensation to the Petitioner in the amount of P14,662,791.23, with legal interest of 12% per annum, reckoned from October 10, 2002 up to the time when the whole amount is actually paid; and (2) the unpaid Commissioner's fees in the amount of P40,000.00.

SO ORDERED. 28

Aggrieved, Land Bank filed a Petition for Review before the Court of Appeals, but this was denied. 29 In its July 12, 2016 Decision, 30 the Court of Appeals affirmed the Special Agrarian Court's rulings with modification.

On the just compensation, the Court of Appeals cited Section 17 of Republic Act No. 6657, 31 which provides the pertinent factors to consider in fixing just compensation, 32 as simplified in Department of Agrarian Reform Administrative Order No. 05-1998. 33 It noted that special agrarian courts should consider these factors in determining just compensation. 34

The Court of Appeals discussed that on July 21, 1999, both the Department of Agrarian Reform and Land Bank issued Joint Memorandum Circular No. 15-1999, 35 which supplied the guidelines for lands planted with sugarcanes. 36 It considered "the practice of ratooning by sugar planters instead of planting original plants per cropping, and the inconstant price of sugar in the open market." 37 It ruled:

JMC 15-99 thus provides the applicable valuation procedure for respondents' property since these guidelines cover all lands planted to sugar cane whose valuations are in process and not yet covered by Memorandum of Valuation as of the date of signing of these guidelines. Respondent's claim is clearly governed by these guidelines. The same guidelines contained a repealing clause that all orders, circulars, rules and regulations inconsistent with it were revoked, amended and modified. 38 (Citation omitted)

Since the Commissioner's Report conformed to "the guidelines on the valuation of land planted to sugar cane," the Court of Appeals affirmed the valuation of P21,300,242.95. 39 It imposed a 12% interest rate from October 10, 2002 to June 30, 2013, and 6% from July 1, 2013 until fully paid. 40

As to the commissioner's fee, the Court of Appeals ruled that without a prior stipulation, its payment shall not exceed the rate provided under Rule 141, Section 16 of the Rules of Court. 41

The dispositive portion of the Court of Appeals Decision reads:

WHEREFORE, the petition is DENIED and the amount of P21,300,242.95 fixed by the RTC-SAC in its Decision dated 25 February 2011 and the Order dated 13 April 2011 as just compensation for respondent DPLI's property is AFFIRMED, with the MODIFICATION that 1) the said amount less the deposit by LBP on 23 September 2002, shall earn legal interest at the rate of 12% interest per annum from 10 October 2002 until June 30, 2013. Thereafter, or beginning July 1, 2013, or until fully paid, interest shall be due at 6% per annum in line with the amendment introduced by BSP-MB Circular No. 799, series of 2013 and, 2) the commissioner's fees shall be that allowed under Section 16, Rule [1]41 to be paid by respondent as part of the costs of proceedings.

SO ORDERED. 42 (Emphasis in the original)

On December 12, 2016, the Court of Appeals denied 43 Land Bank's Motion for Reconsideration. 44

Hence, Land Bank filed this Petition for Review 45 before this Court.

Petitioner argues that the standing valuation was erroneous because Administrative Order No. 02-2009 instead of Administrative Order No. 05-1998 — both Department of Agrarian Reform issuances — was applied in fixing the just compensation. 46

Citing Administrative Order No. 02-2009, petitioner points out: DETACa

It is explicitly provided, however, in said DAR AO 2-2009 that "with respect to land valuation, all Claim Folders received by LBP prior to July 1, 2009 shall be valued in accordance with Section 17 of R.A. No. 6657 prior to its amendment by R.A. No. 9700." In other words, DAR AO 2-2009 authorizes the valuation of lands in conformity with the old Section 17 of RA 6657, as amended (prior to further amendment by RA 9700), provided that the claim folders for such lands have been received by LBP before its amendment by RA 9700 in 2009. Thus, the applicable guidelines in determining the just compensation for DPLI's property would be DAR AO 5-98 considering that the claim folder of the subject property was received by LBP on December 3, 2001. 47 (Emphasis in the original)

Petitioner alleges that since it received the claim folder on December 3, 2001, the data to be used should be those from 12 months before December 2001. 48 It also assails the use of data from 2007 to 2010 when the time of taking was in 2002. 49

Petitioner also questions the award of commissioner's fee, though it does not explain why it was improper. 50

In its Comment, respondent argues that the proper formula was used in computing the value of the property. 51 It also argues that the Special Agrarian Court "is not strictly bound by the different formula created by the [Department of Agrarian Reform] as the determination of just compensation is essentially a judicial function." 52

The issues in this case are:

First, whether or not the Special Agrarian Court's valuation, as affirmed by the Court of Appeals, complies with the rules in determining the amount of just compensation; and

Second, whether or not the Court of Appeals' modifications of the awards of legal interest and commissioner's fee are proper.

The Petition is partly granted.

I

Alfonso v. Land Bank of the Philippines53 laid down the following rule in cases involving the determination of just compensation:

For the guidance of the bench, the bar, and the public, we reiterate the rule: 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. 54 (Citation omitted)

Here, the Court of Appeals cited the Commissioner's Report, which appears to have considered most of the factors in Section 17 of Republic Act No. 6657. A comparison between the Commissioner's Report and petitioner's valuation shows that the Commissioner's Report is more extensive.

However, the Court of Appeals erred in upholding the valuation of the Special Agrarian Court, because it used Department of Agrarian Reform Administrative Order No. 02-2009, 55 which is not applicable here. It also used data from 2007 to 2010, when it appears that data from 1999 to 2001 were available. Petitioner's valuation shows that it used data from the Bais Ursumco Mill District for the years 1999 to 2001. 56

Moreover, the transitory provision of Administrative Order No. 02-2009 provides:

VI. Transitory Provision

With respect to cases where the Master List of ARBs has been finalized on or before July 1, 2009 pursuant to Administrative Order No. 7, Series of 2003, the acquisition and distribution of landholdings shall continue to be processed under the provisions of R.A. No. 6657 prior to its amendment by R.A. No. 9700.

However, with respect to land valuation, all Claim Folders received by LBP prior to July 1, 2009 shall be valued in accordance with Section 17 of R.A. No. 6657 prior to its amendment by R.A. No. 9700. (Emphasis supplied)

According to petitioner, the claim folder was received before July 1, 2009, prior to Republic Act No. 9700's effectivity. 57 As that remained undisputed, this Court rules that the applicable formula is that under Department of Agrarian Reform Administrative Order No. 05-1998. aDSIHc

In Land Bank of the Philippines v. Hilado: 58

In determining just compensation of lands acquired by the government under CARP, Section 17 of R.A. No. 6657 prescribes the valuation factors to be considered. While Congress passed R.A. No. 9700 on August 7, 2009, further amending certain provisions of R.A. 6657, as amended, among them, Section 17, its implementing rules, i.e., DAR A.O. No. 2, series of 2009 clarified that the said law shall not apply to claims/cases where the claim folders were received by the LBP prior to July 1, 2009, as in this case. In such a situation, just compensation shall be determined in accordance with Section 17 of R.A. No. 6657, as amended, prior to its further amendment by R.A. No. 9700.

xxx xxx xxx

Pursuant to the DAR's rule-making power to carry out the object and purposes of R.A. No. 6657, as amended. DAR A.O. No. 5, series of 1998 precisely "filled in the details" of Section 17, R.A. No. 6657 by providing a basic formula by which the factors mentioned therein may be taken into account[.] 59 (Citations omitted)

In Department of Agrarian Reform v. Berina, 60 this Court held that the land's value is computed at the time of taking. Here, respondent's property was taken on October 10, 2002. The Court of Appeals affirmed the time of taking of DPLI's property, stating:

Since TCT No. 814 was cancelled in favor of the Republic of the Philippines on 10 October 2002, it is therefore considered as the "time of taking" or the time when [respondent] was deprived of the use and benefit of his property, not the date as alleged by [petitioner] which is 25 September 1996. 61

II

The Court of Appeals correctly affirmed the award of legal interest for the amount representing the difference between petitioner's valuation and the final valuation as determined by the Special Agrarian Court.

The award of legal interest in just compensation cases is meant "to eradicate the issue of the constant variability of the value of the currency over time, and to limit the opportunity loss of the owner from non-payment of just compensation that can drag from days to decades." 62 This Court has previously imposed legal interest in case of delayed payment of just compensation for properties expropriated under Republic Act No. 6657.

Land Bank of the Philippines v. Manzano, et al.63 involved several properties that were subjected to agrarian reform. In that case, Land Bank deposited the amount of P2,943,797.26 as just compensation, based on its own valuation, for the Manzanos' properties. This valuation was affirmed by the Provincial Agrarian Reform Adjudication Board. The Manzanos filed petitions for judicial determination and payment of just compensation before the trial court, which awarded them P9,100,711.00. The trial court later granted the Manzanos' Motion for Execution Pending Appeal, but imposed legal interest on the judgment award. Land Bank questioned the imposition of interest on the judgment award.

In affirming the imposition of legal interest, this Court discussed:

In this case, the records show that petitioner already gave provisional compensation in the form of cash and bonds, based on an initial valuation of the properties. Respondents acknowledged the deposit of these amounts and later withdrew them.

However, while "the deposits might have been sufficient for purposes of the immediate taking of the landholdings[,] these [deposits] cannot be claimed as amounts that would excuse . . . the payment of interest on the unpaid balance of the compensation due."

Wycoco held that interest should be awarded to the landowner if there is no "prompt and valid payment." There is no prompt payment if the payment is only partial.

This is consistent with this Court's ruling on the matter of interest in expropriating private property for a public use. In Republic v. Court of Appeals:

The constitutional limitation of "just compensation" is considered to be the sum equivalent to the market value of the property, broadly described to be the price fixed by the seller in open market in the usual and ordinary course of legal action and competition or the fair value of the property as between one who receives, and one who desires to sell [it,] fixed at the time of the actual taking by the government. Thus, if property is taken for public use before compensation is deposited with the court having jurisdiction over the case, the final compensation must include interests on its just value to be computed from the time the property is taken to the time when compensation is actually paid or deposited with the court. In fine, between the taking of the property and the actual payment, legal interests accrue in order to place the owner in a position as good as (but not better than) the position he was in before the taking occurred[.]

Petitioner's delay in payment makes it liable for legal interest by way of damages. The legal interest must be applied "on the unpaid balance of the compensation due." Therefore, the amount already received by respondents should be subtracted from the total judgment, and the rate of legal interest should be calculated from that amount. 64 (Emphasis supplied, citations omitted)

Here, the facts show that petitioner paid the just compensation of P6,637,451.72 when it deposited the amount on September 23, 2002. 65 The time of taking was October 10, 2002, the date the title was transferred to the Republic. 66 However, the amount paid appears to be provisional, or only part of the compensation that was due to respondent. Thus, the Court of Appeals correctly ruled that legal interest "shall be imposed on the difference between the initial just compensation paid by [petitioner] and the actual just compensation to be computed by the [Special Agrarian Court.]" 67

On the commissioner's fee, petitioner raised before the Court of Appeals that it was not obliged to pay the P40,000.00 commissioner's fee. 68 Before this Court, it raised that the Court of Appeals wrongly awarded the commissioner's fee, 69 but did not elaborate on this matter. Respondent, the party held liable to pay the commissioner's fee, was also silent. ETHIDa

Hence, this matter may be considered as a non-issue. In any case, the Court of Appeals stated that petitioner and respondent had "manifested their intention and willingness to refer the issue of just compensation to commissioners"; hence, there was basis to award the commissioner's fee. 70

Further, the Court of Appeals did not err in holding respondent liable to pay the commissioner's fee. Land Bank of the Philippines v. Heirs of Sanchez71 held that Land Bank is exempt from paying the commissioner's fee, explaining:

The role of LBP in agrarian reform is more than just the ministerial duty of keeping and disbursing the Agrarian Reform Funds. LBP is also primarily responsible for the valuation and determination of just compensation. In the case of Land Bank of the Philippines v. Gonzales and Land Bank of the Philippines v. Ibarra, We ruled that LBP is exempt from paying the costs of the suit pursuant to Section 1, Rule 142 of the Rules, since it is an instrumentality performing a governmental function in agrarian reform proceedings charged with the disbursement of public funds. Recently, in the case of Land Bank of the Philippines v. Baldoza, We reiterated that since LBP is performing a governmental function in an agrarian reform proceeding, it is exempt from payment of costs of suit, including commissioners' fees, as it is considered part of costs of suit. 72 (Citations omitted)

WHEREFORE, the Petition is PARTLY GRANTED. Civil Case No. 2010-14507 is REMANDED to the Regional Trial Court of Dumaguete City, Branch 32, sitting as the Special Agrarian Court, to determine the amount of just compensation in accordance with this ruling.

The Court of Appeals' July 12, 2016 Decision and December 12, 2016 Resolution in CA-G.R. CEB SP No. 05939, insofar as the Court of Appeals imposed the legal interest on the amount of actual just compensation less the provisional compensation already paid, and ordered respondent Del Prado Ledesma, Inc. to pay the commissioners' fee, are AFFIRMED.

SO ORDERED." (Rosario, J., designated additional Member per Special Order No. 2833)

By authority of the Court:

(SGD.) MISAEL DOMINGO C. BATTUNG IIIDivision Clerk of Court

 

Footnotes

1.Rollo, pp. 12-49.

2.Id. at 50-70. The July 12, 2016 Decision was penned by Associate Justice Pablito Perez and concurred in by Associate Justices Germano Francisco D. Legaspi and Gabriel T. Robeniol of the Special Twentieth Division of the Court of Appeals, Cebu City.

3.Id. at 73-75. The December 12, 2016 Resolution was penned by Associate Justice Pablito Perez and concurred in by Associate Justices Germano Francisco D. Legaspi and Gabriel T. Robeniol of the Former Special Twentieth Division of the Court of Appeals, Cebu City.

4.Id. at 68-69.

5.Id. at 51.

6.Id.

7. Comprehensive Agrarian Reform Law.

8.Rollo, p. 51.

9.Id. "LBP is a government financial institution designated under Section 64 of Republic Act No. 6657 as financial intermediary in the agrarian reform program of the government."

10.Id.

11.Id. at 51.

12.Id.

13.Id.

14.Id.

15.Id.

16.Id.

17.Id.

18.Id.

19.Id.

20.Id.

21.Id. at 60-64.

22.Id. at 53.

23. This is the difference between P21,300,242.95 and the initial deposit of P6,637,451.72.

24. This is the time of Taking.

25. The Special Agrarian Court directed the satisfaction of the commissioner's fees amounting to P80,000.00 to be equally paid by Land Bank and DPLI.

26.Rollo, p. 53.

27.Id.

28.Id. at 53-54.

29.Id. at 50-70.

30.Id. at 50-70.

31.Id. at 58. The provision states:

SECTION 17. Determination of Just Compensation. — In determining just compensation, the cost of acquisition of the land, the current value of like properties, its nature, actual use and income, the sworn valuation by the owner, the tax declarations, and the assessment made by government assessors shall be considered. The social and economic benefits contributed by the farmers and the farm workers and by the Government to the property as well as the non-payment of taxes or loans secured from any government financing institution on the said land shall be considered as additional factors to determine its valuation.

32.Id.

33.Id. at 58-59.

A. There shall be one basic formula for the valuation of lands covered by VOS or CA:

LV = (CNI x 0.6) + (CS x 0.3) = (MV x 0.1)

 

Where:	LV	= Land Value
	CNI	= Capitalized Net Income
	CS	= Comparable Sales
	MV	= Market Value per Tax Declaration

 

* The above formula shall be used if all the three factors are present, relevant, and applicable.

A.1 When the CS factor is not present and CNI and MV are applicable, the formula shall be:

LV = (CNI x 0.9) + (MV x 0.1)

A.2 When the CNI factor is not present, and CS and MV are applicable, the formula shall be:

LV = (CS x 0.9) + (MV x 0.1)

A.3 When both the CS and CNI are not present and only MV is applicable, the formula shall be:

LV = MV x 2

In no case shall the value of idle land using the formula MV x 2 exceed the lowest value of land within the same estate under consideration or within the same barangay or municipality (in that order) approved by LBP within one (1) year from receipt of claim folder.

34.Id. at 59.

35.Id.See JMC 15-99, sec. 4, which provides:

4. Capitalized Net Income (CNI)

a.

 

AGP(sugar)	x	SP(sugar)	x	NIR(sugar)
0.12

 

 

AGP(molasses)	x	SP(molasses)	x	NIR(molasses)
0.12

 

b. CNI(property) = CNI(sugar) + CNI(molasses)

36.Id.

37.Id.

38.Id. at 60.

39.Id.

40.Id. at 67.

41.Id. at 68.

Republic Act No. 6657 expressly mentions that the Rules of Court applies to all SAC proceedings.

RULES OF COURT, Rule 141, sec. 16 provides:

Section 16. Fees of commissioners in eminent domain proceedings. — The commissioners appointed to appraise land sought to be condemned for public uses in accordance with these rules shall each receive a compensation to be fixed by the court of NOT LESS THAN THREE HUNDRED (P300.00) PESOS per day for the time actually and necessarily employed in the performance of their duties an[d] in making their report to the court, which fees shall be taxed as part of the costs of the proceedings.

42.Id. at 68-69.

43.Id. at 73-75.

44.Id. at 78-99.

45.Id. at 12-49.

46.Id. at 28-29.

47.Id. at 29-30.

48.Id. at 28-29.

49.Id. at 30.

50.Id. at 19.

51.Id. at 134-135.

52.Id.

53. 801 Phil. 217 (2016) [Per J. Leonen, En Banc].

54.Id. at 321-322.

55. Rules and Procedures Governing the Acquisition and Distribution of Agricultural Lands under Republic Act (R.A.) No. 6657, as Amended by R.A. No. 9700, October 15, 2009.

56.Rollo, p. 57.

57.Id. at 30.

58. G.R. No. 204010, September 23, 2020, <https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/66887> [Per J. Gaerlan, Third Division].

59.Id.

60. 738 Phil. 605 (2014) [Per J. Perlas-Bernabe, Second Division].

61.Rollo, p. 67.

62.Land Bank of the Philippines v. Heirs of the Estate of Mariano and Angela Vda. De Veneracion, G.R. No. 233401, June 17, 2019; <https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/65439> [Per J. Perlas-Bernabe, Second Division].

63. 824 Phil. 339 (2018) [Per J. Leonen, Third Division].

64.Id. at 378-380.

65.Rollo, p. 51.

66.Id.

67.Id. at 67.

68.Id.

69.Id. at 19.

70.Id. at 68.

71. G.R. No. 214902, January 22, 2020, <https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/66087> [Per J. Carandang, Third Division].

72.Id.