Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&view=article&id=82020:g-r-no-188046,-july-24,-2013-land-bank-of-the-philippines,-petitioner,-v-american-rubber-corporation,-respondent&catid=1572&Itemid=566
Timestamp: 2019-04-21 04:23:00+00:00

Document:
G.R. No. 188046, July 24, 2013 - LAND BANK OF THE PHILIPPINES, Petitioner, v. AMERICAN RUBBER CORPORATION, Respondent.
LAND BANK OF THE PHILIPPINES, Petitioner, v. AMERICAN RUBBER CORPORATION, Respondent.
Before us is a petition for review on certiorari filed by Land Bank of the Philippines (LBP) assailing the August 26, 2008 Decision1 and May 12, 2009 Resolution2 of the Court of Appeals (CA)-Mindanao Station in CA-G.R. SP No. 00990-MIN which affirmed with modification the Orders3 dated June 16, 2005 and March 14, 2006 of the Regional Trial Court (Special Agrarian Court [SAC]) of Pagadian City, Branch 18.
Pursuant to the Rules of Court, the SAC designated three commissioners nominated by the parties: an IBP member (Ret. Judge Cecilio G. Martin) as Chairman, and Engr. Sean C. Collantes from the Development Bank of the Philippines and BIR Revenue Officer Cesar P. Dayagdag as Members.
On March 8, 2004[,] we conducted an ocular inspection. The entire membership of the Court appointed commissioners were all present and both the contending parties also sent their duly authorized representatives.
Our ocular inspection reveal that both parcels of land are pre-dominantly planted to rubber with an approximate density of 290-295 rubber trees per hectare. There are relatively smaller portions thereof which are devoted to the production of rice, cacao, coffee, black pepper, and coconuts. Also found inside the rubber plantation are plant nurseries, office buildings and other infrastructures. The land has an airstrip of about 10 hectares and is likewise traversed and criss-crossed by plantation roads, which were built by plaintiff, American Rubber, containing an area of 27 hectares more or less. The location [of] the rubber plantation is approximately 8 kilometers to the city proper of Isabela, Basilan.
During the course of ocular inspection, some of our members inquired from occupants/workers of the rubber plantation and adjoining owners to get information on the probable selling price of land particularly rubberland. Our inquiry revealed that rubberland commands a selling price of between P120,000 to P150,000 depending on the size of the land and condition of the rubber trees.
x x x we conducted inquiries from the different government agency/officials such as the City Assessors Office of Isabela, Department of Agriculture, Register of Deeds, Department of Agrarian Reform, and the Bureau of Internal Revenue for the purpose of obtaining information on the approximate selling price of rubberland in the Isabela City area. Our investigation reveal that the reasonable selling price of rubber [land] within the City of Isabela ranges from P90,000 to P150,000.
After the SAC denied its motion for reconsideration, petitioner filed a petition for review under Rule 43 with the CA.
WHEREFORE, premises foregoing, the instant petition is PARTIALLY GRANTED. The assailed Orders dated June 16, 2005 and March 14, 2006 of Branch 18 of the Regional Trial Court of Pagadian City is hereby AFFIRMED with MODIFICATION that the award of interest based on the 91-day treasury bill is deleted.
The CA also denied petitioner’s motion for reconsideration.
1. THE COURT OF APPEALS COMMITTED A SERIOUS ERROR OF LAW IN AFFIRMING WITH MODIFICATION THE ORDERS DATED JUNE 16, 2005 AND MARCH 14, 2006 OF THE SPECIAL AGRARIAN COURT (SAC), THE COMPENSATION FIXED BY THE SAC NOT BEING IN ACCORDANCE WITH THE LEGALLY PRESCRIBED VALUATION FACTORS UNDER SECTION 17 OF R.A. 6657 AS TRANSLATED INTO A BASIC FORMULA IN DAR ADMINISTRATIVE ORDER NO. 05, SERIES OF 1998 AND JOINT DAR-LBP MEMORANDUM CIRCULAR NO. 7, SERIES OF 1999, AND AS RULED BY THE SUPREME COURT IN THE CASES OF SPS. BANAL, G.R. NO. 143276 (JULY 20, 2004); CELADA, G.R. NO. 164876 (JANUARY 23, 2006); AND LUZ LIM, G.R. NO. 171941 (AUGUST 2, 2007).
Petitioner assails the CA in affirming the SAC valuation which merely adopted the Commissioners’ Report which, in turn, is based solely on the recommended valuation by respondent’s private appraiser, Cuervo Appraisers, Inc. using a different criteria. It cites our ruling in Land Bank of the Philippines v. Kumassie Plantation Company, Inc.20 where this Court noted that no basis had been shown in the appraisal report for concluding that the market data approach and income approach, the same criteria used by Cuervo Appraisers, Inc. in this case, “conformed to statutory and regulatory requirements.”21 Accordingly, we sustained in said case the valuation made by LBP, which was patterned after the applicable administrative order issued by the DAR.
Petitioner further points out that the SAC’s valuation violated AO 5 guidelines stating that “the computed value using the applicable formula shall in no case exceed the [Landowner’s] offer in case of VOs.”22 In this case, respondent’s revised offer was only P83,346.77 per hectare but the SAC arrived at an average value of P129,742.38 per hectare which is 55.66% more than the landowner’s offer.
Respondent, on the other hand, distinguished the factual setting of this case from that of Land Bank v. Kumassie Plantation Company, Inc.23 It points out that in Kumassie, the SAC merely cited the location of the land and nature of the trees planted, and relied heavily on the appraisal report of the private appraiser which pegged the value of the land on its potential benefits of land ownership. But here, respondent claims that the SAC through its appointed commissioners, “appeared to have dwelt on the Market Data Approach, Income Approach and Residual Value Approach, in determining just compensation of respondent’s property, the data gathered under the said approaches to valuation basically encompassed/embraced most, if not all, of the factors enumerated in Section 17, R.A. 6657 in relation to the relevant DAR Administrative Orders.”24 It cannot be said, therefore, that the SAC herein had no basis in fixing the just compensation of respondent’s property after having taken into consideration the factors enumerated in Section 17 of R.A. No. 6657.
Respondent further invokes our ruling in Apo Fruits Corporation v. Court of Appeals,25 where this Court upheld the valuation made by the RTC which did not merely rely on the report of Commissioners nor on the Cuervo appraiser’s report but also took into account the nature of the property as irrigated land, location along the highway, market value, assessor’s value and the volume and value of its produce, such valuation was considered to be in accordance with R.A. No. 6657.
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 farmworkers 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.
“While [the RTC] is required to consider the acquisition cost of the land, the current value of like properties, its nature, actual use and income, the sworn valuation by the owner, the tax declaration and the assessments made by the government assessors to determine just compensation, it is equally true that these factors have been translated into a basic formula by the DAR pursuant to its rule-making power under Section 49 of R.A. No. 6657. As the government agency principally tasked to implement the agrarian reform program, it is the DAR’s duty to issue rules and regulations to carry out the object of the law. [The] DAR [Administrative Order] 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. The [RTC] was at no liberty to disregard the formula which was devised to implement the said provision.
In ruling for the respondent, the CA ruled that the RTC is not bound to adopt exclusively the formula set by DAR’s issuances, citing this Court’s ruling in Apo Fruits Corporation v. Court of Appeals,31 and that the SAC “may in the exercise of its judicial discretion use other factors and alternative formula in fixing the proper valuation of just compensation.
The rubber plantation income models presented under the old rubber Land Valuation Guideline (LVG No. 6, Series of 1990) recognized the income of rubber plantations based on processed crumb rubber. However, recent consultations with rubber authorities (industry, research, etc.) disclosed that the standard income approach to valuation should measure the net income or productivity of the land based on the farm produce (in their raw forms) and not on the entire agri-business income enhanced by the added value of farm products due to processing. Hence, it is more appropriate to determine the Capitalized Net Income (CNI) of rubber plantations based on the actual yield and farm gate prices of raw products (field latex and cuplump) and the corresponding cost of production.
There is also a growing market for old rubber trees which are estimated to generate net incomes ranging between P20,000 and P30,000 per hectare or an average of about P100 per tree, depending on the remaining stand of old trees at the end of its economic life. This market condition for old rubber trees was not present at the time LVG No. 6, Series of 1990, was being prepared. (The terminal or salvage value of old rubber trees was at that time pegged at only P6,000 per hectare, representing the amount then being paid by big landholders to contractors for clearing and uprooting old trees.
LVG No. 6, Series of 1990, was therefore revised to address the foregoing considerations and in accordance with DAR Administrative Order (AO) No. 05, Series of 1998.
This Court has defined “just compensation” for parcels of land taken pursuant to the agrarian reform program as “the full and fair equivalent of the property taken from its owner by the expropriator.” The measure of compensation is not the taker’s gain but the owner’s loss.34 Just compensation means the equivalent for the value of the property at the time of its taking. It means a fair and full equivalent value for the loss sustained. All the facts as to the condition of the property and its surroundings, its improvements and capabilities should be considered.35 Thus, the current value of like properties should have been considered by petitioner to accurately determine the value of the land at the time of taking, that is, in August 2000 when respondent’s title was transferred to the Government.
However, while the CA correctly observed that petitioner’s valuation omitted an integral factor mandated by Section 17, the records are bereft of any supporting evidence to compute the CS. The documents submitted by the respondent to the Commissioners consisted merely of sworn affidavits of adjacent owners/sellers and not registerable deeds of sale. The SAC’s decision actually did not contain any discussion of its application of any formula to the facts established by evidence, as it merely adopted the Commissioners’ Report, which in turn was based solely on the findings and computation of the Cuervo Appraisal Report.
WHEREFORE, the petition is GRANTED. The August 26, 2008 Decision and May 12, 2009 Resolution of the Court of Appeals-Mindanao Station in CA-G.R. SP No. 00990-MIN are REVERSED and SET ASIDE. The case is hereby REMANDED to the Regional Trial Court (Special Agrarian Court) of Pagadian City, Branch 18, which is directed to determine with dispatch, and with the assistance of at least three commissioners, the just compensation due to the respondent American Rubber Corporation, in accordance with Section 17 of R.A. No. 6657, DAR AO 5, Series of 1998, Joint DAR-LBP MC No. 7, Series of 1999 and other applicable DAR issuances.
Sereno, C.J., (Chairperson), Leonardo-De Castro, Bersamin, and Reyes, JJ., concur.
39 See Land Bank of the Philippines v. Rufino, G.R. Nos. 175644 & 175702, October 2, 2009, 602 SCRA 399, 412.

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