CASE DIGEST: LBP v. Atty. Gonzales (G.R. No. 185821)

G.R. No. 185821 : June 13, 2013 | LAND BANK OF THE PHILIPPINES, Petitioner v. ATTY. RICARDO D. GONZALES, Respondent VILLARAMA, JR., J.:

Respondent Atty. Ricardo Gonzales is the registered owner of two contiguous parcels of land devoted to coconut production total of 3 hectares located at Agusan del Norte. The subject property was tenanted by spouses Virgilio and Espera Tagupa, spouses Valeriano and Erlina Inoc, spouses Isidro and Eden Soria and spouses Rudy and Rosario Peligro.Pursuant to the Comprehensive Agrarian Reform Program (CARP), respondent voluntarily offered to sell the subject property to the Department of Agrarian Reform (DAR) for 250,000 per hectare. Respondent informed the Municipal Agrarian Reform Officer (MARO) that the lands average annual net income is P100,000.

The DAR and the Land Bank of the Philippines (LBP) valued the subject property at P150,265.17 per hectar. Respondent rejected the valuation but the LBP deposited P60,318.20 of the said sum in cash and P90,477.31 thereof in bonds in the name of respondent.

Disappointed with the low valuation, respondent filed before the SAC a petition for just compensation against the LBP, the DAR and the tenants of the subject property.

With the conformity of the parties, the SAC appointed members of the Board of Commissioners to determine the amount of just compensation. The Board recommended that the portion of the subject property devoted to coconut production be valued at P100,000 excluding the trees planted thereon, valued at P400 per tree, and that the portion devoted to rice production be valued at P150,000. Both parties objected to the said report.

SAC opined that respondents asking price was quite high, while LBPS valuation was considerably low. SAC opined that P143,904.23 was the fair valuation. Both DAR and LBP sought reconsideration but SAC denied.

The CA affirmed the findings and ruling of the SAC. The CA found that the SAC actually took into consideration factors enumerated in Section 17 of R.A. no. 6657 in the valuation of the subject property, and said valuation was supported by evidence on record.

ISSUE: Whether or not there was just compensation?

HELD: Decision of the Court of Appeals is hereby reversed and set aside.

Section 17 of R.A. No. 6657 is the principal basis of the computation for just compensation in this case. While the determination of just compensation is essentially a judicial function vested in the RTC acting as a SAC, the judge cannot abuse his discretion by not taking into full consideration the facts specifically identified by law and implementing rules. SACs are not at liberty to disregard the formula laid down in DAR A.O. No. 5 series of 1998, because unless an administrative order is declared invalid, courts have no option but to apply it. Simply put, courts cannot ignore, without violating the agrarian reform law, the formula provided by the DAR for the determination of just compensation.

While the SAC actually used the formula provided in DAR AO No. 5, series of 1998, no reliable and verified production data was cited as basis of AGP. Instead the SAC simply declared that it took judicial notice of the fact that the value of the Philippine peso had nose dived. However, the devaluation of the Philippine currency is not among those factors enumerated, which the trial court is required to consider in determining the amount of just compensation.

1. Acquisition cost of the land
2. The current value of the properties
3. Its nature, actual use, and income
4. The sworn valuation by the owner
5. Tax declaration
6. Assessment made by government assessors.
7. The social and economic benefits contributed by the farmers and the farmworkers, and by the government to the property
8. The non-payment of taxes or loans secured from any government financing institution on the said land if any

In sum, LBPs valuation sufficiently substantiated and in accordance with Section 17 of R.A. No. 6657 and DAR A.O. No. 5 series of 1998. The court declares the valuation by LBP in the amount of P150,795.51 as just compensation for the properties.

It is established that in expropriation cases, interest is due the landowner if there was delay in payment. The imposition of interest is in the nature of damages for the delay in payment, which in effect makes the obligation on the part of the government one of forbearance. It follows that the interest in the form of damages cannot be applied where there was prompt and valid payment of just compensation. Records show that LBP fully paid respondent in the amount P150,795.51 with dispatch, and he himself acknowledged the receipt. Moreover in Land Bank of the Philippines v. Kumassie Plantation Company, Incorporated, we held that the mere fact that LBP appealed the decisions of the SAC and the CA does not mean that LBP deliberately delayed the payment of just compensation to the landowner. Having only exercised its right to appeal, LBP cannot be penalized by making it pay for interest.

Petition for review is GRANTED.