CASE DIGEST: Land Bank v. Castro

G.R. No. 189125 : August 28, 2013




Respondent Bienvenido Castro (Castro) is the owner of an unregistered property identified as Lot No. 2636, Cad. 537-D located at Barangay Mahayag, San Miguel, Surigao Del Sur. On 20 June 1994, Castro voluntarily offered to sell the property to the Department of Agrarian Reform (DAR) under Republic Act (RA) No. 6657 or the Comprehensive Agrarian Reform Law. Castros offered price isP60,000.00 per hectare or a total ofP560,340.00 for the entire 9.3390 hectare lot.

The DAR, petitioner Land Bank of the Philippines (LBP), and the Barangay Agrarian Reform Council conducted an ocular inspection, classifying the lot as riceland and suitable for agriculture. Thereafter, the DAR, through the LBP, assessed the property atP15,441.25 per hectare or a total price ofP144,205.90. Castro rejected it. Castro insisted on a higher valuation through a petition to fix just compensation before the RTC, sitting as SAC.

Relying heavily on the Commissioners and Supplemental Reports, the SAC rendered a Consolidated Decisionfixing the just compensation of Castros property atP43,327.16 per hectare or a total ofP404,632.35 for the entire 9.3390 hectares and rendered judgement in favor of Castro.

Aggrieved, LBP filed a motion for reconsideration of the SACs decision, but the SAC was unmoved by LBPs plea for reconsideration and did not reconsider its decision. On appeal, the Court of Appeals completely agreed with the SAC that LBP was already estopped from raising the defense that Castro has accepted the assessed amount of ₱144,205.90 for the subject property. LBP now appeals to the SC via appeal by certiorari.

ISSUE: Whether or not CA erred in denying the appeal

HELD: Yes. CA decision reversed and set aside.

Political Law- the determination of just compensation is a judicial function

The DAR formula, determined by administrative expertise serves as the immediate guide for judicial determination of just compensation, the exact application being subject to judicial discretion. While the courts should be mindful of the different formula created by the DAR in arriving at just compensation, they are not strictly bound to adhere thereto if the situations before them do not warrant it. There was in this case an unexplained disregard for the guide administrative formula, neglecting such factors as capitalized net income, comparable sales and market value per tax declaration.

While there is a finding that the lot subject of the case was found to be cultivated and suitable for rice production, CNI or Capitalized Net Income was not factored in. Instead of comparable sales, the trial court used the value of lots "of the same condition." There was no explanation why only one factor was used as determinant of valuation. No indication why the administrative guide as regards the interplay of such factors as net income and market value could not be applied.

The trial court committed yet another patent mistake when it placed the valuation at the then present prices. It looked back at the year 2001 when the tax declarations it said covered Castros land indicated the market value at P223,509.00. Then it perfunctorily took judicial notice "that the market value of land increases every year" and concluded as valuation "for Lot No. 2636, subject of Civil Case No. 1516, atP43,327.16 per hectare or a total ofP404,632.35 for the entire 9.3390 hectares."

The fundamental doctrine that private property cannot be taken for public use without just compensation requires that the owner shall receive the market value of his property at the time of the taking, unaffected by any subsequent change in the condition of the property.

But in the case at bar the plaintiff appropriated the property with the consent of the landowners, and without the filing of any expropriation proceedings, in the expectation that the parties would be able to reach an agreement out of court as to the value of the property taken, and the condemnation proceedings were not filed until it was found much later that no such agreement could be reached as to part of the property. Under those circumstances the value of the property should be fixed as of the date when it was taken and not the date of the filing of the proceedings.

The clear substantive flaw of the appealed decisions must result in the reversibleness of the judgment which as such should be set aside. The clarity of error in valuation cannot be swept aside by reference to the procedural principle that defenses not raised in a motion to dismiss or alleged as an affirmative defense are considered waived.

Petition for determination of just compensation dismissed.