Formula for just compensation (DAR AO 5, Series of 1998)


After a judicious study of the case, the Court resolves to DENY the instant petition and AFFIRM the April 12, 2017 Decision[1] and July 26, 2017 Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No. 147036 for failure of petitioner Land Bank of the Philippines (petitioner) to sufficiently show that the CA committed any reversible error in upholding the October 15, 2014 Decision[3] of the Regional Trial Court of Calapan City, Branch 39 (RTC) in Civil Case No. R-4984, fixing the just compensation for the subject lands in the amount of P716,513.83.

As correctly ruled by the CA, the RTC properly computed the just compensation using the formula under Department of Agrarian Reform (DAR) Administrative Order No. (AO) 5, Series of 1998, i.e., LV = MV x 2, which considered the market values as appearing in respondent AFP Retirement and Separation Benefits System's tax declarations.[4] Petitioner's contention[5] that the market values obtained from the Municipal Assessor's Office should prevail in view of the difference in the land classification/land use as per the tax declarations vis-a-vis the actual field investigation, calling for the application[6] of the formula under Item D.2,[7] Part II of DAR AO 5, Series of 1998, was correctly rejected by the CA. Petitioner's insistence that the subject lands are purely cogonal is belied by the declaration in the previous case between the parties, docketed as CA-G.R. SP No. 119218, that the parcels of land covered by TCT Nos. T-51351 and T-51378 are planted with fruit-bearing trees and are subject of lease contracts. Accordingly, the RTC's valuation, as affirmed by the CA, is in accord with the factors under Section 17 of Republic Act No. 6657, as amended, otherwise known as the "Comprehensive Agrarian Reform Law of 1988," as translated in the formula set forth under DAR AO 5, Series of 1998, and must, perforce, be upheld.
Nonetheless, in line with law[8] and prevailing jurisprudence,[9] the Court finds a need to impose legal interest at the rate of 12% per annum (p.a.) on the unpaid balance of the just compensation reckoned from the time of taking[10] up to June 30, 2013 and, thereafter, at 6% p.a. until full payment.


[1] Rollo, pp. 31-49. Penned by Associate Justice Amy C. Lazaro-Javier with Associate Justices Celia C. Librea-Leagogo and Pedro B. Corales concurring.

[2] Id. at 61.

[3] Id. at 76-81. Penned by Judge Manuel C. Luna, Jr.

[4] Item A.3, Part II of DAR AO 5, Series of 1998 which provides:
A. There shall be one basic formula for the valuation of lands covered by [voluntary offer to sell] or [compulsory acquisition]:

LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)
Land Value
Capitalized Net Income
Comparable Sales
Market Value per Tax Declaration

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

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

LV = MV x 2 (Emphasis supplied)
[5] Rollo, pp. 19-22.

[6] Id. at 19-20.

[7] D.2 In case the land classification/land use per [field investigation; (FI)] differs from that reflected in the [tax declaration; (TD)], the result of the actual FI shall prevail and the [unit market value] of the land classification per FI shall be obtained from the municipal assessor's office concerned. (Emphasis supplied)

[8] See Bangko Sentral ng Pilipinas Monetary Board (BSP-MB) Circular No. 799, Series of 2013 dated June 21,2013.

[9] See Vergara v. Grecia, G.R. No. 185638, August 10, 2016, 800 SCRA 23, 38; National Power Corp. v. Heirs of Ramoran, G.R. No. 193455, June 13, 2016, 793 SCRA 211, 219; Republic v. Mupas, 769 Phil. 21, 229 (2015); Nacar v. Gallery Frames, 716 Phil. 267,281-283 (2013).

[10] Rollo, p. 34.