APO FRUITS CORPORATION and HIJO PLANTATION, INC. vs.

CA and LBP FACTS: In its first ground, LBP asserts the use of the formula set forth in the DAR Administrative Order (AO) No. 5, Series of 1998, citing Land Bank of the Philippines v. Celada, in which it was declared that: While SAC 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 rulemaking power under Section 49 of RA 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. DAR AO No. 5, s. of 1998 precisely "filled in the details" of Section 17, RA No. 6657 by providing a basic formula by which the factors mentioned therein may be taken into account. The SAC was at no liberty to disregard the formula which was devised to implement the said provision. (Emphasis supplied.) LBP relies heavily on our pronouncement in the said case that the RTC acting as a special agrarian court cannot disregard the formula under DAR AO No. 5, Series of 1998. LBP also argues that the trial court erred in arriving at its valuation of the properties of the Apo Fruits Corporation (AFC) and Hijo Plantation, Inc. (HPI). ISSUE: Whether the trial court erred in arriving at its valuation of the properties of the Apo Fruits Corporation and Hijo Plantation, Inc.? LAW: Section 17 of Republic Act No. 6657 identified the factors to be considered for the 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 nonpayment of taxes or loans secured from any government financing institution on the said land shall be considered as additional factors to determine its valuation. RULING: NO. The basic formula and its alternatives administratively determined (as it is not found in Republic Act No. 6657, but merely set forth in DAR AO No. 5, Series of 1998) although referred to and even applied by the courts in certain instances, does not and cannot strictly bind the courts. To insist that the formula must be applied with utmost rigidity whereby the valuation is drawn following a strict mathematical computation goes beyond the intent and spirit of the law. The suggested interpretation is strained and would render the law inutile. Statutory construction should not kill but give life to the law. As we have established in earlier jurisprudence, the valuation of property in eminent domain is essentially a judicial function which is vested in the regional trial court acting as a SAC, and not in administrative agencies.

The SAC, therefore, must still be able to reasonably exercise its judicial discretion in the evaluation of the factors for just compensation, which cannot be arbitrarily restricted by a formula dictated by the DAR, an administrative agency. Surely, DAR AO No. 5 did not intend to straightjacket the hands of the court in the computation of the land valuation. While it provides a formula, it could not have been its intention to shackle the courts into applying the formula in every instance. The court shall apply the formula after an evaluation of the three factors, or it may proceed to make its own computation based on the extended list in Section 17 of Republic Act No. 6657, which includes other factors, like the cost of acquisition of the land; the current valuation of like properties; its nature, actual use and income; the sworn valuation by the owner; the tax declarations; and the assessment made by the government assessors. It cannot therefore be said that the trial court had no basis for its valuation of the real properties of AFC and HPI. It took into consideration the required important factors enumerated in Section 17 of Republic Act No. 6657 which, in turn, were the very same matters that made up the DAR formula. Verily, it can be said that the trial court had substantially applied the formula by looking into all the factors included therein, i.e net income, comparable sales and market value per tax declaration, to arrive at the proper land value. Hence, the Supreme Court is convinced that the trial court correctly determined the amount of just compensation due AFC and HPI in accordance with, and guided by, Republic Act No. 6657, the DAR formula, and existing jurisprudence. OPINION: In taking into account the nature, actual use and income, the sworn valuation by the owner, the tax declarations, and the assessment made by the government assessors, the valuation of a property like the subject property in this case, would be proper. I think that the DAR formula is a good measure of the valuation of properties in order to justly compensate the landowners.