G.R. No. 213161 - Land Bank of the Philippines vs. Spouses Latog

The petitioner, Land Bank of the Philippines (LBP), challenged the decisions rendered by the Court of Appeals (CA) which had affirmed with modifications the determination of just compensation made by the Regional Trial Court (RTC) of Iloilo City, Branch 34, in Civil Case No. 02-27157.
The assailed issuances include the RTC Decision dated September 28, 2007, subsequent Order dated November 21, 2007, the CA Decision dated March 15, 2013, and the CA Resolution dated June 17, 2014.

The dispute centers on two parcels of land located in Cabatangan, Lambunao, Province of Iloilo, identified as Lot Nos. 6003 and 6004, which collectively cover an area of 16.1089 hectares.
The properties are covered by Transfer Certificate of Title (TCT) No. T-86890 and are registered under the names of respondents, spouses Rene I. Latog and Nelda Lucero.
The case arises under the ambit of the Comprehensive Agrarian Reform Program (CARP), notably under Republic Act (R.A.) No. 6657 (as amended) and related provisions of R.A. No. 3844, which empower LBP as the government financial intermediary supportive of agrarian reform.

The respondents voluntarily offered to sell their land to the Department of Agrarian Reform (DAR) at a price of P150,000.00 per hectare, totaling approximately P2,400,000.00.
LBP, upon conducting its initial evaluation, recommended a just compensation computed by applying an alternate formula:

where LV represents Land Value, CNI is the Capitalized Net Income, and MV is the Market Value per Tax Declaration.

The respondents, objecting to LBP’s valuation, sought relief first at the Provincial Agrarian Reform Adjudication Board (PARAB) and thereafter filed a Complaint in the RTC for judicial determination of just compensation.

The RTC, acting as a special agrarian court, rendered a judgment on September 28, 2007, fixing the just compensation for the subject properties at P605,291.91, with additional benefits including a 12% interest per annum from December 1, 2001, until full payment, plus an additional 5% incentive under Section 19 of R.A. 6657 for the voluntary offer.
The RTC did not apply any strict formula but considered various factors such as the owner's initial offer, tax declarations, market values, and other socio-economic and property-specific data.

LBP challenged the RTC’s decision by filing a Petition for Review with the CA, disputing the trial court’s departure from the DAR-mandated valuation formula as prescribed in DAR Administrative Order (A.O.) No. 5, series of 1998, and the awarding of interest.
The CA, while increasing the computed just compensation, deleted the award of the 12% interest per annum and affirmed the RTC’s decision with modifications.
A subsequent partial Motion for Reconsideration by LBP was denied by the CA in its Resolution dated June 17, 2014.

The core issue revolves around the appropriateness of the CA’s affirmation with modification of the RTC’s decision, particularly regarding the valuation methodology.
There is a dispute over whether LBP’s adoption of an alternate valuation formula was adequately justified and whether deviation from the mandatory DAR formulas was proper without sufficient explanation or supporting evidence.

Whether the Court of Appeals erred in affirming, with modifications, the RTC’s decision on the determination of just compensation.
Whether LBP’s use of the alternate valuation formula (LV = (CNI x 0.90) + (MV x 0.10)) was justified when the primary formula provided in DAR A.O. No. 5, series of 1998, prescribes the inclusion of the Comparable Sales (CS) factor.
Whether the interest awarded by the RTC, later deleted by the CA, should have been included in the final compensation.
The extent to which a trial court may deviate from the DAR-mandated formulas in determining just compensation, particularly in the absence of adequate evidence and reasoned justification as required by law.