Land Bank of the Philippines v. Barrido

FIRST DIVISION

[G.R. No. 198478. March 6, 2019.]

LAND BANK OF THE PHILIPPINES, petitioner, vs.RIZALINA GUSTILO BARRIDO FOR AND IN BEHALF OF JESUS G. BARRIDO, respondents.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, First Division, issued a Resolution dated March 6, 2019which reads as follows:

"G.R. No. 198478 (Land Bank of the Philippines v. Rizalina Gustilo Barrido for and in behalf of Jesus G. Barrido). — This is a petition for review on certiorari1 filed by the Land Bank of the Philippines (LBP) to annul and set aside the Decision 2 dated March 18, 2009 and Resolution 3 dated August 19, 2011 of the Court of Appeals (CA) in CA-G.R. S.P. No. 01648, directing LBP to pay 12% interest per annum for delay in the payment of just compensation to Jesus G. Barrido (Jesus).

Rizalina Gustilo Barrido (Rizalina), for and in behalf of her son, Jesus, filed an action for determination of just compensation before the Regional Trial Court of Iloilo City, acting as Special Agrarian Court (SAC), against the Department of Agrarian Reform (DAR) and the LBP. The case was raffled to Branch 34 and docketed as Civil Case No. 03-27963. 4 Rizalina alleged that Jesus is the registered owner of 33.6324 hectares of land located in Sto. Rosario, Ajuy, Iloilo covered by Transfer Certificate of Title (TCT) No. T-72182. In a Notice 5 dated April 30, 1997, the LBP, as financial intermediary of the DAR, informed Jesus that the government was taking 20.3679 hectares of his lot (property) for P471,315.44 pursuant to Presidential Decree (PD) No. 27. 6 Rizalina narrated that, as of that date, the beneficiaries of the property had already taken possession, produced, and enjoyed the fruits thereof to the complete exclusion of Jesus. 7 Jesus rejected the LBP's proffered compensation, arguing that the property is a very productive rice land and the LBP's valuation is even lower than the valuation in the tax declarations made by the beneficiaries. He prayed for the SAC to fix the just compensation of the property and award interest at the rate of 12% per annum from April 30, 1997 until fully paid. 8

The LBP countered that the valuation of the property under PD No. 27, as amended by Executive Order (EO) Nos. 228 9 and 407, 10 is a function exclusively vested with the DAR. Its participation is merely to pay based on the DAR's computation; no matter how low and unrealistic the valuation may be. 11 Thus, the LBP insisted that the DAR's valuation of P130,688.08 is the correct just compensation of the property. 12 CAIHTE

The DAR failed to file an answer within the reglementary period, thus, the SAC, upon Jesus' motion, declared it in default. 13

In its Decision 14 dated December 8, 2005, the SAC held that where the process of agrarian reform coverage was started, but not completed, under PD No. 27, the inchoate or expectant right of the tenant-farmer to own the land does not vest as no transfer of ownership was effected under PD No. 27. The process has to be completed under Republic Act (RA) No. 6657 or the Comprehensive Agrarian Reform Law of 1988 with PD No. 27 having suppletory effect. The provisions of Sections 17 and 18 of RA No. 6657 shall be used in the valuation of the property. 15

The SAC then proceeded to compute the just compensation by getting the average between the amount per hectare arrived at using the mathematical formula under PD No. 27 and EO No. 228 which is P23,140.11, and the market value of the property per hectare which is P134,980.00. The average is P79,060.55 per hectare or P1,610,287.30 for the 20.3679 hectares actually taken by the government and transferred in favor of the qualified farmer-beneficiaries. 16 Citing relevant case law, the SAC imposed an interest of 12% per annum from April 30, 1997 until fully paid. It explained that interest is proper because of the delay in payment which in effect makes the obligation on the part of the government one of forbearance. 17 The decretal portion of the SAC's Decision reads:

WHEREFORE, based on the foregoing premises, judgment is hereby rendered fixing the just compensation of the total area of the land actually taken in the amount of P1,610,287.3 and ordering the LBP to pay plaintiff Jesus G. Barrido or his attorney-in-fact Rizalina Gustilo Barrido the total sum of P1,120,183.60 as just compensation for the 20.3679 hectares taken by the government pursuant to P.D. No. 27 and E.O. No. 228 plus [12%] interest per annum from April 30, 1997 until full payment.

SO ORDERED. 18

Jesus filed a motion for reconsideration/clarification, 19 claiming that there is ambiguity in the dispositive portion of the Decision. Although the SAC fixed the just compensation at P1,610,287.30, it ordered the LBP to pay P1,120,183.60. The LBP also moved for reconsideration, averring that the SAC erred in disregarding the formula under PD 27 and awarding 12% interest per annum. The SAC denied the LBP's motion but granted Jesus' motion, thereby amending its Decision dated December 8, 2005 as follows:

WHEREFORE, based on the foregoing premises, judgment is hereby rendered fixing the just compensation of the total area of the land actually taken in the amount of P1,610,287.3 and ordering the LBP to pay plaintiff Jesus G. Barrido or his attorney-in-fact Rizalina Gustilo Barrido the total sum of [P1,610,287.3] as just compensation for the 20.3679 hectares taken by the government pursuant to P.D. No. 27 and E.O. No. 228 plus 12% interest per annum from April 30, 1997 until full payment.

SO ORDERED. 20 (Emphasis supplied).

On appeal, the CA, in its Decision, affirmed the ruling of the SAC with modification. It agreed with the SAC that RA No. 6657 is controlling because Jesus' property was taken on April 30, 1997 or when RA No. 6657 was already in effect. In determining the valuation of the property, Section 17 of RA No. 6657 provides for the following factors to be considered: the cost of the 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. Additional factors include the social and economic benefits contributed by the farmers and the farmworkers and by the government to the property as well as the non-payment of taxes or loans secured from any government financing institution on the said land. 21 The CA, however, observed that the SAC did not apply the formula laid down by law and jurisprudence. It ruled that the formula under DAR Administrative Order No. 5, Series of 1998 22 should be adopted, to wit:

 

Land Value (LV)

=

(Capitalized net income x 0.6) +23

 

Subsequently, the CA ordered the remand of the case to the SAC for proper computation of the just compensation in accordance with the above-stated formula. 24 DETACa

Both parties moved for reconsideration of the Decision. The LBP further filed a manifestation and motion, alleging that the issue on whether the SAC can disregard the formula prescribed under PD No. 27 and EO No. 228 in fixing just compensation had been rendered moot and academic by the enactment of RA No. 9700. 25 Section 5 of which states that "x x x all previously acquired lands wherein valuation is subject to challenge by landowners shall be completed and finally resolved pursuant to Section 17 of Republic Act No. 6657, as amended x x x." Hence, the LBP is only assailing the SAC's award as affirmed by the CA of 12% interest per annum for the alleged delay in the payment of just compensation. The LBP argued that the award should be set aside for lack of legal and factual basis. It maintained that its refusal to pay the higher just compensation is justified because it followed the formula under PD No. 27 and EO No. 228. Furthermore, its obligation to pay is not a forbearance of money or contract of loan under Article 2209 of the New Civil Code. It stressed that the penalty interest for delay can be charged only from the time the amount of claim is determined, fixed, or liquidated. In this case, the final compensation payable to Jesus is determined only when the Decision of the CA becomes final and executory. 26

The CA denied both parties' motions for reconsideration in its Resolution dated August 19, 2011. The LBP is now raising before us the sole issue of whether the CA erred in imposing 12% interest per annum on the just compensation of the property. 27

We deny the petition.

Just compensation does not only refer to the full and fair equivalent of the property taken. It also means payment in full without delay. It is presumed that there is delay if the government failed to pay the property owner the full amount of just compensation on the date of taking. 28

Land Bank of the Philippines v. Prado Verde Corporation29 teaches that the delay in the payment of just compensation is a forbearance of money. In such cases, the landowner is necessarily entitled to earn interest. This is to compensate him/her for the income that he/she would have made had he/she been properly compensated for his/her property at the time of taking. 30 Further, interest is imposed on the unpaid compensation from the time of taking until full payment to equalize the effect of losing the income-generating potential of the property. 31

Here, the fact of delay in the payment of just compensation is duly established. First, the LBP does not dispute that Jesus was already deprived of the possession and use of his property. In its answer to the complaint before the SAC, the LBP admitted that the beneficiaries "had already taken possession, produced and enjoyed the fruits" of the property to the complete exclusion of Jesus. 32 Second, the LBP does not also deny that up to this date Jesus has yet to receive compensation for the taking of his property. It nevertheless insists that Jesus was to be blamed for the non-payment of just compensation because his refusal to get his preliminary compensation of P130,688.08 exclusive of incremental interest from the LBP. 33 The LBP also contends that it cannot be considered in delay in the payment of just compensation until and unless there is a final and executory decision of the court. 34

We disagree.

In Land Bank of the Philippines v. Phil-Agro Industrial Corporation, 35 we reiterated that the requirement of just compensation is not satisfied by the mere deposit with any accessible bank of the provisional compensation determined by the LBP or the DAR, and its subsequent release to the landowner after compliance with the legal requirements set forth by RA No. 6657. Neither is the substantiality of the payments made by the LBP a determining factor in the imposition of interest as nothing less than full payment of just compensation is required. 36 What is material is the fact that the landowner remains unpaid notwithstanding the taking of his/her property.

Our ruling in Land Bank of the Philippines v. Spouses Avanceña37 is also on point:

As in the Apo case, respondents-spouses voluntarily offered to sell their land pursuant to the government's land reform program, however, the valuation made by the LBP on the land was rejected by the former for being undervalued. Respondents-spouses had to resort to the filing of the case with the RTC, sitting as SAC, for the determination of just compensation of their land. It has already been 25 years but respondents-spouses have not received the full amount of the just compensation due them, and further delay can be expected with the remand of the case to the SAC for the recomputation of the just compensation. Thus, the long delay entitles them to the payment of interest to compensate for the loss of income due to the taking. 38 (Emphasis supplied.) aDSIHc

Similar to Spouses Avanceña, Jesus resorted to a judicial determination of just compensation of his land due to the alleged "ridiculously low" valuation of the DAR and the LBP. From the filing of the complaint 39 on December 16, 2003 and until the case reached us on appeal, the LBP does not allege, and there is also no proof, that the government made any payments to Jesus before or after the taking of his property. Clearly, 15 years had already elapsed since Jesus made a judicial demand for payment of just compensation. With the remand of the case to the SAC, few more years of delay can be expected. Considering this long delay, the CA did not err in sustaining the SAC's award of interest in favor of Jesus.

Meanwhile, in view of recent law and jurisprudence, we modify the rate of interest imposed by the courts a quo. Pursuant to Bangko Sentral ng Pilipinas Circular No. 799, Series of 2013, 40 as affirmed in Nacar v. Gallery Frames, 41 and other relevant case law, 42 the interest on the just compensation or the balance thereof shall be pegged at the rate of 12% per annum from the time of taking until June 30, 2013. Thereafter, or from July 1, 2013 until full payment, the just compensation due shall earn legal interest at the rate of 6% per annum. 43

As regards the reckoning or starting point of the interest due, we rule that the RTC and the CA erroneously declared that the interest shall start to run from April 30, 1997, or the date of the LBP's notice informing Jesus of the approval of his land transfer claim. The date or time of taking refers to that time when the State deprived the landowner of the use and benefit of his/her property, such as when the title to the property is transferred in the name of the Republic or when Certificates of Land Ownership Award were issued in favor of the farmer-beneficiaries. 44 Unfortunately, the record is bereft of showing of the exact date when either of these events occurred. Hence, upon remand of the case to the SAC for proper computation of just compensation, the parties should also present evidence on the time of taking.

WHEREFORE, the petition is DENIED. The Decision dated March 18, 2009 and Resolution dated August 19, 2011 of the Court of Appeals in CA-G.R. S.P. No. 01648 are hereby AFFIRMED with MODIFICATION in that the legal interest on the just compensation due to the landowner shall be at the rate of 12% per annum from the date of taking, as shall be determined by Branch 34, Regional Trial Court of Iloilo City, until June 30, 2013 only. Thereafter, or beginning July 1, 2013 until fully paid, the legal interest on the just compensation due shall be 6% per annum.

SO ORDERED."

Very truly yours,

(SGD.) LIBRADA C. BUENADivision Clerk of Court

 

Footnotes

1.Rollo, pp. 3-32.

2.Id. at 36-47; penned by Associate Justice Florito S. Macalino, with the concurrence of Associate Justices Antonio L. Villamor and Stephen C. Cruz.

3.Id. at 49-52; penned by Associate Justice Gabriel T. Ingles, with the concurrence of Associate Justices Pampio A. Abarintos and Eduardo B. Peralta, Jr.

4.Id. at 37.

5.Id. at 175.

6. Decreeing the Emancipation of Tenants from the Bondage of the Soil, Transferring to Them the Ownership of the Land They Till and Providing the Instruments and Mechanism Therefor.

7.Rollo, p. 37.

8.Id.

9. Declaring Full Land Ownership to Qualified Farmer Beneficiaries Covered by Presidential Decree No. 27; Determining the Value of Remaining Unvalued Rice and Corn Lands Subject of P.D. No. 27; and Providing for the Manner of Payment by the Farmer Beneficiary and Mode of Compensation to the Landowner.

10. Accelerating the Acquisition and Distribution of Agricultural Lands, Pasture Lands, Fishponds, Agro-forestry Lands and Other Lands of the Public Domain Suitable for Agriculture.

11.Rollo, p. 147.

12.Id. at 148.

13. Id. at 117.

14. Id. at 116-128.

15. Id. at 126.

16. Id. at 127-128.

17. Id. at 128.

18. Id.

19. Rollo, pp. 131-134.

20. Id. at 130.

21. Id. at 42-44.

22. Revised Rules and Regulations Governing the Valuation of Lands Voluntarily Offered or Compulsorily Acquired Pursuant to Republic Act No. 6657.

23. Rollo, p. 44.

24. Id. at 46-47.

25. An Act Strengthening the Comprehensive Agrarian Reform Program (CARP), Extending the Acquisition and Distribution of all Agricultural Lands, Instituting Necessary Reforms, Amending for the Purpose Certain Provisions of Republic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988, as amended, and Appropriating Funds Therefor.

26. Rollo, pp. 212-215.

27. Id. at 13.

28. Yared v. Land Bank of the Philippines, G.R. No. 213945, January 24, 2018, citing Republic v. Mupas, G.R. No. 181892, April 19, 2016, 790 SCRA 217.

29. G.R. No. 208004, July 30, 2018.

30. Id., citing Land Bank of the Philippines v. Phil-Agro Industrial Corporation, G.R. No. 193987, March 13, 2017, 820 SCRA 149.

31. Yared v. Land Bank of the Philippines, supra.

32. See paragraph 2 of the LBP's Answer before the SAC, which admitted paragraph 5 of Jesus' complaint (RTC records, pp. 19-22). Paragraph 5 of the complaint states that "x x x the beneficiaries of this particular area had already taken possession, produced and enjoyed the fruits thereof to the complete exclusion of Jesus G. Barrido" (Id. at 3).

33. Rollo, p. 20.

34. Id. at 23.

35. Supra note 30.

36. Id. at 158-159, citing Land Bank of the Philippines v. Hababag, Sr., G.R. No. 172352, June 8, 2016, 792 SCRA 399.

37. G.R. No. 190520, May 30, 2016, 791 SCRA 319.

38. Id. at 333, citing Apo Fruits Corporation v. Land Bank of the Philippines, G.R. No. 164195, October 12, 2010, 632 SCRA 727.

39. RTC records, pp. 7-9.

40. Rate of interest in the absence of stipulation.

41. G.R. No. 189871, August 13, 2013, 703 SCRA 439.

42. See Yared v. Land Bank of the Philippines, supra note 28, which cited the following cases as bases for the imposition of 12% interest per annum on the amount of just compensation due to the landowner reckoned from the time of taking: Land Bank of the Philippines v. Dalauta, G.R. No. 190004, August 8, 2017, 835 SCRA 1; Land Bank of the Philippines v. Omengan, G.R. No. 196412, July 19, 2017, 831 SCRA 294; Land Bank of the Philippines v. Heirs of Jose Tapulado, G.R. No. 199141, March 8, 2017, 820 SCRA 26; Heirs of Pablo Feliciano, Jr. v. Land Bank of the Philippines, G.R. No. 215290, January 11, 2017, 814 SCRA 289; Land Bank of the Philippines v. Kho, G.R. 214901, June 15, 2016, 793 SCRA 651; and Land Bank of the Philippines v. Santos, G.R. No. 213863, January 27, 2016, 782 SCRA 441.

43. Yared v. Land Bank of the Philippines, supra note 28.

44. Land Bank of the Philippines v. Rural Bank of Hermosa (Bataan), Inc., G.R. No. 181953, July 25, 2017, 832 SCRA 78, 90.