FIRST DIVISION
[G.R. No. 193503. September 12, 2018.]
LAND BANK OF THE PHILIPPINES, petitioner,vs. PHILIPPINE NATIONAL BANK, respondent.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, First Division, issued a Resolution datedSeptember 12, 2018, which reads as follows: ISHCcT
"G.R. No. 193503 (LAND BANK OF THE PHILIPPINES, Petitioner, v. PHILIPPINE NATIONAL BANK, Respondent.) — Under consideration is the appeal by petition for review on certiorari brought by the Land Bank of the Philippines (LBP) of the decision promulgated on February 11, 2010, 1 whereby the Court of Appeals (CA) affirmed the adverse findings of the Regional Trial Court (RTC), Branch 48, in San Fernando, Pampanga sitting as a Special Agrarian Court (SAC).
The respondent owned the property with an area of 21.822 hectares situated in San Nicolas, Arayat, Pampanga and registered under Transfer Certificate of Title No. 70801-R of the Register of Deeds of Pampanga. In 1987, the Department of Agrarian Reform (DAR) placed the property under Operation Land Transfer (OLT) in relation to Presidential Decree (P.D.) No. 27, 2 as amended by Executive Order (E.O.) No. 228. 3 Although the property was subjected to the OLT under P.D. No. 27 since October 21, 1972, the petitioner made its tender of payment to the respondent only in November 1993. 4 But the parties did not reach an agreement on the just compensation, impelling the respondent to commence action in the RTC as the SAC for the determination of just compensation. 5
The RTC initially dismissed the respondent's complaint, but later reconsidered and set the pre-trial and hearing. The parties then agreed that the formula for the determination of just compensation would be based on P.D. No. 27 and E.O. No. 228, i.e., LV (Land Value) = AGP (Average Gross Production) x 2.5 x GSP (Government Support Price) x land acquired. 6
On January 18, 2008, the RTC rendered judgment, decreeing:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff by modifying the computation of the defendant Land Bank of the Philippines (LBP) and defendant Department of Agrarian Reform (DAR) on the ground aforestated, by ordering the respondent Land Bank of the Philippines:
1. To pay the plaintiff Philippine National Bank the sum of P716,391.86 in cash and bond pursuant to Section 18 of R.A. No. 6657 with current savings banks rate of interest from November 1993 until the date of finality of this Decision and until fully paid.
2. No pronouncement as to attorney's fees and litigation expenses and cost of suit.
SO ORDERED. 7
The petitioner's motion for reconsideration was denied by the RTC on August 7, 2008.
On appeal, the petitioner assailed the GSP component of the formula by maintaining that the RTC should not have adopted the respondent's position that the GSP of palay should be reckoned from the time the certificates of title were awarded to the tenant-farmers. The petitioner contended that the GSP value should instead be reckoned from the time of "taking" on October 21, 1972, the effectivity of P.D. No. 27, and, in accordance with E.O. No. 228, the GSP for a cavan of palay was then P35.00; that as held in Gabatin v. Land Bank of the Philippines, 8 the same GSP must be used unless a later law revised or modified such formula. 9
As stated, the CA promulgated the assailed decision on February 11, 2010, 10 decreeing thusly: CAacTH
WHEREFORE, premises considered, the Decision dated 18 January 2008 rendered by the Regional Trial Court, Branch 48 sitting as a Special Agrarian Court (SAC) of San Fernando, Pampanga, is AFFIRMED with MODIFICATION on the interest imposed in the payment of just compensation.
Petitioner is ordered to pay respondent the sum of P716,391.86 in cash and bond pursuant to Section 18 of R.A. No. 6657 with a 6% interest compounded annually, from the date of compensable taking on 21 October 1972 until 31 December 2009, and thereafter, at the rate of 12% per annum until payment is made.
SO ORDERED. 11
The CA opined that P.D. No. 27 and E.O. No. 228 must be read in conjunction with Republic Act (R.A.) No. 6657 (Comprehensive Agrarian Reform Law of 1988); 12 that the taking of the property under the coverage of P.D. No. 27 and E.O. No. 228 where the payment of just compensation had not yet been made by the time of the passage of R.A. No. 6657 should be reckoned from the payment of just compensation, not upon the effectivity of P.D. No. 27; that the rule that just compensation was to be determined at the time of taking of the property was settled; that the landholding was to be considered taken only upon the payment of just compensation; and that, therefore, the valuation should be based on R.A. No. 6657, with P.D. No. 27 and E.O. No. 228 having only suppletory effect. 13
The CA observed that the parties had agreed during the trial that they would apply the formula prescribed under E.O. No. 228; that pursuant to Section 18 of R.A. No. 6657, no new formula could be used, and the arrangement between the parties should be respected except the matter of the valuation of the GSP; and that the valuation should be based on the GSP for palay fixed at P300.00 by the National Food Authority for the period from 1990 to 1995. 14
As regards interest, the CA held that under DAR Administrative Order (A.O.) No. 13, the grant of 6% per annum increment should be reckoned from the effectivity of P.D. No. 27 on October 21, 1972 and until actual payment but not later than December 31, 2009; that the law did not provide for interest to be paid to the unpaid landowner corresponding to the period from January 1, 2010 onwards; and that under the ruling in Land Bank of the Philippines v. Imperial, 15 interest was imposed in the nature of damages for the delay in the payment of just compensation, and was set at 12% per annum computed from January 1, 2010 until full payment.
On September 1, 2010, the CA denied petitioner's motion for reconsideration. 16
Hence, this appeal, with the petitioner submitting as issues, namely:
WHETHER OR NOT THE COURT OF APPEALS IN ITS DECISION AND RESOLUTION IN QUESTION, HAS ERRED IN:
(1) UPHOLDING THE COMPENSATION DETERMINED BY TRIAL COURT WHICH WAS NEITHER IN ACCORD WITH THE PERTINENT PROVISIONS OF THE TENANCY EMANCIPATION DECREE (P.D. NO. 27, AS AMENDED BY E.O. 228) NOR WITH THAT PRESCRIBED FOR LANDS COVERED UNDER THE COMPREHENSIVE AGRARIAN REFORM PROGRAM (CARP) PURSUANT TO R.A. NO. 6657, AS AMENDED BY R.A. NO. 9700.
(2) HOLDING THAT THE RULINGS LAID DOWN IN GABATIN VS. LAND BANK, 444 SCRA 176 (2004), HAVE BEEN SUPERSEDED OR ABANDONED.
(3) IMPOSING TO LAND BANK OF THE PHILIPPINES A "6% INTEREST COMPOUNDED ANNUALLY, FROM THE DATE OF COMPENSABLE TAKING ON 21 OCTOBER 1972 UNTIL 31 DECEMBER 2009, AND THEREAFTER AT THE RATE OF 12% PER ANNUM UNTIL FULL PAYMENT IS MADE." 17
Otherwise stated, did the CA correctly determine just compensation based on the GSP for palay at the time of payment in 1993, as opposed to the GSP for palay at the time the property was taken in 1972, in accordance with the pronouncement in Gabatin?
It has been held that when the Government has taken private property pursuant to P.D. No. 27 but has not paid the landowner just compensation until after R.A. No. 6657 had taken effect in 1988, it became more equitable to determine just compensation by using the formula in R.A. No. 6657. Indeed, Land Bank of the Philippines v. Ibarra, 18 promulgated in 2014, is instructive on the matter:
The issue in this case has long been laid to rest by this Court. In numerous rulings, We have repeatedly held that the seizure of landholdings or properties covered by PD No. 27 did not take place on October 21, 1972, but upon the payment of just compensation. Indeed, acquisition of property under the Operation Land Transfer Program under PD No. 27 does not necessarily mean that the computation of just compensation thereof must likewise be governed by the same law. In determining the applicable formula, the date of the payment of just compensation must be taken into consideration for such payment marks the completion of the agrarian reform process. If the agrarian reform process is still incomplete as when just compensation is not settled prior to the passage of RA No. 6657, it should be computed in accordance with said law despite the fact that the property was acquired under PD No. 27. Clearly, by law and jurisprudence, R.A. No. 6657, upon its effectivity, became the primary law in agrarian reform covering all then pending and uncompleted processes, with P.D. No. 27 and E.O. No. 228 being only suppletory to the said law. 19 IAETDc
Our jurisprudence is replete with pronouncements that when the agrarian reform acquisition process under P.D. No. 27 remained incomplete, such as when just compensation due the landowner had not yet been settled, and was overtaken by the effectivity of R.A. No. 6657, just compensation should be resolved following the formula established under R.A. No. 6657, and the formulae under P.D. No. 27 and E.O. No. 228 would only suppletorily apply. In short, where R.A. No. 6657 is sufficient, P.D. No. 27 and E.O. No. 228 are superseded. 20
Despite such jurisprudential pronouncements, the parties herein mutually agreed to adopt the formula for the determination of just compensation based on the value of the GSP for palay at the time of "taking" of the property and effectivity of P.D. No. 27 on October 21, 1972, or at the time the tenant-farmers were awarded their certificates of title.
The petitioner laments that the CA should adopt the principles laid down in Gabatin. It submits that just compensation should be determined at the time of taking of the property because such guidepost has neither been abandoned nor superseded by the Court. 21 It posits that inasmuch as the respondent had readily agreed to adopt the formula prescribed in P.D. No. 27 and E.O. No. 228, the latter should not be allowed to disavow the 1972 valuation of the GSP for palay.
The respondent counters that the CA correctly upheld the RTC on the computation and determination of just compensation for the expropriated lands based on the GSP for palay obtaining in 1993.
Ruling of the Court
We find for the respondent.
In Land Bank of the Philippines v. Pacita Agricultural Multi-Purpose Cooperative, Inc., 22 the Court, in keeping with the standard laid down in Section 17 of R.A. No. 6657 for the determination of just compensation in relation to the GSP of palay, deemed it more equitable to determine just compensation based on the GSP of palay at the current price or the value of the property at the time of payment, viz.:
In Gabatin v. Land Bank of the Philippines, the formula under Presidential Decree No. 27, Executive Order No. 228 and A.O. No. 13 was applied. In Gabatin, the crux of the case was the valuation of the GSP for one cavan of palay. In said case, the SAC fixed the government support price (GSP) of palay at the current price of P400 as basis for the computation of the payment, and not the GSP at the time of taking in 1972. On appeal therein by respondent Land Bank of the Philippines, the Court of Appeals reversed the ruling of the SAC. The case was then elevated to this Court, wherein therein petitioners set forth, inter alia, the issue of whether just compensation in kind (palay) shall be appraised at the price of the commodity at the time of the taking or at the time it was ordered paid by the SAC. The Court declared that the reckoning period should be the time when the land was taken in 1972, based on the following ratiocination.
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Since Gabatin, however, the Court has decided several cases in which it found it more equitable to determine just compensation based on the value of said property at the time of payment, foremost of which is Land Bank of the Philippines v. Natividad, cited by the Court of Appeals in its Decision assailed herein. (Emphasis ours)
In Natividad, the parcels of agricultural land involved were acquired from their owners for purposes of agrarian reform on 21 October 1972, the time of the effectivity of Presidential Decree No. 27. Still, as late as the year 1993, the landowners were yet to be paid the value of their lands. Thus, the landowners filed a petition before the trial court for the determination of just compensation. The trial court therein ruled in favor of the landowners, declaring that Presidential Decree No. 27 and Executive Order No. 228 were mere guidelines in the determination of just compensation. Said court likewise fixed the just compensation on the basis of the evidence presented on the valuation of the parcels of land in 1993, not the value thereof as of the time of the acquisition in 1972. Therein petitioner Land Bank of the Philippines sought a review of the Decision of the trial court before this Court. This Court found that the petition for review of therein petitioner Land Bank of the Philippines was unmeritorious, to wit:
Land Bank's contention that the property was acquired for purposes of agrarian reform on October 21, 1972, the time of effectivity of P.D. 27, ergo just compensation should be based on the value of the property as of that time and not at the time of possession in 1993, is likewise erroneous. In Office of the President, Malacañang, Manila v. Court of Appeals, we ruled that the seizure of the landholding did not take place on the date of effectivity of PD 27 but would take effect on the payment of just compensation.
Under the factual circumstances of this case, the agrarian reform process is still incomplete as the just compensation to be paid private respondents has yet to be settled. Considering the passage of Republic Act No. 6657 (RA 6657) before the completion of this process, the just compensation should be determined and the process concluded under the said law. Indeed, RA 6657 is the applicable law, with PD 27 and EO 228 having only suppletory effect, conformably with our ruling in Paris v. Alfeche. [416 Phil. 473.] DcHSEa
xxx xxx xxx
It would certainly be inequitable to determine just compensation based on the guideline provided by PD 27 and EO 228 considering the DAR's failure to determine the just compensation for a considerable length of time. That just compensation should be determined in accordance with RA 6657, and not PD 27 or EO 228, is especially imperative considering that just compensation should be the full and fair equivalent of the property taken from its owner by the expropriator, the equivalent being real, substantial, full and ample.
In Meneses v. Secretary of Agrarian Reform, the Court applied its ruling in Natividad. . . . On the issue of the payment of just compensation, the Court adjudged:
xxx xxx xxx
As previously noted, the property was expropriated under the Operation Land Transfer scheme of P.D. No. 27 way back in 1972. More than 30 years have passed and petitioners are yet to benefit from it, while the farmer-beneficiaries have already been harvesting its produce for the longest time. Events have rendered the applicability of P.D. No. 27 inequitable. Thus, the provisions of R.A. No. 6657 should apply in this case.
In the even more recent case, Lubrica v. Land Bank of the Philippines, the Court also adhered to Natividad, viz.:
The Natividad case reiterated the Court's ruling in Office of the President v. Court of Appeals [413 Phil. 711] that the expropriation of the landholding did not take place on the effectivity of P.D. No. 27 on October 21, 1972 but seizure would take effect on the payment of just compensation judicially determined.
Likewise, in the recent case of Heirs of Francisco R. Tantoco, Sr. v. Court of Appeals [489 SCRA 590], we held that expropriation of landholdings covered by R.A. No. 6657 takes place, not on the effectivity of the Act on June 15, 1988, but on the payment of just compensation.
xxx xxx xxx
We reiterate, therefore, that when the Government takes property pursuant to P.D. No. 27 but does not pay the landowner just compensation until after the effectivity of R.A. No. 6657, it becomes more equitable to determine just compensation using R.A. No. 6657 instead of E.O. No. 228. Similarly, the valuation of the GSP for palay should be based on the value at the time of payment, not at the time of taking. It would be the height of injustice if the landowner, like the respondent, was to be deprived of the enjoyment of its property for more than two decades without being justly compensated therefor. Indeed, the GSP for palay valued in 1972 could have represented the fair market value of the landholdings had the just compensation been actually paid in that year itself. That did not happen herein, rendering it totally unjust if the valuation offered by the petitioner was to be based on the 1972 GSP for palay.
Considering that the factual milieu of this case is similar to that in the cited jurisprudence, the Court finds it to be more in keeping with fairness and equity to determine just compensation using the GSP for palay in 1993, which is consistent with the standard set in Section 17 of R.A. No. 6657.
Anent interest, we modify the ruling by the CA. Legal interest has been allowed in expropriation cases where there is delay in the payment because the just compensation due to the landowners was considered as an effective forbearance on the part of the State. 23 The rate of legal interest has been changed through time. Accordingly, legal interest on the unpaid balance of the just compensation is to be pegged at 12% per annum reckoned from the time of taking in November 1993 (when the certificates of title were awarded to the tenant-farmers) until June 30, 2013 only; thereafter, or beginning on July 1, 2013 until full settlement, the just compensation due to the respondent shall earn interest at the new legal rate of 6% per annum in line with the amendment introduced by Bangko Sentral ng Pilipinas Monetary Board Circular No. 799, 24 Series of 2013.
WHEREFORE, the Court AFFIRMS the decision promulgated on February 11, 2010 subject to MODIFICATION that the unpaid portion of the just compensation shall bear legal interest of 12% per annum from November 1993 until June 30, 2013, and of 6% per annum from July 1, 2013 until its full satisfaction. SCaITA
No pronouncement on cost of suit.
SO ORDERED." Tijam, J., on official leave.
Very truly yours,
(SGD.) LIBRADA C. BUENAActing Division Clerk of Court
Footnotes
1.Rollo, pp. 68-83; penned by Associate Justice Mariflor P. Punzalan Castillo, with the concurrence of Associate Justice Juan Q. Enriquez, Jr. and Associate Justice Michael P. Elbinias.
2. Entitled 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, and issued on October 21, 1972.
3. Signed on July 17, 1987.
4.Rollo, p. 17.
5.Id. at 9.
6.Id. at 11.
7.Id. at 69.
8. G.R. No. 148223, November 25, 2004, 444 SCRA 176, 190-191.
9.Rollo, p. 12.
10.Supra note 1.
11.Id. at 82.
12. Approved on June 10, 1988.
13.Rollo, 16.
14.Id. at 17.
15. G.R. No. 157753, February 12, 2007, 515 SCRA 449, 456.
16.Rollo, pp. 24-26.
17.Id. at 35.
18. G.R. No. 182472, November 24, 2014, 741 SCRA 447, 453-454.
19.Id. at 453-454.
20.Land Bank of the Philippines v. Lajom, G.R. Nos. 184982 & 185048, August 20, 2014, 733 SCRA 511, 520.
21.Rollo, p. 42.
22. G.R. No. 177607, January 19, 2009, 576 SCRA 291, 306-309; see also Heirs of Spouses Tria v. Land Bank of the Philippines, G.R. No. 170245, July 1, 2013, 700 SCRA 188, 194-198.
23.Heirs of Pablo Feliciano, Jr. v. Land Bank of the Philippines, G.R. No. 215290, January 11, 2017, 814 SCRA 289, 301.
24. Entitled Subject: Rate of interest in the absence of stipulation (June 21, 2013).