SPECIAL THIRD DIVISION
[G.R. No. 220171. March 7, 2018.]
LAND BANK OF THE PHILIPPINES, petitioner,vs. EDGARDO L. SANTOS, respondent.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, Third Division, issued a Resolution datedMarch 7, 2018, which reads as follows: HTcADC
"G.R. No. 220171 (Land Bank of the Philippines v. Edgardo L. Santos). — Before this Court is the Motion for Reconsideration filed by herein petitioner Land Bank of the Philippines (Land Bank) of our Resolution 1 dated November 9, 2015 denying Land Bank's petition for review on certiorari for failure to sufficiently show that the appellate court committed any reversible error in the challenged Decision 2 dated November 13, 2014 and Resolution 3 dated September 3, 2015 of the Court of Appeals (CA) in CA-G.R. SP No. 121853 as to warrant this Court's exercise of its discretionary appellate jurisdiction.
The facts follow.
Respondent Edgardo L. Santos (Santos) was the registered owner of a 14.8065-hectare parcel of corn land located in Minadongjol, Sangay, Camarines Sur covered by TCT No. 5717. Pursuant to Presidential Decree (PD) No. 27, 4 he was dispossessed of his landholding when the emancipation patents were distributed to tenant-tillers. 5
On September 28, 2000, Santos filed a case for determination of just compensation before the Provincial Agrarian Reform Adjudication Board (PARAD). On March 27, 2001, the PARAD declared the just compensation of the subject property at P1,147,466.73. Santos accepted the said valuation in his letter dated September 5, 2001. Land Bank, however, rejected the valuation of PARAD and instituted an action for the determination of just compensation before the Regional Trial Court (RTC), Branch 23, Naga City sitting as Special Agrarian Court (SAC).
Santos moved to dismiss the case, which was granted by the RTC. However, the CA, in CA-G.R. CV No. 75010, remanded the case for further proceedings. A portion of the decision states:
[Gabatin v. Land Bank of the Philippines] held that the landowner was not thereby disadvantaged by the use of the GSP [Government Support Price] for 1972, despite the lapse of many years before actual payment since, under DAR Administrative Order No. 13, he is entitled to receive an interest of 6 percent per year compounded annually. The object of AO 13, as explained in Land Bank of the Philippines vs. Court of Appeals and Pascual, supra, at 646, is to compensate the landowner for unearned interest. Had he received payment in 1972 and deposited the amount in a bank, he would have earned a compounded interest of 6% per annum. Applying the formula under EO 228, AGP [Average Gross Production] x 2.5 x GSP, the Court said that the resultant figure could be further multiplied by 1.06 to arrive at the value of the land for purpose of determining the compensation to the landowner. Both the Pascual and Gabatin cases have sealed their imprimatur on this mode of computation signifying compliance with constitutional standards for just compensation.
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As it is, all the elements of the formula have been ascertained. To repeat, the SAC said that the formula applied by the PARAD was also used by LBP except for the figure for the GSP. The AGP figures must, therefore, be those supplied by PARAD. With the determination by us of the GSP, the controversy should now be put to rest.
IN VIEW OF THE FOREGOING, the November 9, 2001 order appealed from is REVERSED, and the LBP is directed to compute and pay the just compensation to defendant Santos in accordance with our dispositions.
SO ORDERED. 6
Accordingly, the case was remanded to the RTC. During the proceedings, Land Bank made payments to Santos based on the initial valuation it previously made. On May 17, 2011, Land Bank valued the subject property at P1,155,223.41, which Santos eventually accepted. In a Decision dated June 22, 2011, the RTC ordered the release of the agreed amount to Santos. 7
Subsequently, Santos filed a motion for reconsideration alleging that the RTC failed to consider his entitlement to twelve percent (12%) legal interest computed from the time the subject property was taken. In the Order dated August 31, 2011, the RTC granted 12% per annum interest in the amount of P1,437,669.75, which was computed from June 26, 2000, the date when the payment of the initial value of the subject property was approved by the Land Bank, to June 22, 2011, the date when the RTC judgment was rendered. 8
Both parties moved for the reconsideration of the August 31, 2011 Order. Santos claimed that the 12% interest should be reckoned from 1972, the time the subject property was taken until the time of actual payment of just compensation. On the other hand, the Land Bank maintained that the value of the property already included an interest at the rate of six percent (6%) compounded annually up to the year 2009, which had already been paid to Santos. 9
In the assailed Order dated October 10, 2011, the RTC modified its previous Order and granted 12% interest on just compensation due the subject property, to be computed from January 1, 2010 until full payment.
In the November 13, 2014 Decision, the CA agreed with the ruling of the RTC that the subject land was expropriated pursuant to PD No. 27 and was covered by several Department of Agrarian Reform (DAR) Administrative Orders which provided the payment of 6% annual interest if there is any delay in the payment of just compensation. DAR Administrative Order No. 06 was effective until December 31, 2009. Thus, the 12% interest shall accrue from January 1, 2010 until the full payment of the just compensation. This was because from the time of the taking and until December 31, 2009, the 6% increment per annum has been added to the value fixed for the subject property. Citing the case of Nacar v. Gallery Frames, 10 the CA held that the interest shall be 6% beginning July 1, 2013 until full payment. The fallo of the decision reads: aScITE
WHEREFORE, the Petition for Review is dismissed. The Orders dated August 31, 2011 and October 10, 2011 rendered in Civil Case No. 2001-0315 by the RTC, Branch 23 of Naga City, sitting as Special Agrarian Court, are AFFIRMED with modification that the 12% interest is applicable until June 30, 2013, and the computation of interest beginning July 1, 2013 until full payment is made, will be at 6%.
SO ORDERED. 11
In a Resolution dated November 9, 2015, this Court resolved to deny the petition for review on certiorari filed by the Land Bank for failure to sufficiently show that the appellate court committed any reversible error.
Thereafter, the Land Bank filed an Omnibus Motion for Reconsideration 12 dated December 23, 2015. In a Resolution dated July 20, 2016, this Court required Santos to file his comment on the motion filed by the Land Bank. The Court also directed the Division Clerk of Court to study the propriety of consolidating the present case with the January 27, 2016 Decision, Land Bank of the Philippines v. Edgardo Santos. 13
In the Report dated August 2, 2016, the Division Clerk of Court reported that the case at bar came about as a result of the CA's dismissal of the petition for review filed by the Land Bank seeking the reversal of the RTC's order to pay Santos interest amounting to P1,437,669.75, and the subsequent October 10, 2011 Order awarding 12% interest on the just compensation from January 1, 2010 until full payment. In the interest of orderly administration of justice and to harmonize the rulings of the Court, albeit the cases have already been resolved by the Court, it was recommended that they be consolidated as they arose from the same set of facts, involve the same parties and deal with inter-related issues; and be referred to the First Division where the lower-number cases are assigned.
It is noted, however, that the motion for reconsideration on the January 27, 2016 Decision was already denied by this Court's First Division on September 14, 2016.
In his Compliance/Comment dated September 24, 2016, Santos argued therein that the Land Bank's motion is baseless and unfounded. He claimed that the payment made by the Land Bank in 2011 after the revaluation of the property directed by the Court is not a full payment of the just compensation of the subject property as it did not entitle him to legal interest required by law to be paid to the landowner together with the adjudged fair and just value of the land.
In the motion for reconsideration before Us, the Land Bank insists that it did not incur delay in the payment of just compensation as to justify the imposition of legal interests. It avows that it promptly and validly deposited the just compensation in Santos' account name on September 16, 2011, and fully paid the amount on October 13, 2011. The penalty interest for delay can be charged only from the time the amount of the claim is determined, fixed or liquidated. Here, the just compensation can be considered determined, fixed or liquidated only when the decision of the SAC has become final and executory. There is no delay when the Land Bank appealed the decision of the SAC to the higher courts. Having only exercised its right to appeal, it cannot be penalized by making it pay for interest. It also prays that the instant case be consolidated with petitions in G.R. No. 214021 and 213863.
This Court resolves to DENY the instant motion for reconsideration.
At the outset, settled is the rule that when the agrarian reform process is still incomplete, such as in this case where the just compensation due the landowner has yet to be settled, just compensation should be determined and the process be concluded under Republic Act (R.A.) No. 6657. 14 In the case of Land Bank of the Philippines v. Natividad, 15 the Court expounded:
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.
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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. 16
The concept of just compensation embraces not only the correct determination of the amount to be paid to the owners of the land, but also payment within a reasonable time from its taking. Without prompt payment, compensation cannot be considered "just" inasmuch as the property owner is made to suffer the consequences of being immediately deprived of his land while being made to wait for a decade or more before actually receiving the amount necessary to cope with his loss. 17 This Court recognizes that the owner's loss is not only his property but also its income-generating potential. Thus, when property is taken, full compensation of its value must immediately be paid to achieve a fair exchange for the property and the potential income lost. 18
In Republic v. CA, 19 it was held:
The constitutional limitation of "just compensation" is considered to be the sum equivalent to the market value of the property, broadly described to be the price fixed by the seller in open market in the usual and ordinary course of legal action and competition or the fair value of the property as between one who receives, and one who desires to sell it, fixed at the time of the actual taking by the government. Thus, if property is taken for public use before compensation is deposited with the court having jurisdiction over the case, the final compensation must include interests on its just value to be computed from the time the property is taken to the time when compensation is actually paid or deposited with the court. In fine, between the taking of the property and the actual payment, legal interests accrue in order to place the owner in a position as good as (but not better than) the position he was in before the taking occurred.
The Bulacan trial court, in its 1979 decision, was correct in imposing interests on the zonal value of the property to be computed from the time petitioner instituted condemnation proceedings and "took" the property in September 1969. This allowance of interest on the amount found to be the value of the property as of the time of the taking computed, being an effective forbearance, at 12% per annum should help eliminate the issue of the constant fluctuation and inflation of the value of the currency over time. Article 1250 of the Civil Code, providing that, in case of extraordinary inflation or deflation, the value of the currency at the time of the establishment of the obligation shall be the basis for the payment when no agreement to the contrary is stipulated, has strict application only to contractual obligations. In other words, a contractual agreement is needed for the effects of extraordinary inflation to be taken into account to alter the value of the currency. HEITAD
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The Court allowed the grant of interest if there is delay in the payment of just compensation to the landowner as the obligation is deemed to be an effective forbearance on the part of the State, 21 thus:
With respect to the commonly raised issue on interest, the RTC may impose the same on the just compensation award as may be justified by the circumstances of the case and in accordance with prevailing jurisprudence. The Court has previously allowed the grant of legal interest in expropriation cases where there was delay in the payment of just compensation, deeming the same to be an effective forbearance on the part of the State. To clarify, this incremental interest is not granted on the computed just compensation; rather, it is a penalty imposed for damages incurred by the landowner due to the delay in its payment.
Thus, legal interest shall be pegged at the rate of 12% p.a. from the time of taking until June 30, 2013. Thereafter, or beginning July 1, 2013, until fully paid, just compensation shall earn interest at the new legal rate of 6% p.a., conformably with the modification on the rules respecting interest rates introduced by Bangko Sentral ng Pilipinas Monetary Board Circular No. 799, Series of 2013. 22
In the January 27, 2016 Decision, the Court determined that the interest at the rate of 12% per annum imposed on the unpaid balance of the just compensation of the subject property is computed from the time of taking until full payment. The case was remanded to the RTC for receipt of evidence as to the date of the grant of the emancipation patents in favor of farmer-beneficiaries of the subject land covered by TCT No. 5717. A portion of the said decision reads:
Thus, in expropriation cases, interest is imposed if there is delay in the payment of just compensation to the landowner since the obligation is deemed to be an effective forbearance on the part of the State. Such interest shall be pegged at the rate of twelve percent (12%) per annum on the unsaid balance of the just compensation, reckoned from the time of taking, or the time when the landowner was deprived of the use and benefit of his property, such as when title is transferred to the Republic, or emancipation patents are issued by the government, until full payment. To clarify, unlike the six percent (6%) annual incremental interest allowed under DAR AO No. 13, Series of 1994, DAR AO No. 2, Series of 2004 and DAR AO No. 6, Series of 2008, this twelve percent (12%) annual interest is not granted on the computed just compensation; rather, it is a penalty imposed for damages incurred by the landowner due to the delay in its payment.
Accordingly, the award of twelve percent (12%) annual interest on the unpaid balance of the just compensation for Land 3 should be computed from the time of taking, and not from January 1, 2010 as ruled by the RTC and the CA, until full payment on October 12, 2011. However, copies of the emancipation patents issued to the farmer-beneficiaries have not been attached to the records of the case.
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To reiterate, the award of interest is imposed in the nature of damages for delay in payment which, in effect, makes the obligation on the part of the government one of forbearance to ensure prompt payment of the value of the land and limit the opportunity loss of the owner. 23 Here, notwithstanding that the Land Bank immediately paid the remaining balance of the unpaid just compensation as finally determined by the court for the subject property on October 12, 2011, however, several years had passed from the time the emancipation patents were issued for the farmer-beneficiaries before Santos was fully paid. Thus, Santos was entitled to legal interest from the time of the taking of the property until the actual payment in order to place him in a position as good as, but not better than, the position he was in before the taking occurred. 24
Accordingly, the CA did not err in imposing interest on the just compensation. However, the award of the 12% annual interest on the unpaid balance of just compensation for the subject land should be computed from the time of taking, which in this case was when the emancipation patents were issued in favor of farmer-beneficiaries, and not on January 1, 2010 as ruled by the CA in CA-G.R. SP No. 121853. There is also no need to impose the interest at 6% per annum, in accordance with the revisions governing the rate of interest established by Bangko Sentral ng Pilipinas Monetary Board Circular No. 799, 25 Series of 2013, 26 for it was established that the Land Bank fully paid the unpaid balance on October 12, 2011.
WHEREFORE, premises considered, the Motion for Reconsideration is DENIED. The Decision dated November 13, 2014 and Resolution dated September 3, 2015 of the Court of Appeals in CA-G.R. SP No. 121853 are hereby AFFIRMED with MODIFICATION in that the awarded twelve percent (12%) interest shall be computed from the date of the taking until its full payment of the just compensation on October 12, 2011 for the subject property covered by TCT No. 5717.
SO ORDERED."(Jardeleza, J., on leave)
Very truly yours,
(SGD.) WILFREDO V. LAPITANDivision Clerk of Court
Footnotes
1.Rollo, p. 166.
2. Penned by Associate Justice Noel G. Tijam (now a Member of this Court), with Associate Justices Priscilla J. Baltazar-Padilla and Agnes Reyes-Carpio, concurring; id. at 114-125.
3.Id. at 128-129.
4.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.
5.Rollo, p. 115.
6.Id. at 154-155. (Citations omitted).
7.Id. at 116-117.
8.Id. at 117.
9.Id. at 118.
10. 716 Phil. 267 (2013).
11.Rollo, p. 124.
12.Id. at 167-173.
13. 779 Phil. 587 (2016).
14.Land Bank of the Philippines v. Heirs of Alsua, 753 Phil. 323, 332 (2015).
15. 497 Phil. 738 (2005).
16.Id. at 746-747. (Citation omitted)
17.Land Bank of the Philippines v. Soriano, et al., 634 Phil. 426, 435 (2010).
18.Secretary of the Department of Public Works and Highways v. Spouses Tecson, 758 Phil. 604, 635 (2015).
19. 433 Phil. 106 (2002).
20.Id. at 122-123. (Emphasis supplied; citations omitted).
21.Land Bank of the Philippines v. Lajom, 741 Phil. 655, 667 (2014).
22.Id. at 667-668. (Emphasis supplied)
23.Land Bank of the Philippines v. Spouses Avanceña, G.R. No. 190520, May 30, 2016, 791 SCRA 319, 330.
24.Republic v. CA, supra note 19.
25. Entitled "RATE OF INTEREST IN THE ABSENCE OF STIPULATION" (June 21, 2013).
26. See Nacar v. Gallery Frames, supra note 10.