THIRD DIVISION
G.R. No. 190520, May 30, 2016
LAND BANK OF THE PHILIPPINES, Petitioner, v. SPOUSES ANTONIO AND CARMEN AVANCENA, Respondents.
D E C I S I O N
PERALTA, J.:
Before us is a petition for review on certiorari filed by petitioner Land Bank of the Philippines seeking to annul and set aside the Decision1 dated August 11, 2008 of the Court of Appeals (CA) issued in CA-G.R. CV No. 00067 directing it to pay twelve percent (12%) interest per annum for the delay in the payment of just compensation. Also assailed is the CA Resolution2 dated December 1, 2009 denying reconsideration thereof.
Respondents-spouses Antonio and Carmen Avanceña were the registered owners of a parcel of agricultural land situated at Sanghan, Cabadbaran, Agusan del Norte covered by Transfer Certificate of Title No. RT-2937 containing an area of 205.0074 hectares. In 1988, respondents spouses voluntarily offered to sell their land to the government under the Comprehensive Agrarian Reform Program (CARP), which consisted of 160.2532 hectares of the land. In 1991, petitioner Land Bank of the Philippines initially valued the subject lot at P1,877,516.09 based on the guidelines prescribed in DAR Administrative Order No. 17, Series of 1989. Upon recomputation in 1994 and based on DAR AO No. 6, Series of 1992, as amended, by DAR AO No. 11, Series of 1994, the land was revalued at P3,337,672.78 but respondents rejected the valuation. Petitioner deposited the difference in the cash portion between the revalued amount and the initial valuation of P1,877,516.09 in trust for the respondents on July 24, 1996. The parties brought the matter of valuation to the Department of Agrarian Reform Adjudication Board (DARAB), Caraga Regional Office, which affirmed petitioner's second valuation.
Respondents-spouses filed with the Regional Trial Court, acting as a Special Agrarian Court (SAC), a complaint for determination of just compensation, docketed as Civil Case No. 4507. They prayed for a valuation of no less than P200,000.00 per hectare for the subject lot or in the alternative, to appoint Commissioners to determine the just compensation; and that they be allowed to withdraw the valuation amount that petitioner had deposited for them including the earned interest, pending the court's final valuation. Petitioner filed its Answer alleging that the valuation was computed based on the factors enumerated in Section 17 of Republic Act No. (R.A.) 6657, the Comprehensive Agrarian Reform Law.
While the complaint was pending, petitioner made a reevaluation of the property using the valuation prescribed by DAR AO 5, series of 1998 which yielded the amount of P9,057,180.32.
On March 29, 2000, the SAC issued its Decision,3 the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered directing the defendants Land Bank of the Philippines (LBP) and the Department of Agrarian Reform (DAK) to pay plaintiffs the following:
1. The sum of Twenty Million Four Hundred Seventy-Five Thousand, Seven Hundred Seventy-Five (P20?475,775) Pesos for the 160.253 hectares |of| land with its improvements with six (6%) percent legal interest thereon, less the provisional deposits from April 1991 until actually paid;
2. The sum of One Hundred Thousand (P100,000) Pesos, as Attorneys' fees;
3. The sum of One Hundred Thousand (P100,000) Pesos, litigation expenses;
4. All other claims and counterclaims are dismissed for lack of merit.
SO ORDERED.4ChanRoblesVirtualawlibrary
WHEREFORE, in view of all the foregoing, the instant appeal is hereby GRANTED and the assailed March 29, 2006 decision of the Regional Trial Court (RTC), 10th Judicial Region, Branch 5, Butuan City, in Civil Case No. 4507, is hereby SET ASIDE. Consequently, this case is remanded to the court a quo for the recomputation of just compensation. In determining the valuation of the subject property, the factors provided under Section 17 of R.A. 6657 shall be considered in accord with the formula prescribed in DAR Administrative Order No. 5, Series of 1998. Moreover, the just compensation due the [S]pouses Avancena should bear 12% interest per annum from the time title to the property was transferred in the name of the government up to the time that LBP deposited the amount of its valuation for the subject land under the account of the appellees. The basis of the 12% interest would be the just compensation that would be determined by the court a quo after remand of the instant case.
SO ORDERED.7ChanRoblesVirtualawlibrary
THE HONORABLE COURT OF APPEALS COMMITTED A SERIOUS ERROR OF LAW IN AWARDING INTEREST AT THE RATE OF 12% PER ANNUM FROM THE TIME TITLE TO THE PROPERTY WAS TRANSFERRED IN THE NAME OF THE GOVERNMENT IN 1991 UP TO THE TIME LBP ALLEGEDLY DEPOSITED THE VALUATION IN 1996.8
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.19ChanRoblesVirtualawlibrary
Let it be remembered that shorn of its eminent domain and social justice aspects, what the agrarian land reform program involves is the purchase by the government, through the LBP, of agricultural lands for sale and distribution to farmers. As a purchase, it involves an exchange of values the landholdings in exchange for the LBPs payment. In determining the just compensation for this exchange, however, the measure to be borne in mind is not the taker's gain but the owner's loss since what is involved is the takeover of private property under the States coercive power. As mentioned above, in the value-for-value exchange in an eminent domain situation, the State must ensure that the individual whose property is taken is not shortchanged and must hence carry the burden of showing that the just compensation requirement of the Bill of Rights is satisfied.
The owner's loss, of course, is not only his property but also its income-generating potential. Thus, when property is taken, lull compensation of its value must immediately be paid to achieve a fair exchange for the property and the potential income lost. The just compensation is made available to the property owner so that he may derive income from this compensation, in the same manner that he would have derived income from his expropriated property. If full compensation is not paid for property taken, then the State must make up for the shortfall in the earning potential immediately lost due to the taking, and the absence of replacement property from which income can be derived; interest on the unpaid compensation becomes due as compliance with the constitutional mandate on eminent domain and as a basic measure of fairness.29
It has been stated in a number of cases that in computing the just compensation for expropriation proceedings, it is the value of the land at the time of the taking which should be taken into consideration. This being so, then in determining the value of the land for the payment of just compensation, the time of taking should be the basis.
In the case at bar, the court a quo failed to consider the value and the character of the land at the time it was taken by the government in 1991. Instead, the former assessed the market value of the idle portion of the subject lot as a riceland. Yet, per LBP's Field Investigation Report (FIR) prepared in 1990, the subject lot was not yet devoted to rice or corn at that time, although its idle portion was classified as suitable for said crops. Also, in computing the value of the land, the court a quo considered the land's appreciation value from the time of taking in 1991 up to the filing of the case in 1997 and of appellee's potential profit from the land's suitability to rice and corn, which We find to be contrary to the settled criterion in determining just compensation. Hence erroneous.
The foregoing pronouncements do not, however, mean that We favor LBP's valuation of P9,057,10.32 for the subject lot. The same is found to be non-reflective of just compensation because the Tax Declaration used by LBP in fixing the market value of the land in its initial valuation for the year 1986, as indicated in the FIR. Additionally, no evidence was adduced to show that LBP used the correct tax declaration (TD), which should be the 1991 TD, in fixing the market value in its latest computation of the land's valuation.
Notably, LBP's initial valuation of the land in 1991 was P1,877,516.09 and became P3,337,672.78 after recomputation in 1994, pursuant to DAR AO No. 11, Series of 1994. During the pendency of the case in court, DAR AO No. 5 series of 1998 was issued; hence, LBP accordingly recomputed its valuation and came up with the amount of P9,057,180.32 (the amount of P8,955,269.16 constitutes the value of the land while PI 01,913.14 was the value of the legal easement).
Albeit LBP claims to have faithfully observed and applied the prescribed formula in DAR AO No. 5, series of 1998, in its recomputation of the land's valuation, it adduced no evidence, like the official computation sheets, to show that the latest valuation of the land was indeed arrived at using the prescribed formula and that the correct documents indicating the factors enumerated in Section 17 of RA 6657 were actually considered. Hence, We cannot accept LBP's latest valuation as well.
Consequently, We deem it proper to remand this case to the court a quo for a recomputation of the just compensation, x x x31
Section 5. Effect of reversal of executed judgment. - Where the executed judgment is reversed totally or partially, or annulled, on appeal or otherwise, the trial court may, on motion, issue such orders of restitution or reparation of damages as equity and justice may warrant under the circumstances.
WHEREFORE, in view of all the foregoing, the instant appeal is hereby GRANTED and the assailed March 29, 2006 decision of the Regional Trial Court (RTC), 10lh Judicial Region, Branch 5, Butuan City, in Civil Case No. 4507, is hereby SET ASIDE. Consequently, this case is remanded to the court a quo for the recomputation of just compensation. The interest on the recomputed just compensation should be computed from December 1991 up to the payment of the lull amount of just compensation less whatever amounts received by the respondents-spouses.
Endnotes:
1 Penned by Associate Justice Jane Aurora C. Lantion, with Associate Justices Edgardo A. Camello and Edgardo T. Lloren concurring; rollo, pp. 41-61.
2 Penned by Associate Justice Edgardo A. Camello. with Associate Justices Edgardo T. Lloren and Leoncia R. Dimagiba, concurring; id at 62-64.
3 Per Judge Galdino B. Jardin, Sr.; id. at 240-254.
4 Id. at 253-254.
5 Id. at 255-259.
6 Id. at 260-262.
7 Id. at 61.
8 Id. at 24-25.
9 Id. at 184.
10 565 Phil. 418, 443 (2007).
11 Rollo, pp. 263-264.
12 Section 16(e) of RA 6657 provides as follows:
Sec. 16. Procedure for Acquisition of Private Lands -
x x x x
(e) Upon receipt by the landowner of the corresponding payment or, in case of rejection or no response from the landowner, upon the deposit with an accessible hank designated by the DAR of the compensation in cash or in LBP bonds in accordance with this Act, the DAR shall take immediate possession of the land and shall request the proper Register of Deeds to issue a Transfer Certificate of Title (TCT) in the name of the Republic of the Philippines, x x x
13Heirs of Tantoeo, Si: v. CA, 523 Phil. 257, 278 (2006), citing Sta. Rosa Really Development Corporation v. Court of Appeals, 419 Phil. 457, 475 (2001); Land Bank of the Philippines v. Court of Appeals, 319 Phil. 246, 258 (1995).
14Land Bank of the Philippines v. Alsua, G.R. No. 21 1351, February 4, 2015; Land Bank of the Philippines v. Santiago, Jr., 696 Phil. 142, 162 (2012).
15 Secretary of the Department of Public Works and Highways v. Tecson, G.R. No. 179334 , April 21 2015.
16 Id.
17Land Bank of the Philippines v. Obias, et al.,, 684 Phil. 296, 304 (2012).
18 433 Phil. 106(2002).
19 Republic v. CA, supra, at 122-123.
20Land Bank of the Philippines v. Soriano, et al, 634 Phil. 426, 435 (2010).
21 Id.
22 Republic of the Philippines, represented by Department of Public Works and Highways v. Soriano, G.R. No. 211666, February 25, 2015; Land Bank of the Philippines v. Rivera, G.R. No. 182431, February 27, 2013, 692 SCRA 148, 153, citing Land Bank of the Philippines v. Celada, 515 Phil. 467, 484 (2006) citing Land Bank of the Philippines v. Wycoco, 464 Phil. 83, 100 (2004), further citing Reyes v. National I lousing Authority, 443 Phil. 603, 616 (2003).
23Land Bank of the Philippines v. Lajom, G.R. No. 1 84982, August 20, 2014, 733 SCRA 5 11, 524.
24 Entitled "RATE OF INTEREST IN THE ABSENCE OF STIPULATION" (June 21, 2013).cralawred
25 See Nacar v. Gallery Frames, G.R. No. 189871, August 13, 2013, 703 SCRA 439, 455.
26 Supra note 10.cralawred
27 Republic of the Philippine v. Court of Appeals, supra note 18.
28Land Bank v. Obias, supra note 17.
29Apo Fruits Corporation v. Land Bank of the Philippines, 647 Phil. 251, 273 (2010).
30 Id.
31Rollo, pp. 57-58.