Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 164195 December 19, 2007
APO FRUITS CORPORATION and HIJO PLANTATION, INC., Petitioners,
vs.
THE HON. COURT OF APPEALS and LAND BANK OF THE PHILIPPINES, Respondents.
R E S O L U T I O N
CHICO-NAZARIO, J.:
For resolution is the Omnibus Motion1 filed by the Land Bank of the Philippines (LBP) for (a) the reconsideration of the Decision dated 6 February 2007; (b) the referral of the case to the Supreme Court sitting en banc; and (c) the setting of its Motion for Oral Argument.
The dispositive portion of our Decision reads:
WHEREFORE, premises considered, the instant Petition is PARTIALLY GRANTED. While the Decision, dated 12 February 2004, and Resolution, dated 21 June 2004, of the Court of Appeals in CA-G.R. SP No. 76222, giving due course to LBP’s appeal, are hereby AFFIRMED, this Court, nonetheless, RESOLVES, in consideration of public interest, the speedy administration of justice, and the peculiar circumstances of the case, to give DUE COURSE to the present Petition and decide the same on its merits. Thus, the Decision, dated 25 September 2001, as modified by the Decision, dated 5 December 2001, of the Regional Trial Court of Tagum City, Branch 2, in Agrarian Cases No. 54-2000 and No. 55-2000 and No. 55-2000 is AFFIRMED. No costs.2
LBP cites the following grounds for the Motion for Reconsideration:
A. THE HONORABLE COURT RULED IN THE FAIRLY RECENT CASE OF LAND BANK OF THE PHILIPPINES v. CELADA, G.R. NO. 164876 THAT SPECIAL AGRARIAN COURTS ARE NOT AT LIBERTY TO DISREGARD THE FORMULA DEVISED TO IMPLEMENT SECTION 17 OF REPUBLIC ACT NO. 6657 OTHERWISE KNOWN AS THE COMPREHENSIVE AGRARIAN REFORM LAW OF 1988.
B. RESPONDENT LBP SATISFIED OR COMPLIED WITH THE CONSTITUTIONAL REQUIREMENT ON PROMPT AND FULL PAYMENT OF JUST COMPENSATION.
C. RESPONDENT LBP ENSURED THAT THE INTERESTS ALREADY EARNED ON THE BOND PORTION OF THE REVALUED AMOUNTS WERE ALIGNED WITH 91-DAY TRASURY BILL (T-BILL) RATES AND ON THE CASH PORTION THE NORMAL BANKING INTEREST RATES.
D. PETITIONERS ARE NOT ENTITLED TO AN AWARD OF ATTORNEY’S FEES AND COMMISSIONERS’ FEES.
E. RESPONDENT LBP’S COUNSEL DID NOT UNNECESSARILY DELAY THE PROCEEDINGS.
F. THE IMMINENT MODIFICATION, IF NOT THE REVERSAL, OF THE SUPREME COURT RULINGS IN BANAL AND CELADA BY THE QUESTIONED DECISION NECESSITATES A REFERRAL OF THE INSTANT CASE TO THE HONORABLE COURT SITTING EN BANC.
The Motion for Reconsideration is partially meritorious.
In its first ground, LBP asserts the use of the formula set forth in the Department of Agrarian Reform (DAR) Administrative Order (AO) No. 5, Series of 1998, citing Land Bank of the Philippines v. Celada,3 in which it was declared that:
While SAC is required to consider the acquisition cost of the land, the current value of like properties, its nature, actual use and income, the sworn valuation by the owner, the tax declaration and the assessments made by the government assessors to determine just compensation, it is equally true that these factors have been translated into a basic formula by the DAR pursuant to its rule-making power under Section 49 of RA No. 6657. As the government agency principally tasked to implement the agrarian reform program, it is the DAR’s duty to issue rules and regulations to carry out the object of the law. DAR AO No. 5, s. of 1998 precisely "filled in the details" of Section 17, RA No. 6657 by providing a basic formula by which the factors mentioned therein may be taken into account. The SAC was at no liberty to disregard the formula which was devised to implement the said provision. (Emphasis supplied.)
LBP relies heavily on our pronouncement in the said case that the RTC acting as a special agrarian court cannot disregard the formula under DAR AO No. 5, Series of 1998.
LBP also argues that the trial court erred in arriving at its valuation of the properties of the Apo Fruits Corporation (AFC) and Hijo Plantation, Inc. (HPI). To quote:
The Schedule of Market Values of the City of Tagum cannot be used as a factor in determining just compensation of the subject property since said schedule of market values refers to residential and industrial properties are outside the coverage of the Comprehensive Agrarian Reform Law. The Comprehensive Agrarian Reform Law of 1988 covers only public and private agricultural lands "devoted to agricultural activity x x x and not classified as mineral, forest, residential, commercial or industrial land." (Please see Sec. 3(c) of R.A. No. 6657; emphasis supplied). Furthermore, Section 17 of the R.A. No. 6657 speaks of "current value of like properties," which necessarily refers to values of similar agricultural properties.
The data on "Comparative Sales" can be used only when similar properties are involved. In this case, however, the data relative to "Comparative Sales," which were presented to the trial court, could not be used as factors for determining just compensation, as these data pertain to sales of properties which are residential, commercial and industrial in nature.
The proximity of the agricultural land to residential, commercial and industrial properties and the "potential use" of subject properties cannot also be used as factors since Section 17 of R.A. No. 6657 refers to "actual use." In fact, the farmer-beneficiaries have devoted the said lands to agricultural productivity, not to other purposes.
In the end, however, the court a quo disregarded said factors and zeroed in on the "LOWEST VALUE FOR RESIDENTIAL LAND at P100/sq.m. for 4th class RESIDENTIAL LAND in 1993," "THE LOWEST VALUE of Php130.00/sq.m. x x x FOR INDUSTRIAL LAND" as the sole factor in determining the just compensation for subject plantations. It then exclusively used THE AVERAGE OF THE AFORESTATED FIGURES as basis in arriving at the amount of Php103.33 for EVERY SQUARE METER of the ACQUIRED AREA consisting of 1,338.6027 hectares, in utter disregard of Section 17 of R.A. No. 6657.4 (Emphasis supplied.)
As to the purported conflict between our decision in this case and that in Land Bank of the Philippines v. Celada, the more acceptable practice has always been to interpret and reconcile apparently conflicting jurisprudence, instead of placing one jurisprudence over another in a destructive confrontation; not to uphold one and annul the other, but instead to give effect to both by harmonizing the two.5 Hence, the pronouncement made in the aforementioned case as to the application of the formula in DAR AO No. 5, Series of 1998, must be put in its proper context and understood in light of the following ratiocination preceding the same,6 to wit:
With regard to the third assigned error, however, we agree with petitioner that the SAC erred in setting aside petitioner’s valuation of respondent’s land on the sole basis of the higher valuation given for neighboring properties. In this regard, the SAC held:
"It appears from the evidence of petitioner that the neighboring lands of similar classification were paid higher than what was quoted to her land by respondent Land Bank as the value per square meter to her land was only quoted at ₱2.1105517 while the others which were of the same classification were paid by respondent Bank at ₱2.42 more or less, per square meter referring to the land of Consuelito Borja (Exh. "D") and Cesar Borja (Exh. "F"). Furthermore, the land of petitioner was allegedly mortgage for a loan of ₱1,200,000.00 before the Rural Bank of San Miguel, Bohol and that it was purchased by her from a certain Felipe Dungog for ₱450,000.00 although no documents therefore were shown to support her claim. Nevertheless, the Court finds a patent disparity in the price quotations by respondent Land Bank for the land of petitioner and that of the other landowners brought under CARP which could be caused by deficient or erroneous references due to the petitioner’s indifference and stubborn attitude in not cooperating with respondent bank in submitting the data needed for the evaluation of the property. x x x At any rate, the price quotation by respondent Land Bank on the land of the petitioner is low more so that it was done some four years ago, particularly, on June 22, 1998 (Exh. "1") and the same has become irrelevant in the course of time due to the devaluation of the peso brought about by our staggering economy."
As can be gleaned from above ruling, the SAC based its valuation solely on the observation that there was a "patent disparity" between the price given to respondent and the other landowners. We note that it did not apply the DAR valuation formula since according to the SAC, it is Section 17 of RA No. 6657 that "should be the principal basis of computation as it is the law governing the matter." The SAC further held that said Section 17 "cannot be superseded by any administrative order of a government agency," thereby implying that the valuation formula under DAR Administrative Order No. 5, Series of 1998 (DAR OA No. 5, s. of 1998), is invalid and of no effect. (Emphasis supplied.)
A careful review of Land Bank of the Philippines v. Celada would thus show that this Court set aside the just compensation arrived at by the trial court, acting as a Special Agrarian Court (SAC), and instead assented to the valuation of the LBP, on the ground that the valuation of the SAC was based "solely on the observation that there was a patent disparity between the price given to the respondent and the other landowners."
Section 17 of Republic Act No. 6657 identified the factors to be considered for the determination of just compensation:
SEC. 17. Determination of Just Compensation. – In determining just compensation, the cost of 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 assessors, shall be considered. The social and economic benefits contributed by the farmers and the farmworkers and by the Government to the property as well as the nonpayment of taxes or loans secured from any government financing institution on the said land shall be considered as additional factors to determine its valuation.
To implement the foregoing, DAR AO No. 5, Series of 1998, laid down the following formula:
A. There shall be one basic formula for the valuation of lands covered by VOS or CA:
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)
Where: LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration
The above formula shall be used if all three factors are present, relevant, and applicable.
A1. When the CS factor is not present and CNI and MV are applicable, the formula shall be:
LV = (CNI x 0.9) + (MV x 0.1)
A2. When the CNI factor is not present, and CS and MV are applicable, the formula shall be:
LV = (CS x 0.9) + (MV x 0.1)
A3. When both the CS and CNI are not present and only MV is applicable, the formula shall be:
LV = MV x 27
In Land Bank of the Philippines v. Celada, the Supreme Court recognized that the factors specified in Section 17, Republic Act No. 6657 "have been translated into a basic formula by the DAR pursuant to its rule-making power under Section 49 of Republic Act No. 6657."8 The Court found that the SAC significantly used only a single factor as a basis for arriving at the valuation of the land involved in the said case, arbitrarily disregarding all other factors.
It bears stressing that in the case before us, unlike in Land Bank of the Philippines v. Celada, the trial court, in arriving at its valuation of the properties of AFC and HPI, actually took into consideration all the factors in the determination of just compensation as articulated in Section 17 of Republic Act No. 6657. And it bears emphasizing, too, that precisely these factors have been translated into a basic formula in DAR AO No. 5, Series of 1998. In other words, the DAR formula merely encapsulated and implemented the guideposts in the determination of just compensation embodied in Section 17 of Republic Act No. 6657.
In arriving at a valuation of ₱103.33 per square meter, the RTC in its decision considered the following, among other things:
(1) The recommendation of the Commissioners based on the Schedule of Market Values of the City of Tagum as per its 1993 and 1994 Revision of Assessment and property classification
(2) The fact that certain portions of the land have been classified as a Medium Industrial District
(3) Permanent improvements on the land and value of said improvements
(4) Comparative sales of adjacent land
(5) Actual use
(6) Potential use
The trial court even meticulously evaluated each factor and justified its final valuation, thus:
The recommendation of the Commissioners’ Report for a value of ₱85.00 per sq.m. or ₱850,000.00 per hectare is founded on evidence. The schedule of market values of the City of Tagum as per its 1993 and 1994 Revision of Assessment and Property Classification (Exhibit "J-6" and "CC-6") give the lowest value for residential land at ₱100/sq.m. for 4th class residential land in 1993. In 1994, it gave the lowest value of ₱80.00/sq.m. for barangay residential lot. It appears that certain portions of the land in question have been classified as Medium Industrial District (Exhibit "J-4" and "CC-4"). The lowest value as for industrial land, 3rd class in a barangay is ₱130.00 sq.m. The average of these figures, using the lowest values in Exhibit "6" and "CC-6" yields the figure of ₱103.33 which is even higher by 22.2% than that recommended by the Commissioners. It is even of judicial notice that assessments made by local governments are much lower than real market value. Likewise, the value of the improvements thereon, were not even considered in the average of ₱103.33. If considered, this will necessarily result in a higher average value.
In said Appraisal Report, mention has been made on "improvements," and our Supreme Court in Republic vs. Gonzales, 50 O.G. 2461, decreed the rule, as follows:
If such improvements are permanent in character, consisting of good paved road, playgrounds, water system, sewerage and general leveling of the land suitable for residential lots together with electric installations and buildings, the same are important factors to consider in determining the value of the land. The original cost of such improvements may be considered, with due regard to the corresponding depreciation. (Davao vs. Dacudao, L-3741, May 8, 1952).
Note should be taken that in said Appraisal Report, permanent improvements on plaintiffs’ lands have been introduced and found existing, e.g., all weather-road network, airstrip, pier, irrigation system, packing houses, among others, wherein substantial amount of capital funding have been invested in putting them up.
This Court, however, notes that the comparative sales (Exhibits "A" to "F") referred to in the Appraisal Report are sales made after the taking of the land in 1996. However, in the offer of evidence, the plaintiff offered additional comparative sales of adjacent land from late 1995 to early 1997, ranging from a high of ₱580.00/sq.meter in September 1996 (Exhibit "L-4" for plaintiff Apo and "EE-4" for plaintiff Hijo) to a low of ₱146.02/sq.meter in October 1997 (Exhibits "L-2" and "EE-2"). The other sales in 1996 were in January 1996 for ₱530.00/sq.meter ( Exhs. "L-3" and "EE-3") and in December 1996 for ₱148.64/sq.meter (Exhs. "L-2" and "EE-1"). On the other hand, the sale in December 1995 (Exhs. "L-5" and "EE-5") was made for ₱530.00/sq.meter." The average selling price based on the foregoing transaction is ₱386.93/sq.meter. The same is even higher by around 350% than the recommended value of ₱85.00, as per the Commissioners’ Report.
The Cuervo Appraisal Report, on the other hand, gave a value of ₱84.53/sq. meter based on the Capitalized Income Approach. The said approach considered only the use of the land and the income generated from such use.
The just compensation for the parcels of land under consideration, taking into account the Schedule of Market Values given by the City Assessor of Tagum (Exhs. "J-6" for Apo "CC-6" for Hijo), the comparative sales covering adjacent lands at the time of taking of subject land, the Cuervo Report, and the Appraisal Report is hereby fixed at ₱103.33/sq.meter.
The valuation given by Cuervo and the Appraisal Report of ₱84.53 and ₱85.00, respectively, in this Court’s judgment, is the minimum value of the subject landholdings and definitely cannot in anyway be the price at which plaintiffs APO and/or HIJO might be willing to sell, considering that the parcels of land adjacent thereto were sold at much higher prices, specifically from a low of ₱146.02/sq.meter to a high of ₱580.00. The average of the lowest value under the 1993 and 1994 Revision of Assessment and Property Classification (Exhibits "J-6" and "CC-6") were already at ₱103.33/sq.meter, even without considering the improvements introduced on the subject landholdings.
Moreover, the Commission made the findings that "portions of the land subject of th(e) report may x x x increase to ₱330.00/sq.meter, specifically th(e) strips of land surrounding the provincial roads" and made the conclusion that "(c)learly, the value recommended by th(e) Commission, which is only about ₱85.00/sq.meter is way below the x x x assessed values, which effectively was fixed (as early as) 1994 or earlier than the Voluntary Offer to Sell of the above plaintiffs’ properties." In the absence of any evidence to the contrary, the said assessed values are presumed to be prevailing [in] December 1996, the time of taking of plaintiffs’ landholdings. The Commission further stated that the average of the said "assessed values as submitted by the City Assessor of Tagum City (is) ₱265.00/sq.meter." This Court, therefore, finds it unfair that the just compensation for the subject landholdings should only be fixed at ₱85.00/sq.meter.
It is similarly true, however, that the determination of just compensation cannot be made to the prejudice of defendants or the government for that matter.
Thus, the selling price of ₱580.00/sq. meter nor the average selling price of ₱386.93/sq. meter or the average assessed value of ₱265.00/sq. meter cannot be said to be the value at which defendants might be willing to buy the subject landholdings.
This Court, therefore, finds the price of ₱103.33/sq. meter for the subject landholdings fair and reasonable for all the parties. Said value is even lower than the lowest selling price of ₱148.64 for sale of adjacent land at the time of the taking of the subject landholdings [in] December 1996. It approximates, however, the average of the lowest values under the 1993 and 1994 Revision of Assessment and Property Clarification (Exhs. "J-6" and "CC-6") of ₱103.33. The said figure will further increase, if the Court will further consider the improvements introduced by plaintiffs, which should be the case. Moreover, the said value of ₱103.33/sq. meter is more realistic as it does not depart from the government recognized values as specified in the 1993 and 1994 Revised Assessment and Property Classification of Tagum City. This Court finds the evidence of the plaintiffs sufficient and preponderant to establish the value of ₱103.33/sq. meter.9
It cannot therefore be said that the trial court had no basis for its valuation of the real properties of AFC and HPI. It took into consideration the required important factors enumerated in Section 17 of Republic Act No. 6657 which, in turn, were the very same matters that made up the DAR formula. Verily, it can be said that the trial court had substantially applied the formula by looking into all the factors included therein, i.e net income, comparable sales and market value per tax declaration, to arrive at the proper land value.
Notably, DAR AO No. 5, Series of 1998, itself prescribes that the basic formula for just compensation shall only be used if all the three factors are present, relevant and applicable. The three factors are: 1) capitalized net income; 2) comparable sales; and 3) market value per tax declaration. DAR AO No. 5, Series of 1998, II A, underscores that the above formula as therein indicated, i.e., LV = (CNI x.06) + (CS x 0.3) + (MV x 0.1), shall be used if all three factors are "present, relevant, and applicable." What is explicit in said AO, therefore, is the qualification that for the aforesaid basic formula to be utilized in arriving at the land value, the three factors, i.e., capitalized net income; comparable sales; and market value per tax declaration must be determined by the RTC acting as SAC to be "present, relevant, and applicable." Hence, it is within its duty to: 1) identify the presence of the three factors; 2) determine if the factors are relevant to the valuation; and 3) judge their applicability. The very same DAR AO, therefore, recognizes that there are circumstances when, to the mind of the court, any of the three factors are not present, relevant or applicable; and the basic formula cannot be used. In such cases, alternative formulae are made available.
What is clearly implicit, thus, is that the basic formula and its alternatives -- administratively determined (as it is not found in Republic Act No. 6657, but merely set forth in DAR AO No. 5, Series of 1998) -- although referred to and even applied by the courts in certain instances, does not and cannot strictly bind the courts. To insist that the formula must be applied with utmost rigidity whereby the valuation is drawn following a strict mathematical computation goes beyond the intent and spirit of the law. The suggested interpretation is strained and would render the law inutile. Statutory construction should not kill but give life to the law.10 As we have established in earlier jurisprudence, the valuation of property in eminent domain is essentially a judicial function which is vested in the regional trial court acting as a SAC, and not in administrative agencies.11 The SAC, therefore, must still be able to reasonably exercise its judicial discretion in the evaluation of the factors for just compensation, which cannot be arbitrarily restricted by a formula dictated by the DAR, an administrative agency. Surely, DAR AO No. 5 did not intend to straightjacket the hands of the court in the computation of the land valuation. While it provides a formula, it could not have been its intention to shackle the courts into applying the formula in every instance. The court shall apply the formula after an evaluation of the three factors, or it may proceed to make its own computation based on the extended list in Section 17 of Republic Act No. 6657, which includes other factors, like the cost of acquisition of the land; the current valuation of like properties; its nature, actual use and income; the sworn valuation by the owner; the tax declarations; and the assessment made by the government assessors.
The argument of LBP that the real properties of AFC and HPI must have a lower valuation, since they are agricultural, conveniently disregards our repeated pronouncement that in determining the just compensation to be paid to the landowner, all the facts as to the condition of the property and its surroundings, as well as its improvements and capabilities, should be considered.12
In National Power Corporation v. Manubay Agro-Industrial Development Corporation13 involving undeveloped, raw agricultural land, the court held that other factors should still be considered in the valuation of the property:
The parcels of land sought to be expropriated are undeniably undeveloped, raw agricultural land. But a dominant portion thereof has been reclassified by the Sangguniang Panlungsod ng Naga – per Zoning Ordinance No. 94-076 dated August 10, 1994 – as residential, per the August 8, 1996 certification of Zoning Administrator Juan O. Villegas, Jr. The property is also covered by Naga City Mayor Jesse M. Robredo’s favorable endorsement of the issuance of a certification for land use conversion by the Department of Agrarian Reform (DAR) on the ground that the locality where the property was located had become highly urbanized and would have greater economic value for residential or commercial use.
The nature and character of the land at the time of its taking is the principal criterion for determining how much just compensation should be given to the landowner. All the facts as to the condition of the property and its surroundings, as well as its improvements and capabilities, should be considered.
In fixing the valuation at ₱550 per square meter, the trial court had considered the Report of the commissioners and the proofs submitted by the parties. These documents included the following: (1) the established fact that the property of respondent was located along the Naga-Carolina provincial road; (2) the fact that it was about 500 meters from the Kayumanggi Resort and 8 kilometers from the Naga City Cental Business District; and a half kilometer from the main entrance of the fully developed Naga City Sports Complex – used as the site of the Palarong Pambansa – and the San Francisco Village Subdivision, a first class subdivision where lots were priced at P2,500 per square meter; (3) the fair market value of P650 per square meter proffered by respondent, citing its recently concluded sale of a portion of the same property to Metro Naga Water District at a fixed price of P800 per square meter; (4) the BIR zonal valuation of residential lots in Barangay Pacol, Naga City, fixed at a price of P220 per square meter as of 1997; and (5) the fact that the price of P430 per square meter had been determined by the RTC of Naga City (Branch 21) as just compensation for the Mercados’ adjoining property, which had been expropriated by NPC for the same power transmission project.
The chairperson of the Board of Commissioners, in adopting the recommendation of Commissioner Bulaos, made a careful study of the property. Factors considered in arriving at a reasonable estimate of just compensation for respondent were the location; the most profitable likely use of the remaining area; and the size, shape, accessibility as well as listings of other properties within the vicinity. Averments pertaining to these factors were supported by documentary evidence.
On the other hand, the commissioner of petitioner – City Assessor Albeus – recommended a price of ₱115 per square meter in his Report dated June 30, 1997. No documentary evidence, however, was attached to substantiate the opinions of the banks and the realtors, indicated in the commissioner’s Report and computation of the market value of the property.
The price of ₱550 per square meter appears to be the closest approximation of the market value of the lots in the adjoining, fully developed San Francisco Village Subdivision. Considering that the parcels of land in question are still undeveloped raw land, it appears to the Court that the just compensation of ₱550 per square meter is justified.
Inasmuch as the determination of just compensation in eminent domain cases is a judicial function, and the trial court apparently did not act capriciously or arbitrarily in setting the price at P550 per square meter – an award affirmed by the CA – we see no reason to disturb the factual findings as to the valuation of the property. Both the Report of Commissioner Bulao and the commissioners’ majority Report were based on uncontroverted facts supported by documentary evidence and confirmed by their ocular inspection of the property. As can be gleaned from the records, they did not abuse their authority in evaluating the evidence submitted to them; neither did they misappreciate the clear preponderance of evidence. The amount fixed and agreed to by the trial court and respondent appellate court has not been grossly exorbitant or otherwise unjustified.
In this case, the trial court properly arrived at the just compensation due AFC and HPI for their properties, taking into account their nature as irrigated land, location along the highway, market value, assessed value at the time of the taking, and the volume and value of their produce.
In addition to these, an ocular inspection conducted by the Commission revealed the following:
On August 5, 2000, this Commission conducted an Ocular Inspection of the properties, viewing vital infrastructure facilities including an extensive all-weather road network, an airfield, engineering facilities, a power plant and water/irrigation system. The properties are also located near the Davao del Norte Regional Trial Hospital, fully developed residential areas, schools and the proposed City Government Center. On the boundary of APO is the Visayan Village, Apokon, the next barangay to the downtown City of Tagum and only about a kilometer to the present City Hall. (Underscoring supplied.)
Significantly, these observations were never rebutted by LBP.
Based on said documentary evidence and the result of the ocular inspection, it was established that the properties of petitioner AFC border "Visayan Village (Barangay of) Apokon, the next barangay to the downtown City of Tagum and only one kilometer to the present City Hall." The portions of the property of AFC located in Madaum had been classified in 1994 as a Major Commercial District and a Medium Industrial District per Municipal Ordinance No. 41 Series of 1994. Also, portions of the properties of AFC and HPI were re-classified as second-class barangay commercial lands at ₱330.00/square meter and second-class barangay industrial lands at ₱200/square meter. The classification of the lands of AFC and HPI by the Municipality of Tagum from agricultural land to "second-class barangay commercial lands and second-class barangay industrial lands, one year after the taking of the land, validates the observation of the commissioners in their Appraisal Report that "the properties are also located near Davao Del Norte Regional Hospital, fully developed residential areas, schools and proposed City Government Center." Moreover, the values of comparative sales of residential land presented before the trial court are in Barangay Apokon, as well as in the Visayan Village in the same Barangay Apokon, adjacent to the Apo property.
Hence, this Court is convinced that the trial court correctly determined the amount of just compensation due AFC and HPI in accordance with, and guided by, Republic Act No. 6657, the DAR formula, and existing jurisprudence.
Similarly unavailing is LBP’s claim that the real properties in question are solely agricultural, as the trial court has determined that certain portions thereof have been classified as a Medium Industrial District, to wit:
It is undeniable that plaintiffs’ agricultural lands as borne out from the records hereof, and remaining unrebutted, shows that all weather-roads network, airstrip, pier, irrigation system, packing houses, and among numerous other improvements are permanently in place and not just a measly, but substantial amounts investments have been infused. To exclude these permanent improvements in rendering its valuation of said properties would certainly be less than fair. x x x.
x x x x
The plaintiffs’ agricultural properties are just a stone’s throw from the residential and/or industrial sections of Tagum City, a fact defendants-DAR and LBP should never ignore. The market value of the property (plus the consequential damages less consequential benefits) is determined by such factors as the value of like properties, its actual or potential use, its size, shape and location as enunciated in B.H. Berkenkotter & Co. vs. Court of Appeals, 216 SCRA 584 (1992). To follow Defendants-DAR and LBP logic, therefore, would in effect restrict and delimit the broad judicial prerogatives of this Court in determining and fixing just compensation of properties taken by the State.
Proceedings before the Panel of Commissioners revealed that permanent improvements as mentioned above exist inside the lands subject of this complaints. It was also established during the trial proper upon reception of the evidence of the plaintiffs which clearly revealed the character, use and valuation of the lands surrounding the properties involved in these cases, indicating the strategic location of the properties subject of these cases. The findings being that surrounding properties have been classified as residential, commercial or industrial. And yet defendant-LBP refused to acknowledge the factual basis of the findings of the Panel of Commissioners and insisted on its guideline in determining just compensation. x x x.14
These are strengthened by the following evidence of AFC and HPI, to wit:
a) Municipal Ordinance No. 41, Series of 1994 issued by the Sangguaniang Bayan of Tagum (when Tagum was still a Municipality), amending the Revised Comprehensive Municipal Zoning Ordinance and classifying parts of Barangay Madaum as Major Commercial District (C-2 and Medium Industrial District (1-2) (Exhibit J-4 for APO, Exhibit CC-4 for HIJO).
b) A certification from the Office of the City Assessor of Tagum City showing the assessed value of second class barangay commercial lands as ₱330.00/sq.m. and second class barangay industrial lands ₱200.00/sq.m. (Exhibit J-6 for APO, Exhibit CC-6 for HIJO).
LBP next cites our decision in Land Bank of the Philippines v. Banal15 to fortify its feeble stand. Again, we strike it down, as Land Bank of the Philippines v. Banal is not on all fours with the present case. Notably, while Land Bank of the Philippines v. Banal involves a determination of just compensation under Republic Act No. 6657, the valuation arrived at by the RTC acting as SAC and affirmed by the Court of Appeals was reversed by this Court on the following grounds:
[T]he RTC failed to observe the basic rules of procedure and the fundamental requirements in determining just compensation for the property. Firstly, it dispensed with the hearing and merely ordered the parties to submit their respective memoranda. Such action is grossly erroneous since the determination of just compensation involves the examination of the following factors specified in Section 17 of R.A. 6657, x x x.
x x x x
Secondly, the RTC, in concluding that the valuation of respondent’s property is ₱703,137.00, merely took judicial notice of the average production figures in the Rodriguez case pending before it and applied the same to this case without conducting a hearing and worse, without the knowledge or consent of the parties, x x x.
x x x x
Lastly, the RTC erred in applying the formula prescribed under Executive Order (EO) No. 228 and R.A. No. 3844, as amended, in determining the valuation of the property; and in granting compounded interest pursuant to DAR Administrative Order No. 13, Series of 1994. x x x.
Clearly, Land Bank of the Philippines v. Banal belongs to a different factual milieu, for the RTC therein acting as SAC failed to conduct a hearing with notice and participation of all the parties, in keeping with the ideals of fair play. In this case, the RTC, as SAC, conducted the requisite hearing, received the evidence of the parties, conducted ocular inspection and gave due regard to all the factors to be considered in determining the correct amount of just compensation when it rendered its valuation of the properties of AFC and HPI.16
However, after a second hard look at the facts of this case, we find that a modification of our Decision dated 6 February 2007 pertaining to the award of interest on just compensation, commissioner’s fees and attorney’s fees, is in order.
On the issue of interest rates imposed by the trial court, Section 18 of Republic Act No. 6657 states:
SEC. 18. Valuation and Mode of Compensation. – The LBP shall compensate the landowner in such amount as may be agreed upon by the landowner, the DAR and LBP or as may be finally determined by the court as the just compensation for the land.
The compensation shall be paid in one of the following modes at the option of the landowner:
(1) Cash payment, under the following terms and conditions:
|
(a) For lands above fifty (50) hectares, insofar as the excess hectarage is concerned |
- Twenty-five percent (25%) cash, the balance to be paid in government financial instruments negotiable at any time. |
x x x x
(4) LBP bonds, which shall have the following features:
(a) Market interest rates aligned with 91-day treasury bill rates. Ten percent (10%) of the face value of the bonds shall mature every year from the date of issuance until the tenth (10th) year: Provided, That should the landowner choose to forego the cash portion, whether in full or in part, he shall be paid correspondingly in LBP bonds.
Under the above provision, in case of payment made in LBP bonds, the same shall earn interest rates aligned with the 91-day treasury bill (T-Bill) rates. The court notes that in the LBP’s Motion for Reconsideration dated 5 October 200117 of the 25 September 2001 Decision of the RTC acting as SAC, the LBP disagreed with the imposition of interest rates by the RTC based on the 91-day T- Bill rate. LBP insisted therein that, assuming interest should be imposed on the amount of just compensation, it should be in accordance with existing jurisprudence laid down in Eastern Shipping Lines v. Court of Appeals,18 to wit:
II. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.
Acting on this motion, the RTC in its Order dated 5 December 200119 acknowledged the proper rate of interest suggested by LBP when it modified its decision by imposing a 12% interest rate due on the amount of just compensation, instead of the earlier interest rate it imposed based on the market interest rate aligned under the 91-day treasury bills as provided in Section 18 of Republic Act No. 6657.
We agree in the position taken by LBP.1âwphi1
It must be noted that after AFC and HPI voluntarily offered to sell the subject lands, respondent DAR referred the Voluntary Offer to Sell application to respondent LBP for initial valuation, which fixed the just compensation at ₱165,484.47 per hectare. AFC and HPI, however, rejected the valuation, hence, respondent LBP opened deposit accounts in the name of the AFC and HPI and credited their accounts with ₱26,409,549.86 and ₱45,481,706.76, respectively. Both AFC and HPI withdrew the amounts in cash from respondent LBP. Thereafter, AFC and HPI filed separate complaints for determination of just compensation with the DAR Adjudication Board (DARAB). When the same were not acted upon for more than three years, AFC and HPI filed the present complaints for determination of just compensation with the RTC of Tagum City, Branch 2.
AFC and HPI now blame LBP for allegedly incurring delay in the determination and payment of just compensation. However, the same is without basis as AFC and HPI’s proper recourse after rejecting the initial valuations of respondent LBP was to bring the matter to the RTC acting as a SAC, and not to file two complaints for determination of just compensation with the DAR, which was just circuitous as it had already determined the just compensation of the subject properties taken with the aid of LBP.
In Land Bank of the Philippines v. Wycoco,20 citing Reyes v. National Housing Authority21 and Republic v. Court of Appeals,22 this Court held that the interest of 12% per annum on the just compensation is due the landowner in case of delay in payment, which will in effect make the obligation on the part of the government one of forbearance. On the other hand, interest in the form of damages cannot be applied, where there was prompt and valid payment of just compensation. Thus:
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 being 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.
x x x 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.23
It is explicit from LBP v. Wycoco that interest on the just compensation is imposed only in case of delay in the payment thereof which must be sufficiently established. Given the foregoing, we find that the imposition of interest on the award of just compensation is not justified and should therefore be deleted.
It must be emphasized that "pertinent amounts were deposited in favor of AFC and HPI within fourteen months after the filing by the latter of the Complaint for determination of just compensation before the RTC".24 It is likewise true that AFC and HPI already collected ₱149.6 and ₱262 million, respectively, representing just compensation for the subject properties. Clearly, there is no unreasonable delay in the payment of just compensation which should warrant the award of 12% interest per annum in AFC and HPI’s favor.
On the matter of commissioner’s fees, the RTC awarded such fees as follows:
Third – Hereby ordering Defendants – DEPARTMENT OF AGRARIAN RE9FORM and/or LAND BANK OF THE PHILIPPINES, thru its Land Valuation Office, to pay jointly and severally the Commissioners’ fees herein taxed as part of the costs pursuant to Section 12, Rule 67 of the 1997 Rules of Civil Procedure, equivalent to, and computed at Two and One-Half (2 ˝) percent of the determined and fixed amount as the fair, reasonable and just compensation of plaintiffs’ land and standing crops and improvements.25
The relevant law is found in Rule 67, Section 12 of the Rules of Court:
SEC. 12. Costs, by whom paid. – The fees of the commissioners shall be taxed as a part of the costs of the proceedings. All costs, except those of rival claimants litigating their claims, shall be paid by the plaintiff, unless an appeal is taken by the owner of the property and the judgment is affirmed, in which event the costs of the appeal shall be paid by the owner.
Rule 141, Section 16 of the Rules of Court, provides that:
SEC. 16. Fees of commissioners in eminent domain proceedings. – The commissioners appointed to appraise land sought to be condemned for public uses in accordance with these rules shall each receive a compensation to be fixed by the court of NOT LESS THAN THREE HUNDRED (₱300.00) pesos per day for the time actually and necessarily employed in the performance of their duties and in making their report to the court, which fees shall be taxed as a part of the costs of the proceedings.
From the afore-quoted provision, the award made by the RTC is way beyond that allowed under Rule 141, Section 16; thus, the award is excessive and without justification. Records show that the commissioners were constituted on 26 May 2000 and they submitted their appraisal report on 21 May 2001, when the old schedule of legal fees was in effect. The amendment in Rule 141 introduced by A.M. No. 04-2-04-SC, which took effect on 16 August 2004, increased the commissioner’s fees from ₱100.00 to ₱300.00 per day. Assuming they devoted all the 360 days from the time they were constituted until the time they submitted the appraisal report in the performance of their duties, and applying the old rate for commissioner’s fees, they would only receive ₱38,000.00. Moreover, even if the new rate is applied, each commissioner would receive only ₱108,000.00. The rule above-quoted is very clear on the amount of commissioner’s fees. The award made by the RTC in the amount of 2˝% of the total amount of just compensation, i.e., 2˝% of ₱1,383,179,000.00, which translates to ₱34,579,475.00, is certainly unjustified and excessive. A remand of the case for the determination of the proper amount of commissioner’s fees is called for, pursuant to the aforecited provision of the Rules of Court.
On the issue of attorney’s fees, we quote the award of the RTC in its modified decision dated 5 December 2001:
Fourth – Hereby ordering Defendants – DEPARTMENT OF AGRARIAN REFORM and/or LAND BANK OF THE PHILIPPINES, thru its Land Valuation Office, to pay jointly and severally the attorney’s fees to plaintiffs equivalent to, and computed at Ten (10%) Percent of the determined and fixed amount as the fair, reasonable and just compensation of plaintiffs’ land and standing crops and improvements.26
In justifying its award of 10% of the just compensation as attorney’s fees, the RTC cited Article 2208 of the Civil Code and supposed delay of three years by the DAR in ruling on the issue of just compensation.
Contracts for attorney’s services in this jurisdiction stand upon an entirely different footing from contracts for the payment of compensation for any other service.
x x x [A]n attorney is not entitled in the absence of express contract to recover more than a reasonable compensation for his services; and even when an express contract is made, the court can ignore it and limit the recovery to reasonable compensation if the amount of the stipulated fee is found by the court to be reasonable27
The general rule is that attorney’s fees cannot be recovered as part of damages because of the policy that no premium should be placed on the right to litigate. They are not to be awarded every time a party wins a suit. The power of the court to award attorney’s fees under Article 2208 of the Civil Code demands factual, legal and equitable justification. A perusal of Article 2208 of the Revised Civil Code will reveal that the award of attorney’s fees in the form of damages is the exception rather than the rule for it is predicated upon the existence of exceptional circumstances.28
In all cases, it must be reasonable, just and equitable if the same is to be granted. It is necessary for the court to make findings of fact and law to justify the grant of such award. The matter of attorney’s fees must be clearly explained and justified by the trial court in the body of its decision.29
In this case, the RTC failed to substantiate its award of attorney’s fees which amounts to ten percent (10%) of the award of ₱1,383,179,000 and is equivalent to ₱138,317,900.00.
It must be noted that the RTC, in justifying attorney’s fees in favor of AFC and HPI, ruled that AFC and HPI were "constrained to go to court due to the unreasonable delay of three (3) years by defendant DAR in failing to rule on their claim for just and additional compensation."30 However, as we have earlier discussed, AFC and HPI’s proper recourse after rejecting the initial valuation of LBP was to bring the matter to the RTC acting as Special Agrarian Court and not to file two complaints for determination of just compensation with the DAR. It is then quite obvious that AFC and HPI’s claimed "unreasonable delay" in obtaining just compensation for its subject properties was brought about by their own undoing for which they should not be made to profit by virtue of an exhorbitant award of attorney’s fees in their favor. Given this, we now hold that the RTC erred in awarding attorney’s fees in favor of AFC and HPI for said award lacks the requisite factual and legal justification. Its deletion is proper.
With the foregoing disquisition, LBP’s prayer for referral of this case to the Court En Banc must be resolved against the bank. For it is abundantly clear that this case does not in any way modify or reverse our holdings in Land Bank of the Philippines v. Banal and Land Bank of the Philippines v. Celada. To reiterate, in Land Bank of the Philippines v. Celada, the RTC acting as SAC arrived at the determination of just compensation based only on one single factor, namely, its observation that there was a patent disparity between the price given to the landowner as compared to the other landowners in that case. This is not true in the present case as we have repeatedly held that the RTC acting as SAC considered all material and relevant factors to arrive at a correct and proper determination of just compensation. On the other hand, in Land Bank of the Philippines v. Banal, the valuation of the RTC acting as SAC was set aside for the reason that the same was arrived at without a hearing and based only on the memoranda of the parties. In this case, the trial court conducted several hearings and ocular inspections before it rendered its decision.
It may be well to remind LBP’s counsel that the Court En Banc is not an appellate tribunal to which appeals from a Division of the Court may be taken. A Division of the Court is the Supreme Court as fully and veritably as the Court En Banc itself, and a decision of its Division is as authoritative and final as a decision of the Court En Banc. Referrals of cases from a Division to the Court En Banc do not take place as just a matter of routine but only on such specified grounds as the Court in its discretion may allow.31
WHEREFORE, premises considered, the Motion for Reconsideration is partially granted as follows:
(1) The award of 12% interest rate per annum in the total amount of just compensation is DELETED.
(2) This case is ordered remanded to the RTC for further hearing on the amount of Commissioners’ Fees.
(3) The award of attorney’s fees is DELETED.
(4) The Motion for Referral of the case to the Supreme Court sitting En Banc and the request or setting of the Omnibus Motion for Oral Arguments are all DENIED for lack of merit. In all other respects, our Decision dated 6 February 2007 is MAINTAINED.
SO ORDERED.
MINITA V. CHICO-NAZARIO
Associate Justice
WE CONCUR:
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson
MA. ALICIA AUSTRIA-MARTINEZ
Associate Justice |
On leave
ANTONIO EDUARDO B. NACHURA*
Associate Justice |
RUBEN T. REYES
Associate Justice
A T T E S T A T I O N
I attest that the conclusions in the above Resolution were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, it is hereby certified that the conclusions in the above Resolution were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.
RENATO S.PUNO
Chief Justice
Footnotes
* On leave.
1 Dated 16 March 2007; rollo, p. 442.
2 Rollo, p. 440.
3 G.R. No. 164876, 23 January 2006, 479 SCRA 495, 506-507.
4 Rollo, pp. 457-459.
5 People v. Olivar, 458 Phil. 375, 388 (2003).
6 Land Bank of the Philippines v. Celada, supra note 3 at 505-506.
7 Land Bank of the Philippines v. Celada, supra note 3 at 508.
8 Id.
9 Rollo, pp. 116-119.
10 People v. Que, 333 Phil. 582, 590 (1996).
11 Didipio Earth-Savers’ Multi- Purpose Association, Inc. v. Gozun, G.R. No. 157882, 30 March 2006, 485 SCRA 586, 617, citing Export Processing Zone Authority v. Dulay, G.R. No. L-59603, 29 April 1987, 149 SCRA 305, 316.
12 Land Bank of the Philippines v. Natividad, G.R. No. 127198, 16 May 2005, 458 SCRA 441, 452-453.
13 G.R. No. 150936, 18 August 2004, 437 SCRA 60, 68-70.
14 Id. at 146-149.
15 G.R. No. 143276, 20 July 2004, 434 SCRA 543, 550-553.
16 Export Processing Zone Authority v. Dulay, supra note 11; Land Bank of the Philippines v. Wycoco, 464 Phil. 83, 97 (2004); Land Bank of the Philippines v. Banal, id.
17 Records, Book 2, p. 1047.
18 G.R. No. 97412, 12 July 1994, 234 SCRA 78, 95-97.
19 Records, Book 2, p. 1140.
20 Supra note 16.
21 443 Phil. 603 (2003).
22 433 Phil. 106 (2002).
23 Reyes v. National Housing Authority, supra note 21 at 616.
24 Rollo, p. 571.
25 Records, Book 2, p. 1158.
26 Records, Book 2, p. 1159.
27 Bach v. Ongkiko Kalaw Manhit & Acorda Law Offices, G.R. No. 160334, 11 September 2006, 501 SCRA 419, 432-433.
28 Sy v. Court of Appeals, G.R. No. 83139, 12 April 1989, 172 SCRA 125.
29 Citibank, N.A. v. Cabamongan, G.R. No. 146918, 2 May 2006, 488 SCRA 517, 535-536.
30 Rollo, p. 121.
31 Bagaoisan v. National Tobacco Administration, 455 Phil. 761, 777 (2003). The following are considered en banc cases:
1. Cases in which the constitutionality or validity of any treaty, international or executive agreement, law, executive order, or presidential decree, proclamation, order, instruction, ordinance, or regulation is in question;
2. Criminal cases in which the appealed decision imposes the death penalty;
3. Cases raising novel questions of law;
4. Cases affecting ambassadors, other public ministers and consuls;
5. Cases involving decisions, resolutions or orders of the Civil Service Commission, Commission on Elections, and Commission on Audit;
6. Cases where the penalty to be imposed is the dismissal of a judge, officer or employee of the judiciary, disbarment of a lawyer, or either the suspension of any of them for a period of more than one (1) year or a fine exceeding ₱10,000.00 or both;
7. Cases where a doctrine or principle laid down by the court en banc or in division may be modified or reversed;
8. Cases assigned to a division which in the opinion of at least three (3) members thereof merit the attention of the court en banc and are acceptable to a majority of the actual membership of the court en banc; and
9. All other cases as the court en banc by a majority of its actual membership may deem of sufficient importance to merit its attention.
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