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Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 179862               September 3, 2009

LAND BANK OF THE PHILIPPINES, Petitioner,
vs.
HEIRS OF ASUNCION AÑONUEVO VDA. DE SANTOS, HEIRS OF LOURDES SANTOS, RAMON A. SANTOS, JOSE ANTONIO SANTOS, TERESITA SANTOS-FLORENTINO, BRENDA SANTOS-REYES and CLARISSA SANTOS-REYES, represented by their Attorney-In-Fact, TERESITA SANTOS-FLORENTINO, Respondents.

D E C I S I O N

CHICO-NAZARIO, J.:

Before Us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court¹ seeking to reverse the Decision² dated 17 April 2007 and Resolution³ dated 25 September 2007 of the Court of Appeals in CA-G.R. SP No. 90976, which affirmed in toto the Decision⁴ dated 28 June 2005 and Order⁵ dated 28 July 2005 of the Regional Trial Court, acting as a Special Agrarian Court (SAC), of Lucena City, in Case No. 98-68.

The facts gathered from the records are as follows:

Respondents are the registered owners of 122.3408 hectares of agricultural land located in Casay, Mulanay, Quezon, and covered by Transfer Certificate of Title (TCT) No. T-209393. In 1972, a portion of the said land, measuring 117.3854 hectares, planted with corn (subject property), was placed by the Department of Agrarian Reform (DAR) under its Operation Land Transfer Program, pursuant to Presidential Decree No. 27.⁶

On 15 June 1988, Republic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988 (CARL), took effect.

Thereafter, from the years 1988 to 1990, DAR subdivided and distributed the subject property to farmer-beneficiaries.⁷

Based on the formula for computation of just compensation embodied in Executive Order No. 228,⁸ petitioner Land Bank of the Philippines valued the subject property at ₱241,070.45. On 17 August 1992, DAR offered the said amount as compensation for the subject property, but respondents rejected the same for being "cheap, unjust and atrociously low." Petitioner, then, upon the instruction of DAR, deposited the ₱241,070.45 in the name and for the account of respondents on 16 October 1992.⁹

On 17 March 1998, respondents filed with the SAC a Complaint against petitioner and DAR for the fixing of just compensation for the subject property, docketed as Case No. 98-68. Respondents beseeched the SAC to render judgment fixing the just compensation for the subject property at ₱19,717.50 per hectare,¹⁰ or a total of ₱2,314,546.62 for the entire 117.3854 hectares.

Subsequently, petitioner filed with the SAC its Answer contending that since the subject property was acquired under Presidential Decree No. 27, its valuation of the subject property was correct as it was based on the formula prescribed by Executive Order No. 228. Thus, petitioner sought the dismissal of respondents’ Complaint.¹¹

After trial, the SAC rendered a Decision in Case No. 98-68 on 28 June 2005, fixing the just compensation for the subject property at ₱1,730,211.21. In arriving at said valuation, the SAC considered the pertinent provisions of the CARL, as well as the testimonial and documentary evidence presented by respondents regarding the market value of the subject property, and the price of corn in the year 1990. Petitioner was ordered to pay the respondents the just compensation of ₱1,730,211.21 in cash and bonds.¹²

The SAC denied the Motion for Reconsideration of petitioner in an Order dated 28 July 2005.¹³ Aggrieved, petitioner filed an appeal with the Court of Appeals, docketed as CA-G.R. SP No. 90976.

In a Decision dated 17 April 2007, the Court of Appeals dismissed the appeal of petitioner and affirmed in toto the SAC Decision dated 28 June 2005 and Order dated 28 July 2005 in Case No. 98-68. In a Resolution dated 25 September 2007, the Court of Appeals denied the Motion for Reconsideration of petitioner.

Hence, petitioner lodged the instant Petition before us raising the following issues:

I.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN APPLYING [the CARL] IN THE DETERMINATION OF JUST COMPENSATION OF RESPONDENTS’ CORNLAND COVERED AND ACQUIRED UNDER THE OPERATION LAND TRANSFER PURSUANT TO PD [No.] 27 AND EO [No.] 228;

II.

WHETHER OR NOT [the CARL] CAN BE GIVEN RETROACTIVE APPLICATION TO COVER PD [No.] 27 ACQUIRED RICE/CORN LAND TAKEN AS OF 21 OCTOBER 1972; AND

III.

WHETHER OR NOT THE COURT OF APPEALS ERRED IN SUSTAINING THE SAC THAT THE GSP FOR CORN SHALL BE ₱225.00/CAVAN FOR THE YEAR 1990 IN LIEU OF THE LEGISLATED GSP OF ₱31.00/CAVAN UNDER PD [No.] 27/EO [No.] 228 ON THE DATE OF TAKING IN 1972.¹⁴

Petitioner claims that the subject property was acquired pursuant to Presidential Decree No. 27 and Executive Order No. 228. Hence, the just compensation for said property should be computed in accordance with the formula prescribed in the same laws. Petitioner argues that the CARL is not applicable in the present case because it operates distinctly from Presidential Decree No. 27 and Executive Order No. 228. The CARL covers all public and private agricultural lands suitable for agriculture, while Presidential Decree No. 27 and Executive Order No. 228 cover rice and corn lands tenanted as of 21 October 1972. Further, the CARL applies prospectively and not retroactively, and cannot be applied to lands acquired on 21 October 1972, prior to its effectivity.¹⁵

The instant Petition is bereft of merit.

Presidential Decree No. 27 proclaimed the "emancipation of all tenant-farmers from the bondage of the soil and transferring to them the land they were tilling effective 21 October 1972." Presidential Decree No. 27 covers private agricultural lands primarily devoted to rice and corn under a system of share-crop or lease tenancy. Executive Order No. 228 provides the following formula for the valuation of rice and corn lands covered by Presidential Decree No. 27:

LV = AGP x 2.5 x ₱31.00

Where:

LV = Land Value,

AGP = Average Gross Production in cavan of 50 kilos in accordance with DAR Memorandum Circular No. 26, Series of 1973,

₱31.00 = Government Support Price for corn on October 21, 1972 pursuant to EO 228.¹⁶

On the other hand, the CARL was enacted to promote social justice to the landless farmers and provide "a more equitable distribution and ownership of land with due regard to the rights of the landowners to just compensation and to the ecological needs of the nation."¹⁷ The CARL shall cover public and private agricultural lands including other lands of the public domain suitable for agriculture,¹⁸ which, as we have explained in Land Bank of the Philippines v. Court of Appeals,¹⁹ embrace even rice and corn lands under Presidential Decree No. 27:

We cannot see why Sec. 18 of RA 6657 should not apply to rice and corn lands under PD 27. Section 75 of RA 6657 clearly states that the provisions of PD 27 and EO 228 shall only have a suppletory effect. Section 7 of the Act also provides -

Sec. 7. Priorities. - The DAR, in coordination with the PARC shall plan and program the acquisition and distribution of all agricultural lands through a period of (10) years from the effectivity of this Act. Lands shall be acquired and distributed as follows:

Phase One: Rice and Corn lands under P.D. 27; all idle or abandoned lands; all private lands voluntarily offered by the owners for agrarian reform; x x x and all other lands owned by the government devoted to or suitable for agriculture, which shall be acquired and distributed immediately upon the effectivity of this Act, with the implementation to be completed within a period of not more than four (4) years.

This eloquently demonstrates that RA 6657 includes PD 27 lands among the properties which the DAR shall acquire and distribute to the landless. And to facilitate the acquisition and distribution thereof, Secs. 16, 17 and 18 of the Act should be adhered to. In Association of Small Landowners of the Philippines v. Secretary of Agrarian Reform this Court applied the provisions of RA 6657 to rice and corn lands when it upheld the constitutionality of the payment of just compensation for PD 27 lands through the different modes stated in Sec. 18.

In several cases, we have, for reason of equity, applied the CARL in determining just compensation for lands acquired under Presidential Decree No. 27 and before the effectivity of CARL on 15 June 1988.

In Land Bank of the Philippines v. Natividad,²⁰ the parcels of agricultural land were acquired from their owners for purposes of agrarian reform on 21 October 1972, the very day Presidential Decree No. 27 took effect. As late as 1993, however, the landowners were not yet paid the value of their lands. Hence, the landowners filed a petition with the trial court for the determination of just compensation. When the case was appealed before us, we ruled that CARL should be applied in determining the just compensation of landowners, to wit:

Land Bank’s contention that the property was acquired for purposes of agrarian reform on October 21, 1972, the time of the effectivity of PD 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.

x x x x

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 this case, the trial court arrived at the just compensation due private respondents for their property, taking into account its nature as irrigated land, location along the highway, market value, assessor’s value and the volume and value of its produce. This Court is convinced that the trial court correctly determined the amount of just compensation due private respondents in accordance with, and guided by, RA 6657 and existing jurisprudence. (Emphasis ours.)

In Lubrica v. Land Bank of the Philippines,²¹ the lands were acquired from their owners on 21 October 1972, pursuant to Presidential Decree No. 27, but they remained unpaid until the year 2003. This prompted the landowners to file separate petitions for determination of just compensation for their lands. Upon appeal to us, we held that the just compensation should be determined under the CARL, viz:

Petitioners insist that the determination of just compensation should be based on the value of the expropriated properties at the time of payment. Respondent LBP, on the other hand, claims that the value of the realties should be computed as of October 21, 1972 when P.D. No. 27 took effect.

The petition is impressed with merit.

x x x x

The Natividad case reiterated the Court's ruling in Office of the President v. Court of Appeals 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, we held that expropriation of landholdings covered by R.A. No. 6657 take place, not on the effectivity of the Act on June 15, 1988, but on the payment of just compensation.

In the instant case, petitioners were deprived of their properties in 1972 but have yet to receive the just compensation therefor. The parcels of land were already subdivided and distributed to the farmer-beneficiaries thereby immediately depriving petitioners of their use. Under the circumstances, it would be highly inequitable on the part of the petitioners to compute the just compensation using the values at the time of the taking in 1972, and not at the time of the payment, considering that the government and the farmer-beneficiaries have already benefited from the land although ownership thereof have not yet been transferred in their names. Petitioners were deprived of their properties without payment of just compensation which, under the law, is a prerequisite before the property can be taken away from its owners. The transfer of possession and ownership of the land to the government are conditioned upon the receipt by the landowner of the corresponding payment or deposit by the DAR of the compensation with an accessible bank. Until then, title remains with the landowner.

x x x x

We also note that the expropriation proceedings in the instant case was initiated under P.D. No. 27 but the agrarian reform process is still incomplete considering that the just compensation to be paid to petitioners has yet to be settled. Considering the passage of R.A. No. 6657 before the completion of this process, the just compensation should be determined and the process concluded under the said law. Indeed, R.A. No. 6657 is the applicable law, with P.D. No. 27 and E.O. No. 228 having only suppletory effect.

x x x x

Petitioners were deprived of their properties way back in 1972, yet to date, they have not yet received just compensation. Thus, it would certainly be inequitable to determine just compensation based on the guideline provided by P.D. No. 227 and E.O. No. 228 considering the failure to determine just compensation for a considerable length of time. That just compensation should be determined in accordance with R.A. No. 6657 and not P.D. No. 227 or E.O. No. 228, is important 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. (Emphases ours.)

The case before us involves circumstances closely similar to Natividad and Lubrica. The DAR acquired the subject property in 1972 under the Operation Land Transfer Program of Presidential Decree No. 27. The subject property was already divided and distributed to the farmer-beneficiaries from 1988-1990, thereby depriving respondents of its use. Withal, the full payment of just compensation due respondents was yet to be made by petitioner. As we found in Natividad and Lubrica, the CARL is the applicable law in the present case, with Presidential Decree No. 27 and Executive Order No. 228 having only suppletory effect. Equity precludes us from computing just compensation for the subject property, using the values at the time of its taking in 1972, as prescribed by Presidential Decree No. 27 and Executive Order No. 228, given that the just compensation was left undetermined and unpaid for a considerable length of time since then. The agrarian reform process remains incomplete until payment of just compensation. Taking into account the passage of the CARL before the completion of said process, the just compensation should be determined and the process concluded under the said law. This is in keeping with the dictate 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.²²

Section 18 of the CARL mandates that petitioner shall compensate the landowner in such amount as may be agreed upon by the landowner, DAR, and petitioner, or as may be finally determined by the court, as the just compensation for the land. In determining just compensation, Section 17 of the CARL enumerates the factors to be considered in the determination of just compensation, namely, 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. The social and economic benefits contributed by the farmers and the farm workers and by the government to the property, as well as the non-payment of taxes or loans secured from any government financing institution on the said land, shall be considered as additional factors to determine its value.

In the case at bar, the SAC arrived at the just compensation due respondents for their subject property by taking into account the market value of the subject property, the tax declaration of respondents, the actual use of and income from the subject property, the assessor’s valuation, and the volume and value of its produce;²³ and factors specifically mentioned under Section 17 of the CARL. The Court of Appeals affirmed in toto the determination of just compensation by the SAC. There being no allegation or evidence that the determination of just compensation for the subject property by the SAC, as affirmed by the appellate court, was not in conformity with or was in violation of the provisions of the CARL, the applicable law, then we have no reason to disturb the same.

WHEREFORE, the instant Petition is hereby DENIED. The Decision dated 17 April 2007, and Resolution dated 25 September 2007, of the Court of Appeals in CA-G.R. SP No. 90976, are hereby AFFIRMED in toto. No costs.

SO ORDERED.

MINITA V. CHICO-NAZARIO
Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson

PRESBITERO J. VELASCO, JR. Associate Justice

ANTONIO EDUARDO B. NACHURA Associate Justice

DIOSDADO M. PERALTA
Associate Justice

A T T E S T A T I O N

I attest that the conclusions in the above Decision 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 Article VIII, Section 13 of the Constitution, and the Division Chairman’s Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

REYNATO S. PUNO
Chief Justice

Footnotes

¹ Rollo, pp. 25-65.

² Penned by Associate Justice Josefina Guevara-Salonga with Associate Justices Vicente Q. Roxas and Ramon R. Garcia concurring; rollo, pp. 66-77.

³ Rollo, pp. 79-80.

⁴ Id. at 189-193.

⁵ Id. at 194-195.

⁶ Entitled as "DECREEING THE EMANCIPATION OF TENANTS FROM THE BONDAGE OF SOIL, TRANSFERRING TO THEM THE OWNERSHIP OF THE LAND THEY TILL AND PROVIDING THEM THE INSTRUMENTS AND MECHANISM THEREFOR," and took effect on 21 October 1972; rollo, pp. 31-33, 135-153.

⁷ Id. at 75, 192.

⁸ Entitled "DECLARING FULL LAND OWNERSHIP TO QUALIFIED FARMER-BENEFICIARIES COVERED BY PD 27; DETERMINING THE VALUE OF REMAINING UNVALUED RICE AND CORN LANDS SUBJECT OF PD 27; AND PROVIDING FOR THE MANNER OF PAYMENT BY THE FARMER-BENEFICIARY AND MODE OF COMPENSATION TO THE LANDOWNER," and signed into law on 17 July 1987; EO 228, SEC. 2. – Henceforth, the valuation of rice and corn lands covered by PD 27 shall be based on the average gross production determined by the Barangay Committee on Land Production in accordance with Department Memorandum Circular No. 26, series of 1973 and related issuances and regulation of the Department of Agrarian Reform. The average gross production per hectare shall be multiplied by two and a half (2.5), the product of which shall be multiplied by Thirty–Five Pesos (₱35.00), the government support price for one cavan of 50 kilos of palay on October 21, 1972, or Thirty-One Pesos (₱31.00), the government support price for one cavan of 50 kilos of corn on October 21, 1972, and the amount arrived at shall be the value of the rice and corn land, as the case may be, for the purpose of determining its cost to the farmer and compensation to the landowner.

⁹ Rollo, pp. 31-33, 135-153.

¹⁰ Id. at 154-158.

¹¹ Id. at 161-165.

¹² Id. at 189-193.

¹³ Id. at 194-195.

¹⁴ Id. at 36-37.

¹⁵ Id. at 37-61.

¹⁶ Id. at 75, 92.

¹⁷ Republic Act No. 6657, Section 2.

¹⁸ Section 4.

¹⁹ 378 Phil. 1248, 1260-1261 (1999).

²⁰ 497 Phil. 738, 746-748 (2005).

²¹ G.R. No. 170220, 20 November 2006, 507 SCRA 415, 421-425.

²² Land Bank of the Philippines v. Natividad, supra note 20.

²³ Rollo, pp. 189-193.

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