LBP Vs Escandor
LBP Vs Escandor
LBP Vs Escandor
Escandor are the registered owners of four parcels of agricultural land located in Tuban and Saliducon, Sta. Cruz, Davao del Sur while respondents Emilio Escandor and Violeta Yap are the registered owners of two parcels of agricultural land situated in Dalagbong and Bulacan in Malalag, Davao del Sur.[3]
In 1995, the Department of Agrarian Reform (DAR) placed the aforesaid lands under compulsory acquisition of the Comprehensive Agrarian Reform Program (CARP) pursuant to Republic Act (R.A.) No. 6657. Petitioner Land Bank of the Philippines (LBP) through its Land Valuation Office conducted a field investigation and came up with its valuations in the aggregate amount of P927,895.97 for the properties of Glenn and Gerome Y. Escandor, and P849,611.01 for the properties of Emilio Escandor and Violeta Yap.[4]
Since respondents rejected the LBPs valuation, the DAR instituted summary administrative proceedings for the determination o f just compensation while petitioner deposited in the name of respondents the amount of compensation in cash and bonds. [5] In the meantime, respondents titles were cancelled and emancipation patents were issued to farmer-beneficiaries. After due proceedings, the DAR sustained the valuation made by petitioner.
On October 8, 1998, respondents filed their respective complaints for determination and payment of just compensation against petitioner and the DAR before the RTC of Davao City, Branch 15, acting as SAC. [6] With the agreement of the parties, the cases were jointly tried. The trial court also ordered the parties to submit the names of their respective commissioners who submitted their reports.
Petitioner contends that the basis of valuation for the determination of just compensation is provided in Section 17 of R.A. No. 6657 and DAR AO No. 06, series of 1992. Unless they are declared unconstitutional or invalid, petitioner submits that the SAC has no other option but to apply the said laws.
On the other hand, respondents maintain that in eminent domain cases, the power to determine the amount of just compensation is a judicial function. They stress that a reading of Section 17 of R.A. No. 6657 will show that the current market value of the properties expropriated are among the factors to be considered in determining the amount of just compensation. Thus, respondents maintain that the CA did not commit error in remanding the case to the SAC and directing the computation of the market value of respondents properties at the ti me they were expropriated in 1997.
Ruling
It is settled that the determination of just compensation is a judicial function. [16] The DARs land valuation is only preliminary and is not, by any means, final and conclusive upon the landowner or any other interested party. In the exercise of their functions, the courts still have the final say on what the amount of just compensation will be. [17]
Although the DAR is vested with primary jurisdiction under the Comprehensive Agrarian Reform Law (CARL) of 1988 to determine in a preliminary manner the reasonable compensation for lands taken under the CARP, such determination is subject to challenge in the courts.[18] The CARL vests in the RTCs, sitting as SACs, original and exclusive jurisdiction over all petitions for the determination of just compensation.[19] This means that the RTCs do not exercise mere appellate jurisdiction over just compensation disputes.
Since the subject lands were placed under land reform after the effectivity of R.A. No. 6657, it is said law which governs the valuation of lands for the purpose of awarding just compensation. Section 17 of R.A. No. 6657 provides the guideposts 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 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 valuation. Subsequently, in Land Bank of the Philippines v. Celada,[23] we held that the factors enumerated under Section 17 of R.A. No. 6657 had already been translated into a basic formula by the DAR pursuant to its rule-making power under Section 49 of R.A. No. 6657. Thus, the formula outlined in DAR AO No. 05, series of 1998[24] should be applied in computing just compensation, to wit:
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1) Where: LV CNI CS MV = Land Value = Capitalized Net Income = Comparable Sales = Market Value per Tax Declaration
In view of the foregoing rulings, we hold that both the SAC and the CA erred in not strictly observing the guidelines provided in Section 17 of RA No. 6657 and adopting DAR administrative orders implementing the same, specifically AO No. 5, series of 1998 which took effect on May 11, 1998 and thus already in force at the time of the filing of the complaints. And contrary to the stance of the CA, we held in Land Bank of the Philippines v. Lim[28] that Section 17 of R.A. No. 6657 and DAR AO No. 6, series of 1992, are mandatory and not mere guides that the RTC may disregard.[29] We have stressed that the special agrarian court cannot ignore, without violating the agrarian law, the formula provided by the DAR for the determination of just compensation. This Court thus rejected the valuation fixed by the RTC because it failed to follow the DAR formula.
LBP vs Ferrer FACTS The consolidated records show that on October 11, 2000, Magin V. Ferrer, Antonio V. Ferrer and Ramon V. Ferrer (the Ferrers), represented by their attorney-in-fact, Rafael Villarosa, filed their Petition for Determination and Payment of Just Compensation against the Land Bank of the Philippines (LBP) before the RTC, docketed as Agrarian Case No. 1142-G. Later, the Ferrers filed an amended petition impleading the Department of Agrarian Reform (DAR) as well. In their petition, the Ferrers alleged that they were the absolute owners pro-indiviso of a parcel of agricultural land with an area of 11.7297 hectares located in Bagong Bayan,San Jose, Nueva Ecija. It was one of the parcels of land they inherited from their deceased mother, Liberata Villarosa, who died ab intestato on January 23, 1968. It was also among the properties covered in the Deed of Extra-Judicial Partition executed by and between them; their deceased grandfather, Gonzalo F. Villarosa; their deceased aunt, Matilde Villarosa, and Rafael Villarosa. The Ferrers further alleged that they found out that an Emancipation Patent covering 3.5773 hectares of the subject agricultural land was secretly issued in the name of Alfredo Carbonel, one of its occupants, without payment of just compensation. The LBP then fixed the just compensation at a very low price of P132,685.67 or approximatelyP12,050.00 per hectare in violation of the guidelines in R.A. No. 6657, otherwise known as The Comprehensive Agrarian Reform Law. They asserted that the just compensation of the subject agricultural land should at least be computed at P250,000.00 per hectare, or the total sum of P2,930,000.00 for the entire 11.7297 hectares considering that it was irrigated and strategically located. On the other hand, the LBP and the DAR were of the position that the subject agricultural property had been placed under the coverage of the Operation Land Transfer(OLT) Program and, therefore, the provisions of P.D. No. 27 (Emancipation Decree of Tenants) and/or Executive
Order (E.O.) No. 228 (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) should apply. Thus, they insisted that the value of the subject agricultural land be in accordance with P.D. No. 27. The LBP and the DAR basically argue that P.D. No. 27, as reaffirmed by E.O. No. 228, should be applied in determining the just compensation for the subject property. They contend that P.D. No. 27 and E.O. No. 228 prescribe the formula in determining the just compensation of rice and corn lands tenanted as of October 21, 1972. As the subject property was tenanted and devoted to rice production in 1972, the just value should be fixed at the prevailing rate at that time, when the emancipation of the tenant-farmers from the bondage of the soil was declared in P.D. No. 27. As to R.A. No. 6657, both the LBP and the DAR insist that it applies only to ricelands and cornlands not tenanted as of October 21, 1972. R.A. No. 6657 does not cover ricelands and cornlands acquired under P.D. No. 27 and E.O. No. 228. The governments OLT progra m on tenanted privately-owned rice and corn lands pursuant to P.D. No. 27 continues separately and distinctly from the Comprehensive Agrarian Reform Program (CARP) acquisition and distribution program under R.A. No. 6657 because 1) R.A. No. 6657 operates prospectively; and 2) Congress intended that lands subject to or governed by existing government programs such as the OLT and homestead under P.D. No. 27 are to be treated distinctly. With respect to the appointment of commissioners, the LBP and the DAR argue that there was no legal basis therefor because 1) there were no long accounts or difficult questions of fact that required the expertise and know-how of the commissioners; and 2) the formula for just compensation was already provided under P.D. No. 27 and E.O. No. 228. On the other hand, the Ferrers adopted the common ruling of the CA stating that it did not err in applying the provisions of R.A. No. 6657 in fixing the just compensation for the subject property.
ISSUE Whether or not the Court of Appeals erred in ruling that RA 6657, rather than P.D. No. 27/E.O. No. 228, is the law that should apply in the determination of just compensation for the subject agricultural land. RULING The issue as to which agrarian law between P. D. No. 27/E.O. No. 228 and R.A. No. 6657 should apply in the determination of just compensation has been laid to rest in a number of cases. In the case of Land Bank of the Philippines v. Hon. Eli G. C. Natividad,[6] it was ruled that: 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.[7] Section 17 of RA 6657 which is particularly relevant, providing as it does the guideposts for the determination of just compensation, reads as follows: 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 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 valuation. It would certainly be inequitable to determine just compensation based on the guideline provided by PD 27 and EO 228 considering the DARs 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. [Emphases supplied] Particularly, in Land Bank of the Philippines v. Natividad, where the agrarian reform process in said case is still incomplete as the just compensation to be paid private respondents has yet to be settled, the Court held therein that just compensation should be determined and the process concluded under R.A. No. 6657 .[12] The retroactive application of R.A. No. 6657 is not only statutory but is also founded on equitable considerations. In Lubrica v. Land Bank of the Philippines,[13] the Court declared that it would be highly inequitable on
the part of the landowners therein to compute just compensation using the values at the time of taking in 1972, and not at the time of payment, considering that the government and the farmer-beneficiaries have already benefited from the land although ownership thereof has not yet been transferred in their names . The same equitable consideration is applicable to the factual milieu of the instant case. The records show that respondents property had been placed under the agrarian reform program in 1972 and had already been distributed to the beneficiaries but respondents have yet to receive just compensation due them. [Emphases supplied] The above rulings were reiterated in the recent cases of Land Bank of the Philippines v. Rizalina Gustilo Barrido and Heirs of Romeo Barrido[14] and Land Bank of thePhilippines v. Enrique Livioco.[15] The CA was, therefore, correct in ruling that the agrarian reform process in this particular case was still incomplete because the just compensation due to the Ferrers had yet to be settled. Since R.A. No. 6657 was already in effectivity before the completion of the process, the just compensation should be determined and the process concluded under this law. With respect to the appointment of the commissioners, it is an issue not properly brought and ventilated in the trial courts below and only raised for the first time on appeal. At any rate, the appointment was proper because the applicable law is R.A. No. 6657.
Private respondent Metraco Tele-Hygienic Services Corporation (METRACO) is the registered owner of three parcels of agricultural land with an aggregate area of 33.5917 hectares located at San Antonio, Ramon, Isabela and covered by Transfer Certificate of Title (TCT) Nos. T-291208, T291209 and T-291210. The lands are fully irrigated by the National Irrigation Administration (NIA) and planted with rice.
In July and December 2000, METRACO voluntarily offered to sell the aforesaid lands under the provisions of Republic Act (R.A.) No. 6657 or the Comprehensive Agrarian Reform Law (CARL) of 1988. Private respondents assessment was P300,000.00 per hectare. On February 8, 2001, the landowners offer was referred to petitionerLand Bank of the Philippines (LBP) for valuation Since private respondent rejected the valuation made by petitioner, the latter deposited the amount of compensation, which the former accepted without prejudice to reevaluation and eventual payment of just compensation due for its property. Private respondent then went to the Department of Agrarian Reform Adjudication Board (DARAB)-Region 02 at San Fermin, Cauayan City, Isabela which held summary proceedings for determination of just compensation
The DAR found untenable petitioners position that the basis of valuation should be the guidelines issued under DAR Administr ative Order (AO) No. 5, series of 1998 and findings of the ocular inspection. It said that to do so would contravene the Supreme Courts declaration in Land Bank of the Philippines v. Court of Appeals[8] that any formula or guidelines promulgated by the bank is a violation of due process of the Constitution.[9]
When the DAR denied its motion for reconsideration, petitioner instituted before the Special Agrarian Court (SAC) CAR Case No. 210636 for determination of just compensation. During the trial, the parties presented their witnesses and documentary evidence.
RULING
Under Section 1 of Executive Order No. 405, series of 1990, petitioner LBP is charged with the initial responsibility of determining the value of lands placed under landreform and the just compensation to be paid for their taking. Through a notice of voluntary offer to sell (VOS) submitted by the landowner, accompanied by the required documents, the DAR evaluates the application and determines the lands suitability for agriculture. The LBP likewise reviews the application and the supporting documents and determines the valuation of the land. Thereafter, the DAR issues the Notice of Land Valuation to the landowner. In both voluntary and compulsory acquisitions, wherein the landowner rejects the
offer, the DAR opens an account in the name of the landowner and conducts a summary administrative proceeding. If the landowner disagrees with the valuation, the matter may be brought to the RTC, acting as a special agrarian court. [20] The LBPs valuation of lands covered by CARL is considered only as an initial determination, which is not conclusive, as it is the RTC, sitting as a Special Agrarian Court, that should make the final determination of just compensation, taking into consideration the factors enumerated in Section 17 of R.A. No. 6657 and the applicable DAR regulations. [21]
Section 17 of R.A. No. 6657 provides: 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. In the case at bar, while the SAC found the formula provided in DAR AO No. 5 applicable in determining the amount of just compensation, it disagreed with petitioner on the correct amount of Selling Price (SP) of palay and valuation of the irrigation canal and road. Petitioner contends that as a result of the erroneous application of DAR AO No. 5 by the SAC and CA, the amount of compensation had tremendously and unduly increased from P4,669,259.92 to P6,293,635.50. The difference of P1,624,375.58 would definitely be hurtful to the States Agrarian Reform Fund, of which petitioner is a mere custodian or trustee. Moreover, compensating the land upon which those improvements were built is consistent with the principle that the equitable distribution and ownership of land sought to be achieved through CARP is undertaken with due regard to the rights of landown ers to just compensation. Petitioners interpretation of Item II.F of DAR AO No. 5 would only lead to absurd and unjust consequences for the landowner whose landholding a substantial portion thereof -- is not being covered by the CARP and yet, the landowner is deprived of its use while the farmer-beneficiaries benefit from the present improvements (irrigation canal and road) on the property taken. Hence, we fully agree with the private respondent in arguing that: Verily, Petitioners suggestion that Metraco should not be compensated for the canal and road that are be ing used by the farmer-tillers notwithstanding that the same are already registered in the name of the Republic of the Philippines is dangerous as it would be tantamount to taking private property without due process of law and without payment of just compensation in violation of the constitution.[31]
We must stress, at this juncture, that the taking of private lands under the agrarian reform program partakes of the nature of an expropriation proceeding. In a number of cases, we have stated that just compensation in expropriation proceedings represents the full and fair equivalent of the property taken from its owner by the expropriator. The measure is not the takers gain, but the owners loss. To compensate is to render something which is equal in value to that taken or received.[32] In sum, we find petitioners valuation sufficiently substantiated and in accordance with Section 17 of R.A. No. 6657 and DAR AO No. 5, series of 1998,[33] except that the portions of the landholdings occupied by the NIA water system and road should also be included in the total compensable area. WHEREFORE, the petition for review on certiorari is PARTLY GRANTED. The Decision dated June 27, 2005 and Resolution dated March 9, 2006 of the Court of Appeals in CA-G.R SP No. 80441 are hereby SET ASIDE. The Court hereby DECLARES the valuation made by Land Bank of the Philippines in the total amount ofP4,669,259.92 as just compensation for the properties of Metraco Tele-Hygienic Services Corporation covered by TCT Nos. T-291208, T-291209 and T-291210 of the Registry of the Province of Isabela, and ORDERING it to pay additional compensation for the excluded 1.1173 hectares based on the same formula and computation.