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LAND BANK OF THE Petitioner, |
G.R. No. 182431
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- versus - ESTHER
ANSON RIVERA, ANTONIO G. ANSON AND CESAR G. ANSON, Respondents. |
Present: CORONA,
C. J., Chairperson, VELASCO, JR., LEONARDO-DE CASTRO, PERALTA,* and PEREZ, JJ. Promulgated: November 17, 2010 |
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PEREZ, J.:
This is a petition for review on certiorari under Rule 45 of the
1997 Rules of Civil Procedure filed by Petitioner Land Bank of the Philippines
(LBP) assailing the Decision[1] of
the Court of Appeals dated 9 October 2007 in CA G.R. SP No. 87463, ordering the
payment by LBP of just compensation and interest in favor of respondents Esther
Anson Rivera, Antonio G. Anson and Cesar G. Anson, and at the same time directed
LBP to pay the costs of suit. Likewise
assailed is the Resolution[2] of
the Court of Appeals dated
The respondents are the co-owners of a parcel of agricultural land
embraced by Original Certificate of Title No. P-082, and later transferred in
their names under Transfer Certificate of Title No. T-95690 that was placed
under the coverage of Operation Land Transfer pursuant to Presidential Decree No.
27 in 1972. Only 18.8704 hectares of the
total are of 20.5254 hectares were subject of the coverage.
After the Department of Agrarian
Reform (DAR) directed payment, LBP approved the payment of P265,494.20,
exclusive of the advance payments made in the form of lease rental amounting to
P75,415.88 but inclusive of 6% increment of P191,876.99 pursuant
to DAR Administrative Order No. 13, series of 1994.[4]
On 1 December 1994, the respondents instituted
Civil Case No. 94-03 for determination and payment of just compensation before
the Regional Trial Court (RTC), Branch 3 of Legaspi City,[5] claiming
that the landholding involved was irrigated with two cropping seasons a year
with an average gross production per season of 100 cavans of 50 kilos/hectare,
equivalent of 200 cavans/year/hectare; and that the fair market value of
the property was not less that P130,000.00/hectare, or P2,668,302.00
for the entire landholding of 20.5254 hectares.
LBP filed its answer,[6]
stating that rice and corn lands placed under the coverage of Presidential Decree
No. 27[7]
were governed and valued in accordance with the provisions of Executive Order
No. 228[8] as
implemented by DAR Administrative Order No. 2, Series of 1987 and other
statutes and administrative issuances; that the administrative valuation of
lands covered by Presidential Decree No. 27 and Executive Order No. 228 rested
solely in DAR and LBP was the only financing arm; that the funds that LBP would
use to pay compensation were public funds to be disbursed only in accordance
with existing laws and regulations; that the supporting documents were not yet
received by LBP; and that the constitutionality of Presidential Decree No. 27
and Executive Order No. 228 was already settled.
On
ACCORDINGLY, the just
compensation of the land partly covered by TCT No. T-95690 is fixed at
Php1,297,710.63. Land Bank of the Philippines
is hereby ordered to pay Esther Anson, Cesar Anson and Antonio Anson the
aforesaid value of the land, plus interest of 12% per annum or Php194.36 per
day effective October 7, 2004, until the value is fully paid, in cash or in
bond or in any other mode of payment at the option of the landowners in
accordance with Sec. 18, RA 6657.[9]
LBP filed a Motion for Reconsideration[10]
which the RTC denied in its Order dated
LBP next filed a petition for Review to the Court of Appeals docketed as
CA G.R. SP No. 87463. The Court of
Appeals rendered a decision dated
WHEREFORE, the DECISION DATED
OCTOBER 6, 2004 is MODIFIED, ordering petitioner LAND BANK OF THE PHILIPPINES
to pay to the respondents just compensation (inclusive of interests as of
October 6, 2004) in the amount of P823,957.23, plus interest of 12% per
annum on the amount of P515,777.57, or P61,893.30 per annum,
beginning October 7, 2004 until the just compensation is fully paid in accordance
with this decision.
In arriving at its computation, the Court of Appeals explained:
In computing the just
compensation of the property, pursuant to Executive Order No. 228, Sec. 2
thereof, the formula is –
(
WHERE: AGP
= 99.36 cavans per hectare
GSP
= Php 35.00 per cavan
A = 18.8704 hectares
COMPUTATION:
With
increment of 6% interest per annum compounded annually beginning October 21,
1972 until October 21, 1994 and immediately after said date with 12% interest
per annum until the value is fully paid in accordance with extant
jurisprudence, computed as follows:
To be
compounded annually at 6% per annum from
CA
= P(1+R)n
(CA is Compounded Amount; P is Principal; R is Rate;
and n is the number of years)
WHERE: P = Php 164,059.26
R
= 6% per annum
N
= 22 years
COMPUTATION:
CA
= 164,059.26 x (1+06) 22
CA
= 164,059.26 x (1.06) 22
CA
= 164,059.26 x 3.60353741
CA
= Php 591,193.68
Plus simple interest of 12%
per annum from
I
= P x R x T
(I is the Interest; P is the
Principal; R is the Rate and T is the time)
WHERE: P = Php591,193.68
R
= 12% per annum
T
= 9 years
COMPUTATION:
I
= 591,193.68 x 12 x 9
I
= 70,943.24 x 9
I
= Php638,489.18
(Plus interest of 12% per
annum from
COMPUTATION:
I
= (591,193.68 x .12) x 350
350
I
= 194.3605 x 350
I
= Php68,027.77
Total Interest Php 706,516.95
RECAPITULATION:
Compounded Amount Php 591,193.68
Total Interest 706,516.95
TOTAL AMOUNT Php 1,297,710.63
The Court of Appeals pointed out
that:
Pursuant
to AO 13, considering that the landholding involved herein was tenanted prior
to
LBP disagreed with the imposition of 12% interest and its liability to
pay the costs of suit. It filed a Motion
for Reconsideration which was denied in the Court of Appeals’ Resolution dated
The Court of Appeals held:
We DENY the petitioner’s
motion for partial reconsideration for the following reasons, to wit:
1. Anent the first ground, the decision of
2. Regarding costs of suit, they are allowed to
the prevailing party as a matter of course, unless there be special reasons for
the court to decree otherwise (Sec. 1, Rule 43, Rules of Court). In appeals, the Court has the power to render
judgment for costs as justice may require (Sec. 2, Rule 142, Rules of Court).
In view of the foregoing, the
award of costs to the respondents was warranted under the circumstances.[14]
Before this Court, LBP raises the same issues for resolution:
I. Is it valid or lawful to award 12% rate of
interest per annum in favor of respondents notwithstanding the 6% rate of
interest per annum compounded annually prescribed under DAR A.O. No. 13, series
of 1994, DAR A.O. No. 02, series of 2004, and DAR A.O. No. 06, series of 2008,
“xxx from November 1994 up to the time of actual payment?
II. Is it valid or lawful to
adjudge petitioner LBP, which is performing a governmental function, liable for
costs of suit?[15]
At the outset, the Court notes that the parcels of land subject matter of
this case were acquired under Presidential Decree No. 27, but the complaint for
just compensation was filed in the RTC on
x x x [I]f just compensation is not settled prior to
the passage of Republic Act No. 6657, it should be computed in accordance with
the said law, although the property was acquired under Presidential Decree No.
27. The fixing of just compensation should
therefore be based on the parameters set out in Republic Act No. 6657, with
Presidential Decree No. 27 and Executive Order No. 228 having only suppletory
effect.
In
the instant case, while the subject lands were acquired under Presidential
Decree No. 27, the complaint for just compensation was only lodged before the
court on
LV
= (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)
Where:
CNI
= Capitalized Net Income
CS
= Comparable Sales
MV
= Market Value per Tax Declaration
In the case before Us, the just
compensation was computed based on Executive Order No. 228, which computation the
parties do not contest. Consequently, we reiterate our rule in LBP v.
Soriano that “while we uphold the amount derived from the old formula, since
the application of the new formula is a matter of law and thus, should be made
applicable, the parties are not precluded from asking for any additional amount
as may be warranted by the new formula.”[18]
That settled, we now proceed to resolve the issue of the propriety of the
imposition of 12% interest on just compensation awarded to the respondents. The Court of Appeals imposed interest of 12%
per annum on the amount of P515,777.57 beginning
We agree with the Court of Appeals.
In Republic v. Court of Appeals,[19] we affirmed the award of 12% interest on
just compensation due to the landowner.
The court decreed:
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, if 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 interest
on its just value to be computed from the time the property is taken to the
time when compensation is actually paid or deposited with the court. In fine, between the taking of the property
and the actual payment, legal interests accrue in order to place the owner in a
position as good as (but not better than) the position he was in before the
taking occurred.
The Bulacan trial court, in
its 1979 decision, was correct in imposing interest on the zonal value of the
property to be computed from the time petitioner instituted condemnation
proceedings and “took” the property in September 1969. This allowance of interest on the amount
found to be the value of the property as of the time of the taking computed,
being an effective forbearance, at 12% per annum should help eliminate the issue
of the constant fluctuation and inflation of the value of the currency over
time.[20]
We similarly upheld Republic’s
12% per annum interest rate on the unpaid expropriation compensation in the
following cases: Reyes v. National Housing Authority,[21] Land Bank of the Philippines v. Wycoco,[22] Republic v. Court of Appeals,[23] Land Bank of the Philippines v. Imperial,[24] Philippine Ports Authority v.
Rosales-Bondoc,[25] Nepomuceno v. City of Surigao,[26] and
Curata v. Philippine Ports Authority.[27]
Conformably with the foregoing resolution, this Court rules that a 12%
interest per annum on just compensation, due to the respondents, from the
finality of this decision until its satisfaction, is proper.[28]
We now proceed to the issue of whether or not the Court of Appeals correctly
adjudged LBP liable to pay the cost of suit.
According to LBP, it performs a governmental function when it disburses the
Agrarian Reform Fund to satisfy awards of just compensation. Hence, it cannot be made to pay costs in
eminent domain proceedings.
LBP cites Sps. Badillo v. Hon. Tayag,[29]
to further bolster its claim that it is exempt from the payment of costs of
suit. The Court in that case made the
following pronouncement:
On the other hand, the NHA contends that it is
exempt from paying all kinds of fees and charges, because it performs
governmental functions. It cites Public Estates Authority v. Yujuico,
which holds that the Public Estates Authority (PEA), a government-owned and
controlled corporation, is exempt from paying docket fees whenever it files a
suit in relation to its governmental functions.
We agree. People's Homesite and Housing
Corporation v. Court of Industrial Relations declares that the provision of
mass housing is a governmental function:
Coming now to the case at bar, We note that since
1941 when the National Housing Commission (predecessor of PHHC, which is now
known as the National Housing Authority [NHA] was created, the Philippine
government has pursued a mass housing and resettlement program to meet the
needs of Filipinos for decent housing. The agency tasked with implementing such
governmental program was the PHHC.
These can be gleaned from the provisions of
Commonwealth Act 648, the charter of said agency.
We rule that the PHHC is a governmental institution
performing governmental functions.
This is not the first time We are ruling on the
proper characterization of housing as an activity of the government. In the
1985 case of National Housing Corporation
v. Juco and the NLRC (No. L-64313,
While it has not always been easy to distinguish
governmental from proprietary functions, the Court's declaration in the
Decision quoted above is not without basis. Indeed, the characterization of
governmental functions has veered away from the traditional
constituent-ministrant classification that has become unrealistic, if not
obsolete. Justice Isagani A. Cruz avers:
"[I]t is now obligatory upon the State itself to promote social justice, to
provide adequate social services to promote a rising standard of living, to
afford protection to labor to formulate and implement urban and agrarian reform
programs, and to adopt other measures intended to ensure the dignity, welfare
and security of its citizens.....These functions, while traditionally regarded
as merely ministrant and optional, have been made compulsory by the
Constitution."[30]
We agree with the LBP. The
relevant provision of the Rules of Court states:
Rule 142
Costs
Section 1. Costs ordinarily
follow results of suit. – Unless otherwise provided in these rules,
costs shall be allowed to the prevailing party as a matter of course but
the court shall have power, for special reasons adjudge that either party shall
pay the costs of an action, or that the same be divided, as may be
equitable. No costs shall be allowed
against the Republic of the
In Heirs of Vidad v. Land Bank of the Philippines,[31]this
Court extensively discussed the role of LBP in the implementation of the
agrarian reform program.
LBP is an agency created
primarily to provide financial support in all phases of agrarian reform
pursuant to Section 74 of Republic Act (RA) No. 3844 and Section 64 of RA No.
6657. It is vested with the primary responsibility and authority in the
valuation and compensation of covered landholdings to carry out the full
implementation of the Agrarian Reform Program. It may agree with the DAR and the land owner as to the amount of just
compensation to be paid to the latter and may also disagree with them and bring
the matter to court for judicial determination.
x x x x
To the contrary, the Court had already recognized
in Sharp International Marketing v. Court of Appeals that the LBP plays
a significant role under the CARL and in the implementation of the CARP, thus:
As may be gleaned very clearly from EO 229, the LBP
is an essential part of the government sector with regard to the payment
of compensation to the landowner. It is, after all, the instrumentality that is
charged with the disbursement of public funds for purposes of agrarian reform.
It is therefore part, an indispensable cog, in the governmental machinery that
fixes and determines the amount compensable to the landowner. Were LBP to be
excluded from that intricate, if not sensitive, function of establishing the
compensable amount, there would be no amount "to be established by the
government" as required in Sec. 6, EO 229. This is precisely why the law
requires the [Deed of Absolute Sale (DAS)], even if already approved and signed
by the DAR Secretary, to be transmitted still to the LBP for its review,
evaluation and approval.
It needs no exceptional intelligence to understand
the implications of this transmittal. It simply means that if LBP agrees on the
amount stated in the DAS, after its review and evaluation, it becomes its duty
to sign the deed. But not until then. For, it is only in that event that the
amount to be compensated shall have been "established" according to
law. Inversely, if the LBP, after review and evaluation, refuses to sign, it is
because as a party to the contract it does not give its consent thereto. This necessarily
implies the exercise of judgment on the part of LBP, which is not supposed to
be a mere rubber stamp in the exercise. Obviously, were it not so, LBP
could not have been made a distinct member of [Presidential Agrarian Reform
Council (PARC)], the super body responsible for the successful implementation
of the CARP. Neither would it have been given the power to review and evaluate
the DAS already signed by the DAR Secretary. If the function of the LBP in this
regard is merely to sign the DAS without the concomitant power of review and
evaluation, its duty to "review/evaluate" mandated in Adm. Order No.
5 would have been a mere surplus age, meaningless, and a useless ceremony.
x x x x
Even more explicit is R.A. 6657 with respect to the
indispensable role of LBP in the determination of the amount to be compensated
to the landowner. Under Sec. 18 thereof, "the LBP shall compensate the
landowner in such amount as may be agreed upon by the landowner and the DAR
and LBP, in accordance with the criteria provided in Secs. 16 and 17, and
other pertinent provisions hereof, or as may be finally determined by the
court, as the just compensation for the land."
x x x x
It must be observed that once an expropriation
proceeding for the acquisition of private agricultural lands is commenced by
the DAR, the indispensable role of Land Bank begins.
x x x x
It is evident from the afore-quoted jurisprudence
that the role of LBP in the CARP is more than just the ministerial duty of
keeping and disbursing the Agrarian Reform Funds. As the Court had previously
declared, the LBP is primarily responsible for the valuation and determination
of compensation for all private lands. It has the discretion to approve or
reject the land valuation and just compensation for a private agricultural land
placed under the CARP. In case the LBP disagrees with the valuation of land and
determination of just compensation by a party, the DAR, or even the courts, the
LBP not only has the right, but the duty, to challenge the same, by appeal to
the Court of Appeals or to this Court, if appropriate.[32]
It is clear from the above discussions that
since LBP is performing a governmental function in agrarian reform proceeding,
it is exempt from the payment of costs of suit as provided under Rule 142,
Section 1 of the Rules of Court.
WHEREFORE, premises
considered, the petition is GRANTED. The decision
of the Court of Appeals in CA G.R. SP No. 87463 dated 9 October 2007 is AFFIRMED with the MODIFICATION that LBP is hereby held
exempted from the payment of costs of suit.
In all other respects, the Decision of the Court of Appeals is AFFIRMED.
No costs.
SO ORDERED.
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JOSE Associate Justice |
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WE CONCUR: RENATO C.
CORONA Chief Justice Chairperson |
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PRESBITERO
J. VELASCO, JR. Associate Justice |
TERESITA J. LEONARDO-DE
CASTRO Associate Justice |
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DIOSDADO M. PERALTA Associate Justice |
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C E R T I F I C A T I O N
Pursuant
to Section 13, Article VIII of the Constitution, I certify that the conclusions
in the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.
RENATO
C. CORONA
Chief
Justice
* Per Special Order No. 913, Associate Justice Diosdado M. Peralta is designated as additional member in place of Associate Justice Mariano C. Del Castillo who is on official leave.
[1] Penned by Associate Justice Lucas P. Bersamin (now a member of this Court), with Associate Justices Portia Aliño Hormachuelos and Estela M. Perlas-Bernabe, concurring. Rollo, pp. 50-62.
[2]
[3]
[4] Memorandum of the Petitioner.
[5] Rollo, p. 139.
[6]
[7] Entitled, “Decreeing The Emancipation Of Tenants From The Bondage Of The Soil Transferring To Them The Ownership Of The Land They Till And Providing The Instruments And Mechanism Therefor.”
[8] Declaring full land ownership to qualified farmer beneficiaries covered by Presidential Decree No. 27. Determining the value of remaining unvalued rice and corn lands subject to Presidential Decree No. 27 and providing for the manner of payment by the farmer beneficiary and modes of compensation to the landowners.
[9]
[10]
[11]
[12]
[13]
[14]
[15]
[16] Comprehensive Agrarian Reform Law
(CARL), which took effect on
[17] G.R. Nos. 180772 and 180776, 6 May 2010; see also Land Bank of the Philippines v. Gallego, Jr., G.R. No. 173226, 20 January 2009, 576 SCRA 680; Land Bank of the Philippines v. Heirs of Asuncion Añonuevo Vda. De Santos, G.R. No. 179862, 3 September 2009, 598 SCRA 115.
[18] Land Bank of the
[19] 433 Phil. 106 (2002).
[20] Id. at 122-123.
[21] 443 Phil. 603 (2003).
[22] 464
Phil. 83 (2004).
[23] 494
Phil. 494 (2005).
[24] G.R. No. 157753, 12 February 2007,
515 SCRA 449.
[25] G.R. No. 173392, 24 August 2007, 531
SCRA 198.
[26] G.R.
No. 146091, 28 July 2008, 560 SCRA 41.
[27] G.R.
No. 154211-12, 22 June 2009, 590 SCRA 214.
[28] National Housing Authority v. Heirs of
Guivelondo, G.R. No. 166518, 16 June 2009, 589 SCRA 213, 222 citing Republic v. Court of Appeals, supra note
19.
[29] 448 Phil. 606 (2003).
[30] Id. at 617-618.
[31] G.R. No. 166461,
[32]