596 Phil. 315
CHICO-NAZARIO, J.:
WHEREFORE, judgment is hereby rendered as follows:Respondent filed a Motion for Clarificatory Order,[25] alleging that the Decision of the SAC merely provided for a formula to be used in determining the value of the land but did not provide the exact amount therefor. Acting thereon, the SAC issued a Clarificatory Order[26] on 22 June 2000, with the following decree:
- The [herein petitioner], Land Bank of the Philippines, is hereby ordered to pay [herein respondent] for the remaining 26.2514 hectares of rice land taken under Presidential Decree No. 27 in October 1972, valuated at 112.5 cavans of 50 kilo palay per sack per hectare, and computed in accordance with Executive Order No. 228, plus [an] increment of six percent (6%) interest and compounded per annum effective October 21, 1972 until fully paid;[23]
- The rights acquired by the farmer beneficiaries under Presidential Decree No. 27 shall be recognized and respected; and
- No pronouncement as to costs.[24]
WHEREFORE, par. (1) of the dispositive portion of the DECISION dated May 18, 2000, (sic) is hereby amended to read as follows:Unsatisfied, respondent filed a Motion for Reconsideration[27] of the SAC Decision dated 18 May 2000 and Order dated 22 June 2000, but the same was denied by the SAC in an Order[28] dated 20 September 2001.
1) The [herein petitioner], Land Bank of the Philippines, is hereby ordered to pay [herein respondent] for the remaining 28.2514 hectares of rice land taken under Presidential Decree No. 27 on October 21, 1972 valuated at 112.5 cavans of 50-kilo palay per sack per hectare and computed in accordance with Executive Order No. 228, plus increment of six (6%) percent interests (sic) and compounded per annum effective October 21, 1972 until fully paid, and with the present accrued amount of P506,649.28.
We find for the [herein respondent].On the application of the provisions of Republic Act No. 6657, the Court of Appeals further elucidated that:
There is no doubt that PD 27 and the implementing rule EO 228 are constitutional. Their constitutionality has been upheld in the landmark case of Association of Small Landowners vs. DAR and reiterated in a long line of cases. That notwithstanding, this Court opines that the application of the formula under PD 27 and EO 228 in arriving at the just compensation in the case at bar is not only unjust, but is also oppressive to the rights of [respondent].
Be it noted that the lands subject matter of this case were taken in 1972, but remained unpaid to this day. The compensation offered by the [herein petitioner] in the amount of P148,172.21 for the remaining lands was based on the land valuation some 20 years ago, at the time of its taking in 1972, pursuant to PD 27. EO 228, series of 1987 declared that 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 Memo Circular No. 26, series of 1973 and related issuances and regulation (sic) of the DAR. 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 (P35.00), government support price for one cavan of 50 kilos of palay on October 21, 1972, or thirty-one pesos (P31.00), 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 land owner (sic). Following a literal interpretation of said rule, the price of rice and corn lands today would be based on prices 20 years ago. If such were the case, it would clearly result in an injustice to the landowner. No further argument is needed to illustrate the unjustness of fixing the price of palay at P35.00 per cavan even if the payment will be made now.
The determination of just compensation under PD 27 is not final or conclusive. Determination of just compensation is a judicial prerogative. Section 2 of Executive Order No. 228, however, may serve as a guiding principle, or one of the factors in determining just compensation, but may not substitute the court's own judgment as to what amount should be awarded and how to arrive at such amount. A perusal of the assailed decision shows that in arriving at the just compensation to be paid to the landowner, the lower court strictly applied the provisions of PD 27 and EO 228, anchoring its argument solely on the ground that the lands were taken pursuant to the said law, and even went on to state that the courts in treating the valuation under PD 27 are bound by the formula set by law and there is not much room for discretion as in the cases under the CARP. To reiterate, the determination of just compensation is a task unmistakably within the prerogative of the courts. In determining just compensation, not only must the courts consider the value of the land, but also other factors as well, in accordance with the particular circumstances of each case. The resolution of just compensation cases for the taking of lands under agrarian reform is, after all, essentially a judicial function.
Pertinent hereto is the recent case of Land Bank of the Philippines vs. Eli G. Natividad, et al., which we partly quote hereunder, viz:"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.
x x x x
That just compensation should be determined in accordance with RA 6657, and not PD 27 and 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."[29] (Emphasis ours.)
Moreover, 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 -Accordingly, the Court of Appeals disposed of the case in this manner:"SECTION 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 year from the effectivity of this Act. Lands shall be acquired and distributed as follows: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, Sections 16, 17 and 18 of the Act should be adhered to. In Association of Small Landowners of the Philippines vs. 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." (sic)[30]
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; . . . 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."
WHEREFORE, the appeal is GRANTED. The Decision appealed from is REVERSED and SET ASIDE. The instant case is hereby remanded to the Regional Trial Court, Branch 54, Bacolod City sitting as a Special Agrarian Court (SAC) for the recomputation of the value of the subject lands based on Sections 16, 17 and 18 of RA 6657.[31]Petitioner moved for the reconsideration[32] of the afore-quoted Decision, but the appellate court denied the same in its assailed Order dated 20 April 2007.
Petitioner challenges the ruling of the Court of Appeals insofar as it retroactively applied Republic Act No. 6657 to the instant case, in spite of the fact that the said law does not provide for any retroactive application. Petitioner argues that the 12 December 2005 Decision of the Court of Appeals runs afoul of the pronouncement laid down in Gabatin v. Land Bank of the Philippines.[33] In said case, the Court held that the taking of private lands under the agrarian reform program was deemed effected on 21 October 1972, when the landowners were deprived of ownership over their lands in favor of qualified beneficiaries, pursuant to Executive Order No. 228 and by virtue of Presidential Decree No. 27. Hence, in computing the value of the land for the payment of just compensation to the landowner, the time of taking in 1972 should be made the basis. In such event, petitioner avers that no injustice will be inflicted upon the respondent, inasmuch as the latter is entitled to receive the increment of six percent (6%) yearly interest compounded annually pursuant to DAR A.O. No. 13, Series of 1994. Finally, petitioner contends that, although Section 75 of Republic Act No. 6657[34] states that Presidential Decree No. 27 and Executive Order No. 228 shall have suppletory effect, these two executive issuances are not in any way inferior to Republic Act No. 6657, nor have they been superseded by the statute.I.
WHEN IT RENDERED THE QUESTIONED DECISION RETROACTIVELY APPLYING R.A. NO. 6657 TO A LAND ACQUIRED UNDER P.D. NO. 27/E.O. NO. 228, IN EFFECT DISREGARDING THE AFOREMENTIONED LAWS AND THE SUPREME COURT RULING IN G.R. NO. 148223 TITLED (sic) "FERNANDO GABATIN, ET AL., VS. LAND BANK OF THE PHILIPPINES," (25 NOVEMBER 2005).II.
WHEN IT FAILED TO TAKE MANDATORY JUDICIAL NOTICE TO (sic) THE GOVERNMENT SUPPORT PRICE (GSP) FOR [PALAY] PRESCRIBED IN P.D. NO. 27/E.O. NO. 228 AMOUNTING TO THIRTY FIVE PESOS (PHP 35.00) FOR ONE (1) CAVAN OF 50 KILOS OF [PALAY].III.
WHEN IT CONSIDERED P.D. NO. 27/E.O. 228 INFERIOR TO R.A. NO. 6657 NOTWITHSTANDING THE SUPREME COURT RULING IN SIGRE VS. COURT OF APPEALS THAT THESE LAWS OPERATE DISTINCTLY FROM EACH OTHER.
We must stress, at the outset, 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 in computing the just compensation for expropriation proceedings, it is the value of the land at the time of the taking, not at the time of the rendition of judgment, which should be taken into consideration. This being so, then in determining the value of the land for the payment of just compensation, the time of taking should be the basis. In the instant case, since the dispute over the valuation of the land depends on the rate of the GSP used in the equation, it necessarily follows that the GSP should be pegged at the time of the taking of the properties.Since Gabatin, however, the Court has decided several cases in which it found it more equitable to determine just compensation based on the value of said property at the time of payment, foremost of which is Land Bank of the Philippines v. Natividad,[38] cited by the Court of Appeals in its Decision assailed herein.
In the instant case, the said taking of the properties was deemed effected on 21 October 1972, when the petitioners were deprived of ownership over their lands in favor of qualified beneficiaries, pursuant to E.O. No. 228 and by virtue of P.D. No. 27. The GSP for one cavan of palay at that time was at P35. Prescinding from the foregoing discussion, the GSP should be fixed at said rate, which was the GSP at the time of the taking of the subject properties.[37] (Emphases ours.)
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.In Meneses v. Secretary of Agrarian Reform,[40] the Court applied its ruling in Natividad. The landowners in Meneses were likewise deprived of their property in 1972, which land has since been distributed and titles already distributed to farmer-beneficiaries in accordance with the provisions of Presidential Decree No. 27 and Executive Order No. 228. However, up to the year 1993, no payment or rentals were made for the land. Thus, the landowners filed a complaint for determination and payment of just compensation. The trial court ruled that since the land was taken from the owners on 21 October 1972 under the Operation Land Transfer pursuant to Presidential Decree No. 27, just compensation must be based on the value of the property at the time of taking. The appeal by the landowners to the Court of Appeals was dismissed. The landowners, thus, elevated the case to this Court. On the issue of the payment of just compensation, the Court adjudged:
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. [416 Phil. 473.]
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 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.[39] (Emphases ours.)
The Court also finds that the CA erred in sustaining the RTC ruling that just compensation in this case should be based on the value of the property at the time of taking, October 21, 1972, which is the effectivity date of P.D. No. 27.In the even more recent case, Lubrica v. Land Bank of the Philippines,[42] the Court also adhered to Natividad, viz:
Respondent correctly cited the case of Gabatin v. Land Bank of the Philippines [444 SCRA 176], where the Court ruled that "in computing the just compensation for expropriation proceedings, it is the value of the land at the time of the taking (or October 21, 1972, the effectivity date of P.D. No. 27), not at the time of the rendition of judgment, which should be taken into consideration." x x x.
It should also be pointed out, however, that in the more recent case of Land Bank of the Philippines vs. Natividad, [458 SCRA 441] the Court categorically ruled: "the seizure of the landholding did not take place on the date of effectivity of P.D. No. 27 but would take effect on the payment of just compensation." x x x.
Under the circumstances of this case, the Court deems it more equitable to apply the ruling in the Natividad case. x x x.
x x x x
As previously noted, the property was expropriated under the Operation Land Transfer scheme of P.D. No. 27 way back in 1972. More than 30 years have passed and petitioners are yet to benefit from it, while the farmer-beneficiaries have already been harvesting its produce for the longest time. Events have rendered the applicability of P.D. No. 27 inequitable. Thus, the provisions of R.A. No. 6657 should apply in this case.[41]
The Natividad case reiterated the Court's ruling in Office of the President v. Court of Appeals [413 Phil. 711] 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.The instant case involves a closely similar factual milieu as that in Natividad and Meneses. The DAR acquired the subject property in 1972 through its Operation Land Transfer Program, pursuant to Presidential Decree No. 27. Since then, the subject property has already been distributed to the farmer-beneficiaries who, since then, have exclusively possessed the same and harvested its produce. Eventually, the Emancipation Patents were issued in the beneficiaries' favor. Even after the lapse of 23 years - from 1972, when the DAR took the subject land property, until 1995, when respondent filed its Petition before the SAC - the full payment of just compensation due respondent has yet to be made by petitioner. These circumstances, the same as in Natividad and Meneses, make it more equitable for the SAC to determine the just compensation due the respondent for the remainder of the subject property using values at the time of its payment.
Likewise, in the recent case of Heirs of Francisco R. Tantoco, Sr. v. Court of Appeals [489 SCRA 590], 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.
Our ruling in Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform [175 SCRA 343] is instructive, thus:It is true that P.D. No. 27 expressly ordered the emancipation of tenant-farmer as October 21, 1972 and declared that he shall "be deemed the owner" of a portion of land consisting of a family-sized farm except that "no title to the land owned by him was to be actually issued to him unless and until he had become a full-fledged member of a duly recognized farmer's cooperative." It was understood, however, that full payment of the just compensation also had to be made first, conformably to the constitutional requirement.
When E.O. No. 228, categorically stated in its Section 1 that:All qualified farmer-beneficiaries are now deemed full owners as of October 21, 1972 of the land they acquired by virtue of Presidential Decree No. 27 (Emphasis supplied.)it was obviously referring to lands already validly acquired under the said decree, after proof of full-fledged membership in the farmers' cooperatives and full payment of just compensation. x x x.[43]