Land Bank of the Philippines v. Rivera
REITERATIONFacts
The Antecedents: Respondents Esther Anson Rivera, Antonio G. Anson, and Cesar G. Anson are co-owners of an agricultural land covered by TCT No. T-95690, with 18.8704 hectares placed under Operation Land Transfer pursuant to Presidential Decree No. 27 in 1972. The Department of Agrarian Reform (DAR) directed payment, and Land Bank of the Philippines (LBP) approved ₱265,494.20, exclusive of advance payments and inclusive of a 6% increment. Procedural History: On December 1, 1994, respondents filed a civil case for determination and payment of just compensation before the RTC, claiming a higher valuation. LBP countered that valuation should be in accordance with Executive Order No. 228 and DAR issuances, and that it was merely a financing arm. The RTC fixed just compensation at ₱1,297,710.63 plus 12% interest per annum from October 7, 2004. LBP's motion for reconsideration was denied. The Court of Appeals modified the RTC decision, ordering LBP to pay ₱823,957.23, plus 12% interest per annum on ₱515,777.57 from October 7, 2004. LBP's motion for reconsideration was denied. The Petition: LBP filed a petition for review on certiorari, assailing the Court of Appeals' decision regarding the 12% interest rate and the award of costs of suit.
Issue(s)
Whether it is valid or lawful to award a 12% rate of interest per annum in favor of respondents despite the 6% rate prescribed under DAR Administrative Orders. Whether LBP, performing a governmental function, is liable for costs of suit.
Ruling
The petition is GRANTED. The decision of the Court of Appeals is AFFIRMED with the MODIFICATION that LBP is exempted from the payment of costs of suit. In all other respects, the Decision of the Court of Appeals is AFFIRMED.
Ratio Decidendi
On the issue of the 12% interest rate: The Court affirmed the Court of Appeals' imposition of a 12% interest per annum. It reiterated the principle that if just compensation is not settled prior to the passage of Republic Act No. 6657, it should be computed in accordance with RA 6657, even if the property was acquired under PD 27. Section 17 of RA 6657 should be the principal basis for computation. The Court noted that while the computation was based on EO 228, the parties did not contest it, but reiterated the rule in LBP v. Soriano that parties are not precluded from asking for additional amounts warranted by the new formula. The Court cited Republic v. Court of Appeals and other cases affirming the award of 12% interest on just compensation due to the landowner from the time of taking until actual payment, as it represents an effective forbearance and helps account for inflation. The Court clarified that the 12% interest was imposed on a specific portion of the compensation from a particular date until full payment, as determined by the Court of Appeals. On the issue of costs of suit: The Court ruled in favor of LBP, holding that it is exempt from paying costs of suit. The Court cited Sps. Badillo v. Hon. Tayag and Public Estates Authority v. Yujuico, which held that government-owned and controlled corporations performing governmental functions are exempt from paying fees and charges. The Court emphasized LBP's role as an agency created to provide financial support in all phases of agrarian reform, vested with primary responsibility and authority in the valuation and compensation of covered landholdings. It was established that LBP's role is more than ministerial, involving discretion to approve or reject land valuation and just compensation, and it has the duty to challenge valuations it disagrees with. Therefore, as LBP performs a governmental function in agrarian reform proceedings, it is exempt from the payment of costs of suit under Rule 142, Section 1 of the Rules of Court.
Main Doctrine
While lands acquired under Presidential Decree No. 27 should have their just compensation computed based on Republic Act No. 6657 if the complaint for just compensation was filed after the effectivity of RA 6657, the parties are not precluded from asking for any additional amount as may be warranted by the new formula. Furthermore, a 12% interest per annum on just compensation is proper from the time of taking until actual payment, and government agencies performing governmental functions are exempt from payment of costs of suit.