Land Bank v. Soriano
REITERATIONFacts
The Antecedents: Respondents Domingo and Mamerto Soriano were the registered owners of several parcels of rice land, a significant portion of which was placed under the Comprehensive Agrarian Reform Program (CARP) pursuant to Presidential Decree No. 27 and Republic Act No. 6657. The Land Bank of the Philippines (LBP) pegged the value of the subject lands at ₱482,363.95 for 18.0491 hectares and ₱8,238.94 for the remaining 0.2329 hectare. Procedural History: Dissatisfied with LBP's valuation, respondents filed a complaint for judicial determination of just compensation with the Regional Trial Court (RTC) of Legazpi City, sitting as a Special Agrarian Court (SAC). The SAC ordered LBP to pay respondents ₱894,584.94, applying the formula under Executive Order No. 228 and granting compounded interest. Both parties appealed to the Court of Appeals (CA), which affirmed the SAC's decision, including the award of compounded interest. The Petition: LBP filed a Petition for Review on Certiorari with the Supreme Court, assailing the CA's decision and resolution, particularly the amount awarded as just compensation and the imposition of the 6% interest rate. LBP argued that the interest should not be computed up to full payment but only until the time LBP approved the payment and made a deposit, citing DAR Administrative Order No. 13, series of 1994, as amended. LBP also contended that the DARAB decision regarding the 0.2329 hectare had attained finality.
Issue(s)
Whether the computation of just compensation for lands acquired under Presidential Decree No. 27 should be based on Republic Act No. 6657 when the complaint for just compensation was filed after the passage of Republic Act No. 6657. Whether the 6% interest rate on the just compensation should be reckoned from the date of taking until full payment, or only until the date of LBP's approval and deposit of the compensation. Whether the DARAB decision regarding the 0.2329 hectare had attained finality and could no longer be modified.
Ruling
The Supreme Court denied the petition, affirming the decision of the Court of Appeals. The Court held that the just compensation should be computed based on Republic Act No. 6657, and the 6% interest rate should be reckoned from the time of taking until full payment. The Court also reiterated that the determination of just compensation is a judicial function and not bound by preliminary DAR valuations.
Ratio Decidendi
On the computation of just compensation: The Court held that even if the lands were acquired under Presidential Decree No. 27, if the complaint for just compensation was filed after the passage of Republic Act No. 6657 (CARL), then Section 17 of Republic Act No. 6657 should be the principal basis for computation. Presidential Decree No. 27 and Executive Order No. 228 have only suppletory effect in such cases. The Court acknowledged that while the records lacked adequate data for the new formula under DAR Administrative Order No. 5, series of 1998, it upheld the amount derived from the old formula while leaving the parties open to claim any additional amount warranted by the new formula. This ensures that the landowner receives compensation in accordance with the prevailing law at the time the judicial determination is sought. On the imposition of interest: The Court disagreed with LBP's contention that the interest should only be computed up to the date of approval and deposit. It emphasized that the intent of administrative issuances regarding interest was to compensate landowners for being deprived of their property and the use of its value since the time of taking. The Court reasoned that conditioning payment upon LBP's approval and release upon documentary requirements would negate the essence of 'prompt payment,' which is a component of 'just compensation.' Therefore, to expedite payment and prevent prejudice, the 6% interest rate must be imposed from the time of taking until the time of full payment of just compensation. This interpretation aligns with recent rulings that mandate interest from the time of taking until full payment. On the finality of the DARAB decision: The Court reiterated that the determination of just compensation is a judicial function. The land valuation made by the Department of Agrarian Reform (DAR) is merely preliminary and not final or conclusive upon the landowner or any interested party. Courts retain the final say on the amount of just compensation. Therefore, the SAC's computation, which was sustained by the CA, was upheld, as it correctly exercised its judicial prerogative in determining the just compensation for the 0.2329 hectare of land.
Main Doctrine
When just compensation for lands acquired under Presidential Decree No. 27 was not settled prior to the passage of Republic Act No. 6657, the computation of just compensation must be based on Republic Act No. 6657, with Presidential Decree No. 27 and Executive Order No. 228 having only suppletory effect. Furthermore, the 6% interest rate on just compensation should be reckoned from the time of taking until the time of full payment to ensure prompt payment and prevent undue prejudice to the landowner.