Land Bank v. Puyat
REITERATIONFacts
The Antecedents: Gloria and Maximo Puyat (deceased) were registered owners of a 46.8731-hectare riceland. The Department of Agrarian Reform (DAR) placed 44.3090 hectares under Operation Land Transfer pursuant to PD 27. Emancipation patents were issued in December 1989 and annotated on the Puyats' title on March 20, 1990, causing partial cancellation of their title. The Puyats received no compensation at that time. Land Bank of the Philippines (Land Bank) was instructed to pay just compensation in September 1992. Land Bank's initial valuation of ₱87,510.90 was rejected by the Puyat heirs as "ridiculously low." Procedural History: The heirs filed a complaint for determination and payment of just compensation with the RTC. The RTC ruled that while the property was appropriated under PD 27, its valuation should be made under Section 17 of RA 6657. The RTC valued the property at ₱100,000.00 per hectare, totaling ₱4,430,900.00 for the 44.3090 hectares actually distributed, with 6% legal interest per annum from the date of taking (1990) until fully paid. Land Bank appealed to the CA, arguing that PD 27 and EO 228 should govern the valuation and that the imposition of additional legal interest was redundant. The CA affirmed the RTC decision, modifying the reckoning of interest to March 20, 1990, and holding that the determination of just compensation is a judicial function not strictly bound by administrative formulae. The Petition: Land Bank filed a Petition for Review with the Supreme Court, assailing the CA decision. It argued that PD 27 and EO 228 should govern the valuation and that the imposition of 6% legal interest was erroneous. Land Bank also contended that RA 9700, enacted during the pendency of the case, necessitated a remand for recomputation under the amended Section 17 of RA 6657.
Issue(s)
Whether lands acquired pursuant to PD 27 can be valued using the factors in Section 17 of RA 6657. Whether it is proper to impose 6% legal interest per annum on the unpaid just compensation. Whether the case should be remanded to the trial court for recomputation of just compensation under RA 9700.
Ruling
The Petition is DENIED for lack of merit. The assailed June 28, 2006 Decision of the Court of Appeals in CA-G.R. SP No. 86582 is AFFIRMED.
Ratio Decidendi
On the applicable law for determining just compensation: The Court reiterated its established jurisprudence that when the acquisition process under PD 27 remains incomplete and is overtaken by RA 6657, the just compensation must be determined under RA 6657. The Court emphasized that it would be inequitable to determine just compensation based on PD 27 and EO 228 when the DAR failed to determine it for a considerable length of time. RA 6657 is the applicable law, with PD 27 and EO 228 having only suppletory effect. Section 17 of RA 6657 provides the factors for determining just compensation, and Land Bank cannot insist on applying PD 27 to render Section 17 of RA 6657 inutile. The taking of the property and the valuation occurred during the effectivity of RA 6657, making it the governing law. On the imposition of legal interest: The Court found no error in the imposition of 6% legal interest per annum on the unpaid just compensation. The imposition was based on the finding that Land Bank was guilty of delay in payment, as the Puyats were deprived of their property since March 20, 1990, without receiving just compensation. The Court clarified that this interest was not a double imposition, as the lower courts did not apply DAR AO No. 13, series of 1994, which Land Bank claimed already provided for interest. While acknowledging that current jurisprudence sets the interest rate for delay at 12% per annum, the Court did not disturb the 6% rate imposed by the lower courts, as the respondents did not contest it and to do so would violate due process. On the remand of the case due to RA 9700: The Court ruled that there was no merit in Land Bank's motion to remand the case for recomputation under RA 9700. RA 9700 took effect when the case was already submitted for resolution, and the issue of its applicability was not raised by the parties in their memoranda. The Court also noted that DAR's own Implementing Rules (DAR AO No. 02-09) provide that claim folders received by LBP prior to July 1, 2009, shall be valued in accordance with Section 17 of RA 6657 prior to its amendment by RA 9700. Since Land Bank received the claim folder in 1992, long before RA 9700's effectivity, remand was unnecessary. Furthermore, the Court found it impractical and inequitable to remand the case for consideration of the two new factors added by RA 9700, as the parties had already litigated the matter extensively and the respondents had been deprived of their property for 22 years.
Main Doctrine
When the acquisition process under Presidential Decree (PD) No. 27 remains incomplete upon the effectivity of Republic Act (RA) No. 6657, the process should be completed under RA 6657, and just compensation should be determined in accordance with its provisions, not PD 27 or Executive Order No. 228.