Land Bank v. Santiago
REITERATIONFacts
The Antecedents: The Department of Agrarian Reform (DAR) acquired 17.4613 hectares of respondent Emiliano R. Santiago, Jr.'s 18.5615-hectare landholding under Presidential Decree No. 27 (PD 27). The Land Bank of the Philippines (LBP) and DAR initially determined the just compensation using the formula under PD 27 and Executive Order No. 228 (EO 228), resulting in a land value pegged at 3,915 cavans of palay. LBP reserved ₱135,482.12 for the heirs of Santiago in 1992, which was released in 1998. Additional payments for incremental interest were made in 1998. Procedural History: Respondent filed a petition for judicial determination of just compensation, arguing for the use of the 1998 Government Support Price (GSP) of ₱400.00 per cavan and a 6% compounded annual interest. The Regional Trial Court (RTC), acting as Special Agrarian Court (SAC) Branch 23, ordered LBP to pay ₱1,039,017.88 with 12% legal interest. SAC Branch 29 reconsidered, lowering the legal interest to 6% and ordering the return of the unacquired portion of the land. The Court of Appeals (CA) affirmed the RTC's decision as modified by the SAC Branch 29. The Petition: LBP filed a petition for review on certiorari, questioning the CA's affirmation of the RTC's decision, arguing that the prescribed formula under PD 27 and EO 228 was disregarded and that the grant of 6% interest was erroneous.
Issue(s)
Whether the Court of Appeals can disregard the formula prescribed under P.D. 27 and E.O. 228 in fixing the just compensation of subject P.D. 27-acquired land. Whether the Court of Appeals erred in affirming the grant by the court a quo of 6% interest to the respondent; the applicable interest rate should be 12% per annum from the date of taking until full satisfaction, less any payments already received.
Ruling
The petition is DENIED insofar as it seeks to have the Land Bank of the Philippines’ valuation of the subject property sustained. The assailed September 28, 2007 Decision and March 14, 2008 Resolution of the Court of Appeals in CA-G.R. SP No. 82467 are REVERSED and SET ASIDE for lack of factual and legal basis. Agrarian Case No. 125-AF is REMANDED back to the Regional Trial Court of Cabanatuan City, Branch 29, to determine the just compensation due Emiliano R. Santiago, Jr., less whatever payments he and his co-owners had received, strictly in accordance with the guidelines in this Decision; Section 17 of Republic Act No. 6657, as amended; and Department of Agrarian Reform Administrative Order No. 02-09 dated October 15, 2009.
Ratio Decidendi
On Issue 1 (Computation of Just Compensation): The Court held that when the agrarian reform process remains incomplete and is overtaken by Republic Act No. 6657 (RA 6657), the just compensation must be determined and the process concluded under RA 6657, not solely under PD 27 and EO 228. The Court cited Land Bank of the Philippines v. Natividad and Land Bank of the Philippines v. Puyat, emphasizing that RA 6657 is the applicable law, with PD 27 and EO 228 having only suppletory effect. In this case, emancipation patents were issued from 1992 to 1994, and the preliminary compensation was reserved in 1992 but not released until 1998, meaning both the taking and valuation occurred after RA 6657 became effective. Therefore, the determination of just compensation should be governed by Section 17 of RA 6657, which considers various factors beyond the simple formula in PD 27 and EO 228. The Court also noted that even Republic Act No. 9700 (CARPER Law) mandates that previously acquired lands where valuation is subject to challenge shall be resolved pursuant to Section 17 of RA 6657, as amended. On Issue 2 (Imposition of 6% Legal Interest): The Court ruled that a 12% legal interest per annum should be imposed on the just compensation from the date of the "taking" of the subject property until its full satisfaction, less any payments already received by the landowner. The Court clarified that the award of interest in expropriation cases with delayed payment is in the nature of damages for forbearance. Citing Land Bank of the Philippines v. Wycoco and Eastern Shipping Lines, Inc. v. Court of Appeals, the Court stated that when an obligation is breached and it consists in the payment of a sum of money, the interest rate shall be 12% per annum from the time of default, which in this case is the date of taking. The lower courts' imposition of 6% legal interest was deemed incorrect because the delay in payment constitutes forbearance, which warrants the higher rate. The Court emphasized that the interest is to place the owner in a position as good as, but not better than, the position they were in before the taking occurred.
Main Doctrine
In cases where the agrarian reform process remains incomplete and is overtaken by Republic Act No. 6657, just compensation must be determined and the process concluded under Republic Act No. 6657, not solely under Presidential Decree No. 27 and Executive Order No. 228. Furthermore, a 12% legal interest per annum should be imposed on the just compensation from the date of taking until actual payment, as the delay in payment constitutes forbearance on the part of the government.