November 2004 - Philippine Supreme Court Decisions/Resolutions
G.R. No. 148223 - FERNANDO GABATIN, ET AL. v. LAND BANK OF THE PHILIPPINES
[G.R. NO. 148223 : November 25, 2004]
FERNANDO GABATIN, JOSE GABATIN AND ALBERTO GABATIN, Petitioners, v. LAND BANK OF THE PHILIPPINES, Respondent.
D E C I S I O N
Before us is a petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to set aside the Decision and Resolution dated 15 September 2000 and 03 May 2001, respectively, of the Court of Appeals in CA-G.R. CV No. 61240, entitled, "Fernando Gabatin, Alberto Gabatin and Jose Gabatin, petitioners-appellees v. Department of Agrarian Reform, respondent." The Decision set aside the order of the Special Agrarian Court (SAC) dated 04 May 1998, and the Resolution denied petitioners' motion for reconsideration.
Petitioners Fernando, Alberto, and Jose, all surnamed Gabatin, were registered owners of three parcels of rice land situated in Sariaya, Quezon, under separate certificates of title, namely: Transfer Certificate of Title (TCT) No. T-107863 (0.3965 hectare),1 TCT No. T-107864 (1.4272 hectares)2 and TCT No. T-107865 (1.4330 hectares).3 In 1989, the properties, pursuant to the Land Reform Program of the Government as defined under Presidential Decree (P.D.) No. 274 and Executive Order (E.O.) No. 228,5 were placed by the Department of Agrarian Reform (DAR) under its Operation Land Transfer (OLT). The properties were distributed to deserving farmer beneficiaries through the issuance of emancipation patents.6
The formula prescribed under P.D. No. 27 and E.O. No. 2287 for computing the Land Value (LV) of rice lands is 2.5 x Average Gross Production (AGP) x Government Support Price (GSP). Otherwise stated, the formula is as follows:
LV = 2.5 x AGP x GSP
The AGP for the lots covered under TCTs No. T-107863 and No. T-107864 was at 94.64 cavans per hectare while that of TCT No. T-107865 was at 118.47.8 The DAR and respondent Land Bank of the Philippines (Land Bank), fixed the GSP at P35 which was the price of each cavan of palay in 1972, when the lots were deemed taken for distribution. Hence, respondent's valuation of the properties:
Area in hectares
TCT No. T-107864
TCT No. T-107865
TCT No. T-107863
Petitioners rejected the valuation.
On 16 April 1996, petitioners filed a case for the determination of just compensation of their lands with the Regional Trial Court (RTC) of Lucena City, naming the DAR and Land Bank as respondents.10 The case was docketed as Civil Case No. 96-57 and raffled to Branch 56, the designated Special Agrarian Court (SAC). Petitioners prayed that the just compensation be fixed in accordance with the formula in P.D. No. 27, with 6% compounded annual interest to be paid based on the price of palay at the time of payment and not at the time of taking. The SAC, in its order,11 fixed the GSP of palay at the current price of P400 as basis for the computation of the payment, and not the GSP at the time of taking, thus:
Respondent Land Bank filed a motion for reconsideration13 dated 04 June 1998 which was denied by the trial court in its Order14 dated 23 July 1998. Of the two respondents in the trial court, only Land Bank appealed to the Court of Appeals under Rule 41 of the Rules of Court.15
On 10 July 2000, petitioners filed a motion to remand the records to the SAC and to dismiss the appeal on the grounds that the decision of the SAC became final and executory, and that the appeal raised issues involving purely questions of law. They maintained that the appeal of respondent, not being an indispensable party, did not stop the running of the period to appeal, thereby making the decision final. They also claimed that the appeal should be dismissed because the proper venue is the Supreme Court via a Petition for Review under Rule 45, and not the Court of Appeals.16
On 15 September 2000, the Court of Appeals rendered a decision denying the motion to dismiss and reversing the decision of the SAC. It ruled it has jurisdiction over the appeal reasoning that its jurisdiction over appeals from RTCs cannot simply be disregarded on the submission that the issues presented before it are purely legal in nature. As to the personality of Land Bank to file the said appeal, the Court of Appeals made a finding that respondent was a necessary party; hence, it had a personality to appeal the SAC decision. It also fixed the GSP at the time of taking of the land in 1972, instead of the GSP at the time of payment. Thus:
Based on the foregoing, the appropriate land valuation formula for the appellees' property should be two and a half (2' ) multiplied by the average gross production multiplied by the price of palay (P35.00), (P.D. No. 27). In addition, the said amount shall accumulate compounded interest at 6% per annum, pursuant to A.O. No. 13, (1994) (supra) computed from the time of taking, i.e., when P.D. No. 27 came into effect in October, 1972, until the full amount is paid.
. . .
WHEREFORE, premises considered, the instant appeal is hereby GRANTED. The appealed order of the Regional Trial Court below is hereby REVERSED and SET ASIDE. In lieu thereof, judgment is hereby rendered fixing the just compensation due to the petitioners-appellees based on the price of palay per cavan at the time the subject properties were taken, under the formula abovementioned, with interest at 6% per annum, compounded annually, starting October, 1972 until the full amount is paid.17
The petitioners' motion for reconsideration was likewise denied.18
Hence, this Petition for Review . The following issues were raised:
FIRST: Is the special mode of appeal by Petition for Review from a decision of the Special Agrarian Court (SAC) pursuant to Section 60 of R.A. 6657 still effective as the only mode of appeal from decisions of the SAC?chanroblesvirtualawlibrary
SECOND: May the Court of Appeals give due course to the appeal filed by a necessary party without being joined by the indispensable party which did not appeal the decision?chanroblesvirtualawlibrary
THIRD: Whether just compensation in kind (palay) at the time of the taking of the properties shall be appraised at the price of the commodity at the time of the taking or at the time it was ordered paid by the SAC?
In the case of Land Bank v. De Leon19 (hereinafter referred to as Decision), we made the definitive pronouncement that a Petition for Review under Rule 42, and not an ordinary appeal under Rule 41, is the appropriate mode of appeal on the decisions of the RTCs acting as SACs. In the said case, Land Bank filed a motion for reconsideration. In a resolution20 dated 20 March 2003 (hereinafter referred to as Resolution), we resolved the Motion for Reconsideration in this wise:
WHEREFORE, the motion for reconsideration dated October 16, 2002 and the supplement to the motion for reconsideration dated November 11, 2002 are PARTIALLY GRANTED. While we clarify that the Decision of this Court dated September 10, 2002 stands, our ruling therein that a Petition for Review is the correct mode of appeal from decisions of Special Agrarian Courts shall apply only to cases appealed after the finality of this Resolution.21 (Emphasis supplied)cralawlibrary
Herein petitioners assailed the Resolution. It is the remonstration of the petitioners that since the notice of appeal filed by respondent under Rule 41 was incorrect, the same did not stop the running of the reglementary period to file a Petition for Review under Rule 42. The decision, therefore, of the SAC became final and executory and, consequently, respondent had completely lost the remedy of appeal. In effect, petitioners contended that the Resolution, when it prescribed for the prospective application of the Decision, took away their vested rights to immediate payment of just compensation and created a second right to appeal in favor of the respondent.
On the other hand, respondent asseverates that since its appeal of the decision of the SAC, via notice of appeal under Rule 41, was perfected prior to the promulgation of the Resolution, the same cannot be dismissed outright since the Resolution applies prospectively.22
We do not agree with the petitioners.
It bears noting that the Decision, which prescribed for Rule 42 as the correct mode of appeal from the decisions of the SAC, was promulgated by this Court only on 10 September 2002, while the Resolution of the motion for reconsideration of the said case giving it a prospective application was promulgated on 20 March 2003. Respondent appealed to the Court of Appeals on 31 July 1998 via ordinary appeal under Rule 41 of the Rules of Court. Though appeal under said rule is not the proper mode of appeal, said erroneous course of action cannot be blamed on respondent. It was of the belief that such recourse was the appropriate manner to question the decisions of the SAC. In Land Bank v. De Leon,23 we held:
On account of the absence of jurisprudence interpreting Sections 60 and 61 of RA 6657 regarding the proper way to appeal decisions of Special Agrarian Courts as well as the conflicting decisions of the Court of Appeals thereon, LBP cannot be blamed for availing of the wrong mode. Based on its own interpretation and reliance on the Buenaventura ruling, LBP acted on the mistaken belief that an ordinary appeal is the appropriate manner to question decisions of Special Agrarian Courts.
Thus, while the rule is that the appropriate mode of appeal from the decisions of the SAC is through Petition for Review under Rule 42, the same rule is inapplicable in the instant case. The Resolution categorically stated that said ruling shall apply only to those cases appealed after 20 March 2003.24
It is beyond cavil, therefore, that since this Court had already ruled on the prospective application of the Land Bank v. De Leon decision, said issue must be laid to rest and must no longer be disturbed in this decision. Stare decisis et non quieta movere.25 Stand by the decisions and disturb not what is settled. It is a very desirable and necessary judicial practice that when a court has laid down a principle of law as applicable to a certain state of facts, it will adhere to that principle and apply it to all future cases where the facts are substantially the same, absent any countervailing considerations.26 An in-depth study of the case at bar clearly shows that it does not fall under the exception of the stare decisis rule.
Petitioners find fault in the decision of the Court of Appeals which ruled that Land Bank has the right to appeal on the ground that it is a necessary party. It is argued that DAR, being the only agency authorized by law to represent the Republic of the Philippines in the acquisition of private agricultural lands for agrarian reform, as stated under Section 51(1) of Republic Act No. 3844 and amended by Rep. Act No. 6389, is an indispensable party in expropriation proceedings. Petitioners allege that Land Bank is only a necessary party, thus, the Court of Appeals should have dismissed the appeal pursuant to MWSS v. Court of Appeals27 which states that "when indispensable parties are not before the courts, the action should be dismissed." Hence, petitioners concluded that the Court of Appeals acted without jurisdiction when it gave due course and decided the appeal filed by Land Bank, a necessary party, without being joined by the DAR, the indispensable party.
Respondent answered that it can file an appeal independently of the DAR in land valuation or in just compensation cases arising from the agrarian reform program. In support of its argument, respondent avers that it is an agency created primarily to provide financial support in all phases of agrarian reform pursuant to Section 74 of Rep. Act No. 3844 and Section 64 of Rep. Act No. 6657. It is also vested with the primary responsibility and authority in the valuation and compensation of covered landholdings to carry out the full implementation of the Agrarian Reform Program.28 It may agree with the DAR and the landowner as to the amount of just compensation to be paid to the latter and may also disagree with them and bring the matter to court for judicial determination.29
Respondent cited jurisprudence pronouncing that it is not just a "mere rubber stamp" but a "necessary cog"30 in agrarian reform as it does not just exercise a ministerial function but has an "independent discretionary role"31 in the valuation process of the land covered by land reform. Respondent further stressed that this Court, in the Decision, has recognized its right to appeal from an adverse decision in a just compensation case.
We agree with the respondent.
The Rules of Court provides that parties in interest without whom no final determination can be had of an action shall be joined either as plaintiffs or defendants.32 In BPI v. Court of Appeals,33 this Court explained:
. . . An indispensable party is one whose interest will be affected by the court's action in the litigation, and without whom no final determination of the case can be had. The party's interest in the subject matter of the suit and in the relief sought are so inextricably intertwined with the other parties' that his legal presence as a party to the proceeding is an absolute necessity. In his absence there cannot be a resolution of the dispute of the parties before the court which is effective, complete, or equitable.
Conversely, a party is not indispensable to the suit if his interest in the controversy or subject matter is distinct and divisible from the interest of the other parties and will not necessarily be prejudiced by a judgment which does complete justice to the parties in court. He is not indispensable if his presence would merely permit complete relief between him and those already parties to the action or will simply avoid multiple litigation.
Without the presence of indispensable parties to a suit or proceeding, judgment of a court cannot attain real finality. (emphasis supplied)
It must be observed that once an expropriation proceeding for the acquisition of private agricultural lands is commenced by the DAR, the indispensable role of Land Bank begins.
Even in the preliminary stage of the valuation and the determination of just compensation, the respondent's task is inseparably interwoven with that of the DAR, thus:
. . . under the law, the Land Bank of the Philippines is charged with the initial responsibility of determining the value of lands placed under agrarian reform and compensation to be paid for their taking (Section 1, E.O. 405). Through the notice sent to the landowner pursuant to '16(a) of R.A. No. 6657, the DAR makes an offer. In case the landowner rejects the offer, a summary administrative proceeding is held and afterward, the provincial (PARAD), the regional (RARAD) or the central (DARAB) adjudicator as the case maybe, depending on the value of the land, fixes the price to be paid for the land. If the landowner does not agree to the price fixed, he may bring the matter to the RTC acting as Special Agrarian Court.34
E.O. No. 405 provides that the DAR is required to make use of the determination of the land valuation and compensation by the Land Bank as the latter is primarily responsible for the determination of the land valuation and compensation for all private lands under Rep. Act No. 6657.35
In Sharp International Marketing v. Court of Appeals,36 this Court even went on to say that without the Land Bank, there would be no amount to be established by the government for the payment of just compensation, thus:
As may be gleaned very clearly from EO 229, the LBP is an essential part of the government sector with regard to the payment of compensation to the landowner. It is, after all, the instrumentality that is charged with the disbursement of public funds for purposes of agrarian reform. It is therefore part, an indispensable cog, in the governmental machinery that fixes and determines the amount compensable to the landowner. Were LBP to be excluded from that intricate, if not sensitive, function of establishing the compensable amount, there would be no amount "to be established by the government" as required in Section 6 of EO 229. (emphasis supplied)
More telling is the fact that Land Bank can disagree with the decision of the DAR in the determination of just compensation, and bring the matter to the RTC designated as a SAC for final determination of just compensation.37
The foregoing clearly shows that there would never be a judicial determination of just compensation absent respondent Land Bank's participation. Logically, it follows that respondent is an indispensable party in an action for the determination of just compensation in cases arising from agrarian reform program.
Assuming arguendo that respondent is not an indispensable party but only a necessary party as is being imposed upon us by the petitioners, we find the argument of the petitioners that only indispensable parties can appeal to be incorrect.
There is nothing in the Rules of Court that prohibits a party in an action before the lower court to make an appeal merely on the ground that he is not an indispensable party. The Rules of Court does not distinguish whether the appellant is an indispensable party or not. To avail of the remedy, the only requirement is that the person appealing must have a present interest in the subject matter of the litigation and must be aggrieved or prejudiced by the judgment.38 A party, in turn, is deemed aggrieved or prejudiced when his interest, recognized by law in the subject matter of the lawsuit, is injuriously affected by the judgment, order or decree.39 The fact that a person is made a party to a case before the lower court, and eventually be made liable if the judgment be against him, necessarily entitles him to exercise his right to appeal. To prohibit such party to appeal is nothing less than an outright violation of the rules on fair play.
To determine the land value under P.D. No. 27 and E.O. No. 228, the following formula is used:
LV (land value) = 2.5 x AGP x GSP
Petitioners argue that the GSP be fixed at the time of payment by SAC which was then at P400. In support thereof, they cited the case of Land Bank v. Court of Appeals,40 wherein Land Bank was ordered to pay the land value based on the GSP at the time the Provincial Agrarian Reform Adjudicator's (PARAD) decision was rendered, and not at the time of the taking of the property. Petitioners also made reference to Article 1958 of the Civil Code which provides for the appraisal of an interest payable in kind at the current price of the product at the time and place of payment.41
Respondent counters that in keeping with settled jurisprudence, the determination of compensation for lands covered by P.D. No. 27 is reckoned from the time of the taking of the same.42 Under E.O. No. 228, 21 October 1972 was the time of taking for this was when the landowner was effectively deprived of possession and dominion over his landholding.43
In the case at bar, parties are in harmony as to the AGP of the lots under consideration. The AGP for the lots covered under TCTs No. T-107863 and No. T-107864 was at 94.64 cavans per hectare, and that for the lot under TCT No. T-107865 was at 118.47.44
The pith of the controversy is the determination of the GSP for one cavan of palay. Should the same be based on the price at the time of taking or at the time of payment as ordered by the SAC?chanroblesvirtualawlibrary
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.45 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.46 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.
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. 22847 and by virtue of P.D. No. 27.48 The GSP for one cavan of palay at that time was at P35.49 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.
Petitioners are not rendered disadvantaged by the computation inasmuch as they are entitled to receive the increment of six percent (6%) yearly interest compounded annually pursuant to DAR Administrative Order No. 13, Series of 1994.50 As amply explained by this Court:51
The purpose of AO No. 13 is to compensate the landowners for unearned interests. Had they been paid in 1972 when the GSP for rice and corn was valued at P35.00 and P31.00, respectively, and such amounts were deposited in a bank, they would have earned a compounded interest of 6% per annum. Thus, if the PARAD used the 1972 GSP, then the product of (2.5 x AGP x P35.00 or P31.00) could be multiplied by (1.06) to determine the value of the land plus the additional 6% compounded interest it would have earned from 1972.
Petitioners' reliance on Land Bank v. Court of Appeals52 where we ordered Land Bank to pay the just compensation based on the GSP at the time the PARAD rendered the decision, and not at the time of the taking, is not well taken. In that case, PARAD, in its decision, used the GSP at the time of payment in determining the land value. When the decision became final and executory, Land Bank, however, refused to pay the landowner arguing that the PARAD's valuation was null and void for want of jurisdiction. We ruled therein that the PARAD has the authority to determine the initial valuation of lands involving agrarian reform. Thus, the decision of the PARAD was binding on Land Bank. Land Bank was estopped from questioning the land valuation made by PARAD because it participated in the valuation proceedings and did not appeal the said decision. Hence, Land Bank was compelled to pay the land value based on the GSP at the time of payment.
The factual milieu of the case relied upon by petitioners is different from the case at bar. In the case on hand, respondent insisted from the very start that the land valuation be based on the GSP at the time of the taking - - 1972. It stood firm on that ground. When SAC ordered Land Bank to pay petitioners the land value based on the GSP at the time of payment, respondent vehemently disagreed and questioned the valuation before the Court of Appeals.
WHEREFORE, we DENY the instant petition. The Decision of the Court of Appeals dated 15 September 2000 and its Resolution dated 03 May 2001 in CA-G.R. CV No. 61240 are hereby AFFIRMED. No costs.
Puno, (Acting C.J.) Austria-Martinez, Callejo, Sr., and TINGA, JJ., concur.
1 Located in Brgy. Antipolo, Sariaya, Quezon.
2 Located in Brgy. Antipolo, Sariaya, Quezon.
3 Located in Brgy. Talaan-Pantok, Sariaya, Quezon.
4 Decreeing the Emancipation of Tenants from the Bondage of the Soil, Transferring to Them the Ownership of the Land They Till and Providing the Instruments and Mechanism therefor [issued 21 October 1972].
5 Declaring Full Land Ownership to Qualified Farmer Beneficiaries Covered by Presidential Decree No. 27: Determining the Value of Remaining Unvalued Rice and Corn Lands Subject to P.D. No. 27; and Providing for the Manner of Payment by the Farmer Beneficiary and Mode of Compensation to the Landowner [issued 17 July 1987].
6 Rollo, p. 53.
7 Under Section 2, E.O. No. 228, the value of rice and corn lands is determined as follows:
Sec. 2. Henceforth, the valuation of rice and corn lands covered by P.D. No. 27 shall be based on the average gross production determined by the Barangay Committee on Land Production in accordance with Department Memorandum Circular No. 26, series of 1973, and related issuances and regulations of the Department of Agrarian Reform. 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), the government support price for one cavan of 50 kilos of palay on October 21, 1972, or Thirty-One Pesos (P31), 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 landowner.
8 RTC Records, p. 281.
9 Records, p. 262. The valuation of the Land Bank for this property came later on 17 September 1997.
10 Records, pp. 1-2.
11 RTC Records, p. 324.
12 Rollo, p. 10.
13 RTC Records, pp. 293-300.
14 RTC Records, p. 324.
15 CA Records, pp. 10-11.
16 CA Records, pp. 291-297.
17 Rollo, pp. 33-34.
18 Rollo, pp. 46-47.
21 Id. at 385.
22 Rollo, p. 114.
23 Supra note 20 at 382-383.
25 Pinlac v. Court of Appeals, G.R. No. 91486, 10 September 2003, 410 SCRA 419; Tala Realty Services, Corp. v. Banco Filipino Savings and Mortgage Bank, G.R. No. 137980, 20 June 2000, 334 SCRA 114; Acosta, et al. v. Court of Appeals, et al., G.R. No. 132088, 28 June 2000, 334 SCRA 486.
28 Section 15, E.O. No. 228.
29 Sections 16 and 18 of Rep. Act No. 6657.
32 Section 7 of Rule 3 of the Rules of Court.
34 Land Bank v. Spouses Banal, G.R. No. 143276, 20 July 2004; Land Bank v. Wycoco, G.R. NOS. 140160 and 146733, 13 January 2004; Republic v. Court of Appeals, G.R. No. 122256, 30 October 1996, 263 SCRA 758, 764.
35 E.O. No. 405, Section 1.
36 Supra note 30; Land Bank v. Court of Appeals, supra note 31.
37 Land Bank v. Spouses Banal, supra note 34.
38 III Vicente J. Francisco, The Revised Rules of Court in the Philippines, p. 69, East Publishing, Manila (1968).
40 Supra note 31.
41 Article 1958 of the Civil Code provides: In the determination of interest, if it is payable in kind, its value shall be appraised at the current price of the products or goods at the time and place of payment.
42 National Power Corporation v. Gutierrez, G.R. No. 60077, 18 January 1991, 193 SCRA 1; Association of Small Landowners in the Phils., Inc. v. Secretary of Agrarian Reform, G.R. NOS. 78742, 79310, 79744 and 79777, 14 July 1989, 175 SCRA 343; Export Processing Zone Authority v. Dulay, G.R. No. L-59603, 29 April 1987, 149 SCRA 305; Commissioner of Public Highways v. Burgos, G.R. No. L-36706, 31 March 1980, 96 SCRA 831; Republic v. Vda. De Castellvi, G.R. No. L-20620, 15 August 1974, 58 SCRA 336; Republic v. Deleste, 99 Phil. 1035 (1956).
44 RTC Records, p. 84.
45 Land Bank of the Philippines v. Court of Appeals, G.R. NOS. 118712 and 118745, 05 July 1996, 258 SCRA 404; Association of Small Landowners in the Phils., Inc. v. Secretary of Agrarian Reform, supra note 42.
46 Republic of the Philippines v. Ker and Company Limited, G.R. No. 136171, 02 July 2002, 383 SCRA 584; Association of Small Landowners in the Phils., Inc. v. Secretary of Agrarian Reform, supra note 42.
47 Operation Land Transfer.
48 E.O. No. 228, Section 1 provides: 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.
49 Ibid., Section 2.
50 Land Bank v. Court of Appeals, supra note 31 at 646.
52 Supra note 31.