Philippine Supreme Court Jurisprudence > Year 2011 > February 2011 Decisions > [G.R. No. 172230 : February 02, 2011] LAND BANK OF THE PHILIPPINES, PETITIONER, VS. MAGIN FERRER, ANTONIO V. FERRER, AND RAMON V. FERRER, REPRESENTED BY THEIR ATTORNEY-IN-FACT, ATTY. RAFAEL VILLAROSA, RESPONDENTS. [G.R. NO. 179421] DEPARTMENT OF AGRARIAN REFORM, REPRESENTED BY SECRETARY NASSER C. PANGANDAMAN, PETITIONER, VS. ANTONIO V. FERRER AND RAMON V. FERRER, RESPONDENTS.:

Challenged in these consolidated petitions for review are the August 30, 2005^[1] and the January 24, 2007^[2] Decisions of the Court of Appeals (CA) in C.A. G.R. SP No. 88012 and C.A. G.R. SP No. 88008, respectively. The separate CA decisions affirmed the decision of the Regional Trial Court, Branch 33, Guimba, Nueva Ecija (RTC).  The CA ruled that Republic Act (R.A.) No. 6657, and not Presidential Decree (P.D.) No. 27, should govern in the determination of just compensation after the effectivity of said act.

The Facts

The consolidated records show that on October 11, 2000, Magin V. Ferrer, Antonio V. Ferrer and Ramon V. Ferrer (the Ferrers), represented by their attorney-in-fact, Rafael Villarosa, filed their Petition for Determination and Payment of Just Compensation against the Land Bank of the Philippines (LBP)  before the RTC, docketed as Agrarian Case No. 1142-G.  Later, the Ferrers filed an amended petition impleading the Department of Agrarian Reform  (DAR) as well.

In their petition, the Ferrers alleged that they were the absolute owners pro-indiviso of a parcel of agricultural land with an area of 11.7297 hectares located in Bagong Bayan, San Jose, Nueva Ecija.   It was one of the parcels of land they inherited from their deceased mother, Liberata Villarosa, who died ab intestato on January 23, 1968. It was also among the properties covered in the Deed of Extra-Judicial Partition executed by and between them; their deceased grandfather, Gonzalo F. Villarosa; their deceased aunt, Matilde Villarosa, and Rafael Villarosa.

The Ferrers further alleged that they found out that an Emancipation Patent covering 3.5773 hectares of the subject agricultural land was secretly issued in the name of Alfredo Carbonel, one of its occupants, without payment of just compensation. The LBP then fixed the just compensation at a very low price of P132,685.67 or approximately P12,050.00 per hectare in violation of the guidelines in R.A. No. 6657, otherwise known as "The Comprehensive Agrarian Reform Law." They asserted that the just compensation of the subject agricultural land should at least be computed at P250,000.00 per hectare, or the total sum of P2,930,000.00 for the entire 11.7297 hectares considering that it was irrigated and strategically located.

On the other hand, the LBP and the DAR were of the position that the subject agricultural property had been placed under the coverage of the Operation Land Transfer (OLT) Program and, therefore, the provisions of P.D. No. 27 (Emancipation Decree of Tenants) and/or Executive Order (E.O.) No. 228 (Declaring Full Land Ownership to Qualified Farmer-Beneficiaries covered by PD 27; Determining the Value of Remaining Unvalued Rice and Corn Lands subject of PD 27; and Providing for the Manner of Payment By the Farmer Beneficiary and Mode of Compensation to the Landowner)  should apply. Thus, they insisted that the value of the subject agricultural land be in accordance with P.D. No. 27.

In the proceedings below, the RTC appointed three (3) commissioners who were tasked to determine the amount of just compensation to be paid to the Ferrers. On September 27, 2004, after the written reports of the commissioners were submitted, the RTC rendered a decision, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered:

1. Fixing the just compensation for plaintiffs' 4.6203 hectares of land at P208,000.00 per hectare or a total of P961, 022.50;

2. Ordering the defendants DAR and LBP to pay the above amount of money to the plaintiffs in the manner provided by law and existing legislations.

SO ORDERED.

Unsatisfied with the decision, the LBP and the DAR filed separate motions for reconsideration which were both denied by the RTC in its Order dated December 1, 2004.

Thereafter, the LBP and the DAR filed their respective petitions for review before the CA. The LBP petition was docketed as CA-G.R. SP No. 88012 and raffled to the Eighth Division while the DAR petition was docketed as CA-G.R. SP No. 88008 and raffled to the Eleventh Division.

On August 30, 2005, the CA-Eighth Division, in CA-G.R. SP No. 88012, rendered a decision affirming the RTC decision. On January 24, 2007, the CA-Eleventh Division, in CA-G.R. SP No. 88008, likewise affirmed the decision.

As earlier stated, the two divisions of the CA similarly ruled that R.A. No. 6657, and not P.D. No. 27, should govern in the determination of just compensation in this case. They reasoned out that although the subject property was tenanted and devoted to rice production in 1972 when P.D. No. 27 was issued, the just compensation cannot be based on the value of the property in 1972 because there was then no taking of the subject land as there was no payment yet to the private respondents.  The CA explained that the land shall be considered taken only upon payment of just compensation because it would complete the agrarian reform process.  The CA further stated that R.A. No. 6657 was the law of primary jurisdiction while P.D. No. 27 and other agrarian laws not inconsistent with R.A. No. 6657 shall only apply suppletorily.

The LBP and the DAR filed their respective motions for reconsideration but these were denied by the CA in its resolutions dated April 7, 2006^[3] and August 22, 2007,^[4] respectively.

Dissatisfied with the CA decisions, the LBP and the DAR filed their separate petitions before this Court. The LBP petition was docketed as G.R. No. 172230 and the DAR petition as G.R. No. 179421. On December 3, 2007, the Court issued a resolution^[5] consolidating the two petitions because both cases involved the same subject matter and questions of law and fact.

Both petitions basically raise this

ISSUE

Whether or not the Court of Appeals erred in ruling that RA 6657, rather than P.D. No. 27/E.O. No. 228, is the law that should apply in the determination of just compensation for the subject agricultural land.

Positions of the Parties

The LBP and the DAR basically argue that P.D. No. 27, as reaffirmed by E.O. No. 228, should be applied in determining the just compensation for the subject property. They contend that P.D. No. 27 and E.O. No. 228 prescribe the formula in determining the just compensation of rice and corn lands tenanted as of October 21, 1972. As the subject property was tenanted and devoted to rice production in 1972, the just value should be fixed at the prevailing rate at that time, when the emancipation of the tenant-farmers from the bondage of the soil was declared in P.D. No. 27.

As to R.A. No. 6657, both the LBP and the DAR insist that it applies only to ricelands and cornlands not tenanted as of October 21, 1972. R.A. No. 6657 does not cover ricelands and cornlands acquired under P.D. No. 27 and E.O. No. 228. The government's OLT program on tenanted privately-owned rice and corn lands pursuant to P.D. No. 27 continues separately and distinctly from the Comprehensive Agrarian Reform Program (CARP) acquisition and distribution program under R.A. No. 6657 because 1) R.A. No. 6657 operates prospectively; and 2) Congress intended that lands subject to or governed by existing government programs such as the OLT and homestead under P.D. No. 27 are to be treated distinctly.

With respect to the appointment of commissioners, the LBP and the DAR argue that there was no legal basis therefor because 1) there were no long accounts or difficult questions of fact that required the expertise and know-how of the commissioners; and 2) the formula for just compensation was already provided under P.D. No. 27 and E.O. No.  228.

On the other hand, the Ferrers adopted the common ruling of the CA stating that it did not err in applying the provisions of R.A. No. 6657 in fixing the just compensation for the subject property.

The Court's Ruling

The issue as to which agrarian law between P. D. No.  27/E.O. No. 228 and R.A. No. 6657 should apply in the determination of just compensation has been laid to rest in a number of cases.  In the case of Land Bank of the Philippines v. Hon. Eli G. C. Natividad,^[6] it was ruled that:

Under the factual circumstances of this case, the agrarian reform process is still incomplete as the just compensation to be paid private respondents has yet to be settled. Considering the passage of Republic Act No. 6657 (RA 6657) before the completion of this process, the just compensation should be determined and the process concluded under the said law. Indeed, RA 6657 is the applicable law, with PD 27 and EO 228 having only suppletory effect, conformably with our ruling in Paris v. Alfeche.^[7]

Section 17 of RA 6657 which is particularly relevant, providing as it does the guideposts for the determination of just compensation, reads as follows:

Sec. 17. Determination of Just Compensation.--In determining just compensation, the cost of acquisition of the land, the current value of like properties, its nature, actual use and income, the sworn valuation by the owner, the tax declarations, and the assessment made by government assessors shall be considered. The social and economic benefits contributed by the farmers and the farm-workers and by the Government to the property as well as the non-payment of taxes or loans secured from any government financing institution on the said land shall be considered as additional factors to determine its valuation.

It would certainly be inequitable to determine just compensation based on the guideline provided by PD 27 and EO 228 considering the DAR's failure to determine the just compensation for a considerable length of time. That just compensation should be determined in accordance with RA 6657, and not PD 27 or EO 228, is especially imperative considering that just compensation should be the full and fair equivalent of the property taken from its owner by the expropriator, the equivalent being real, substantial, full and ample. [Emphases supplied]

In Land Bank of the Philippines v. Manuel O Gallego, Jr.,^[8] the Court handed down the same ruling. Thus:

The Court has already ruled on the applicability of agrarian laws, namely, P.D. No. 27/E.O. No. 228 in relation to Republic Act (R.A.) No. 6657, in prior cases concerning just compensation.

In Paris v. Alfeche,^[9] the Court held that the provisions of R.A. No. 6657 are also applicable to the agrarian reform process of lands placed under the coverage of P.D. No. 27/E.O. No. 228, which has not been completed upon the effectivity of R.A. No. 6657. Citing Land Bank of the Philippines v. Court of Appeals,^[10] the Court in Paris held that P.D. No. 27 and E.O. No. 228 have suppletory effect to R.A. No. 6657, to wit:

We cannot see why Sec. 18 of RA [No.] 6657 should not apply to rice and corn lands under PD [No.] 27. Section 75 of RA [No.] 6657 clearly states that the provisions of PD [No.] 27 and EO [No.] 228 shall only have a suppletory effect. Section 7 of the Act also provides -

Sec. 7. Priorities.--The DAR, in coordination with the PARC shall plan and program the acquisition and distribution of all agricultural lands through a period of (10) years from the effectivity of this Act. Lands shall be acquired and distributed as follows:

Phase One: Rice and Corn lands under P.D. 27; all idle or abandoned lands; all private lands voluntarily offered by the owners of agrarian reform; x x x and all other lands owned by the government devoted to or suitable for agriculture, which shall be acquired and distributed immediately upon the effectivity of this Act, with the implementation to be completed within a period of not more than four (4) years (emphasis supplied).

This eloquently demonstrates that RA [No.] 6657 includes PD [No.] 27 lands among the properties which the DAR shall acquire and distribute to the landless. And to facilitate the acquisition and distribution thereof, Secs. 16, 17 and 18 of the Act should be adhered to. In Association of Small Landowners of the Philippines v. Secretary of Agrarian Reform, this Court applied the provisions (of) RA 6657 to rice and corn lands when it upheld the constitutionality of the payment of just compensation for PD [No.] 27 lands through the different modes stated in Sec. 18.^[11]  

Particularly, in Land Bank of the Philippines v. Natividad, where the agrarian reform process in said case "is still incomplete as the just compensation to be paid private respondents has yet to be settled," the Court held therein that just compensation should be determined and the process concluded under R.A. No. 6657.^[12]

The retroactive application of R.A. No. 6657 is not only statutory but is also founded on equitable considerations. In Lubrica v. Land Bank of the Philippines,^[13] the Court declared that it would be highly inequitable on the part of the landowners therein to compute just compensation using the values at the time of taking in 1972, and not at the time of payment, considering that the government and the farmer-beneficiaries have already benefited from the land although ownership thereof has not yet been transferred in their names. The same equitable consideration is applicable to the factual milieu of the instant case. The records show that respondents' property had been placed under the agrarian reform program in 1972 and had already been distributed to the beneficiaries but respondents have yet to receive just compensation due them. [Emphases supplied]

The above rulings were reiterated in the recent cases of Land Bank of the Philippines v. Rizalina Gustilo Barrido and Heirs of Romeo Barrido^[14]  and Land Bank of the Philippines v. Enrique Livioco.^[15]

The CA was, therefore, correct in ruling that the agrarian reform process in this particular case was still incomplete because the just compensation due to the Ferrers had yet to be settled. Since R.A. No. 6657 was already in effectivity before the completion of the process, the just compensation should be determined and the process concluded under this law.

With respect to the appointment of the commissioners, it is an issue not properly brought and ventilated in the trial courts below and only raised for the first time on appeal.  At any rate, the appointment was proper because the applicable law is R.A. No. 6657.

WHEREFORE, the petitions for review on certiorari are DENIED.

SO ORDERED.

Carpio, (Chairperson), Nachura, Peralta, and Abad, JJ., concur.

Endnotes:

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^[1] Rollo (G.R. No. 172230), pp. 46-57. Penned by Associate Justice Mariano C. Del Castillo (now a member of this Court), with Associate Justice Salvador J. Valdez, Jr. and Associate Justice Magdangal M. De Leon, concurring.

^[2] Rollo (G.R. No. 179421), pp. 27-36. Penned by Associate Justice Rosalinda Asuncion-Vicente, with Associate Justice Elvi John S. Asuncion and Associate Justice Enrico A. Lanzanas, concurring.

^[3] Rollo (G.R. No. 172230), pp. 59-60.

^[4] Rollo (G.R. No. 179421), pp. 38-39.

^[5] Id. at 50.

^[6] 497 Phil 738 (2005).

^[7] 416 Phil. 473 (2001).

^[8] G.R. No. 173226, January 20, 2009, 576 SCRA 680.

^[9]   416 Phil 473 (2001).

^[10] 378 Phil. 1248 (1999).

^[11] Association of Small Landowners in the Philippines, Inc. v. Hon. Secretary of Agrarian Reform, 256 Phil. 777 (1989).

^[12] 497 Phil. 738 (2005).

^[13] G.R. No. 170220, November 20, 2006, 507 SCRA 415.

^[14] G.R. No. 183688, April 18, 2010.

^[15] G.R. No. 170685, September 22, 2010.