[ G.R. No. 172352. September 16, 2015 ] 769 Phil. 687
FIRST DIVISION
[ G.R. No. 172352. September 16, 2015 ]
LAND BANK OF THE PHILIPPINES, PETITIONER, VS. ALFREDO HABABAG, SR., SUBSTITUTED BY HIS WIFE, CONSOLACION, AND CHILDREN, NAMELY: MANUEL, SALVADOR, WILSON, JIMMY, ALFREDO, JR., AND JUDITH, ALL SURNAMED HABABAG, RESPONDENTS. [G.R. Nos. 172387-88] ALFREDO HABABAG, SR., SUBSTITUTED BY HIS WIFE, CONSOLACION, AND CHILDREN, NAMELY: MANUEL, SALVADOR, WILSON, JIMMY, ALFREDO, JR., AND JUDITH, ALL SURNAMED HABABAG, PETITIONERS, VS. LAND BANK OF THE PHILIPPINES AND THE DEPARTMENT OF AGRARIAN REFORM, RESPONDENTS. D E C I S I O N
PERLAS-BERNABE, J.:
Assailed in these consolidated petitions for review on certiorari[1] are the Decision[2] dated November 15, 2005 and the Resolution[3] dated April 19, 2006 of the Court of Appeals (CA) in CA-G.R. SP Nos. 86066 and 86167, which set aside the Amended Decision[4] dated March 22, 2004 and the Order[5] dated August 10, 2004 of the Regional Trial Court of Sorsogon City, Branch 52 (RTC) in Civil Case No. 96-6217, fixing the amount of just compensation at P2,398,487.24, with interest at 12% per annum (p.a.), in view of the expropriation of certain parcels of land owned by the Heirs of Alfredo Hababag, Sr. (Hababag Heirs).
The Facts
Alfredo Hababag, Sr. (Alfredo) was the owner of several parcels of agricultural land with an aggregate area of 82.4927 hectares (has.) situated in Barangays Carriedo, Manapao, and Casili, in the Municipality of Gubat, Sorsogon, and covered by Transfer Certificate of Title No. T-12107. The aforesaid landholdings were voluntarily offered for sale (VOS) to the government under Republic Act No. (RA) 6657,[6] otherwise known as the “Comprehensive Agrarian Reform Law of 1988,” but only 69.3857 has. thereof[7] (subject lands) were acquired in 1990.[8] The Land Bank of the Philippines (LBP) initially valued the subject lands at P1,237,850.00, but Alfredo rejected the valuation. After summary administrative proceedings for the determination of the amount of just compensation, the Office of the Provincial Agrarian Reform Adjudicator (PARAD) of the Department of Agrarian Reform (DAR) Adjudication Board (DARAB) fixed the value of the subject lands at P1,292,553.20.[9] Dissatisfied, Alfredo filed a Complaint[10] for the determination of the amount of just compensation before the RTC. As a matter of course, the RTC appointed two commissioners designated by each party to conduct an evaluation and appraisal of the subject lands. Subsequently, the LBP-appointed commissioner, Francisco M. Corcuera (Commissioner Corcuera), submitted his Commissioner’s Report,[11] fixing the amount of just compensation for the subject lands at P2,358,385.48 based on (DAR) Administrative Order (AO) No. 6, series of 1992 (DAR AO 6-92), as amended by DAR AO No. 11, series of 1994 (DAR AO 11-94). On the other hand, the commissioner designated by Alfredo, Margarito Cuba (Commissioner Cuba) of Banco Sorsogon, valued the lands at P5,420,600.00.[12] On December 20, 1999, the RTC rendered a Decision[13] (December 20, 1999 Decision) fixing the amount of just compensation of the subject lands at P5,653,940.00 computed as follows:
Coconut land - 63.61 has @ P50,000.00/ha.
P3,180,500.00
Rice land - 4.75 has. @ P60,000.00/ha.
285,000.00
Total Land Appraised Value
3,465,500.00
Fruit-bearing coconut trees - 9,723 x P200.00
1,944,600.00
Timber trees 7 x P1,500.00
10,500.00
Total Plants and Trees Appraised Value
1,955,100.00
Reasonable income of the coconut trees for the next 20 years (based on the Income
Productivity Approach)[14]
233,340.00
Total
P5,653,940.00[15]
In reaching the above-stated total amount, the RTC applied the Income Productivity Approach. It also considered the Inspection and Appraisal Report submitted by Commissioner Cuba, finding the same to be “the more realistic appraisal [,] considering the economic condition of the country [,] as well as the acquisition of the property and the present assessed value and also the proximity of the property to the commercial center."[16] Alfredo appealed to the CA, which was docketed as CA-G.R. CV No. 66824, averring that the RTC committed a mathematical error in computing the amount of just compensation for the subject lands, as well as in fixing the remaining productive life of the coconut trees to only 20 years instead of 40 to 45 years. On January 16, 2004, the CA rendered a Decision[17] (January 16, 2004 CA Decision) in the aforesaid case, indeed finding a mathematical error in the computation of the reasonable income from the coconut trees, which if corrected would have been P23,335,200.00.[18] Accordingly, adding to the same the total land appraised value of P3,465,500.00,[19] the CA came up with a total of P26,800,700.00.[20] It, however, rejected Alfredo’s claim for the adjustment of the productive life of the coconut trees to anywhere between 40 to 45 years, as it gave credence to the Inspection and Appraisal Report submitted by Commissioner Cuba which stated that the remaining productive life of the coconut trees would only be 20 years. While expressing misgivings to the resultant amount which far exceeded the computations made by the parties’ commissioners,[21] it nonetheless remanded the case for the re-computation of the accurate amount of just compensation, applying thereto the Income Productivity Approach. In this light, it ratiocinated that the “court a quo, with the aid of its duly-appointed commissioner, x x x is in the best position to appreciate the technical elements involved in the formula used to determine the just compensation for [Alfredo’s] property."[22] Pursuant to the January 16, 2004 CA Decision, the RTC ordered Commissioner Cuba to re-compute the accurate amount of just compensation applying the Income Productivity Approach. Accordingly, the latter submitted the following re-computation:
RE-COMPUTATION OF COCONUT PRODUCTION ALFREDO HABABAG PROPERTY
Situated at Brgy[s]. Carriedo, Manapao,[and] Casili, all at Gubat[,] Sorsogon
Date: February 24, 2004
A. Itemized re: computation of coconut production 1. Total existing coconut fruit bearing trees
9,723 x x x
- Average nuts produce per tree per harvest
10 pcs.
- An average of eight regular harvest of nuts/tree/year
80 pcs.
- Total nuts produce per year from (9,723) fruits bearing tree
777,840 pcs.
B. Re: computation of copra production
- Total nuts produce per year
777,840 pcs.
- Average weight of one nut to copra
.30 kls.
- Total kilos of copra produce per year
233,352 kls.
- Gross income of copra produce per year by average of P15.00/kilo
P 3,500,280.00
Less: fifty percent labor cost/transportation expense and tenant share
1,750.140.00
Total net income of copra produce per year
P 1,750,140.00
- Estimated income of copra for the remaining (20) years economic life of (9,723) coconut fruit bearing trees is more or less
P35,002,800.00[23]
Commissioner Cuba, however, retained the total appraised values for the subject lands and the plants/trees at P3,465,500.00 and P1,955,100.00, respectively, as similarly indicated in the December 20, 1999 RTC Decision.
The RTC Ruling
On March 22, 2004, the RTC rendered an Amended Decision,[24] fixing the amount of the just compensation for the subject lands at P40,423,400.00 computed as follows:
Coconut land - 63.61 has. @ P50,000.00/ha.
P3,180,500.00
Rice Land - 4.75 has. @ P60,000.00/ha.
285,000.00
Total Land Appraised Value
3,465,500.00
Fruit-bearing coconut trees - 9,723 x P200.00
1,944,600.00
Timber trees 7 x P1,500.00
10,500.00
Total Plants and Trees Appraised Value
1,955,100.00
Recomputed Estimated Income of the Copra for the remaining twenty (20) years economic life of the 9,723 coconut fruit bearing trees
35,002,800.00
Total
P 40,423,400.00[25]
With their motions for reconsideration having been denied in an Order[26] dated August 10, 2004, the LBP and the DAR filed separate petitions[27] for review with the CA, docketed as CA-G.R. SP Nos. 86066 and 86167, respectively. For its part, the LBP averred[28] that the RTC gravely erred in disregarding the factors under Section 17 of RA 6657 and DAR AO 6-92, as amended by DAR AO 11-94, as ordained by the Court in the case of LBP v. Banal.[29] On the other hand, the DAR contended that the RTC erred[30] in including in its computation the estimated income of the coconut trees for their remaining economic life (computed at 20 years) and in adjudging a just compensation award which is higher than the offered valuation of the landowner. Pending appeal, Alfredo passed away and was substituted by his heirs, i.e., the Hababag Heirs.
The CA Ruling
In the assailed Decision[31] dated November 15, 2005, the CA set aside the RTC’s valuation for failure to give due consideration to the factors enumerated in Section 17 of RA 6657 and the formula under DAR AO 6-92, as amended by DAR AO 11-94. Moreover, contrary to the limitation imposed by DAR AO 6-92 - i.e., that the computed value using the applicable formula shall not exceed the landowner’s offer to sell - the CA found that the amount as recomputed by the RTC was way beyond the landowner’s offer of P1,750,000.00 as stated in the Claims Valuation and Processing Form.[32] Consequently, it gave more credence to the report submitted by Commissioner Corcuera which made use of the DAR formula derived from the factors enumerated under Section 17 of RA 6657. The just compensation for the subject lands was thus computed[33] as follows:
Land Use
Area (ha.)
Land Value/ha.
Total
Coconut
66.9961
P35,586.24
P2,384,139.20[34]
Unirrigated Riceland
1.3896
8,243.71
11,455.46[35]
Cogonal
1.0000
2,892.58
2,892.58[36]
69.3857 has.
P2,398,487.24[37]
Based on the foregoing, the average value per hectare of the 69.3857 hectare lands would therefore be P34,567.4576. The CA likewise considered the government’s obligation to pay just compensation to be in the nature of a forbearance of money and, as such, additionally imposed interests on the just compensation award at 12% p.a., to be reckoned from the time of the taking or the filing of the complaint, whichever is earlier.[38] The LBP and the Hababag Heirs filed their respective motions for partial reconsideration which were both denied in a Resolution[39] dated April 19, 2006; hence, the instant petitions for review on certiorari.
The Issues Before the Court
The present controversy revolves around the CA’s award of just compensation, including interests at the rate of 12% p.a. In G.R. No. 172352, the LBP assails the award of interests by the CA, contending that since the Hababag Heirs were already paid the provisional compensation, no interest can legally accrue to them. Further, it argues that unless there is a final and executory decision, it is under no obligation to pay interests since there could be no delay as of yet in the payment of just compensation. Besides, it maintains that RA 6657 did not provide for the payment of such interests. In G.R. Nos. 172387-88, the Hababag Heirs contend that the CA erred in setting aside the just compensation fixed by the RTC which was in accordance with the provisions of Section 17 of RA 6657 and the final decision of the CA in CA-G.R. CV No. 66824 directing its re-computation.
The Court’s Ruling
The petitions lack merit. In the landmark case of Association of Small Landowners in the Philippines, Inc. v. Hon. Secretary of Agrarian Reform,[40] the Court defined the term “just compensation” as follows:
Just compensation is defined as the full and fair equivalent of the property taken from its owner by the expropriator. It has been repeatedly -stressed by this Court that the measure is not the taker’s gain but the owner’s loss. The word “just” is used to intensify the meaning of the word “compensation” to convey the idea that the equivalent to be rendered for the property to be taken shall be real, substantial, full [and] ample.[41]
In this relation, the RTC, sitting as a Special Agrarian Court, has been conferred with the original and exclusive power to determine just compensation for parcels of land acquired by the State pursuant to the agrarian reform program.[42] To guide the RTC in this function, Section 17[43] of RA 6657 enumerates the factors which must be taken into consideration to accurately determine the amount of just compensation to be awarded in a particular case. They are: (a) the acquisition cost of the land; (b) the current value of like properties; (c) the nature and actual use of the property, and the income therefrom; (d) the owner’s sworn valuation; (e) the tax declarations; (f) the assessment made by government assessors; (g) the social and economic benefits contributed by the farmers and the farmworkers, and by the government to the property; and (h) the nonpayment of taxes or loans secured from any government financing institution on the said land, if any.[44] Corollarily, pursuant to its rule-making power under Section 49[45] of the same law, the DAR translated these factors into a basic formula,[46] which courts have often referred to and applied, as the CA did in this case. It, however, bears stressing that courts are not constrained to adopt the said formula in every case since the determination of the amount of just compensation essentially partakes the nature of a judicial function. In this accord, courts may either adopt the DAR formula or proceed with its own application for as long as the factors listed in Section 17 of RA 6657 have been duly considered.[47] In keeping with these considerations, the Court finds the CA’s valuation - which made use of the DAR formula - as reflective of the factors set forth in Section 17 of RA 6657. Records disclose that the CA’s computation, as adopted from the LBP’s own computation, is based on: (a) actual production data; (b) the appropriate industry selling prices of the products from the Philippine Coconut Authority and the Bureau of Agricultural Statistics of Sorsogon; and (c) the actual uses of the property. Likewise, the (a) income from the coconut fruit-bearing trees, as well as the unirrigated riceland, (b) cumulative cost of the non-fruit-bearing trees; and (c) market value of the cogonal land have been duly considered. The Court observes that the holistic data gathered therefrom adequately consider the factors set forth in Section 17 of RA 6657, as well as the DAR formula. As such, the CA’s computation, which was derived from the same, must be sustained. Lest it be misunderstood, the ascertainment of just compensation on the basis of the landholdings’ nature, location, and market value, as well as the volume and value of the produce is valid and accords with Section 17 of RA 6657[48] and the DAR formula, as in this case. On the contrary, the Court finds the RTC’s valuation to be improper, as it contradicts the definition of “market value” as crafted by established jurisprudence on expropriation. To elucidate, in determining the amount of just compensation for the subject lands, the RTC applied the Income Productivity Approach which approximated the income for the remaining productive life of the crops therein, without considering the fortuitous events and plant diseases, and with the expectation that they would be compensated by developments which could be made by the property owner.[49] The Court has repeatedly ruled that the constitutional limitation of just compensation is considered to be the sum equivalent of the market value of the property, which is, in turn, defined as the price fixed by the seller in open market in the usual and ordinary course of legal action and competition, or the fair value of the property as between one who receives and one who desires to sell it, fixed at the time of the actual taking by the government.[50] In this accord, therefore, the Court cannot sustain the formula used by the RTC which was “based on the principle of anticipation which implies that the value of a property is dependent on the potential net benefit that may be derived from its ownership."[51] Clearly, this approach, which is largely characterized by the element of futurity, is inconsistent with the idea of valuing the expropriated property at the time of the taking. Furthermore, the Court also observes that the Income Productivity Approach, as applied by the RTC, adopts an investor’s point of view which is actually off-tangent with the governmental purpose behind the acquisition of agricultural lands. On this score, case law states that agricultural lands are not acquired for investment purposes but for redistribution to landless farmers in order to lift their economic status[52] by enabling them to own directly or collectively the lands they till or to receive a just share of the fruits thereof.[53] In this regard, farmer-beneficiaries are not given those lands so they can live there but so that they can till them. Since they generally live on a hand-to-mouth existence, their source of repaying the just compensation is but derived out of their income from their cultivation of the land. Hence, in order to be just, the compensation for the land must be what the farmer-beneficiaries can reasonably afford to pay based on what the land can produce.[54] It would therefore be highly inequitable that in the 30-year allowable period[55] to pay the annual amortizations for the lands, farmer-beneficiaries would be required to pay for the same income they expect to earn therefrom on top of the computed market value of the landholdings. Such could not have been the intent of the State’s agrarian reform program. In fine, the Court cannot sustain the RTC’s application of the Income Productivity Approach used as one of its bases in arriving at its decreed valuation. Not only is the same aversive to the jurisprudential concept of “market value,” but it also deviates from the factors laid down in Section 17 of RA 6657 and thus, remains legally baseless and unfounded. On the issue of interests, suffice it to state that the just compensation due to the landowners for their expropriated property is treated as an effective forbearance on the part of the State.[56] The rationale therefor, as enunciated in the case of Apo Fruits Corporation v. LBP,[57] is to compensate the landowners for the income they would have made had they been properly compensated for their properties at the time of the taking. In other words, the award of 12% interests is imposed in the nature of damages for the delay in the payment of the full just compensation award.[58] In the present case, the LBP had already made the corresponding deposit of their offered valuation in the amount of P1,237,850.00 in cash and in bonds prior to the DAR’s possession of the property.[59] This amount is lower than the just compensation awarded and, hence, in view of the above-stated principle, the payment of interests remains in order insofar as the unpaid balance is concerned. Anent the time of accrual, the interests should be computed from the time of the taking of the subject lands. This is based on the principle that interest “runs as a matter of law and follows from the right of the landowner to be placed in as good position as money can accomplish, as of the date of the taking."[60] With respect to the rate of interests, the Court observes that from the time of the taking up until June 30, 2013, the interest must be pegged at the rate of 12% p.a. pursuant to Section 2[61] of Central Bank Circular No. 905, series of 1982, which was the prevailing rule on interest rates during such period. From July 1, 2013 onwards and until full payment, the interest rate should then be pegged at the rate of 6% p.a. pursuant to Bangko Sentral ng Pilipinas Circular No. 799, series of 2013,[62] which accordingly amended the old 12% p.a. interest rate. WHEREFORE, the petitions are DENIED. Accordingly, the Decision dated November 15, 2005 and the Resolution dated April 19, 2006 of the Court of Appeals in CA-G.R. SP Nos. 86066 and 86167 are hereby AFFIRMED with the MODIFICATION imposing interests on the unpaid balance of the just compensation due to the Heirs of Alfredo Hababag, Sr. at the rate of 12% p.a., reckoned from the taking of the expropriated property until June 30, 2013, and thereafter, at 6% p.a. until full payment. SO ORDERED. Sereno, C.J., (Chairperson), Leonardo-De Castro, Bersamin, and Perez, JJ., concur.