LAND BANK OF THE PHILIPPINES, PETITIONER, VS. SPOUSES PLACIDO AND CLARA DY ORILLA, RESPONDENTS.

Land Bank versus Orilla

The Case

This is a petition for review on certiorari brought by the Land Bank of the Philippines against the spouses Placido and Clara Orilla, arising from the determination of just compensation for agricultural land taken under the Comprehensive Agrarian Reform Law. The Land Bank asks the Supreme Court to overturn the ruling of the Court of Appeals that a decision of the Special Agrarian Court fixing just compensation, although later annulled and set aside on appeal, could still be the subject of an execution pending appeal. The case matters because it draws the line between the validity of an order allowing execution pending appeal, which the Court had already upheld with finality, and the validity of the monetary award that the execution would enforce, which rests on a valuation the appellate court struck down as void.

Procedural History

The Department of Agrarian Reform provincial office in Bohol sent the spouses a notice of land valuation and acquisition, and after they rejected the Land Bank's valuation, a summary hearing was held before the Provincial Agrarian Adjudication Board, which affirmed that valuation. The spouses then filed an action for the determination of just compensation before the Regional Trial Court of Tagbilaran City sitting as a Special Agrarian Court. After trial, that court fixed just compensation at seven pesos per square meter, with legal interest from the filing of the complaint, and ordered the Land Bank to indemnify the spouses for appraisal expenses.

The Land Bank filed a notice of appeal. The spouses moved for execution pending appeal, and the Special Agrarian Court granted the motion, ordering the Land Bank to deposit the amount due and allowing the spouses to withdraw it. The Land Bank challenged that order before the Court of Appeals by a special civil action for certiorari and prohibition, but the appellate court dismissed the petition, and the Supreme Court affirmed that dismissal in a decision rendered in June 2008, denying reconsideration with finality.

Meanwhile, the Land Bank's separate appeal on the merits proceeded before the Court of Appeals, which granted it, set aside the decision of the Special Agrarian Court, and remanded the case for the proper determination of just compensation. The appellate court added that should the recomputed value be lower than the amount already paid, the spouses must return the excess. The Land Bank moved for partial reconsideration, arguing that the annulled valuation could no longer be executed, but the Court of Appeals denied the motion. Hence, this petition for review on certiorari before the Supreme Court.

Facts

The spouses Placido and Clara Orilla owned a parcel of land in Bohol, identified as Lot Number 1, 11-12706, containing an area of 23.3416 hectares and covered by Transfer Certificate of Title Number 18401. In the latter part of November 1996, the Department of Agrarian Reform provincial office sent them a notice of land valuation and acquisition dated November 15, 1996, informing them of the compulsory acquisition of 21.1289 hectares of their landholding under the Comprehensive Agrarian Reform Law for 371,154.99 pesos, based on the Land Bank's valuation.

The spouses rejected the valuation. A summary hearing was conducted by the Provincial Agrarian Adjudication Board, which affirmed the Land Bank's figure. The spouses then went to the Special Agrarian Court, which after trial fixed just compensation at seven pesos per square meter, or a total of 1,479,023 pesos, with legal interest from the filing of the complaint.

The Land Bank appealed, and the spouses obtained an order allowing execution pending appeal. The Court of Appeals later annulled the valuation for having no valid and sufficient legal basis, since the trial court merely granted the amount prayed for without any computation or explanation, and remanded the case for recomputation. The Land Bank then insisted that the writ of execution, which remained unimplemented, could no longer be enforced because the judgment it rested on had been set aside.

Issues

• Whether or not a decision of the Special Agrarian Court fixing just compensation, which has been annulled and set aside on appeal, can still be the subject of an execution pending appeal.
• Whether or not the finality of the earlier ruling upholding the order granting execution pending appeal bars the Land Bank from questioning the enforcement of that writ after the valuation was annulled.
• Whether or not the amount offered by the Land Bank as compensation may nonetheless be released to the landowners pending the recomputation of just compensation.

Applicable Provisions

Section 18(1) of Republic Act Number 6657, the Comprehensive Agrarian Reform Law, provides:

Section 18. Valuation and Mode of Compensation. — The LBP shall compensate the landowner in such amount as may be agreed upon by the landowner and the DAR and the LBP, in accordance with the criteria provided for in Sections 16 and 17, and other pertinent provisions hereof, or as may be finally determined by the court, as the just compensation for the land.

This provision is the source of the Land Bank's obligation to pay, and of the court's authority to fix, just compensation in the event of disagreement.

Ruling

On the first issue, the Court held that the petition is without merit. The Court clarified that its earlier decision upholding the order granting execution pending appeal resolved only the propriety of the issuance of that order, not the amount of the monetary award, which corresponds to the valuation made by the Special Agrarian Court. The Court quoted itself: "While this decision does not finally resolve the propriety of the determination of just compensation by the SAC in view of the separate appeal on the matter, we find no grave abuse of discretion on the part of the SAC Judge in allowing execution pending appeal." Since the Court of Appeals annulled the valuation for lack of sufficient legal basis, it effectively voided the decision fixing just compensation, and the amount, being the fruit of a void judgment, cannot be the proper subject of the execution pending appeal.

The Court laid down the rule on void judgments:

A void judgment or order has no legal and binding effect, force or efficacy for any purpose. In contemplation of law, it is non-existent. Such judgment or order may be resisted in any action or proceeding whenever it is involved. It is not even necessary to take any steps to vacate or avoid a void judgment or final order; it may simply be ignored.

On the second issue, the Court held that the finality of the earlier ruling did not bar the Land Bank. The Court explained that the situation contemplated by the Court of Appeals was one in which payment had already been made during the pendency of the appeal. The writ of execution pending appeal remained unimplemented when the valuation was annulled, and since the monetary award emanated from a void valuation, the writ could not be properly implemented. Had the writ already been enforced while the valuation still stood, the situation would have been different, and any excess paid would simply be returned.

On the third issue, the Court held that the amount of 371,154.99 pesos representing the compensation offered by the Land Bank may still be awarded to the spouses, following the earlier ruling allowing the release of the offered compensation pending the final determination of valuation. The Court stressed that the concept of just compensation embraces not only the correct determination of the amount, but also payment within a reasonable time from the taking, for without prompt payment compensation cannot be considered just.

Doctrine

A void judgment is no judgment at all. It produces no right and no obligation, it can never become final, and any writ of execution based on it is itself void. The finality of an order granting execution pending appeal does not validate the monetary award it seeks to enforce; the order and the award are distinct, and once the valuation is annulled, the writ resting on it cannot be implemented. Where, however, the writ has already been enforced while the valuation stood, the payment is respected, subject to the return of any excess after recomputation. Finally, the landowner may receive the compensation originally offered by the Land Bank pending the final determination of just compensation, without prejudice to the outcome of the recomputation.

Disposition

The Supreme Court affirmed the decision and resolution of the Court of Appeals, and ordered the Land Bank of the Philippines to release the amount of 371,154.99 pesos to the spouses Placido and Clara Orilla, without prejudice to the recomputation of just compensation by the Regional Trial Court.

Remember This

Memorize the line that a void judgment is no judgment at all, and any writ of execution based on it is void. Examiners use this case to test the distinction between the validity of an order granting execution pending appeal and the validity of the award it enforces, and to test the rule that just compensation includes prompt payment.