GR 183901; (July, 2014) (Digest)
G.R. No. 183901 & G.R. No. 183931, July 9, 2014
DEPARTMENT OF AGRARIAN REFORM and LAND BANK OF THE PHILIPPINES, Petitioners, vs. SALUD GACIAS BERIÑA, CESAR GACIAS, NORMA GACIAS TANDOC, LYDIA LEANDER GACIAS, and GREGORIO MEDEN GACIAS, Respondents.
FACTS
The respondents are among the heirs of the late spouses Sabiniano and Margarita Gacias. Portions of the spouses’ riceland and other agricultural lands in Irosin, Sorsogon, were placed under the Operation Land Transfer (OLT) Program under Presidential Decree No. 27 (PD 27). Prior to PD 27’s effectivity on October 21, 1972, the spouses executed deeds of sale conveying portions of the land to their children, but these deeds were notarized in 1973 and registered only in 1979. The Department of Agrarian Reform (DAR) Secretary declared these conveyances ineffectual for failing to comply with a DAR Memorandum, upheld the lands’ coverage under PD 27, and affirmed the issuance of emancipation patents/certificates of land transfer to farmer-beneficiaries. The DAR initially valued an 8-hectare riceland portion at ₱77,000.00 using the formula under Executive Order No. 228 (EO 228). Dissatisfied, the respondents filed a complaint for determination of just compensation before the Regional Trial Court (RTC). The RTC rejected the DAR valuation and fixed just compensation at ₱735,562.05, using a modified formula that doubled the Average Gross Product (AGP) and imposed 6% annual interest compounded from 1972. The Court of Appeals (CA) affirmed the RTC decision but modified the interest to 12% per annum from the judgment’s finality until full payment. The DAR and Land Bank of the Philippines (LBP) filed these consolidated petitions.
ISSUE
1. Whether the CA erred in directing LBP to pay just compensation despite the absence of a land transfer claim folder.
2. Whether the CA erred in affirming the RTC’s decision to double the AGP in the computation formula.
3. Whether the CA erred in imposing legal interest at 12% per annum on the compensation award.
RULING
The Supreme Court granted the petitions and remanded the case to the RTC for proper determination of just compensation.
1. On the absence of a claim folder: The Court ruled that the respondents’ entitlement to just compensation cannot be disregarded by the mere absence of claim folders. The subject land had already been expropriated, as evidenced by the DAR’s initial valuation and the issuance of emancipation patents/certificates of land transfer to beneficiaries, which dispossessed the owners. The undue delay or failure of the DAR to forward the folders does not negate the obligation to pay just compensation for the taking of the property.
2. On the determination of just compensation: The Court held that since the agrarian reform process was incomplete (payment not yet made), just compensation should be determined under Republic Act No. 6657 (Comprehensive Agrarian Reform Law of 1988), with PD 27 and EO 228 having only suppletory effect. The RTC, sitting as a Special Agrarian Court, has the final judicial prerogative to determine just compensation. However, both the RTC and the CA failed to consider the factors enumerated under Section 17 of RA 6657 in their determination. The RTC’s use of a formula that arbitrarily doubled the AGP and applied compounded interest from 1972 lacked factual and legal basis. Therefore, a remand to the RTC is necessary for the proper computation of just compensation in accordance with Section 17 of RA 6657 and applicable jurisprudence.
3. On the imposition of interest: In line with prevailing jurisprudence, the Court ruled that if there is a delay in the payment of just compensation, legal interest is imposed to compensate for the delay. However, the proper rate should be 12% per annum from the time of taking (which, for lands under PD 27, is October 21, 1972, or when the title was transferred to the Republic) until June 30, 2013, and 6% per annum from July 1, 2013, until full payment, following the Court’s guidelines in Nacar v. Gallery Frames. The imposition of interest is subject to the final outcome of the recomputation by the RTC upon remand.