GR 192890; (June, 2013) (Digest)
G.R. No. 192890; June 17, 2013
LAND BANK OF THE PHILIPPINES, Petitioner, vs. VIRGINIA PALMARES, LERMA P. AVELINO, MELILIA P. VILLA, NINIAN P. CATEQUISTA, LUIS PALMARES, JR., SALVE P. VALENZUELA, GEORGE P. PALMARES, AND DENCEL P. PALMARES HEREIN REPRESENTED BY THEIR ATTORNEY-IN-FACT, LERMA P. AVELINO, Respondents.
FACTS
Respondents inherited a 19.98-hectare agricultural land in Passi City, Iloilo. In 1995, they voluntarily offered it for sale to the government under the Comprehensive Agrarian Reform Law (R.A. No. 6657). The Department of Agrarian Reform (DAR) acquired 19.1071 hectares, valued by petitioner Land Bank of the Philippines (LBP) at ₱440,355.92. Respondents rejected this amount. The DAR Adjudication Board (DARAB) adopted LBP’s valuation, and this amount was deposited as provisional compensation. Respondents filed a petition for judicial determination of just compensation before the Regional Trial Court (RTC) of Iloilo City, acting as a Special Agrarian Court. The RTC directed LBP to recompute the value, which LBP increased to ₱503,148.97, but respondents still rejected it. The RTC fixed just compensation at ₱669,962.53 by averaging the LBP’s computed price per hectare and the market value per the 1997 tax declaration, and ordered LBP to pay this amount plus 12% interest per annum from June 1995. LBP appealed to the Court of Appeals (CA), arguing the RTC failed to properly consider the factors in Section 17 of R.A. 6657. The CA affirmed the compensation amount but modified the interest to apply only to the remaining balance (₱229,606.61), as LBP had already deposited ₱440,355.92. LBP’s motion for reconsideration was denied.
ISSUE
1. Whether the Court of Appeals erred in affirming the RTC’s determination of just compensation, which was not in accordance with the valuation factors under Section 17 of R.A. 6657 and the applicable DAR administrative orders.
2. Whether the Court of Appeals erred in holding LBP liable for 12% interest per annum.
3. Whether the Court of Appeals erred in not consolidating the case with a related case (CA-G.R. CEB SP No. 01845) and remanding it to the RTC.
RULING
The Supreme Court granted the petition.
1. On the determination of just compensation: The Court ruled that the RTC’s method of simply averaging the LBP valuation (based on DAR formulas) and the market value from a 1997 tax declaration was a “basically flawed” and “simplistic” approach. The principal basis for computing just compensation is Section 17 of R.A. 6657, which lists multiple factors that must be considered. The DAR, pursuant to its rule-making power, translated these factors into basic formulas through its administrative orders. While the courts are not strictly bound to these formulas, they must nevertheless consider the factors enumerated in Section 17 and explain their deviation from the DAR formula. The RTC failed to do this; it did not take into account all the statutory factors and merely averaged two figures. Therefore, the case must be remanded to the RTC for proper determination of just compensation in accordance with Section 17 of R.A. 6657 and applicable jurisprudence.
2. On the imposition of interest: In view of the remand for proper computation of just compensation, the issue of the imposition of 12% interest was rendered premature. The Court noted that the applicable interest rate for just compensation, following established doctrine, is 12% per annum from the time of taking until June 30, 2013, and 6% per annum from July 1, 2013, until full payment.
3. On the consolidation of cases: The Court found that the related case (CA-G.R. CEB SP No. 01845, filed by the DAR) had already been decided by a different CA Division, which ordered a remand to the RTC. Since the instant petition also results in a remand, the relief sought by LBP (consolidation and remand) had been effectively mooted and granted.
DISPOSITIVE:
The August 28, 2007 Decision and June 29, 2010 Resolution of the Court of Appeals were REVERSED and SET ASIDE. The March 27, 2006 Decision of the Regional Trial Court was VACATED. The case was REMANDED to the Regional Trial Court of Iloilo City, Branch 34, for the proper determination of just compensation in accordance with Section 17 of R.A. 6657 and applicable DAR administrative orders and jurisprudence.