Land Bank of the Philippines v. Del Rosario
REITERATIONFacts
The Antecedents: Respondents Ma. Aurora and Irene del Rosario owned a 39.1248-hectare agricultural land. Following an ocular inspection in October 2000, a team recommended that 36.3168 hectares be placed under the Comprehensive Agrarian Reform Program (CARP) pursuant to Republic Act (RA) 6657. The Land Bank of the Philippines (Land Bank) appraised the property at Php34,994.36 per hectare, totaling Php1,172,369.21 for 33.5017 hectares, excluding a 2.8151-hectare legal easement. Respondents rejected this offer. The Provincial Agrarian Reform Adjudicator (PARAD) initiated summary proceedings and, in a Decision dated February 18, 2004, fixed just compensation at Php6,766,000.00. Procedural History: On April 20, 2004, Land Bank filed a petition before the Regional Trial Court (RTC), sitting as a Special Agrarian Court, for the determination of just compensation, maintaining its initial valuation. During the pendency of the case, RA 9700 (CARPER Law) was enacted, amending RA 6657 by including additional factors for determining just compensation. The RTC, in its Decision dated August 17, 2012, fixed just compensation at Php3,829,514.29, did not deduct the legal easement, reckoned the time of taking as June 30, 2009 (enactment of RA 9700), and applied DAR AO No. 2, s. 2009 and No. 1, s. of 2010. The Court of Appeals (CA), in its Decision dated July 31, 2013, affirmed the RTC ruling with modification, fixing just compensation at Php2,176,571.58. The CA found that the trial court erred in adopting June 30, 2009 as the time of taking, stating that DAR AO No. 5, s. of 1998 should govern as the property was covered in 2001. It also noted Land Bank's failure to include the value of standing trees and modified the valuation of copra prices. The Petition: Land Bank filed the present petition, assailing the CA's computation of just compensation for the copra produce and the imposition of 12% interest. Land Bank argued that the CA should have considered the prevailing price at the time of taking (2011) and not the average price from 1998-2003. It also contended that it was not guilty of delay in payment, thus the interest should be deleted.
Issue(s)
Whether the Court of Appeals erred in computing the amount of just compensation for the property, specifically regarding the time of taking and the applicable valuation method. Whether the imposition of twelve percent (12%) interest per annum on the balance of just compensation is warranted.
Ruling
The petition is partly meritorious. The Court modified the Court of Appeals' decision, fixing just compensation at Php1,310,563.37 and directing Land Bank to pay the balance with legal interest.
Ratio Decidendi
On the computation of just compensation and the time of taking: The Court reiterated that the taking of private lands under the agrarian reform program is akin to an expropriation proceeding, requiring just compensation. Just compensation is the full and fair equivalent of the property taken, measured by the owner's loss, not the taker's gain. The Court affirmed the CA's finding that the time of taking was in 2001, specifically November 26, 2001, when the Transfer Certificate of Title (TCT) was issued in the name of the Republic. Consequently, Republic Act No. 6657, prior to its amendment by Republic Act No. 9700, governs the computation of just compensation. The Court emphasized that new valuation methods introduced by RA 9700 cannot be given retroactive effect to properties taken before its enactment. The Court found that the CA erred in applying a six-year average for copra prices (1998-2003) when the governing DAR Administrative Order No. 5, s. of 1998, specifically for computing Capitalized Net Income, requires the use of the 12-month average selling prices prior to the date of receipt of the Claim Folder by LBP. Therefore, the 2001 average of Php688.75 per 100 kilos, as used by Land Bank, has stronger legal mooring than the CA's six-year average. The Court recalculated the just compensation based on the 2001 average selling price, applying the formula under DAR AO No. 5, s. of 1998, resulting in a total land value of Php1,310,563.37. On the imposition of interest: The Court held that the imposition of twelve percent (12%) interest per annum on the balance of the just compensation is warranted. The right to just compensation includes the right to be paid on time. The rationale for imposing interest is to compensate property owners for the income they would have made had they been paid the full amount of just compensation at the time of taking. Although Land Bank paid the initial valuation, it was guilty of delay concerning the balance. The Court directed that the balance of Php138,194.16 shall earn legal interest of twelve percent (12%) per annum from the time of taking (November 26, 2001) until June 30, 2013, and thereafter, at six percent (6%) per annum from July 1, 2013, until fully paid, in accordance with prevailing rates.
Main Doctrine
The determination of just compensation for lands acquired under the Comprehensive Agrarian Reform Program (CARP) must be based on the prevailing values at the time of taking, applying the valuation method prescribed under Republic Act No. 6657 and its pertinent DAR administrative issuances in force at that time. Amendments introduced by Republic Act No. 9700 cannot be given retroactive effect to cover properties taken prior to its enactment. The right to just compensation includes the right to be paid on time, warranting the imposition of legal interest on any unpaid balance.