Land Bank v. Macaraeg
REITERATIONFacts
The Antecedents: Respondent Milagros De Jesus-Macaraeg (Milagros) is the registered owner of a 15.1836-hectare parcel of land. In 2002, 7.1838 hectares were placed under the Comprehensive Agrarian Reform Program (CARP). Petitioner Land Bank of the Philippines (Land Bank) and the Department of Agrarian Reform (DAR) valued the property at P472,382.33, which Milagros rejected. Land Bank deposited this amount, which Milagros later withdrew. Procedural History: An administrative proceeding before the DAR Adjudication Board (DARAB) valued the property at P1,280,099.20. Land Bank appealed to the Regional Trial Court-Special Agrarian Court (RTC-SAC). During proceedings, Land Bank failed to present evidence, while Milagros presented her valuation and testimony from her husband, Ramon Macaraeg, regarding pineapple production. The RTC-SAC fixed just compensation at P20.00 per square meter. The Court of Appeals (CA) remanded the case for proper computation. Upon remand, Land Bank submitted a recomputed valuation of P777,880.40. The RTC-SAC, under a new decision, ordered Land Bank to pay P2,765,727.08, using an AGP of 46,666 kilos per hectare and an SP of P5.00 per kilo. The CA reversed this, reducing the SP to P2.50 per kilo and adjusting the MV, ultimately fixing just compensation at P1,271,523.91, with 6% legal interest. The Petition: Land Bank assails the CA's decision, questioning the AGP of 46,666 kilos per hectare as unverified and arguing for an AGP of 8,901.28 kilos per hectare based on Bureau of Agricultural Statistics (BAS) data. Land Bank also disputes the award of legal interest, claiming prompt payment due to the initial deposit. Milagros posits a higher valuation based on a prior compromise agreement.
Issue(s)
Whether the Court of Appeals erred in fixing just compensation at P1,271,523.91, and whether the Court of Appeals erred in its computation of the Annual Gross Production (AGP) and Selling Price (SP) for the subject property. Whether the award of legal interest on the unpaid just compensation was proper.
Ruling
The Supreme Court partly granted the petition, modifying the Court of Appeals' decision. The just compensation was fixed at P777,880.40. The difference between this amount and the initial deposit shall earn twelve percent (12%) legal interest per annum from March 3, 2003, until June 30, 2013, and six percent (6%) legal interest per annum thereafter until fully paid.
Ratio Decidendi
On the computation of just compensation: The Court found that the Court of Appeals erred in fixing just compensation at P1,271,523.91. The RTC-SAC's use of an AGP of 46,666 kilos per hectare was deemed unverified and based on the self-serving submission of Milagros' husband. The Court emphasized that DAR Administrative Order No. 5 (DAR AO5) requires the AGP to correspond to the latest 12-month gross production immediately preceding the field investigation. Land Bank's data from the BAS, showing an AGP of 8,901.28 kilos per hectare, was found to be in accordance with DAR AO5. Furthermore, the Court adjusted the Selling Price (SP) to P7.96 per kilo, which Land Bank had consistently used since the remand of the case and obtained from the BAS. The Court recalculated the Capitalized Net Income (CNI) using the established AGP and SP, and then computed the Land Value (LV) using the formula LV = (CNI x 0.9) + (MV x 0.1), resulting in a total land value of P777,880.40. On the award of legal interest: The Court affirmed the award of legal interest, holding that the right to just compensation includes prompt payment. The Court cited Land Bank of the Philippines v. Uy and Apo Fruits Corporation v. Land Bank of the Philippines, stating that without prompt payment, compensation cannot be considered "just" as the property owner suffers the consequences of immediate deprivation. The Court clarified that interest is due on the unpaid balance of the just compensation to compensate for the loss of income-generating potential. The Court adjusted the interest rate to twelve percent (12%) per annum from the date of withdrawal of the initial deposit until June 30, 2013, and six percent (6%) per annum thereafter until fully paid, in accordance with Nacar v. Gallery Frames.
Main Doctrine
The Supreme Court modified the Court of Appeals' computation of just compensation for agrarian reform land, emphasizing the correct application of DAR Administrative Order No. 5 (DAR AO5) in determining Annual Gross Production (AGP) and Selling Price (SP), and affirmed the award of legal interest on the unpaid balance.