Case Summary (G.R. No. 244213)
Procedural History — Administrative and Deposit Actions
In 2002, 7.1838 hectares of the subject land were placed under CARP. DAR and Land Bank initially valued the property at P65,756.61 per hectare (total P472,382.33) under DAR AO5; Land Bank offered that amount and deposited it in Milagros’s name when she rejected the offer. The DAR Adjudication Board (DARAB) later valued the property at P1,280,099.20 (DARAB Resolution, Feb. 19, 2003). Land Bank’s motion for reconsideration before DARAB was denied.
RTC‑SAC Proceedings and First Trial
Land Bank elevated the matter to the Regional Trial Court, Branch 15, Davao City, sitting as Special Agrarian Court (RTC‑SAC) via Civil Case No. 29,824‑2003. Land Bank failed to appear at the scheduled presentation of its evidence. Milagros presented an appraisal valuing the property at P3,055,000.00 (Asian Appraisal Corp.) and testimony from Ramon Macaraeg (her husband), who claimed a pineapple production average of 46,666 kilos per hectare and an average price of P15.00 per kilo based on agricultural statistics.
Interim Developments and RTC‑SAC Decision (2005)
On March 3, 2003 Milagros withdrew the initial deposit by Land Bank. By Decision dated February 21, 2005, RTC‑SAC fixed just compensation at P20.00 per square meter and awarded attorney’s fees of P100,000.00; Land Bank’s motion for reconsideration was denied (Order May 9, 2005). The Court of Appeals remanded for proper computation and deleted attorney’s fees (CA Decision October 25, 2011).
Reopened Proceedings and Land Bank’s Recomputation
On remand, Land Bank submitted a recomputed valuation using Bureau of Agricultural Statistics (BAS) data: AGP adjusted to 8,901.28 kilos of pineapple per hectare and SP at P7.96/kilo, arriving at a total valuation of P777,880.40. The RTC‑SAC, however, in a subsequent Decision (Aug. 26, 2014) set AGP at 46,666 kilos/ha (adopting DARAB’s figure), set SP at P5.00/kilo in its discretion, pegged MV at P50.00/sq.m. based on zonal valuation, and computed just compensation of P2,765,727.08 with 12% interest per annum until fully paid. Land Bank’s motion for reconsideration was denied (Order Apr. 10, 2015).
Court of Appeals Disposition (2018)
The Court of Appeals reversed the RTC‑SAC in part. It held that the RTC‑SAC’s SP of P5.00/kilo was arbitrary and reduced it to P2.50/kilo (based on Land Bank’s initial offer). The Court of Appeals adjusted MV to P20,012.96 per hectare (applying DAR AO5 guidance that assessed value, not zonal, should be used), but affirmed the AGP of 46,666 kilos/ha because Land Bank’s BAS figure (8,901.28) was considered far lower than DARAB’s figure. The Court of Appeals fixed just compensation at P1,271,523.91 (less initial deposit) and awarded legal interest at 6% per annum in accordance with Nacar v. Gallery Frames. Land Bank’s motion for reconsideration before the Court of Appeals was denied.
Present Petition and Issues Raised
Land Bank petitioned to reduce the Court of Appeals’ just compensation, principally contesting the use of 46,666 kilos/ha as AGP (attributing it to the unverified, self‑serving submission of Milagros’s husband) and insisting that DAR AO5 requires AGP to correspond to the latest 12‑month gross production immediately preceding field investigation (here, BAS data reflecting 8,901.28 kilos/ha). Land Bank reasserted its recomputed valuation of P777,880.40 using AGP 8,901.28 and SP P7.96. Land Bank also opposed the award of 6% interest on the balance, contending that its timely deposit of its initial valuation constituted prompt payment of just compensation (citing Land Bank v. Alcantara and Land Bank v. Celada). Milagros defended a higher valuation reference (P210,000/ha based on a compromise agreement in another civil case) and supported the award of 6% interest given the prolonged delay.
Standard of Review and Scope of Supreme Court Review
Under Rule 45, the Supreme Court generally confines review to questions of law and will not re‑examine factual findings, except where findings are based on misapprehension of facts or where lower tribunals’ factual findings conflict. Because the Court of Appeals’ valuation conflicted cogently with the RTC‑SAC’s valuation, the Court exercised its discretion to review factual findings pertinent to valuation.
Governing Valuation Formula under DAR AO5 and Applicable Factors
The RTC‑SAC has original and exclusive jurisdiction to determine just compensation under RA 6657, and must consider factors enumerated in Section 17 of RA 6657. DAR AO5 operationalizes those factors into a default formula: LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1). Where Comparable Sales (CS) data are absent, the formula adjusts to LV = (CNI x 0.9) + (MV x 0.1). CNI is computed per DAR AO5 as: CNI = [(AGP x SP) - CO] / 0.12, with an assumed Net Income Rate (NIR) used when CO cannot be ascertained; DAR AO5 allows an assumed NIR of 20% for many crops (thus operationally CNI = AGP x SP x 0.20 / 0.12 when CO is not verified).
Determination of AGP and SP by the Supreme Court
The Supreme Court found the 46,666 kilos/ha AGP unreliable and unverified because it derived from the position paper of Milagros’s husband (a plainly interested witness), not from independent BAS data. The Court accepted Land Bank’s BAS‑sourced AGP of 8,901.28 kilos/ha as corresponding to the DAR AO5 definition (latest available 12‑month gross production preceding the field investigation). Regarding SP, although the Court of Appeals reduced RTC‑SAC’s P5.00/kilo to P2.50/kilo based on Land Bank’s initial offer, the Supreme Court noted that Land Bank later consistently adopted P7.96/kilo (BAS data) in its recomputation and was bound by that admission. Consequently, the Court applied SP = P7.96/kilo.
Recalculation of Capitalized Net Income (CNI) and Land Valuation (LV)
Applying DAR AO5 with AGP = 8,901.28 kilos/ha and SP = P7.96/kilo, and using the assumed NIR of 20% and capitalization rate 0.12, the Court computed CNI per hectare
Case Syllabus (G.R. No. 244213)
The Case
- Petition assails the Court of Appeals Decision dated February 15, 2018 and Resolution dated January 9, 2019 in CA-G.R. SP No. 06849-MIN.
- Relief sought by Land Bank of the Philippines (Land Bank): reduction of the amount of just compensation fixed by the Court of Appeals at P1,271,523.91 and reconsideration of the award of legal interest at six percent (6%) per annum.
- The Court below had fixed just compensation for a portion of property placed under CARP and imposed legal interest on the amount due from time of taking until fully paid.
Antecedents / Factual Background
- Respondent Milagros De Jesus-Macaraeg (Milagros) is the registered owner of a 15.1836-hectare parcel in Cawayan, Calinan, Davao City subject of TCT No. T-77552.
- In 2002, 7.1838 hectares of the subject land were placed under the Comprehensive Agrarian Reform Program (CARP) pursuant to Republic Act No. 6657.
- The Department of Agrarian Reform (DAR) and Land Bank initially valued the property at P65,756.61 per hectare, total P472,382.33, using the basic formula in DAR Administrative Order No. 5 (DAR AO5).
- Land Bank offered P472,382.33 to Milagros, who rejected the offer; Land Bank deposited the amount under Milagros’ name.
- DAR Adjudication Board (DARAB) by Resolution dated February 19, 2003 valued the property at P1,280,099.20; Land Bank’s motion for reconsideration was denied.
- Land Bank filed Civil Case No. 29,824-2003 with the Regional Trial Court-Branch 15, Davao City sitting as a Special Agrarian Court (RTC‑SAC).
- Land Bank did not appear during the scheduled hearing to present evidence; Milagros presented her appraisal valuing the property at P3,055,000.00 (Asian Appraisal Corp.) and testimony of Ramon Macaraeg (her husband), who claimed a pineapple production study showing average production of 46,666 kilos per hectare and average price of P15.00 per kilo based on agricultural statistics.
- On March 3, 2003, Milagros withdrew Land Bank’s initial deposit of just compensation.
- RTC‑SAC Decision dated February 21, 2005 fixed just compensation at P20.00 per square meter and awarded P100,000.00 attorney’s fees; Land Bank’s motion for reconsideration was denied on May 9, 2005.
- On appeal (CA-G.R. SP No. 00349-MIN), the Court of Appeals by Decision dated October 25, 2011 remanded the case to RTC‑SAC for proper computation of just compensation and deleted the award of attorney’s fees for lack of basis.
- Upon remand, Land Bank submitted a recomputed valuation using BAS data: P777,880.40 total, with AGP adjusted to 8,901.28 kilos/ha and SP at P7.96 per kilo.
Ruling of the RTC‑SAC (Remand Proceedings)
- RTC‑SAC Decision dated August 26, 2014 ordered Land Bank to pay Milagros P2,765,727.08 as just compensation, with twelve percent (12%) interest per annum until fully paid.
- RTC‑SAC computations and assumptions:
- Set AGP at 46,666 kilos per hectare based on DARAB Resolution dated February 19, 2003.
- Exercised discretion to set Selling Price (SP) of pineapples at P5.00 per kilo.
- Pegged Market Value (MV) of the property at P50.00 per square meter based on zonal valuation.
- Land Bank’s motion for reconsideration of the RTC‑SAC Decision was denied on April 10, 2015.
Dispositions of the Court of Appeals
- Court of Appeals Decision dated February 15, 2018 reversed RTC‑SAC figures and computations in part:
- Held RTC‑SAC’s SP of P5.00 per kilo was arbitrary and reduced SP to P2.50 per kilo based on Land Bank’s initial offer of P472,382.33.
- Noted DAR AO5 prescribes use of assessed value rather than zonal value for computing MV and adjusted MV to P20,012.96 per hectare.
- Affirmed use of AGP at 46,666 kilos per hectare (because Land Bank’s BAS-derived figure of 8,901.28 was much lower than DARAB’s figure).
- Fixed just compensation at P1,271,523.91 less the initial deposit and affirmed award of legal interest, reduced to six percent (6%) per annum in accordance with Nacar v. Gallery Frames.
- Land Bank’s motion for reconsideration dated March 8, 2018 was denied by the Court of Appeals Resolution dated January 9, 2019.
Present Petition (Issues Raised by Land Bank and Milagros’ Positions)
- Land Bank’s contentions:
- Challenges use of 46,666 kilos/ha AGP as unverified and self‑serving (sourced from Milagros’ husband).
- Argues DAR AO5 requires AGP to correspond to the latest 12‑month gross production immediately preceding the field investigation (May 2003), which yields 8,901.28 kilos/ha per BAS data.
- Insists on P777,880.40 as just compensation using AGP 8,901.28 kilos/ha and SP P7.96 per kilo.
- Opposes six percent (6%) interest award, asserting timely deposit of initial valuation constitutes prompt payment and therefore no delay (citing Land Bank v. Alcantara and Land Bank v. Celada).
- Milagros’ contentions:
- Argues for valuation of P210,000.00 per hectare based on a compromise agreement between heirs of Marcela de Jesus (including herself) and Land Bank in Civil Case No. 28,340-00; the property is part of the same tract prior to CARP coverage.
- Defends award of six percent (6%) legal interest per annum, emphasizing a seventeen‑year wait for just compensation.
Standard of Review / Jurisdictional Principles
- Rule 45 of the Rules of Court: only questions of law may generally be raised before the Supreme Court; the Court is not a trier of facts and will not normally re‑examine evidence or factual findings.
- Exception: the Court may review factual findings when the judgment is based on misapprehension of facts or when factual findings of the tribunals below are conflicting.
- Here, because the Court of Appeals’ valuation was cogently at variance with RTC‑SAC’s valuation, the Supreme Court exercised discretion to review factual findings of the two tribunals.
- RTC‑SAC has original and exclusive jurisdiction to determine just compensation for lands acquired for agrarian reform.