G.R. No. 233401 - Land Bank of the Philippines vs. Heirs of the Estate of Mariano

The respondents, heirs of the estate of Mariano and Angela Vda. De Veneracion, are co-owners of a 24.4170-hectare parcel of riceland located in Barrio Taguilid (now Veneracion), Batang, Pamplona, Camarines Sur, as evidenced by Transfer Certificate of Title No. RT 1405.
A 21.8513-hectare portion of this land (the subject land) was acquired by the Department of Agrarian Reform (DAR) in 1972 and subsequently distributed to farmer-beneficiaries pursuant to Presidential Decree No. 27.

On February 3, 1999, the respondents filed a petition before the Regional Trial Court (RTC) of Naga City, Branch 23, seeking the fixing of just compensation, accounting, the collection of rental arrears, and damages against the Land Bank of the Philippines (LBP) President and the DAR Secretary.
The petition was based on their claim that they had not been paid just compensation for the subject land—the land being classified as first class irrigated riceland, which they contended should be valued at no less than P300,000.00 per hectare.

The respondents alleged non-payment of substantial just compensation for the subject land and emphasized that the farmer-beneficiaries had already received Certificates of Land Transfer (CLTs) and Emancipation Patents (EPs), thereby being deprived of the full economic use and benefit of the land.
The LBP countered by arguing that no cause of action lay against it since it had not yet received the Claim Folder (CF) for the subject land from the DAR.
Both parties presented evidence, and there was a stipulated acknowledgment regarding the existence of the CLTs and EPs awarded to the farmer-beneficiaries.

The LBP computed the land’s value using the formula prescribed under the DAR Administrative Order (AO) No. 1, Series of 2010:

Based on this computation, the land was valued at P69,707.73 per hectare, resulting in a total just compensation of P1,523,204.50 for the subject land.
The RTC, in its Decision dated September 6, 2013, adopted the LBP’s computation as the basis for the just compensation but also imposed the payment of interest at 12% per annum, reckoned from 1998 (the year tax declarations were issued) until full payment.

The LBP filed a motion for partial reconsideration concerning the imposition of interest; however, this was denied by the RTC in an Order dated October 11, 2013.
The matter was subsequently elevated to the Court of Appeals (CA), which in a Decision dated April 25, 2017, affirmed the RTC’s ruling on the compensation.
The CA modified the imposition of legal interest by ordering it to be computed at 12% per annum from 1998 up to June 30, 2013, and at 6% per annum thereafter until full payment.
Following dissatisfaction with this ruling, the LBP sought reconsideration, which was denied by the CA in its Resolution dated August 10, 2017; this led to the present petition for review on certiorari at the Supreme Court.

Adjudging that the LBP was liable to pay legal interest on the just compensation.
Imposing the computation of legal interest from 1998 up to June 30, 2013, at 12% p.a., and at 6% p.a. thereafter, in view of the valuation methodology adopted under DAR AO No. 1, Series of 2010.