G.R. No. 168453 - Land Bank of the Philippines vs. Chico

The dispute involves an 8.3027-hectare portion (the subject property) extracted from a larger 12.2209-hectare property covered by Transfer Certificate of Title (TCT) No. N-18893 in the name of respondent Hernando T. Chico.
The subject property forms part of three parcels (Lot Nos. 1, 2, and 3) of irrigated rice land located at Sitio Sta. Cruz, Sto. Tomas Feria, Quezon, Nueva Ecija.

In his Amended Petition for Fixing Just Compensation dated June 2, 2002, respondent, represented by his Attorney-in-Fact Lorna Chico, alleged that the property was taken by the Department of Agrarian Reform (DAR) and transferred to farmer-beneficiaries (FBs) via the issuance of Emancipation Patents on December 27, 1994, without prior notice or payment of just compensation.
DAR, however, contended that respondent was duly notified and that the compensation amount had been agreed upon at ₱10,000.00 per hectare under a Landowner-Tenant Production Agreement (LTPA) executed with the FBs.

Petitioner Land Bank of the Philippines (LBP) argued that it was not under any legal obligation to finance the transfer since the necessary Land Transfer Claim (LTC) or claim folder from DAR, which would guide the evaluation and payment of compensation, had not been properly endorsed.
LBP suggested that the transaction might have been executed under a Voluntary Land Transfer (VLT) scheme, whereby an agreement on compensation had already been reached, or that amortizations by the FBs had been completed.
The case proceeded to trial on the merits with testimony from witnesses and submission of evidence from both parties.

The Special Agrarian Court (SAC) rendered a decision on May 17, 2004, holding that:

The ₱10,000.00 per hectare price in the LTPA could not be substantiated without evidence of voluntary agreement.
The valuation was unrealistic for a prime parcel of land; consequently, an award was rendered ordering DAR through LBP to pay just compensation, initially computed at ₱1,860,540.00 with a 12% legal interest per annum.

Following an Ex-Parte Motion to Correct Clerical Errors, the SAC modified its order (May 26, 2004) reducing the total area to 8.3027 hectares and the awarded compensation to ₱1,660,540.00.
LBP filed a Motion for Reconsideration arguing that the date of taking should be October 21, 1972 (under P.D. No. 27 and E.O. No. 228) instead of applying Republic Act (R.A.) No. 6657.
On July 29, 2004, the SAC denied LBP’s motion and granted motions for execution, partially directing LBP to pay ₱800,000.00 as just compensation.
The Court of Appeals (CA) later affirmed the SAC’s ruling on March 17, 2005 but modified the award by reducing the just compensation to ₱1,482,340.00 and substituting the interest from 12% to six (6)% per annum from the time of taking until full payment.
Subsequent motions for reconsideration by LBP before the CA were denied.

LBP contended that without the duly endorsed Land Transfer Claim (LTC) by DAR, it should not be obliged to pay compensation.
LBP further argued that even if obligated to pay, the just compensation should be based on the contractual arrangement under the LTPA (i.e., ₱10,000.00 per hectare) and determined under PD 27/E.O. No. 228, not R.A. No. 6657.
Respondent maintained that he had been deprived of the property since 1994 without just compensation and that the imposition of interest was necessary due to the delay in payment.
The Supreme Court was called upon to review whether questions of fact raised by LBP could be entertained and whether the lower court’s determinations on issues of compensation and interest were sustainable in law.

Whether LBP is legally obligated to pay just compensation to the respondent in the absence of a duly endorsed Land Transfer Claim (LTC) or claim folder from DAR.
Whether the amount of just compensation should be pegged at ₱10,000.00 per hectare as purported in the LTPA, or determined via an independent judicial valuation based on the applicable criteria.
Which legal basis governs the determination of just compensation—the provisions of R.A. No. 6657 (with its comprehensive factors) or the guidelines under P.D. No. 27 and E.O. No. 228, with the latter seen as merely suppletory.
Whether the imposition of interest (six percent per annum) on the award of just compensation is legally justifiable, or if such interest should be deleted from the award.