G.R. Nos. 236772-73. June 28, 2021.
LAND BANK OF THE PHILIPPINES, PETITIONER, VS. IGNACIO PALIZA, SR., RESPONDENT.

FACTS

Ignacio Paliza, Sr. owned two coconut lands placed under compulsory agrarian reform: Lot 5763 (3.2208 hectares) and Lot 5853 (0.5028 hectares). Field investigations were conducted on March 23, 1994, and November 12, 1997, respectively. The Land Bank received the claim folders on May 10, 1996, and November 17, 1998. Title to Lot 5763 was transferred to the Republic of the Philippines on January 20, 1997, and a CLOA for Lot 5853 was issued to a farmer-beneficiary on March 16, 1999. Land Bank computed preliminary valuations using DAR Administrative Orders, arriving at P105,666.81 for Lot 5763 and P9,290.54 for Lot 5853. Dissatisfied, Paliza filed a case with the DARAB, which fixed higher amounts. Land Bank then filed a complaint before the RTC, which acted as a Special Agrarian Court. The RTC fixed just compensation at a total of P374,590.77 using the formula under DAR Administrative Order No. 1, Series of 2010 (DAR AO No. 1), and imposed legal interest. The Court of Appeals affirmed the RTC with modification on the interest rate. Land Bank appealed, arguing DAR AO No. 1 was inapplicable as the claim folders were received before July 1, 2009, and that its initial deposit constituted prompt payment.

ISSUE

1. Whether the CA erred in upholding the RTC’s valuation of just compensation using DAR AO No. 1.
2. Whether the CA erred in affirming the imposition of legal interest on the just compensation.

RULING

1. On the valuation: Yes, the CA erred. The applicable DAR formulas are those in effect at the time of taking. The “time of taking” is when the landowner is deprived of the use and benefit of the property, such as when title is transferred to the Republic or when CLOAs are issued. For Lot 5763, the taking was on January 20, 1997 (title transfer), and for Lot 5853, it was on March 16, 1999 (CLOA issuance). Since both takings occurred before July 1, 2009, DAR AO No. 1 (which presumes a taking date of June 30, 2009) is inapplicable. The proper formulas are those prevailing at the actual time of taking: DAR AO No. 11, Series of 1994 (for Lot 5763) and DAR AO No. 5, Series of 1998 (for Lot 5853). The court’s determination of just compensation must consider the factors in Section 17 of Republic Act No. 6657 as translated into the applicable DAR formula, subject to the guidelines in Alfonso v. Land Bank. The case was remanded to the RTC for recalculation using the correct formulas and data relevant to the actual time of taking.
2. On the imposition of interest: No, the CA did not err. Just compensation is due at the time of taking. If payment is not made promptly, the landowner is entitled to interest as a form of damages for the delay. The initial deposit by Land Bank does not constitute full and prompt payment because the amount was contested. The modified interest imposed by the CA—12% per annum from June 30, 2009, to June 30, 2013, and 6% per annum thereafter until full payment—is in accordance with prevailing jurisprudence (Nacar v. Gallery Frames). However, since the valuation is to be recomputed, the interest shall be reckoned from the actual time of taking for each lot until full payment.