G.R. No. 172352 and G.R. Nos. 172387-88, September 16, 2015.
LAND BANK OF THE PHILIPPINES, PETITIONER, VS. ALFREDO HABABAG, SR., SUBSTITUTED BY HIS WIFE, CONSOLACION, AND CHILDREN, NAMELY: MANUEL, SALVADOR, WILSON, JIMMY, ALFREDO, JR., AND JUDITH, ALL SURNAMED HABABAG, RESPONDENTS. [G.R. Nos. 172387-88] ALFREDO HABABAG, SR., SUBSTITUTED BY HIS WIFE, CONSOLACION, AND CHILDREN, NAMELY: MANUEL, SALVADOR, WILSON, JIMMY, ALFREDO, JR., AND JUDITH, ALL SURNAMED HABABAG, PETITIONERS, VS. LAND BANK OF THE PHILIPPINES AND THE DEPARTMENT OF AGRARIAN REFORM, RESPONDENTS.

FACTS

Alfredo Hababag, Sr. owned agricultural land with an aggregate area of 82.4927 hectares in Gubat, Sorsogon. A portion of 69.3857 hectares was voluntarily offered for sale and acquired by the government under the Comprehensive Agrarian Reform Law in 1990. The Land Bank of the Philippines (LBP) initially valued the land at ₱1,237,850.00, which was rejected. After administrative proceedings, the Provincial Agrarian Reform Adjudicator fixed the value at ₱1,292,553.20. Dissatisfied, Alfredo filed a complaint for determination of just compensation before the Regional Trial Court (RTC). The RTC-appointed commissioners submitted differing valuations: the LBP’s commissioner valued the land at ₱2,358,385.48 using DAR formulas, while Alfredo’s commissioner valued it at ₱5,420,600.00. The RTC initially fixed just compensation at ₱5,653,940.00, applying the Income Productivity Approach. Alfredo appealed to the Court of Appeals (CA), which found a mathematical error and remanded the case for re-computation. On remand, the RTC, using a re-computation from Alfredo’s commissioner, fixed just compensation at ₱40,423,400.00. The LBP and the Department of Agrarian Reform (DAR) appealed to the CA. The CA set aside the RTC’s valuation, finding it failed to consider the factors in Section 17 of Republic Act No. 6657 and the DAR formula. The CA fixed just compensation at ₱2,398,487.24 and imposed 12% per annum interest. The LBP and the heirs of Alfredo Hababag (Hababag Heirs) filed separate petitions for review.

ISSUE

The main issues are: (1) whether the Court of Appeals correctly fixed the amount of just compensation at ₱2,398,487.24; and (2) whether the imposition of 12% per annum interest on the just compensation award is proper.

RULING

The Supreme Court affirmed the Court of Appeals’ decision with modification regarding the interest rate. The Court held that the determination of just compensation must consider the factors enumerated in Section 17 of Republic Act No. 6657 and the applicable DAR administrative orders. The RTC’s valuation of ₱40,423,400.00 was erroneous as it was based solely on the Income Productivity Approach and disregarded the DAR formula. The CA correctly relied on the valuation report using the DAR formula, which considered the factors under the law, resulting in ₱2,398,487.24. On the issue of interest, the Court held that just compensation earns legal interest from the time of taking until full payment. However, applying Bangko Sentral ng Pilipinas Circular No. 799, the legal interest rate is 6% per annum from July 1, 2013, until full payment. Prior to that, the rate is 12% per annum from the time of taking in 1990 until June 30, 2013. The Court emphasized that the government’s obligation to pay just compensation is a forbearance of money, and the landowner is entitled to interest for the delay in payment.