G.R. No. 193987 March 13, 2017
LAND BANK OF THE PHILIPPINES, Petitioner, vs. PHIL-AGRO INDUSTRIAL CORPORATION, Respondent.

FACTS

Respondent Phil-Agro Industrial Corporation owned 19 parcels of land in Bukidnon, totaling 267.0043 hectares, placed under the compulsory coverage of the Comprehensive Agrarian Reform Program (CARP). Petitioner Land Bank of the Philippines offered an initial valuation of ₱2,139,996.57, which respondent rejected. The case for just compensation was filed before the Regional Trial Court (RTC), which constituted a commission. The commission chairman appraised the land at ₱20,589,373.00 based on physical attributes, soil type, and local expert opinions. The RTC adopted this valuation.
On appeal, the Court of Appeals (CA) modified the RTC decision, reducing the just compensation to ₱11,640,730.68—the valuation submitted by Land Bank’s commissioner, which was computed using the formula under DAR Administrative Order No. 5, series of 1998. The CA initially awarded 6% interest per annum on the compensation from the date of taking (September 16, 1992) plus 12% legal interest. Upon motions for reconsideration, the CA amended its decision, modifying the interest to 1% per annum from the date of taking and 12% legal interest per annum from the finality of its decision until full payment. Land Bank filed this petition, challenging the imposition of any interest from the date of taking.

ISSUE

Whether the Court of Appeals erred in imposing a 1% interest per annum on the just compensation from the date of taking.

RULING

The Supreme Court denied the petition and affirmed the amended decision of the Court of Appeals. The legal logic is anchored on the nature of just compensation and the consequences of delay in its payment. Just compensation is not merely the correct valuation but must also be paid without delay. If payment is delayed, the landowner is entitled to interest as a form of damages for the income it could have earned had it been paid promptly.
The Court held that the date of compensable taking was September 16, 1992, when Certificates of Land Ownership Award were issued to farmer-beneficiaries, as the landowner was effectively deprived of its property from this date. While Land Bank made an initial deposit of its valuation, the final compensation as adjudicated by the courts was significantly higher. Therefore, the balance of the adjudged just compensation remained unpaid from the time of taking. The imposition of interest from this date is proper to compensate for the delay. The CA correctly reduced the interest rate to 1% per annum, conforming to jurisprudence that when just compensation is determined judicially, interest at the rate of 1% per month (12% per annum) is due from the time of taking until June 30, 2013, and thereafter at 6% per annum until full payment. The 12% legal interest imposed by the CA from the finality of judgment until full payment is also correct, as this represents the forbearance of money once the judgment becomes final and executory.