G.R. No. 215290 January 11, 2017
HEIRS OF PABLO FELICIANO, JR., represented by its assignee, VICTORIA ALDA REYES ESPIRITU, Petitioners, vs. LAND BANK OF THE PHILIPPINES, Respondent.

FACTS

Petitioners are co-owners of agricultural land, a 135.2583-hectare portion of which was placed under the coverage of Presidential Decree No. 27 in 1972. The Department of Agrarian Reform (DAR) valued the land at ₱1,301,498.09, which the landowners rejected. The Land Bank of the Philippines (LBP) deposited this amount in 1998, and it was released to the landowners in 2000. Following administrative and judicial proceedings for just compensation, the Regional Trial Court (RTC) directed a revaluation pursuant to DAR Administrative Order No. 1, Series of 2010. The LBP revalued the land at ₱7,725,904.05, which the landowners’ assignee, Espiritu, accepted.
The dispute centered on the interest due on the revalued compensation. The RTC ordered LBP to pay 12% per annum interest on the unpaid balance from January 1, 2010, until full payment. The Court of Appeals (CA), in an amended decision, held that LBP, having fully paid the principal on December 13, 2011, was liable for 12% interest per annum only on that principal amount for the period from July 1, 2009, to December 13, 2011, totaling ₱1,892,471.01. This accrued amount was then to earn 6% interest per annum from the finality of the CA decision until full satisfaction.

ISSUE

Whether the Court of Appeals correctly determined the just compensation and the applicable interest rates.

RULING

The Supreme Court affirmed the CA’s determination of the principal just compensation at ₱7,725,904.05 but modified the ruling on interest. The Court clarified that for PD 27 cases where just compensation remains unsettled, the valuation must be concluded under Republic Act No. 6657 , as amended. The “time of taking” for determining the fair market value is when the landowner is deprived of the property’s use and benefit, which here occurred when emancipation patents were issued to farmer-beneficiaries in 1989. However, for lands where the claim folder was received by LBP before July 1, 2009, the governing law for valuation is RA 6657 prior to its amendment by RA 9700. Since the claim folder here was received in 1997, the revaluation under DAR AO 1, s. 2010—which used values as of July 1, 2009—was proper.
On the interest, the Court held that the 12% per annum rate imposed by the CA was erroneous. Citing prevailing jurisprudence, the legal interest for unpaid just compensation in agrarian cases is 6% per annum from the time of taking until full payment. The “time of taking” was in 1989. Therefore, the 6% interest should run from 1989, not from July 1, 2009. The Court remanded the case to the RTC for the precise computation of the 6% interest on the principal compensation of ₱7,725,904.05, from 1989 until its actual payment on December 13, 2011. Any unpaid interest shall further earn 6% per annum from finality of this decision until full payment.