G.R. No. L-46383. March 23, 1987.
DELIA DEL VALLE VDA. DE ORTIZ, NECITAS ORTIZ, FREDDIE PANGANIBAN, NANCY ORTIZ-MEJIA, and LINO MEJIA, petitioners, vs. LAND BANK OF THE PHILIPPINES and HON. AMADOR T. VALLEJOS, as Presiding Judge, CFI Manila, Branch XXII, respondents.

FACTS

Ildefonso Ortiz owned land in Camarines Sur placed under agrarian reform by Presidential Decree No. 27, promulgated on October 21, 1972. The decree initially provided for direct payment by tenant-farmers to landowners. This was later amended by P.D. No. 251, which designated the Land Bank as the financing entity to pay landowners, with tenants reimbursing the Bank. Ortiz elected to be paid under the first mode specified in P.D. No. 251: 10% in cash and the balance in 25-year, 6% Land Bank bonds. The Bank approved his claim and paid him the total computed value on April 1, 1974, deducting rentals tenants had paid to Ortiz after October 21, 1972. Ortiz executed deeds of assignment in favor of the Bank.
Subsequently, Ortiz filed a complaint, alleging he was entitled to 6% interest on the acquisition price from October 21, 1972 (the date of P.D. No. 27’s promulgation) until April 1, 1974 (the date of actual payment by the Bank). The Court of First Instance dismissed the complaint. Ortiz’s heirs, the petitioners, appealed, contending that provisions in P.D. Nos. 27 and 85 obligated the Land Bank to pay such accrued interest.

ISSUE

Whether the Land Bank is legally obligated to pay 6% interest on the land’s acquisition price for the period from October 21, 1972, to April 1, 1974.

RULING

No. The Supreme Court affirmed the dismissal, holding the Land Bank had no such obligation. The legal logic is clear: P.D. No. 27, which petitioners cited for the 6% interest provision, governed only the relationship between tenant-farmer and landowner, specifying that the tenant would pay the land cost plus 6% interest over 15 years. It did not involve the Land Bank. The financing mechanism was established later by P.D. No. 251, which outlined specific modes of Bank payment to landowners. Ortiz voluntarily chose one mode—cash and bonds—with the bonds earning 6% interest only from the date of claim approval, not from 1972. The Court found no legal basis to impose an additional interest obligation on the Bank for the interim period. This interpretation was consistent with the operative principle that the tenant-farmer is deemed owner from October 1972, with lease rentals during the interim credited as amortizations, not as a basis for accruing interest payable by the Bank. The Court also noted Ortiz had executed affidavits agreeing the bonds would earn interest only from the claim approval date, estopping him from claiming otherwise. The payment made was in full accordance with the law and his chosen mode of settlement.