LAND BANK v. PHIL-AGRO

LAND BANK OF THE PHILIPPINES, Petitioner, vs. PHIL-AGRO INDUSTRIAL CORPORATION, Respondent. 

G.R. No. 193987

March 13, 2017

Petitioner is seeking to annul and set aside the Amended Decision of the Court of Appeals, which ordered the Land Bank of the Philippines (petitioner) to pay Phil-Agro Industrial Corporation (respondent) the total amount of P11,640,730.68 plus interests.

FACTS:

The subject of this petition is 19 parcels of land situated in Baungon, Bukidnon, with an aggregate area of 267.0043 hectares, registered under the name of the respondent. These landholdings were then placed under the compulsory coverage of the Comprehensive Agrarian Reform Program (CARP) by the Department of Agrarian Reform (DAR).

On June 7, 2000, the parties agreed to the creation of a commission to determine the fair market value of the subject landholdings. The respondent’s nominated commissioner submitted the amount of P63, 045,000.00 based on the findings of the Asian Appraisal Company, Inc.,. On the other hand, using as basis the Revised Rules and Regulations Governing the Valuation of Land Voluntarily Offered or Compulsory Acquired Pursuant to Republic Act (R.A.) No. 6657,7 the petitioner’s nominated commissioner submitted a lower amount of P11,640,730.68.

The Chairman of the Commission, however, appraised the subject landholdings in the amount of P20,589,373.00. On November 21, 2001, the RTC rendered its judgment adopting the Chairman’s report assessing the value of the subject landholdings at P20,589,373.00. On appeal, the CA modified the trial court’s ruling and on September 30, 2010, the CA rendered an Amended Decision to grant the Petitioner's motion for Partial Reconsideration.

1. Ordering [the petitioner] to pay [the respondent] P11,640,730.68 as just compensation for the subject property;

2. Ordering [the petitioner] to pay 1% interest per annum on the amount of just compensation counted from September 16, 1992, until all the amounts are fully paid;

3. Ordering [the petitioner] to pay 12% legal interest per annum on the amount of just compensation plus the 1% interest, from the finality of this Decision until full payment thereof;

ISSUE:

Whether or not the award of 1% per annum, allegedly to cover for the increase in value of real properties, is proper?

HELD:

The award of interest is imposed in the nature of damages for delay in payment which makes the obligation on the part of the government one of forbearance to ensure prompt payment of the value of the land and limit the opportunity loss of the owner. Therefore, there is no need for the payment of 1% interest per annum to cover for the increase in value of real properties.

Nonetheless, the Court observes that the CA erred as to the reckoning point on which the award of legal interest of 12% should accrue. Notably, while the petitioner claimed that it deposited the initial valuation in the amount of P2,139,996.57, the said amount is way below the just compensation finally adjudged by the CA at P11,640,730.68. Clearly, delay in payment occurred and cannot at all be disputed. The respondent was deprived of its lands since September 16, 1992, when CLOAs were issued in the name of three farmer beneficiaries associations, and to date, had not yet received full payment of the principal amount due to it. Evidently, from September 16, 1992 until the present, or after almost 25 years, the respondent is deprived of just compensation which therefore warrants the imposition of interest.

WHEREFORE, the petition is PARTLY GRANTED. The Amended Decision dated September 30, 2010 of the Court of Appeals in CA-G.R. CV No. 75045-MIN is hereby AFFIRMED with MODIFICATION as follows:

1. Petitioner Land Bank of the Philippines is ordered to pay respondent Phil-Agro Industrial Corporation P11,640,730.68 representing the just compensation of the subject landholdings; and

2. Legal interest shall be pegged at the rate of twelve percent (12%) per annum, reckoned from the time of taking on September 16, 1992. Thereafter, or beginning July 1, 2013, until fully paid, just compensation shall earn interest at the new legal rate of six percent (6%) per annum. SO ORDERED.