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I. Just compensation for the land planted to corn should be based on the valuation factors enumerated under R.A. No. 6657 and the relevant DAR formula.

Just compensation is defined as the full and fair equivalent of the property taken from its owner by the expropriator. The word "just" modifies the term compensation, which means that the equivalent to be given for the property to be taken shall be real, substantial, full, and ample. In determining just compensation a wide range of factors must be considered in approximating the real and full value of a land. As a judicial function, RTC-SACs are enjoined to take into full consideration the factors specifically identified by law and implementing rules, which includes guidelines and formulae prescribed by the DAR, issued pursuant to its mandate to implement agrarian reform programs.

LBP in its petition argued that the CA incorrectly affirmed the RARAD valuation, which was subsequently affirmed by the DARAB when it fixed just compensation for 60.0932 hectares of the property planted to corn in the amount of ₱6,306,786.00.

We find LBP's argument impressed with merit.

In the instant case, it is undisputed that the subject properties were acquired by the government under a voluntary offer to sell made by its owners under the CARP. Relatedly, this Court has repeatedly recognized the applicability of R.A. No. 6657 to corn lands subject of agrarian reform Accordingly, the valuation of the subject corn land should be determined pursuant to the valuation factors provided by R.A. No. 6657 and the relevant implementing guidelines and formula, and not under P.D. No. 27.

Thus, as correctly pointed out by LBP, the RARAD/DARAB improperly made the valuation using the formula in acquisitions made under P.D. No. 27 despite the fact that the subject property was acquired under R.A. No. 6657. The RARAD/DARAB computed the valuation for the land planted to corn using the formula provided under P.D. No. 27:

Accordingly, We find that the CA erred in affirming the foregoing valuation considering that it was not in accordance with the valuation factors set forth in R.A. No. 6657.

We have held that the exercise of judicial discretion is not unbridled, but must be discharged within the metes and bounds of the law.

In this case, the computation of just compensation for the corn land should be guided by the factors enumerated in Section 17 of R.A. No. 6657, which states:

Section 17. Determination of Just Compensation. – In determining just compensation, the cost of acquisition of the land, the current value of like properties, its nature, actual use and income, the sworn valuation by the owner, the tax declarations, and the assessment made by government assessors, shall be considered. The social and economic benefits contributed by the farmers and the farm workers and by the Government to the property, as well as the non-payment of taxes or loans secured from any government financing institution on the said land, shall be considered as additional factors to determine its valuation.

Relatedly, the DAR issued A.O. No. 5, Series of 1998 to fill in the details and provide a basic formula to operationalize the determination of just compensation pursuant to Section 17 of R.A. No. 6657, to wit:

II. The following rules and regulations are hereby promulgated to govern the valuation of lands subject of acquisition whether under voluntary offer to sell (VOS) or compulsory acquisition (CA).

A. There shall be one basic formula for the valuation of lands covered by VOS or CA:

LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)

Where:	LV  = Land Value
	CNI = Capitalized Net Income
	CS   = Comparable Sales
	MV = Market Value per Tax Declaration

The above formula shall be used if all three factors are present, relevant and applicable.

A.1 When the CS factor is not present and CNI and MV are applicable, the formula shall be:

LV = (CNI x 0.9) + (MV x 0.1)

A.2 When the CNI factor is not present, and CS and MV are applicable, the formula shall be:

LV = (CS x 0.9) + (MV x 0.1)

A.3 When both the CS and CNI are not present and only MV is applicable, the formula shall be:

LV = MV x 2

Accordingly, the valuation of the corn land and the computation of just compensation therefor should be based on the foregoing formula, taking into account the production data and values at the time of taking.

II. The time of taking of the subject property

In determining just compensation it is imperative to consider the nature and character of the land at the time of taking or the time when the owner was deprived of the use and benefit of the property, such as when title is transferred in the name of the Republic of the Philippines. The time of taking also determines the applicable DAR administrative order to serve as a guideline for the determination of just compensation.

In the instant case, the certificates of titles in the name of the landowners were cancelled and transfer certificates of title were issued in the name of the Republic of the Philippines on December 30, 2003.

Accordingly, the just compensation for both sugar land and corn land should be valued at the time of taking on December 30, 2003.

III. A remand of the case is warranted given the foregoing findings

In view of the foregoing disquisitions, the just compensation for the subject lands should be computed based on the valuation factors set forth in Section 17 of R.A. No. 6657 and the guidelines and formula under DAR A.O. No. 5, Series of 1998 using the production data and values as of the time of taking, on December 30, 2003.

After a careful review of the records of the instant case, this Court cannot determine just compensation in accordance with the foregoing factors. We, likewise, cannot adhere to the preliminary determination of just compensation made by LBP, as it does not reckon its computation based on the time of taking.

Accordingly, since the final determination of just compensation is a judicial function, the reception of evidence is necessary to establish and prove the facts and figures to be used in determining just compensation.

As this Court is not a trier of facts, We are, thus, constrained to remand the case to the RTC-SAC to determine just compensation, guided by this Court's discussion and strictly in accordance with Section 17 of R.A. No. 6657 and applicable DAR regulations, in particular, DAR A.O. No. 5, Series of 1998.

IV. Imposable Interest

Just compensation entails not only the correct determination of the amount to be paid to the owners of the land, but also payment within a reasonable time from its taking. When property is taken, full compensation of its value must immediately be paid to achieve a fair exchange for the property and the potential income lost.

Thus, this Court has upheld the imposition of legal interest in expropriation cases where there is delay in the payment since the just compensation due to the landowners was deemed to be an effective forbearance on the part of the State. This is in order to eradicate the issue of the constant variability of the value of the currency over time, and to compensate the owner for the loss of income due to the taking, the imposition of interest is only just and proper.

However, interest shall be imposed only on the unpaid balance of the just compensation, which pertains to the difference between the final amount as properly adjudged by the court in accordance with the applicable DAR issuance and the initial provisional deposit made by the government.

Accordingly, in line with jurisprudence, legal interest shall be fixed at the rate of twelve percent (12%) per annum from the time of taking, which in this case was on December 30, 2003, until June 30, 2013. Afterwards, or beginning July 1, 2013, until finality of this Resolution, just compensation shall earn interest at the new legal rate of six percent (6%) per annum, applying prospectively Section 1 of Bangko Sentral ng Pilipinas – Monetary Board Circular No. 799, Series of 2013.

Thereafter, the total amount of just compensation shall earn legal interest at six percent (6%) per annum from the finality of this Resolution until its full payment.

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