PETITION: petition for review on certiorari under Rule 45 by Petitioner Land Bank of the Philippines (LBP) assailing the

Decision of the Court of Appeals ordering the payment by LBP of just compensation and interest in favor of respondents Esther Anson Rivera et al and at the same time directed LBP to pay the costs of suit. FACTS: - The respondents are the co-owners of a parcel of agricultural land and later transferred in their names under Transfer Certificate of Title that was placed under the coverage of Operation Land Transfer pursuant to Presidential Decree No. 27. - After the Department of Agrarian Reform (DAR) directed payment, LBP approved the payment of P265,494.20, exclusive of the advance payments made in the form of lease rental amounting to P75,415.88 but inclusive of 6% increment of P191,876.99 pursuant to DAR Administrative Order No. 13, series of 1994. - The respondents instituted Civil Case No. 94-03 for determination and payment of just compensation before the Regional Trial Court (RTC), Branch 3 of Legaspi City, claiming that the landholding involved was irrigated with two cropping seasons a year with an average gross production per season of 100 cavans of 50 kilos/hectare, equivalent of 200 cavans/year/hectare; and that the fair market value of the property was not less that P130,000.00/hectare, or P2,668,302.00 for the entire landholding of 20.5254 hectares. - LBP filed its answer, stating that rice and corn lands placed under the coverage of Presidential Decree No. 27 were governed and valued in accordance with the provisions of Executive Order No. 228 etc. - The RTC rendered its decision, holding: the just compensation of the land partly covered by TCT No. T-95690 is fixed at Php1,297,710.63. Land Bank of the Philippines is hereby ordered to pay Esther Anson, Cesar Anson and Antonio Anson the aforesaid value of the land, plus interest of 12% per annum or Php194.36 per day effective October 7, 2004, until the value is fully paid, in cash or in bond or in any other mode of payment at the option of the landowners in accordance with Sec. 18, RA 6657. - LBP filed MR DENIED - LBP next filed a petition for Review to the Court of Appeals then the DECISION DATED OCTOBER 6, 2004 is MODIFIED, ordering petitioner LAND BANK OF THE PHILIPPINES to pay to the respondents just compensation (inclusive of interests as of October 6, 2004) in the amount of P823,957.23, plus interest of 12% per annum on the amount of P515,777.57, or P61,893.30 per annum, beginning October 7, 2004 until the just compensation is fully paid in accordance with this decision. - The Court of Appeals pointed out that: - Pursuant to AO 13, considering that the landholding involved herein was tenanted prior to October 21, 1972, the rate of 6% per annum is imposed, compounded annually from October 21, 1972 until October 21, 1994, the date of the effectivity of AO 13. - Beyond October 21, 1994, only the simple rate of 6% per annum interest is imposable until October 6, 2004 (the date of the rendition of the decision of the RTC) on the total value (that is, P164,059.26 plus the compounded increments up to October 21, 1994) but minus the lease rentals of P75,415.88. - Only the simple rate of 6% is applicable up to then because the obligation to pay was not founded on a written agreement that stipulated a different rate of interest. From October 7, 2004 until the full payment, the simple interest rate is raised to 12% per annum. - The reason is that the amount thus determined had by then acquired the character of a forbearance in money. - LBP disagreed with the imposition of 12% interest and its liability to pay the costs of suit. It filed a Motion for Reconsideration which was denied in the Court of Appeals Resolution dated 18 March 2008. Before this Court, LBP raises the same issues for resolution: I. Is it valid or lawful to award 12% rate of interest per annum in favor of respondents notwithstanding the 6% rate of interest per annum compounded annually prescribed under DAR A.O. No. 13, series of 1994, DAR A.O. No. 02, series of 2004, and DAR A.O. No. 06, series of 2008, "xxx from November 1994 up to the time of actual payment?

II. Is it valid or lawful to adjudge petitioner LBP, which is performing a governmental function, liable for costs of suit? RATIO: - At the outset, the Court notes that the parcels of land subject matter of this case were acquired under In the instant case, while the subject lands were acquired under Presidential Decree No. 27, the complaint for just compensation was only lodged before the court on 23 November 2000 or long after the passage of Republic Act No. 6657 in 1998. - Therefore, Section 17 of Republic Act No. 6657 should be the principal basis of the computation for just compensation. - Conformably with the foregoing resolution, this Court rules that a 12% interest per annum on just compensation, due to the respondents, from the finality of this decision until its satisfaction, is proper. IMPORTANT issue of whether or not the Court of Appeals correctly adjudged LBP liable to pay the cost of suit. - According to LBP, it performs a governmental function when it disburses the Agrarian Reform Fund to satisfy awards of just compensation. Hence, it cannot be made to pay costs in eminent domain proceedings. - On the other hand, the NHA contends that it is exempt from paying all kinds of fees and charges, because it performs governmental functions. - COURT AGREES DO NOT NEED TO PAY COST PERFORMING VOT FUNCTIONS - We agree. People's Homesite and Housing Corporation v. Court of Industrial Relations declares that the provision of mass housing is a governmental function: - We note that since 1941 when the National Housing Commission (predecessor of PHHC, which is now known as the National Housing Authority [NHA] was created, the Philippine government has pursued a mass housing and resettlement program to meet the needs of Filipinos for decent housing. The agency tasked with implementing such governmental program was the PHHC. - We rule that the PHHC is a governmental institution performing governmental functions. We ruled that housing is a governmental function. - While it has not always been easy to distinguish governmental from proprietary functions, the Court's declaration in the Decision quoted above is not without basis. Indeed, the characterization of governmental functions has veered away from the traditional constituent-ministrant classification that has become unrealistic, if not obsolete. - Justice Isagani A. Cruz avers: "[I]t is now obligatory upon the State itself to promote social justice, to provide adequate social services to promote a rising standard of living, to afford protection to labor to formulate and implement urban and agrarian reform programs, and to adopt other measures intended to ensure the dignity, welfare and security of its citizens.....These functions, while traditionally regarded as merely ministrant and optional, have been made compulsory by the Constitution." - The relevant provision of the Rules of Court states: No costs shall be allowed against the Republic of the Philippines unless otherwise provided by law.. - LBP is an agency created primarily to provide financial support in all phases of agrarian reform pursuant to Section 74 of Republic Act (RA) No. 3844 and Section 64 of RA No. 6657. - It is vested with the primary responsibility and authority in the valuation and compensation of covered landholdings to carry out the full implementation of the Agrarian Reform Program. - It is evident from the afore-quoted jurisprudence that the role of LBP in the CARP is more than just the ministerial duty of keeping and disbursing the Agrarian Reform Funds. - As the Court had previously declared, the LBP is primarily responsible for the valuation and determination of compensation for all private lands. It has the discretion to approve or reject the land valuation and just compensation for a private agricultural land placed under the CARP.

In case the LBP disagrees with the valuation of land and determination of just compensation by a party, the DAR, or even the courts, the LBP not only has the right, but the duty, to challenge the same, by appeal to the Court of Appeals or to this Court, if appropriate. It is clear from the above discussions that since LBP is performing a governmental function in agrarian reform proceeding, it is exempt from the payment of costs of suit as provided under Rule 142, Section 1 of the Rules of Court.

HELD: the petition is GRANTED. The decision of the Court of Appeals is AFFIRMED with the MODIFICATION that LBP is hereby held exempted from the payment of costs of suit. In all other respects, the Decision of the Court of Appeals is AFFIRMED. No costs.