G.R. No. 224760 . October 06, 2021
LAND BANK OF THE PHILIPPINES, PETITIONER, VS. CORAZON M. VILLEGAS, RESPONDENT. SEPARATE OPINION

FACTS

This case involves the determination of just compensation for the expropriation of respondent Corazon M. Villegas’s property under the Comprehensive Agrarian Reform Program (CARP). The date of taking was September 29, 2004. The main opinion (ponencia) computed just compensation using the formula from Department of Agrarian Reform Administrative Order No. 5, series of 1998, and awarded interest on the unpaid balance. The ponencia applied the Bangko Sentral ng Pilipinas (BSP) interest rates of twelve percent (12%) per annum until June 30, 2013, and six percent (6%) per annum thereafter, categorizing the delay in payment as a forbearance of money on the part of the State.

ISSUE

Whether the delay in the payment of just compensation by the State should be legally categorized as a forbearance of money, thereby warranting the application of BSP-prescribed interest rates.

RULING

No. The separate opinion disagrees with the ponencia’s categorization of the delay as a forbearance of money and its consequent application of BSP-prescribed rates. The opinion argues that the term “forbearance” must be narrowly construed within the context of the Usury Law, requiring: (1) an agreement or contractual obligation; (2) to refrain from enforcing payment or extend the payment period; (3) for an obligation already due and demandable; and (4) in return for compensation (interest). Proceedings for determining just compensation are not usurious and do not meet this definition. Instead, the interest accruing on the unpaid just compensation is an integral part of the just compensation itself, necessary to make the property owner whole for the forced sale from the date of taking. For lack of a more suitable metric, the opinion finds it reasonable to impose, by analogy, the legal interest rate of six percent (6%) per annum under Article 2209 of the Civil Code on the unpaid balance, to run from the date of taking (September 29, 2004) until full payment.