G.R. No. 231546, March 29, 2023.
LAND BANK OF THE PHILIPPINES, PETITIONER, VS. MARGARITO E. TAYKO, JORGE E. TAYKO, MAURO E. TAYKO, JR., JESUS E. TAYKO, DR. MANUEL E. TAYKO, FELIPE E. TAYKO, JOVENCIO E. TAYKO, JOSE E. TAYKO, TEOPISTO T. GUINGONA, JR., MANUEL T. GUINGONA, BENJAMIN T. GUINGONA, BRIGADA TANKER GUINGONA, BARTOLOME T. GUINGONA, BERNARDINO T. GUINGONA, BIANCA MARIE T. GUINGONA, JOSE T. GUINGONA, LUIS T. GUINGONA, AND JOSEFA TAYKO GUINGONA, RESPONDENTS.

FACTS

This case involves the determination of just compensation for properties taken under agrarian reform. The Regional Agrarian Reform Adjudicator (RARAD), affirmed by the Department of Agrarian Reform Adjudication Board (DARAB), valued the subject properties using the formula under Presidential Decree No. 27. The time of taking was determined to be December 30, 2003, when the landowners’ certificates of title were cancelled and new titles were issued in the name of the Republic.

ISSUE

The primary legal issue addressed in the Separate Opinion is whether the delay in the payment of just compensation should be categorized as a forbearance of money in favor of the State, thereby justifying the imposition of legal interest at the Bangko Sentral ng Pilipinas (BSP)-prescribed rate.

RULING

Justice Caguioa, in his Separate Opinion, concurs with the ponencia‘s grant of the petition and its specific findings that: (1) just compensation should be based on Section 17 of Republic Act No. 6657 (Comprehensive Agrarian Reform Law) and relevant DAR formulas; (2) the RARAD and DARAB erred in applying the P.D. No. 27 formula as R.A. 6657 was already in effect; (3) the time of taking was December 30, 2003; and (4) a remand is necessary to compute just compensation using R.A. 6657 factors applied to data and values as of December 2003.
However, Justice Caguioa expresses a separate view on the rationale for imposing interest on the delayed payment. He disagrees with categorizing such delay as a forbearance of money. He argues that “forbearance” must be narrowly construed within the context of the Usury Law, requiring an agreement or contractual obligation to refrain from enforcing payment of a due and demandable obligation in return for compensation (interest). Since expropriation proceedings lack such an agreement and are not usurious, the BSP-prescribed rates should not apply.
Instead, he posits that interest accruing due to expropriation is an integral part of just compensation itself. The purpose of just compensation is to restore the property owner to their prior financial state. Therefore, a compensation that does not account for accruing interests from the forced sale is not “just.” Thus, while interest is due to the landowners, it is not because the delay is a forbearance, but because it is a necessary component of making the compensation truly just.