G.R. No. 221216 - Land Bank of the Philippines vs. Heirs of Barrameda

Case Digest (G.R. No. 221216)
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Facts:

Ownership and Distribution of the Subject Property

Leoncio Barrameda was the registered owner of a parcel of land in San Jose, Camarines Sur as evidenced by TCT No. RT-8786 covering 6.1415 hectares.
Upon his death, the property was transferred to his heirs (heirs of Barrameda).
A portion (5.7602 hectares) of the property was placed under Presidential Decree No. 27 and subsequently distributed among three farmer-beneficiaries:

1.6900 hectares to Ester Pejo;
1.5814 hectares to Damian C. Pilapil;
2.5885 hectares to Juan P. Sarcilla.

Emancipation patents and tax declarations were issued in the names of the beneficiary farmers.

Initiation of the Complaint and Positions of the Parties

On September 20, 2000, the heirs of Barrameda filed a complaint for determination and payment of just compensation against DAR Secretary and Land Bank of the Philippines (LBP).
The complaint alleged that the farmer-beneficiaries had been in possession since 1972 but had not received just compensation despite demands.
The heirs prayed for a compensation computed at P150,000.00 per hectare.
In their answer, DAR and LBP argued that the computation should be based on:

Section 1 of P.D. No. 27 and Section 2 of E.O. No. 228; and
The valuation factors prescribed in Section 17 of R.A. No. 6657, further formulated under DAR Administrative Order No. 1, Series of 2010.

Based on these valuation factors, the property was valued at P113,506.30 per hectare, resulting in a total just compensation of P653,818.99.

Trial Court (RTC-SAC) Proceedings

In its August 15, 2013 decision, the RTC-SAC:

Upheld LBP’s valuation computed pursuant to A.O. No. 01-10; and
Found that LBP was guilty of delay in the payment of the just compensation.

Consequently, the RTC-SAC imposed a 12% interest per annum on the entire amount of P653,818.99, reckoned from January 1998 (the time when tax declarations were issued) until full payment.
LBP raised a motion for partial reconsideration arguing:

The valuation was based on June 30, 2009 values under A.O. No. 01-10, which already updated any loss arising from delay; and
That if interest were to be imposed, it should only run from the finality of the decision and the rate should be only 12% from that point or 6% based on Article 2209 of the Civil Code, to avoid double imposition.

Appellate Court (CA) Proceedings

LBP elevated the case to the Court of Appeals (CA) contesting the imposition of interest from January 1998.
The CA clarified that:

The provisions in A.O. No. 01-10 provide only the methodology for valuation and do not redefine the “time of taking.”
The actual “time of taking” should be reckoned from the issuance of the emancipation patents.

The CA rejected LBP’s contention that interest was inherently included in the updated valuation, noting that:

Instances where such inclusion was alleged pertained to valuations under A.O. No. 13-94 (which provided for a 6% interest); and
That the current computation under A.O. No. 01-10 did not contain a similar provision regarding interest.

Since LBP delayed payment (payment was made only on November 19, 2013), the CA held that interest at 12% per annum was justified.
However, due to insufficient records regarding the exact issuance date of the emancipation patents, the CA remanded the case back to the RTC-SAC, directing it to determine the precise “time of taking” for interest reckoning.

Final Developments on the Appeal

In its petition for review on certiorari, LBP reiterated its position that:

The use of updated June 30, 2009 values should offset any delay-related losses; and
If interest must run, then it should commence from June 30, 2009 and be computed at 6% as per relevant BSP guidelines (BSP Monetary Board Circular No. 799, Series of 2013).

The heirs of Barrameda, on the other hand, maintained that:

The proper date of taking is the issuance date of the emancipation patents (April 16, 1990); and
The imposition of 12% interest is proper as it compensates for the State’s undue delay.

Issues:

Determination of the Correct Date of Taking

Whether the interest on account of LBP’s delay in the payment of just compensation should be reckoned from the issuance of the emancipation patents on April 16, 1990 (the date when the property was effectively taken), or
From June 30, 2009, when the updated valuation (under A.O. No. 01-10) took effect.

Appropriate Interest Rate Applicable

Whether the legal interest should be imposed at the rate of 12% per annum, as the lower courts have done,
Or if it should be adjusted to 6% per annum, in line with claims based on Article 2209 of the Civil Code and references to BSP Circular No. 799.

Avoidance of Double Imposition of Interest

Whether the updated valuation (which already reflects certain losses) would make an additional award of interest from the original date (April 16, 1990) tantamount to double imposition,
Or if it remains proper to award interest only from a later date thereby compensating solely for the delay in payment beyond that point.

Ruling:

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Ratio:

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Doctrine:

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