grant of interest in expropriation cases

The Court has allowed the grant of interest in expropriation cases where there is delay in the payment of just compensation.⁵⁵ In fact, the interest imposed in case of delay in payments in agrarian cases is 12% per annum and not 6%⁵⁶ as "the imposition x x x is in the nature of damages for delay in payment which in effect makes the obligation on the part of the government one of forbearance."⁵⁷

Quoting Republic v. Court of Appeals⁵⁸ this Court, in Land Bank of the Philippines v. Rivera,⁵⁹ held :

The constitutional limitation of "just compensation" is considered to be the sum equivalent to the market value of the property, broadly described to be the price fixed by the seller in open market in the usual and ordinary course of legal action and competition or the fair value of the property as between one who receives, and one who desires to sell, if fixed at the time of the actual taking by the government. Thus, if property is taken for public use before compensation is deposited with the court having jurisdiction over the case , the final compensation must include interest on its jus t value to be computed from the time the property is taken to the time when compensation is actually paid or deposited with the court. In fine , between the taking of the property and the actual payment, legal interests accrue in order to place the owner in a position as good as (but not better than) the position he was in before the taking occurred.

The Bulacan trial court, in its 1979 decision, was correct in imposing interest on the zonal value of the property to be computed from the time petitioner instituted condemnation proceedings and "took" the property in September 1969. This allowance of interest on the amount found to be the value of the property as of the time of the taking computed, being an effective forbearance, at 12% per annum should help eliminate the issue of the constant fluctuation and inflation of the value of the currency over time. ⁶⁰ (Citation omitted, emphasis in the original.)

x x x x

The Court, in Republic, recognized that "the just compensation due to the landowners for their expropriated property amounted to an effective forbearance on the part of the State."⁶¹ In fixing the interest rate at 12%, it followed the guidelines on the award of interest that we enumerated in Eastern Shipping Lines, In c. v. Court of Appeals,⁶² to wit:

I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts is breached, the contravenor can be held liable for damages. The provisions under Title XVIII on "Damages" o f the Civil Code govern in determining the measure of recoverable damages.

II. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:

1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Fur t her more, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.

2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at t he discretion of the court at the rate of 6% per annum. N o interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extra judicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the d ate the judgment o f the court is made (at which time the quantification of damages ma y be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.

3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.⁶³ (Citations omitted.)

This Court therefore deems it proper to impose a 12% legal interest per annum, computed from the date of the "taking" of the subject property on the just compensation to be determined by the SAC, due to respondent, less whatever he and his co-owners had already received. 

LAND BANK OF THE PHILIPPINES, Petitioner, vs.EMILIANO R. SANTIAGO, JR., Respondent.G.R. No. 182209    (FIRST DIVISION   October 3, 2012)