NPC v. Angas, 208 SCRA 196 (1992)
On April 13, 1974 and December 3, 1974, petitioner National Power Corporation, a government-owned and controlled corporation and the agency through which the government undertakes the on-going infrastructure and development projects throughout the country, filed two complaints for eminent domain against private respondents with the Court of First Instance (now Regional Trial Court) of Lanao del Sur, docketed as Civil Case No. 2248 and Civil Case No. 2277, respectively. The complaint which sought to expropriate certain specified lots situated at Limogao, Saguiaran, Lanao del Sur was for the purpose of the development of hydro-electric power and production of electricity as well as the erection of such subsidiary works and constructions as may be necessarily connected therewith.
Both cases were jointly tried upon agreement of the parties. After a series of hearings were held, on 15 June 1979, a consolidated decision was rendered by the lower court, declaring and confirming that the lots mentioned and described in the complaints have entirely been lawfully condemned and expropriated by NAPOCOR, and ordering the latter to pay the landowners certain sums of money as just compensation for their lands expropriated "with legal interest thereon until fully paid.
Two consecutive motions for reconsideration of the consolidated decision were filed by NAPOCOR. The same were denied by the court.
NAPOCOR did not appeal on the consolidated decision, which became final and executory.
Thus, on 16 May 1980, one of the landowners (Sittie Sohra Batara) filed an ex-parte motion for the execution of the decision, praying that petitioner be directed to pay her the unpaid balance of P14,300.00 for the lands expropriated from her, including legal interest which she computed at 6% per annum. The said motion was granted by the lower court.
Thereafter, the lower court directed the petitioner to deposit with its Clerk of Court the sums of money as adjudged in the joint decision dated 15 June 1979. NAPOCOR complied with said order and deposited the sums of money with interest computed at 6% per annum.
On 10 February 1981, another landowner (Pangonatan Cosna Tagol) filed with the trial court an ex-parte motion praying, for the first time, that the legal interest on the just compensation awarded to her by the court be computed at 12% per annum as allegedly "authorized under and by virtue of Circular 416 of the Central Bank issued pursuant to Presidential Decree 116 and in a decision of the Supreme Court that legal interest allowed in the judgment of the courts, in the absence of express contract, shall be computed at 12% per annum."
On 11 February 1981, the lower court granted the said motion allowing 12% interest per annum.
Subsequently, the other landowners filed motions also praying that the legal interest on the just compensation awarded to them be computed at 12% per annum, on the basis of which the lower court issued on 10 March 1981 and 28 August 1981 orders bearing similar import.
NAPOCOR moved for the reconsideration of the lower court's last order dated 28 August 1981, which the court denied on 25 January 1982.
NAPOCOR filed a petition for certiorari and mandamus with the Supreme Court.
Whether, in the computation of the legal rate of interest on just compensation for expropriated lands, the rate applicable as legal interest is 6% (Article 2209 of the Civil Code) or 12% (Central Bank Circular 416)
Article 2209 of the Civil Code, which provides that "If the obligation consists in the payment of a sum of money, and the debtor incurs a delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the legal interest, which is six percent per annum," and not Central Bank Circular 416, is the law applicable.
The Central Bank circular applies only to loan or forbearance of money, goods or credits and to judgments involving such loan or forbearance of money, goods or credits. This is evident not only from said circular but also from Presidential Decree 116, which amended Act 2655, otherwise known as the Usury Law.
On the other hand, Article 2209 of the Civil Code applies to transactions requiring the payment of indemnities as damages, in connection with any delay in the performance of the obligation arising therefrom other than those covering loan or forbearance of money, goods or credits.
Herein, the transaction involved is clearly not a loan or forbearance of money, goods or credits but expropriation of certain parcels of land for a public purpose, the payment of which is without stipulation regarding interest, and the interest adjudged by the trial court is in the nature of indemnity for damages. The legal interest required to be paid on the amount of just compensation for the properties
expropriated is manifestly in the form of indemnity for damages for the delay in the payment thereof.
Therefore, since the kind of interest involved in the joint judgment of the lower court sought to be enforced in this case is interest by way of damages, and not by way of earnings from loans, etc.
Article 2209 of the Civil Code shall apply.