TL;DR

In expropriation cases in the Philippines, landowners are entitled to just compensation, which includes legal interest for delays in payment. The Supreme Court affirmed that interest on unpaid just compensation accrues from the time of taking of the property until full payment. The interest rate is 12% per annum from the date of taking until June 30, 2013, and 6% per annum from July 1, 2013, until full satisfaction, reflecting changes in legal interest rates set by the Bangko Sentral ng Pilipinas. This ruling ensures landowners receive fair value for their expropriated land, accounting for the time they were deprived of its use and benefit.

Delayed Justice: Upholding Landowner Rights in Expropriation Disputes

The case of Republic of the Philippines v. Casimiro Tamparong, Jr. (G.R. No. 232169, March 08, 2023) revolves around a fundamental aspect of Philippine law: the right to just compensation when private property is taken for public use. This case specifically addresses the contentious issue of legal interest on just compensation in expropriation proceedings initiated by the Department of Public Works and Highways (DPWH) for the Cagayan de Oro Third Bridge project. At the heart of the dispute is the question: what is the rightful interest rate to be applied to the unpaid balance of just compensation from the time the government takes possession of private land until full payment is made to the landowner?

The legal battle began in 1999 when the DPWH initiated expropriation proceedings against Casimiro Tamparong, Jr. for a portion of his land in Cagayan de Oro City. While the Republic was granted possession of the property in 2000, the determination of just compensation dragged on for years. In 2010, the Regional Trial Court (RTC) fixed the just compensation and ordered the Republic to pay with legal interest from the taking of possession. However, disagreement arose during the execution stage regarding the computation of the remaining balance, particularly concerning the applicable interest rate. The DPWH proposed a 6% interest rate, while Tamparong argued for 12% per annum from the time of taking, citing prevailing jurisprudence. This divergence led to further legal wrangling, culminating in a petition to the Supreme Court.

The Supreme Court anchored its decision on the constitutional mandate that “[n]o private property shall be taken for public use without just compensation.” This constitutional safeguard necessitates that just compensation must be paid promptly, ideally upon the date of taking. However, the judicial determination of just compensation often entails delays, during which landowners are deprived of both their property and its potential benefits. To mitigate this, legal interest is imposed to compensate landowners for the delay in receiving the full value of their property. The Court reiterated that this interest is not merely damages for delay but an integral part of just compensation, ensuring the landowner is placed in as good a position as they were before the taking.

Referencing established precedents, the Supreme Court clarified the applicable interest rates. Prior jurisprudence dictates that the delay in payment of just compensation constitutes a forbearance of money, thus warranting legal interest. The Court affirmed the imposition of 12% interest per annum from the time of taking until July 1, 2013. This period reflects the then-prevailing legal interest rate. Subsequently, with the reduction of legal interest to 6% per annum by Bangko Sentral ng Pilipinas (BSP) Circular No. 799, the applicable rate from July 1, 2013, onwards became 6% per annum until full payment. The Court explicitly rejected the DPWH’s attempt to apply a lower 6% interest rate from the outset, emphasizing that the prevailing rate at the time of taking and during the majority of the delay was 12%.

The Court underscored that provisional payments made by the government do not absolve it from paying interest on the difference between the final adjudged amount and the initial payment. These provisional payments are merely mechanisms to facilitate immediate government possession of the property for public projects, but they do not negate the landowner’s right to just compensation, including interest for any delay in full payment. The Supreme Court found the DPWH’s computation, which used a 6% interest rate and limited the interest calculation period, to be “specious” and inconsistent with established legal principles. The Court also noted the unfortunate circumstances of Mr. Tamparong, who, in his advanced age and declining health, was further disadvantaged by the delayed and under-computed compensation.

Ultimately, the Supreme Court denied the Republic’s petition and affirmed the Court of Appeals’ decision with modification. The modification clarified that the 12% legal interest applies from November 29, 2000 (date of taking) to June 30, 2013, and 6% per annum from July 1, 2013, until full satisfaction. The case was remanded to the RTC for proper computation of the remaining balance based on this ruling. This decision reaffirms the importance of prompt and full payment of just compensation, including appropriate legal interest, in expropriation cases, safeguarding the constitutional rights of property owners in the Philippines.

FAQs

For inquiries regarding the application of this ruling to specific circumstances, please contact Atty. Gabriel Ablola through gaboogle.com or via email at connect@gaboogle.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Republic of the Philippines v. Casimiro Tamparong, Jr., G.R. No. 232169, March 08, 2023.