G.R. No. 244115 , February 03, 2021.
Republic of the Philippines, represented by the Department of Public Works and Highways, Petitioner, vs. Heirs of Andres Francisco, Respondents.

FACTS

The petitioner, the Republic of the Philippines through the DPWH, filed a complaint for expropriation on October 19, 2012, against spouses Andres Francisco and Socorro Luna to acquire portions of two residential lots in Valenzuela City for the C-5 Northern Link Road Project. The spouses were later substituted by their heirs, the respondents. Prior to taking possession, the petitioner deposited with the Regional Trial Court (RTC) manager’s checks representing 100% of the cost of improvements and 100% of the BIR zonal value of the subject lots on November 23 and December 13, 2012. The RTC issued a Writ of Possession on February 8, 2013. The parties initially agreed to execute a compromise agreement on valuation but later failed to do so. The RTC, in its Decision dated February 22, 2016, fixed just compensation at P7,500.00 per square meter, awarded consequential damages and attorney’s fees, and ordered the payment of interest at 12% per annum on the unpaid balance from the time of taking until June 30, 2013, and 6% per annum thereafter. The Court of Appeals (CA), in its Decision dated June 13, 2018, partially granted the appeal. It remanded the case to the RTC for proper determination of just compensation, deleted the awards of consequential damages and attorney’s fees, but upheld the imposition of 12% interest per annum from the time of taking (February 8, 2013) until June 30, 2013, and 6% per annum thereafter. The petitioner filed this Petition for Review, arguing that the imposition of interest was erroneous since the properties were taken after the deposit of payment, and thus, there was no delay in payment.

ISSUE

Whether or not the award of interest on the unpaid compensation is proper.

RULING

The petition is denied. The award of interest is proper. The Supreme Court held that just compensation means not only the correct determination of the amount to be paid but also payment within a reasonable time. Prompt payment must be made to the property owner who suffers immediate deprivation. The initial deposits made by the petitioner, based on the BIR zonal value and cost of improvements, were only provisional. The final just compensation had not been determined and fully paid at the time of taking. Therefore, the respondents were deprived of the full and fair equivalent of their property from the time of taking. The imposition of interest compensates for this delay in the full payment. The Court affirmed the CA’s ruling that legal interest at the rate of 12% per annum should be imposed on the unpaid balance of the just compensation from the time of taking (February 8, 2013) until June 30, 2013, and at 6% per annum from July 1, 2013, until full payment. The case was remanded to the RTC for the proper determination of just compensation in accordance with the factors outlined in Section 5 of Republic Act No. 8974 and relevant jurisprudence.