G.R. No. 60225-26 - National Power Corp. vs. Angas

Case Summary (G.R. No. 60225-26)

Key Dates and Procedural Posture

Complaints for eminent domain were filed April 13, 1974 and December 3, 1974 and were jointly tried. The trial court rendered a consolidated decision on June 15, 1979 declaring the parcels condemned and awarding just compensation “with legal interest thereon … until fully paid.” Petitioner’s motions for reconsideration were denied and the decision became final and executory. After deposits were made by petitioner with interest computed at 6% per annum, several private respondents moved in 1981 for recomputation of legal interest at 12% per annum pursuant to Central Bank Circular No. 416; the trial court granted such motions by orders dated February 11, March 10 and August 28, 1981. Petitioner’s motion for reconsideration was denied January 25, 1982. Petitioner then filed an original action for certiorari and mandamus in the Supreme Court challenging the trial court’s recomputations and seeking annulment of the orders assessing interest at 12%.

Legal Issue Presented

Whether the legal rate of interest applicable to just compensation for expropriated lands is governed by Article 2209 of the Civil Code (legal interest of 6% per annum) or by Central Bank Circular No. 416 (12% per annum), the latter having been issued under authority of Act No. 2655 as amended and pursuant to Presidential Decree No. 116.

Applicable Law

Central Bank Circular No. 416 (quoted): it prescribes that “the rate of interest for the loan or forbearance of any money, goods or credits and the rate allowed in judgments, in the absence of express contract as to such rate of interest, shall be twelve per cent (12%) per annum,” by authority of Act No. 2655 (Usury Law) as amended. Article 2209, Civil Code (quoted): where the obligation consists in payment of a sum of money and the debtor incurs delay, the indemnity for damages, in the absence of stipulation, shall be the legal interest of six percent per annum. Presidential Decree No. 116 and Act No. 2655 appear in the record as the statutory basis for Circular No. 416.

Court’s Statutory Construction and Reasoning

The Court applied established rules of statutory construction, in particular the doctrine of ejusdem generis, to construe the phrase “judgments” in Circular No. 416. Because the circular expressly mentions “loan or forbearance of any money, goods or credits” before the more general reference to “judgments,” the general word must be read as limited to judgments of the same class — i.e., judgments in litigation involving loans or forbearance of money, goods or credits. The Court relied on authority in the record holding that the Monetary Board’s power under the Usury Law and PD No. 116 reaches only loans/forbearance and related judgments; it cannot be read to rewrite or impliedly repeal other statutory provisions outside that domain. Applying this construction, Circular No. 416 does not purport to govern monetary judgments that are compensatory in nature (indemnities for delay) and arise from obligations other than loan or forbearance. The award of interest on just compensation for expropriated land, the Court reasoned, is an indemnity for delay in payment and therefore falls within Article 2209’s framework rather than within the ambit of the Central Bank circular.

Application to the Facts

The compensation awarded for expropriated land was not a loan or a forbearance of money, goods or credits; it was a judicially adjudicated indemnity for delay in payment of amounts due upon condemnation. There was no stipulation fixing a different rate of interest. Consequently, the legal interest applicable to the just compensation in these eminent-domain proceedings is the 6% per annum prescribed by Article 2209 of the Civil Code, not the 12% per annum stated in Central Bank Circular No. 416, which is limited to loan/forbearance contexts.

Holding and Relief Gra

Case Syllabus (G.R. No. 60225-26)

Nature of the Proceeding

Original action for certiorari and mandamus filed by petitioner National Power Corporation (NPC) raising a question of law concerning the correct legal rate of interest applicable to just compensation for expropriated lands.
Petitioner sought issuance of a writ of preliminary injunction and/or restraining order to enjoin the respondent trial judge from enforcing specific lower-court orders and from further acting or proceeding with Civil Case Nos. 2248 and 2277 pending consideration on the merits.
The petition challenges lower-court orders that recomputed legal interest on just compensation at 12% per annum rather than at 6% per annum.

Core Legal Issue

Whether Article 2209 of the Civil Code (prescribing legal interest at 6% per annum) or Central Bank Circular No. 416 (fixing legal interest at 12% per annum pursuant to Presidential Decree No. 116) governs the computation of legal interest on just compensation awarded for lands expropriated for public use.

Relevant Parties and Roles

Petitioner: National Power Corporation, a government-owned and controlled corporation carrying out infrastructure and development projects, here seeking to pay just compensation for expropriated lands.
Respondents: Hon. Zain B. Angas (District Judge of the Court of First Instance of Lanao del Sur) and numerous private landowners named in Civil Case Nos. 2248 and 2277, including intervenors and parties who obtained final judgments for just compensation.
Private respondents sought enforcement and recomputation of interest on awarded compensation at 12% per annum based on Central Bank Circular No. 416.

Factual and Procedural Antecedents

April 13, 1974 and December 3, 1974: NPC filed two complaints for eminent domain against private respondents in the Court of First Instance of Lanao del Sur, docketed as Civil Case Nos. 2248 and 2277.
Purpose of expropriation: Development of hydro-electric power, production of electricity, and erection of subsidiary works necessary thereto; specific lots at Limogao, Saguiaran, Lanao del Sur were sought to be condemned.
The two cases were jointly tried by agreement of the parties; after issues were joined, court-designated commissioners conducted hearings.
June 15, 1979: The lower court rendered a consolidated decision in Civil Cases Nos. 2248 and 2277 declaring the lots lawfully condemned and awarding just compensation with legal interest until fully paid.
Petitioner filed two consecutive motions for reconsideration of the consolidated decision; both were denied. The consolidated decision became final and executory when petitioner did not appeal.
May 16, 1980: Private respondent Sittie Sohra Batara filed an ex parte motion for execution of the June 15, 1979 decision requesting payment of an unpaid balance of P14,300.00 plus legal interest computed at 6% per annum; the lower court granted the motion.
Following the execution order, the lower court directed NPC to deposit the adjudged sums; NPC complied and deposited the sums with interest computed at 6% per annum.

Subsequent Lower-Court Orders Recomputing Interest

February 10, 1981: Private respondent Pangonatan Cosna Tagol filed an ex parte motion in Civil Case No. 2248 requesting recomputation of legal interest at 12% per annum, citing Central Bank Circular No. 416 issued pursuant to PD No. 116 and referring to a Supreme Court decision that legal interest allowed in judgments shall be computed at 12% per annum in the absence of express contract.
February 11, 1981: The lower court granted the motion and allowed 12% interest per annum in that instance.
Thereafter, other private respondents filed motions seeking recomputation of interest at 12% per annum; the trial court issued orders on March 10, 1981 and August 28, 1981 bearing similar import, recomputing interest at 12% per annum.
Petitioner moved for reconsideration of the August 28, 1981 order, arguing (inter alia) that: the main decision had become final and executory; NPC had complied by depositing sums with interest at 6%; the trial court could not modify a final judgment; and Presidential Decree No. 116 was inapplicable because Article 2209 of the Civil Code governs.
January 25, 1982: The lower court denied petitioner's motion for reconsideration, stating that the applicable rate of interest at the time of promulgation of the June 15, 1979 decision was that prescribed by Central Bank Circular No. 416 (12% per annum), and that the court had merely amplified its order in determining legal interest.

Petitioner’s Contentions

The legal rate of interest on the award of just compensation for expropriated lands is governed by Article 2209 of the Civil Code, which prescribes a legal interest rate of 6% per annum where there is no stipulation to the contrary.
Central Bank Circular No. 416 and Presidential Decree No. 116 are inapplicable because they address loans or forbearance of money, goods, or credits and judgments involving such transactions.
The trial court erred in recomputing interest at 12% after petitioner had already complied with the final judgment by depositing sums with 6% interest; the main decision had become final and executory and could no longer be modified by the trial court.

Respondents’ Contentions (as presented)

Private respondents argued that th