Expropriation; just compensation; interest rate; writ of possession

The purpose of just compensation is not to reward the owner for the property taken, but to compensate him for the loss thereof. As such, the true measure of the property, as upheld in a plethora of cases, is the market value at the time of the taking, when the loss resulted. Indeed, the State is not obliged to pay premium to the property owner for appropriating the latter's property; it is only bound to make good the loss sustained by the landowner, with due consideration to the circumstances availing at the time the property was taken.

In addition, the Supreme Court has also recognized that the owner's loss is not only his property, but also its income-generating potential. Thus, when property is taken, full compensation of its value must be immediately paid to achieve a fair exchange for the property and the potential income lost. The value of the landholdings should be equivalent to the principal sum of the just compensation due, and interest is due and should be paid to compensate for the unpaid balance of this principal sum after taking has been completed. This shall comprise the real, substantial, full, and ample value of the expropriated property, and constitutes due compliance with the constitutional mandate of just compensation in eminent domain.In Republic v. Macabagdal (G.R. No. 227215. January 10, 2018), from the date of the taking of the subject lot on May 5, 2008 when the RTC issued a writ of possession[28] in favor of the Republic (expropriator), until the just compensation therefor was finally fixed at P9,000.00/sq. m., petitioner had only paid a provisional deposit in the amount of P550,000.00 (i.e., at P2,750.00/sq. m.). Thus, this left an unpaid balance of the "principal sum of the just compensation," warranting the imposition of interest. It is settled that the delay in the payment of just compensation amounts to an effective forbearance of money, entitling the landowner to interest on the difference in the amount between the final amount as adjudged by the court and the initial payment made by the government.

However, as aptly pointed out by the Republic, the twelve percent (12%) p.a. rate of legal interest is only applicable until June 30, 2013. Thereafter, legal interest shall be at six percent (6%) p.a. in line with BSP-MB Circular No. 799, Series of 2013. Prevailing jurisprudence has upheld the applicability of BSP-MB Circular No. 799, Series of 2013 to forbearances of money in expropriation cases, contrary to respondent's contention. The cases of Sy v. Local Government of Quezon City and Land Bank of the Philippines v. Wycoco, cited by respondent are both inapplicable because they were all decided prior to the effectivity of BSP-MB Circular No. 799, Series of 2013 on July 1, 2013.
Nonetheless, it bears to clarify that legal interest shall run not from the date of the filing of the complaint but from the date of the issuance of the Writ of Possession, since it is from this date that the fact of the deprivation of property can be established. As such, it is only proper that accrual of legal interest should begin from this date.

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