National Power Corporation vs. Angas

The legal rate of interest on just compensation for expropriated lands is 6% per annum under Article 2209 of the Civil Code, not 12% per annum under Central Bank Circular No. 416, because the latter applies only to loans or forbearance of money, goods, or credits and judgments involving such transactions, while interest on delayed payment of just compensation is in the nature of indemnity for damages.

The National Power Corporation (NPC) is a government-owned and controlled corporation tasked with undertaking infrastructure and development projects throughout the country, including the development of hydro-electric power and the production of electricity. Central Bank Circular No. 416, issued pursuant to Presidential Decree No. 116 (which amended the Usury Law, Act No. 2655), prescribed the rate of interest for loans or forbearance of money, goods, or credits and the rate allowed in judgments—at 12% per annum—in the absence of express contract. Article 2209 of the Civil Code, by contrast, fixes the legal interest at 6% per annum for obligations consisting in the payment of a sum of money where the debtor incurs delay and there is no stipulation to the contrary. The dispute arose from the question of which of these two provisions governs the computation of legal interest on just compensation awarded in expropriation proceedings.

On April 13, 1974 and December 3, 1974, the National Power Corporation filed two complaints for eminent domain against private respondents with the Court of First Instance of Lanao del Sur, docketed as Civil Case No. 2248 and Civil Case No. 2277, respectively. The complaints sought to expropriate certain specified lots situated at Limogao, Saguiaran, Lanao del Sur for the purpose of developing hydro-electric power and producing electricity, as well as erecting subsidiary works and constructions necessarily connected therewith. Both cases were jointly tried upon agreement of the parties, and after responsive pleadings were filed and issues joined, a series of hearings before court-designated commissioners was held.

On June 15, 1979, the lower court rendered a consolidated decision declaring and confirming that the lots had been lawfully condemned and expropriated by NPC, and ordering the latter to pay the private respondents certain sums of money as just compensation for their expropriated lands "with legal interest thereon . . . until fully paid." NPC filed two consecutive motions for reconsideration of the consolidated decision, both of which were denied. NPC did not appeal, and the consolidated decision became final and executory.

On May 16, 1980, private respondent Sittie Sohra Batara filed an ex-parte motion for execution, praying that NPC be directed to pay the unpaid balance of ₱14,300.00 for the lands expropriated from her, including legal interest computed at 6% per annum. The motion was granted, and the lower court directed NPC to deposit with its Clerk of Court the sums adjudged in the joint decision. NPC complied, depositing the sums with interest computed at 6% per annum.

On February 10, 1981, private respondent Pangonatan Cosna Tagol filed an ex-parte motion praying, for the first time, that the legal interest on the just compensation awarded to her be computed at 12% per annum, invoking Central Bank Circular No. 416 issued pursuant to Presidential Decree No. 116. On February 11, 1981, the lower court granted the motion, allowing 12% interest per annum. Other private respondents followed with similar motions, on the basis of which the lower court issued orders on March 10, 1981 and August 28, 1981 of similar import. NPC moved for reconsideration of the August 28, 1981 order, arguing that the main decision had already become final and executory with interest deposited at 6%, that the decision could no longer be modified, and that Article 2209 of the Civil Code, not Presidential Decree No. 116, applied. On January 25, 1982, the lower court denied the motion, stating that the applicable rate at the time of the promulgation of the June 15, 1979 decision was the 12% per annum prescribed by Central Bank Circular No. 416, and that it had not modified but merely amplified its order in the determination of legal interest.

• Finality of Judgment: Petitioner maintained that the main decision of June 15, 1979 had already become final and executory upon its compliance of depositing the sums as just compensation with legal interest at 6% per annum, and that the said decision could no longer be modified or changed by the lower court.
• Applicable Law: Petitioner argued that Presidential Decree No. 116 and Central Bank Circular No. 416 are not applicable because the transaction involved is expropriation, not a loan or forbearance of money, goods, or credits; hence, Article 2209 of the Civil Code, prescribing 6% per annum, governs.

• Scope of "Judgments" in CB Circular No. 416: Private respondents contended that the term "judgments" in Central Bank Circular No. 416 refers to any judgment directing the payment of legal interest, which includes the lower court's judgment awarding just compensation in the case at bar.
• Implied Repeal: Private respondents argued that Central Bank Circular No. 416 impliedly repealed or modified Article 2209 of the Civil Code.

• Applicable Legal Interest Rate: Whether Central Bank Circular No. 416 (12% per annum) or Article 2209 of the Civil Code (6% per annum) applies to the computation of legal interest on just compensation for expropriated lands.
• Scope of "Judgments" in CB Circular No. 416: Whether the term "judgments" in Central Bank Circular No. 416 encompasses judgments in expropriation cases or is limited to judgments involving loans or forbearance of money, goods, or credits.
• Implied Repeal: Whether Central Bank Circular No. 416 impliedly repealed or modified Article 2209 of the Civil Code.

• Applicable Legal Interest Rate: Article 2209 of the Civil Code applies, prescribing 6% per annum. The interest adjudged on just compensation for expropriated lands is in the nature of indemnity for damages for delay in payment, not earnings from loans, and therefore falls outside the scope of Central Bank Circular No. 416.
• Scope of "Judgments" in CB Circular No. 416: No. The term "judgments" in Central Bank Circular No. 416 refers only to judgments involving loans or forbearance of money, goods, or credits, by application of the doctrine of ejusdem generis.
• Implied Repeal: No. Central Bank Circular No. 416 and Article 2209 of the Civil Code contemplate different situations and apply to different transactions; there is no conflict between them, and no implied repeal occurred.

• Applicable Legal Interest Rate: Central Bank Circular No. 416, by its express terms, applies only to "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." The transaction in the case at bar is expropriation of parcels of land for a public purpose, not a loan or forbearance of money, goods, or credits. The interest adjudged by the trial court on the just compensation is in the nature of indemnity for damages for the delay in payment thereof. Since the interest involved is by way of damages and not by way of earnings from loans, Article 2209 of the Civil Code—which governs obligations consisting in the payment of a sum of money where the debtor incurs delay and there is no stipulation on interest—applies, fixing the legal interest at 6% per annum.
• Scope of "Judgments" in CB Circular No. 416: The general term "judgments" in Central Bank Circular No. 416 follows the designation of particular subjects—"loan or forbearance of any money, goods or credits." Under the doctrine of ejusdem generis, the general term is construed to comprehend only those things of the same class or nature as those specifically enumerated. The purpose of the rule is to give effect to both the particular and general words by treating the particular words as indicating the class and the general words as including all embraced in that class. Applying this rule, "judgments" can refer only to judgments in cases involving loans or forbearance of money, goods, or credits. This interpretation is consistent with Reformina vs. Tomol, where the Court held that the judgments referred to are judgments in litigations involving loans or forbearance of money, goods, or credits, and that the Monetary Board may not rewrite other laws beyond the authority granted to it.
• Implied Repeal: Repeals or amendments by implication are not favored when two laws can be fairly reconciled. Courts are slow to hold that one statute has repealed another by implication and will not do so if any just and reasonable construction can avoid it. Central Bank Circular No. 416 and Article 2209 of the Civil Code contemplate different situations and apply to different transactions: the former governs loans or forbearance of money, goods, or credits and judgments relating thereto, while the latter governs indemnities as damages for delay in the performance of obligations other than those involving loan or forbearance. There is no conflict between the two, and no basis for holding that the former impliedly repealed the latter.

• Ejusdem Generis — Where general terms follow the designation of particular things or classes of persons or subjects, the general term is construed to comprehend only those things or persons of the same class or nature as those specifically enumerated. The purpose is to give effect to both the particular and general words by treating the particular words as indicating the class and the general words as including all embraced in that class, although not specifically named. Applied in this case to confine the term "judgments" in Central Bank Circular No. 416 to judgments involving loans or forbearance of money, goods, or credits, excluding expropriation judgments.
• Implied Repeal Not Favored — Repeals or amendments by implication are disfavored when two laws can be fairly reconciled. Courts will not enlarge the meaning of one act to decide that it repeals another by implication unless such a result is inevitable. Applied here to hold that Central Bank Circular No. 416 did not impliedly repeal Article 2209 of the Civil Code, as the two provisions contemplate different transactions and can coexist without conflict.
• Nature of Interest on Just Compensation — The legal interest required to be paid on the amount of just compensation for properties expropriated is in the nature of indemnity for damages for the delay in payment, not earnings from loans. This characterization determines that Article 2209 of the Civil Code, rather than Central Bank Circular No. 416, governs the applicable rate.

• "The term 'judgments' as used in Section 1 of the Usury Law, as well as in Central Bank Circular No. 416, should be interpreted to mean only judgments involving loan or forbearance of money, goods or credits, following the principle of ejusdem generis." — This passage articulates the ratio decidendi: the application of ejusdem generis to confine the scope of "judgments" in Central Bank Circular No. 416, thereby excluding expropriation judgments from its coverage.
• "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. Art. 2209 of the Civil Code shall apply." — This passage states the controlling characterization of interest on just compensation as indemnity for damages, which is the decisive basis for applying Article 2209 over Central Bank Circular No. 416.
• "The judgments spoken of and referred to are judgments in litigations involving loans or forbearance of any money, goods or credits. Any other kind of monetary judgment which has nothing to do with, nor involving loans or forbearance of any money, goods or credits does not fall within the coverage of the said law for it is not within the ambit of the authority granted to the Central Bank." — This quotation from Reformina vs. Tomol, as adopted by the Court, defines the outer limit of the Monetary Board's authority to prescribe interest rates and is frequently cited in subsequent jurisprudence on the scope of Central Bank Circular No. 416.

• Reformina vs. Tomol, 139 SCRA 260 — Controlling precedent followed. The Court relied on this case to hold that the "judgments" referred to in Central Bank Circular No. 416 are judgments in litigations involving loans or forbearance of money, goods, or credits, and that the Monetary Board's authority does not extend to other kinds of monetary judgments.
• Go Tiaco vs. Union Ins. Society of Canton, 40 Phil. 40 — Cited as support for the doctrine of ejusdem generis in statutory construction.
• Mutuc vs. COMELEC, 36 SCRA 228 — Cited as additional authority for the application of ejusdem generis.

• Article 2209, Civil Code of the Philippines — Provides that if the obligation consists in the 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 6% per annum. Applied as the governing provision for computing legal interest on just compensation in expropriation, because such interest is in the nature of indemnity for damages for delay.
• Central Bank Circular No. 416 — Issued pursuant to the Usury Law (Act No. 2655, as amended), prescribing 12% per annum as the rate of interest for loans or forbearance of money, goods, or credits and the rate allowed in judgments in the absence of express contract. Held inapplicable to expropriation cases, as its scope is limited to loans or forbearance and judgments involving the same.
• Presidential Decree No. 116 — Amended Act No. 2655 (Usury Law) and authorized the Monetary Board to prescribe interest rates. Held to be the source of the Monetary Board's authority for Central Bank Circular No. 416, but that authority does not extend to transactions other than loans or forbearance of money, goods, or credits.
• Section 1, Act No. 2655 (Usury Law), as amended — The statutory basis for the Monetary Board's authority to prescribe interest rates. Construed in conjunction with Central Bank Circular No. 416 to limit the term "judgments" to those involving loans or forbearance.

Justices Melencio-Herrera, Padilla, Regalado, and Nocon concurred.