Question III, Civil Law, 2017 Bar Exam

Josef owns a piece of land in Pampanga. The National Housing Authority (NHA) sought to expropriate the property for its socialized housing project. The trial court fixed the just compensation for the property at P50 million. The NHA immediately deposited the same at the authorized depository bank and filed a motion for the issuance of a writ of possession with the trial court. Unfortunately, there was delay in the resolution of the motion. Meanwhile, the amount deposited earned interest.

When Josef sought the release of the amount deposited, NHA argued that Josef should only be entitled to P50 million.

Who owns the interest earned? (3%)

Suggested Answer:

Josef owns the interest earned. Answer

Under jurisprudence, the property owner is entitled to interest on the unpaid just compensation if there is no full payment for the expropriated property. While case law speaks of legal interest on the unpaid amount, it may also cover bank interest as the rationale is the same. Without prompt payment, the property owner is deprived not only of his property but also the income-generating potential thereof. Thus, any interest that may accrue on the unpaid just compensation should rightfully belong to the property owner, and not the Government. Rule

In the case at bar, Josef was not promptly paid his just compensation. Accordingly, the resulting bank interest on the deposited amount should properly belong to him for the income or opportunity loss that he may have suffered...

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