Republic v. Tayengco
REITERATIONFacts
The Antecedents: The Republic of the Philippines filed a complaint for expropriation to widen the Iloilo South Road and simultaneously took possession of the properties owned by Jose C. Tayengco and Alicia Schmid Echols. The owners did not contest the expropriation but disputed the compensation amount, demanding P60.00 per square meter instead of the offered P17.00. Procedural History: The Republic deposited P12,149.22 on January 17, 1958. The trial court authorized the owners to withdraw this deposit. The court a quo eventually fixed the reasonable value at P35.00 per square meter and ordered the Republic to pay the owners the total sums of P4,360.30 to Tayengco and P20,652.80 to Echols, plus legal interest at 6% per annum from April 17, 1957, with credit for the amounts already withdrawn. The Petition: The Republic appealed, arguing that the interest should only be imposed on the balance after deducting the deposited amount from the total compensation, citing Republic vs. Lara, et al.. The Court of Appeals certified the case to the Supreme Court due to the purely legal question involved.
Issue(s)
Whether the 6% legal interest on the expropriation award should be computed on the total valuation from the date of taking (April 17, 1957) or only on the balance remaining after the provisional deposit was made nine months later (January 17, 1958).
Ruling
The appealed decision is affirmed. The Republic of the Philippines is ordered to pay the defendants-appellees the respective sums awarded, plus legal interest at 6% per annum from April 17, 1957, with credit for the amounts withdrawn as of January 17, 1958.
Ratio Decidendi
On Issue 1: The Supreme Court held that the Republic's argument for limiting interest was partially incorrect because it failed to account for the nine-month delay between the taking of the property and the making of the deposit. While the Republic relied on the case of Republic vs. Lara, the Court distinguished that case by noting that the deposit in Lara was made at the commencement of the proceedings, whereas here it was delayed. The Court emphasized that interest begins to accrue from the moment of taking as a matter of right for the landowner. Under the established doctrines in Philippine Railway Co. vs. Solon and Manila Railway Co. vs. Attorney-General, the obligation to pay interest on the full amount persists until the moment of actual payment or deposit. Consequently, the interest on the P12,149.22 portion of the award ceased to accrue only on January 17, 1958, the date it was deposited. Therefore, the Republic must pay interest on the total award of P25,013.10 from April 17, 1957, to January 17, 1958, and interest on the remaining balance from January 17, 1958, until fully paid.
Main Doctrine
In expropriation cases, owners of condemned lands are entitled to recover legal interest from the date the condemnor takes possession of the lands until the amounts granted are paid or deposited in court. Partial deposits made after the taking of possession only stop the accrual of interest on the deposited amount from the date of deposit, not from the date of taking.