Republic v. Holy Trinity Realty
REITERATIONFacts
The Antecedents: The Republic of the Philippines, represented by the Toll Regulatory Board (TRB), filed a Consolidated Complaint for Expropriation against landowners, including Holy Trinity Realty Development Corporation (HTRDC), for the North Luzon Expressway project. TRB filed an Urgent Ex-Parte Motion for a Writ of Possession, having deposited P28,406,700.00 with the Land Bank of the Philippines (LBP) to cover 100% of the zonal value of affected properties, complying with Section 4 of Republic Act (R.A.) No. 8974. The Regional Trial Court (RTC) issued the Writ of Possession. HTRDC moved for reconsideration. The Sheriff reported the need for police assistance to implement the writ. HTRDC filed a Motion to Withdraw Deposit, seeking P22,968,000.00 plus accrued interest. The RTC granted the withdrawal of the principal amount, stating the issue of interest would be threshed out later. The RTC later directed the appearance of LBP officials to testify on whether the expropriation account earned interest. TRB submitted a Manifestation attaching a letter confirming the account was interest-bearing. Procedural History: On March 11, 2004, the RTC ruled that interest earnings from the deposited amount of P22,968,000.00 belong to HTRDC by virtue of accession and directed LBP to compute and release the accrued interest to HTRDC. TRB moved for reconsideration, arguing that payment of interest was not sanctioned by law or jurisprudence. HTRDC moved for reconsideration of a subsequent RTC Order dated February 7, 2005, which granted TRB's motion and stated the issue of interest entitlement should be ventilated before the Board of Commissioners. The RTC denied HTRDC's motion on May 16, 2005. HTRDC filed a Petition for Certiorari with the Court of Appeals (CA). The CA vacated the RTC's February 7 and May 16, 2005 Orders and reinstated the March 11, 2004 Order, ruling that interest accrued to HTRDC by accession. The Petition: The Republic, through TRB, filed a Petition for Review on Certiorari, asserting HTRDC is entitled only to the zonal value of the property and not the accrued interest, citing Section 4 of R.A. No. 8974 and Section 2, Rule 67 of the Rules of Court, and arguing that interest is part of just compensation determined in the second stage of expropriation proceedings.
Issue(s)
Whether the interest earned on the deposited amount for expropriation accrues to the property owner by virtue of accession. Whether the cited cases of National Power Corporation v. Angas and Land Bank of the Philippines v. Wycoco are applicable to the present case concerning earned interest on expropriation deposits.
Ruling
The Petition is DENIED. The Court of Appeals Decision dated April 14, 2006, which set aside the February 7, 2005 and May 16, 2005 Orders of the Regional Trial Court of Malolos, Bulacan, is AFFIRMED.
Ratio Decidendi
On the issue of whether the interest earned on the deposited amount for expropriation accrues to the property owner by virtue of accession: The Court affirmed the Court of Appeals' ruling that the interest earned by the deposited amount belongs to HTRDC by virtue of accession. The Court clarified that under Section 4 of Republic Act No. 8974, the government is required to make 'immediate payment' of 100% of the zonal value, not merely a deposit as under Rule 67 of the Rules of Court. This 'immediate payment' constitutes a constructive delivery of the amount to the property owner. Since HTRDC was entitled to and was the owner of the principal amount deposited, the interest earned thereon, considered as civil fruits, should also pertain to HTRDC. The Court emphasized that the deposit was made to comply with the requirement of immediate payment to secure a writ of possession, and TRB did not object to HTRDC's withdrawal of the principal amount, provided certain conditions were met. The Court noted that the interest accrued after the deposit, and thus belonged to the owner of the principal, which was determined to be HTRDC for the amount of P22,968,000.00. The fact that the account was in the name of the Department of Public Works and Highways (DPWH) was deemed immaterial, as DPWH would be considered a trustee of the funds intended as initial payment for the landowners. On the applicability of cited cases: The Court found the cases of National Power Corporation v. Angas and Land Bank of the Philippines v. Wycoco inapplicable. The Court explained that Angas dealt with the computation of legal interest as damages for delay in payment, and Wycoco clarified that interest as damages cannot be applied where there is prompt and valid payment of just compensation. In contrast, the present case concerns interest earned by the deposited amount while it was in the expropriation account, not interest as damages for delay. The Court reiterated that R.A. No. 8974 mandates two payments: an initial payment upon filing of the complaint and a final payment of any difference between the initial payment and the determined just compensation. HTRDC's claim was based on the interest earned from the initial payment, which effectively transferred ownership of the amount to HTRDC, and not on damages for delay.
Main Doctrine
Interest earned on the deposited amount for expropriation, which constitutes 'immediate payment' under Republic Act No. 8974, accrues to the property owner by virtue of accession, as the deposit is considered constructive delivery and ownership transfers upon fulfillment of the conditions for withdrawal.