Republic v. Gamir-Consuelo Diaz Heirs Ass'n
REITERATIONFacts
The Antecedents: Respondent, Jose Gamir-Consuelo Diaz Heirs Association, Inc., was the registered owner of a parcel of land. After negotiations, respondent and petitioner, Republic of the Philippines represented by the Department of Public Works and Highways (DPWH), executed a Deed of Absolute Sale for the property in consideration of P275,099.24. The property was registered in petitioner's name. Respondent alleged that the DPWH took possession of the land in 1957, and the sale price was based on the 1957 value. Respondent demanded payment of interest from 1957, claiming it was entitled to interest because just compensation was not paid promptly upon taking. Procedural History: The Regional Trial Court (RTC) dismissed respondent's complaint for lack of merit. The Court of Appeals (CA) reversed the RTC decision, ruling that respondent was entitled to legal interest at 12% per annum from 1957 until full payment, citing Apo Fruits Corporation v. Land Bank of the Philippines and stating that the Deed of Absolute Sale did not waive the payment of interest as it was a matter of law in eminent domain cases. The Petition: Petitioner sought review of the CA decision, arguing that respondent was not entitled to interest due to the absence of stipulation in the Deed of Absolute Sale, invoking the Parol Evidence Rule and asserting that the parties were bound by their contract. Petitioner also argued that the Apo Fruits ruling was inapplicable.
Issue(s)
Whether respondent is entitled to payment of interest notwithstanding the absence of any stipulation in the Deed of Absolute Sale with petitioner. Whether the Court of Appeals erred in reversing the Regional Trial Court's decision and ordering the payment of interest.
Ruling
The petition is meritorious. The December 12, 2013 Decision and the June 9, 2015 Resolution of the Court of Appeals are REVERSED and SET ASIDE. The March 4, 2010 Decision of the Regional Trial Court, Branch 15, Davao City is REINSTATED.
Ratio Decidendi
On whether respondent is entitled to payment of interest notwithstanding the absence of any stipulation in the Deed of Absolute Sale with petitioner: The Court ruled that respondent is not entitled to payment of interest. The Court distinguished between expropriation proceedings and negotiated sales. In expropriation, prompt payment of just compensation is constitutionally mandated, and interest accrues from the time of taking if payment is delayed. However, in a negotiated sale, the parties are bound by the terms and conditions of their contract. The Deed of Absolute Sale, which was voluntarily executed after negotiations, did not contain any stipulation for the payment of interest. The respondent did not reserve its right to claim interest, and its demand for interest prior to the execution of the deed was rejected and subsequently abandoned when it agreed to the contract without such a provision. The Parol Evidence Rule prohibits the admission of extrinsic evidence to contradict or vary the terms of a written agreement, and the respondent failed to establish any of its exceptions. Therefore, the absence of a stipulation for interest in the written contract, which represents the parties' true agreement, bars the claim. On whether the Court of Appeals erred in reversing the Regional Trial Court's decision and ordering the payment of interest: The Court found that the CA erred in relying on Apo Fruits Corporation v. Land Bank of the Philippines and similar cases involving expropriation. The CA's reasoning that the Deed of Absolute Sale did not waive the payment of interest because it was a matter of law in eminent domain cases was misplaced. The Court reiterated that the nature of a negotiated sale differs significantly from expropriation. In a negotiated sale, the government does not exercise its power of eminent domain, and the parties are free to stipulate terms. The respondent's claim that it had no choice but to sign the deed was unsubstantiated, as there was no allegation of coercion or vitiated consent. The respondent could have opted to initiate expropriation proceedings or included a reservation clause in the deed. Since the Deed of Absolute Sale was the law between the parties and contained no provision for interest, the CA's reversal of the RTC decision was erroneous.
Main Doctrine
In a negotiated sale of property to the government, the absence of a stipulation for the payment of interest in the Deed of Absolute Sale, especially when the landowner had prior negotiations and did not reserve such claim, bars the landowner from claiming interest, as the contract is the law between the parties and the Parol Evidence Rule prohibits the admission of extrinsic evidence to vary the terms of the written agreement.