Case Summary (G.R. No. 172410)
Procedural History and Facts
On 29 December 2000 the TRB filed a Consolidated Complaint for Expropriation (Civil Case No. 869-M-2000) to acquire lands for North Luzon Expressway works; HTRDC was among the affected landowners. On 18 March 2002 TRB filed an urgent ex parte motion seeking a writ of possession, stating it had deposited with Land Bank of the Philippines (LBP) South Harbor the sum of P28,406,700.00, alleged to cover 100% of zonal values of affected properties. The RTC issued the writ of possession on 19 March 2002. HTRDC moved for reconsideration.
Subsequent RTC Proceedings on Possession and Deposit
The sheriff reported on 7 October 2002 that landowners did not voluntarily vacate; TRB, via OSG, sought PNP assistance. On 3 March 2003 HTRDC filed a Motion to Withdraw Deposit seeking P22,968,000.00 of the P28,406,700.00 deposit plus accrued interest, asserting absolute ownership. The RTC ordered LBP to release P22,968,000.00 to HTRDC (Order dated 21 April 2003), but deferred resolution of accrued interest pending further proceedings. After hearings, on 5 November 2004 the RTC issued an Order of Expropriation.
RTC Rulings on Interest and Subsequent Reconsiderations
On 11 March 2004 the RTC ruled that interest earnings on the P22,968,000.00 deposit were civil fruits under accession and properly pertained to HTRDC, directing LBP to compute and release accrued interest to HTRDC. TRB moved for reconsideration, arguing law and jurisprudence did not sanction interest on consigned or deposited money for writ-of-possession purposes. On 7 February 2005 the RTC granted TRB’s reconsideration, holding the interest issue should be determined later by appointed commissioners in the second stage (just compensation determination). HTRDC’s motion for reconsideration of that decision was denied on 16 May 2005.
Court of Appeals Disposition
HTRDC filed a petition for certiorari with the Court of Appeals (CA-G.R. SP No. 90981). On 21 April 2006 the Court of Appeals vacated the RTC Orders of 7 February and 16 May 2005 and reinstated the RTC’s 11 March 2004 order, holding the interest accrued on the deposited amount belonged to HTRDC by virtue of accession. The CA reasoned that the deposit was a constructive delivery to HTRDC and that bank interest are civil fruits that belong to the owner of the principal.
Issue Presented to the Supreme Court
Whether the interest earned on the amount deposited in the expropriation account accrues to HTRDC (as owner of the deposited amount) or whether the interest issue is to be resolved only in the second stage determination of just compensation.
Distinction Between RA 8974 and Rule 67
The Court emphasized the difference between RA 8974 and Rule 67: RA 8974 governs expropriation for national government infrastructure projects and requires immediate payment of 100% of zonal valuation (plus value of improvements) upon filing to obtain writ of possession; Rule 67 prescribes deposit equivalent to assessed value for taxation and a different procedure. Because the expropriation here was for a national infrastructure project, RA 8974 applied and TRB’s deposit was intended as immediate payment to the property owner under that statute.
Ownership of the Deposited Amount and Accession Principle
The Court analyzed ownership under Article 440 of the Civil Code: ownership of the principal gives the right by accession to everything produced thereby. The RTC had ordered release of P22,968,000.00 to HTRDC, effectively determining HTRDC’s ownership of that portion of the deposit. The Court of Appeals and the Supreme Court agreed that the deposit constituted constructive delivery to HTRDC; consequently, interest or bank earnings on that principal are civil fruits (Art. 442) that belong to the owner of the principal by accession.
Rejection of TRB’s Arguments and Distinguishing Precedent
The Supreme Court found TRB’s reliance on Land Bank v. Wycoco and National Power Corp. v. Angas inapposite. Angas concerned computation of legal damages interest for delayed payment (Article 2209) and Wycoco held that damages interest cannot be applied where payment of just compensation was prompt and valid. By contrast, the present dispute involves interest actually earned by deposited funds (bank e
...continue readingCase Syllabus (G.R. No. 172410)
Procedural Posture
- Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to set aside the Court of Appeals Decision dated 21 April 2006 in CA-G.R. SP No. 90981.
- The Court of Appeals had vacated RTC Orders dated 7 February 2005 and 16 May 2005 (Branch 85, Malolos, Bulacan, Civil Case No. 869-M-2000) and reinstated the RTC Order dated 11 March 2004.
- The Supreme Court promulgated its Decision on 14 April 2008, authored by Justice Minita V. Chico-Nazario, denying the Petition and affirming the Court of Appeals Decision.
- No costs were imposed by the Supreme Court.
Parties and Subject Matter
- Petitioner: Republic of the Philippines, represented by the Toll Regulatory Board (TRB).
- Respondent: Holy Trinity Realty and Development Corporation (HTRDC), an affected landowner in expropriation proceedings.
- Subject: Ownership of interest that accrued on monies deposited in an expropriation account as initial payment under Republic Act No. 8974 for properties to be taken for a national government infrastructure project (North Luzon Expressway).
Factual Background — Filing, Deposit and Writ of Possession
- On 29 December 2000, TRB filed a Consolidated Complaint for Expropriation (Civil Case No. 869-M-2000) against various landowners for construction, rehabilitation and expansion of the North Luzon Expressway; the case was raffled to Branch 85, Malolos.
- On 18 March 2002, TRB filed an Urgent Ex-Parte Motion for issuance of a Writ of Possession, representing that it deposited P28,406,700.00 — the sum sufficient to cover 100% of the zonal value of affected properties — with Land Bank of the Philippines, South Harbor Branch (LBP-South Harbor), an authorized government depository.
- TRB asserted compliance with Section 4 of Republic Act No. 8974 and Section 2, Rule 67 of the Rules of Court; the RTC issued an Order for a Writ of Possession and the Writ itself on 19 March 2002.
Subsequent Events: Resistance, Sheriff Report, and Request for PNP Assistance
- HTRDC moved for reconsideration of the RTC’s 19 March 2002 Order.
- On 7 October 2002, the Sheriff reported that landowners did not voluntarily vacate the properties and that PNP assistance would be necessary to implement the Writ of Possession.
- TRB, through the Office of the Solicitor General (OSG), filed an Omnibus Motion requesting an order directing PNP assistance to the Sheriff.
- On 15 November 2002, the RTC ordered landowners to file comments on TRB’s Omnibus Motion.
HTRDC’s Motion to Withdraw Deposit and Initial Release Order
- On 3 March 2003, HTRDC filed a Motion to Withdraw Deposit, seeking release of P22,968,000.00 from the TRB’s deposit of P28,406,700.00, including interest accrued.
- On 21 April 2003, the RTC ordered the manager of LBP-South Harbor to release P22,968,000.00 to HTRDC, finding that HTRDC proved absolute ownership over the subject properties and had paid taxes due thereon; the RTC reserved the issue of accrued interest for further consideration.
Proceedings on Accrued Interest Before the RTC
- On 7 May 2003, after a hearing on accrued interest, the RTC directed the issuance of an order of expropriation and gave TRB 30 days to inquire from LBP-South Harbor whether the deposit was earning interest.
- On 6 August 2003, the RTC directed the appearance of LBP officials to testify on whether the Department of Public Works and Highways (DPWH) expropriation account was earning interest.
- On 9 October 2003, TRB filed a Manifestation attaching Atty. Rosemarie M. Osoteo’s letter dated 19 August 2003 stating that the DPWH Expropriation Account was an interest-bearing current account.
RTC Order of 11 March 2004 — Interest Belongs to HTRDC
- On 11 March 2004, the RTC resolved that interest earnings from the deposit of P22,968,000.00 pertaining to 100% of the zonal value should, under the principle of accession, be considered fruits and belong to the defendant/property owner (HTRDC).
- The RTC directed LBP to compute the accrued interest on P22,968,000.00 from deposit until release and to release the computed interest to HTRDC through its authorized representative.
RTC and Further Motions, Orders of Expropriation and Reconsiderations
- TRB filed a Motion for Reconsideration of the RTC’s 11 March 2004 Order, arguing that payment of interest on money deposited for a writ of possession was not sanctioned by law or jurisprudence.
- TRB filed a Motion to Implement the 7 May 2003 order (which had directed issuance of an order of expropriation). On 5 November 2004, the RTC issued an Order of Expropriation.
- On 7 February 2005, the RTC granted TRB’s Motion for Reconsideration and ruled that entitlement to interest should be addressed before the board of commissioners in the second stage (determination of just compensation).
- HTRDC sought reconsideration; the RTC denied HTRDC’s motion on 16 May 2005.
Court of Appeals Decision (21 April 2006)
- HTRDC filed a petition for certiorari with the Court of Appeals (CA-G.R. SP No. 90981).
- The Court of Appeals vacated the RTC Orders of 7 February 2005 and 16 May 2005 and reinstated the RTC’s 11 March 2004 Order that the interest accrued on the deposited amount pertained to HTRDC by virtue of accession.
- The CA concluded that TRB’s deposit constituting 100% zonal valuation was deemed a constructive delivery to HTRDC and therefore interest (accession) belonged to the owner of the principal amount.
Issues Presented to the Supreme Court
- Whether the interest earned on money deposited in the expropriation account, representing the initial payment of 100% zonal valuation under Republic Act No. 8974, belongs to the landowner (HTRDC) as owner of the principal amount by accession.
- Whether the issue of interest pertains only to the second stage of expropriation proceedings (determination of just compensation) and thus should have been left to the board of commissioners to decide.
- Whether the deposit in the DPWH account (in the name of DPWH) p