THIRD
DIVISION
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REPUBLIC OF THE
Petitioner, - versus
- HOLY TRINITY REALTY DEVELOPMENT CORP., Respondent. |
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G.R. No. 172410 Present: YNARES-SANTIAGO, J., Chairperson, AUSTRIA-MARTINEZ,
CHICO-NAZARIO, REYES, and DE CASTRO,*
JJ. Promulgated: |
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CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of
Court, seeking to set aside the Decision[1]
dated 21 April 2006 of the Court of Appeals in CA-G.R. SP No. 90981 which, in
turn, set aside two Orders[2]
dated 7 February 2005[3]
and 16 May 2005[4] of the
Regional Trial Court (RTC) of Malolos, Bulacan, in Civil Case No.
869-M-2000.
The undisputed factual and procedural
antecedents of this case are as follows:
On
On 18 March 2002, TRB filed an Urgent
Ex-Parte Motion for the issuance of a Writ of Possession, manifesting that it deposited a sufficient amount to
cover the payment of 100% of the zonal value of the affected properties, in the
total amount of P28,406,700.00, with the Land Bank of the Philippines,
South Harbor Branch (LBP-South Harbor), an authorized government
depository. TRB maintained that since it
had already complied with the provisions of Section 4 of Republic Act No. 8974[5] in
relation to Section 2 of Rule 67 of the Rules of Court, the issuance of the
writ of possession becomes ministerial on the part of the RTC.
The RTC issued, on
On
On P22,968,000.00, out
of TRB’s advance deposit of P28,406,700.00
with P22,968,000.00 since the latter already proved its absolute
ownership over the subject properties and paid the taxes due thereon to the
government. According to the RTC, “(t)he
issue however on the interest earned
by the amount deposited in the bank, if there is any, should still be
threshed out.”[6]
On 7 May 2003, the RTC conducted a hearing on the accrued interest, after which, it directed the issuance of an order of expropriation, and granted TRB a period of 30 days to inquire from LBP-South Harbor “whether the deposit made by DPWH with said bank relative to these expropriation proceedings is earning interest or not.”[7]
The RTC issued an Order, on
On
WHEREFORE, the interest earnings from the deposit of P22,968,000.00
respecting one hundred (100%) percent of the zonal value of the affected
properties in this expropriation proceedings under the principle of accession
are considered as fruits and should properly pertain to the herein defendant/property
owner [HTRDC]. Accordingly, the Land Bank
as the depositary bank in this expropriation proceedings is (1) directed to
make the necessary computation of the accrued interest of the amount of P22,968,000.00
from the time it was deposited up to the time it was released to Holy Trinity
Realty and Development Corp. and thereafter (2)
to release the same to the defendant Holy Trinity Development Corporation
through its authorized representative.[8]
TRB filed a Motion for
Reconsideration of the afore-quoted RTC Order, contending that the payment of
interest on money deposited and/or consigned for the purpose of securing a writ
of possession was sanctioned neither by law nor by jurisprudence.
TRB filed a Motion to Implement Order
dated
On
Now it was
HTRDC’s turn to file a Motion for Reconsideration of the latest Order of the
RTC. The RTC, however, denied HTRDC’s
Motion for Reconsideration in an Order dated
HTRDC
sought recourse with the Court of Appeals by filing a Petition for Certiorari, docketed as CA-G.R. SP No. 90981. In its Decision, promulgated on 21 April 2006,
the Court of Appeals vacated the Orders dated
7 February 2005 and 16 May 2005 of the RTC, and reinstated the Order
dated 11 March 2004 of the said trial court wherein it ruled that the interest
which accrued on the amount deposited in the expropriation account belongs to
HTRDC by virtue of accession. The Court
of Appeals thus declared:
WHEREFORE, the foregoing premises
considered, the assailed Orders dated 07 February and 16 May 2005 respectively
of the Regional Trial Court of Malolos, Bulacan (Branch 85) are hereby VACATED
and SET ASIDE. Accordingly, the Order
dated
From the
foregoing, the Republic, represented by the TRB, filed the present Petition for
Review on Certiorari, steadfast in
its stance that HTRDC is “entitled only to an amount equivalent to the zonal
value of the expropriated property, nothing more and nothing less.”[10] According to the TRB, the owner of the subject
properties is entitled to an exact amount as clearly defined in both Section 4
of Republic Act No. 8974, which reads:
Section 4. Guidelines for Expropriation
Proceedings. – Whenever it is necessary to acquire real property for the
right-of-way, site or location for any national government infrastructure
project through expropriation, the appropriate implementing agency shall
initiate the expropriation proceedings before the proper court under the
following guidelines:
(a) Upon the filing of the complaint, and
after due notice to the defendant, the implementing agency shall immediately
pay the owner of the property the amount
equivalent to the sum of (1) one hundred (100%) percent of the value of the
property based on the current relevant zonal valuation of the Bureau of
Internal Revenue (BIR); and (2) the value of the improvements and/or
structures as determined under Section 7 hereof.
and Section
2, Rule 67 of the Rules of Court, which provides:
Sec. 2.
Entry of plaintiff upon depositing
value with authorized government depositary. – Upon the filing of the
complaint or at anytime thereafter and after due notice to the defendant, the
plaintiff shall have the right to take or enter upon the possession of the real
property involved if he deposits with the authorized government depositary an amount equivalent to the assessed value
of the property for purposes of taxation to be held by such bank subject to
the orders of the court. Such deposit
shall be in money, unless in lieu thereof the court authorizes the deposit of a
certificate of deposit of a government bank of the Republic of the
The TRB
reminds us that there are two stages[11]
in expropriation proceedings, the determination of the authority to exercise
eminent domain and the determination of just compensation. The TRB argues that it is only during the
second stage when the court will appoint commissioners and determine claims for
entitlement to interest, citing Land Bank
of the Philippines v. Wycoco[12]
and National Power Corporation v. Angas.[13]
The TRB
further points out that the expropriation account with
At the outset, we call attention to a significant oversight in the TRB’s line of reasoning. It failed to distinguish between the expropriation procedures under Republic Act No. 8974 and Rule 67 of the Rules of Court. Republic Act No. 8974 and Rule 67 of the Rules of Court speak of different procedures, with the former specifically governing expropriation proceedings for national government infrastructure projects. Thus, in Republic v. Gingoyon,[14] we held:
There are at least two crucial differences between the
respective procedures under Rep. Act No. 8974 and Rule 67. Under the statute, the Government is required to make immediate payment
to the property owner upon the filing of the complaint to be entitled to a writ
of possession, whereas in Rule 67, the Government is required only to make
an initial deposit with an authorized government depositary. Moreover,
Rule 67 prescribes that the initial deposit be equivalent to the assessed value
of the property for purposes of taxation, unlike Rep. Act No. 8974 which
provides, as the relevant standard for initial compensation, the market value
of the property as stated in the tax declaration or the current relevant zonal
valuation of the Bureau of Internal Revenue (BIR), whichever is higher, and the
value of the improvements and/or structures using the replacement cost method.
x x x x
Rule 67 outlines the procedure under which eminent
domain may be exercised by the Government. Yet by no means does it serve at
present as the solitary guideline through which the State may expropriate
private property. For example, Section 19 of the Local Government Code governs
as to the exercise by local government units of the power of eminent
domain through an enabling ordinance. And then there is Rep. Act No. 8974,
which covers expropriation proceedings intended for national government
infrastructure projects.
Rep. Act No. 8974, which provides for a procedure
eminently more favorable to the property owner than Rule 67, inescapably
applies in instances when the national government expropriates property “for
national government infrastructure projects.” Thus, if expropriation is engaged
in by the national government for purposes other than national infrastructure
projects, the assessed value standard and the deposit mode prescribed in Rule
67 continues to apply.
There is no
question that the proceedings in this case deal with the expropriation of
properties intended for a national government infrastructure project. Therefore, the RTC correctly applied the
procedure laid out in Republic Act No. 8974, by requiring the deposit of the
amount equivalent to 100% of the zonal value of the properties sought to be
expropriated before the issuance of a writ of possession in favor of the
Republic.
The
controversy, though, arises not from the amount of the deposit, but as to the
ownership of the interest that had since accrued on the deposited amount.
Whether the
Court of Appeals was correct in holding that the interest earned by the
deposited amount in the expropriation account would accrue to HRTDC by virtue
of accession, hinges on the determination of who actually owns the deposited
amount, since, under Article 440 of the Civil Code, the right of accession is
conferred by ownership of the principal property:
Art. 440. The
ownership of property gives the right by accession to everything which is
produced thereby, or which is incorporated or attached thereto, either
naturally or artificially.
The
principal property in the case at bar is part of the deposited amount in the
expropriation account of DPWH which pertains particularly to HTRDC. Such amount, determined to be P22,968,000.00
of the P28,406,700.00 total deposit, was already ordered by the RTC to
be released to HTRDC or its authorized representative. The Court of Appeals further recognized that
the deposit of the amount was already deemed a constructive delivery thereof to
HTRDC:
When the [herein petitioner] TRB deposited
the money as advance payment for the expropriated property with an authorized
government depositary bank for purposes of obtaining a writ of possession, it
is deemed to be a “constructive delivery” of the amount corresponding to the
100% zonal valuation of the expropriated property. Since [HTRDC] is entitled thereto and
undisputably the owner of the principal amount deposited by [herein petitioner]
TRB, conversely, the interest yield, as accession, in a bank deposit should
likewise pertain to the owner of the money deposited.[15]
Since the
Court of Appeals found that the HTRDC is the owner of the deposited amount,
then the latter should also be entitled to the interest which accrued thereon.
We agree
with the Court of Appeals, and find no merit in the instant Petition.
The deposit
was made in order to comply with Section 4 of Republic Act No. 8974, which
requires nothing less than the immediate payment of 100%
of the value of the property, based on the current zonal valuation of the BIR,
to the property owner. Thus, going back
to our ruling in Republic v. Gingoyon[16]:
It is the plain intent of Rep. Act No.
8974 to supersede the system of deposit under Rule 67 with the scheme of
“immediate payment” in cases involving national government infrastructure
projects. The following portion of the Senate deliberations, cited by PIATCO in
its Memorandum, is worth quoting to cogitate on the purpose behind the plain
meaning of the law:
THE CHAIRMAN (SEN. CAYETANO). “x x x Because the
Senate believes that, you know, we have to pay the landowners immediately
not by treasury bills but by cash.
Since we are depriving them, you know, upon payment,
‘no, of possession, we might as well pay them as much, ‘no, hindi lang 50
percent.
x x x x
THE CHAIRMAN (REP. VERGARA). Accepted.
x x x x
THE CHAIRMAN (SEN. CAYETANO). Oo. Because
this is really in favor of the landowners, e.
THE CHAIRMAN (REP. VERGARA). That’s why we need
to really secure the availability of funds.
x x x x
THE CHAIRMAN (SEN. CAYETANO). No, no. It’s the
same. It says here: iyong first
paragraph, diba? Iyong zonal –
talagang magbabayad muna. In other words, you know, there must be a
payment kaagad. (TSN, Bicameral
Conference on the Disagreeing Provisions of House Bill 1422 and Senate Bill
2117, August 29, 2000, pp. 14-20)
x x x x
THE CHAIRMAN (SEN. CAYETANO). Okay, okay, ‘no. Unang-una,
it is not deposit, ‘no. It’s payment.”
REP. BATERINA. It’s payment, ho, payment.”
The
critical factor in the different modes of effecting delivery which gives legal
effect to the act is the actual intention to deliver on the part of the party
making such delivery.[17] The intention of the TRB in depositing such
amount through DPWH was clearly to comply with the requirement of immediate
payment in Republic Act No. 8974, so that it could already secure a writ of
possession over the properties subject of the expropriation and commence
implementation of the project. In fact,
TRB did not object to HTRDC’s Motion to Withdraw Deposit with the RTC, for as
long as HTRDC shows (1) that the property is free from any lien or encumbrance
and (2) that respondent is the absolute owner thereof.[18]
A close scrutiny of TRB’s arguments would
further reveal that it does not directly challenge the Court of Appeals’
determinative pronouncement that the interest earned by the amount deposited in
the expropriation account accrues to HTRDC by virtue of accession. TRB only asserts that HTRDC is “entitled only
to an amount equivalent to the zonal value of the expropriated property,
nothing more and nothing less.”
We agree in
TRB’s statement since it is exactly how the amount of the immediate payment
shall be determined in accordance with Section 4 of Republic Act No. 8974, i.e.,
an amount equivalent to 100% of the zonal value of the expropriated properties. However, TRB already complied therewith by
depositing the required amount in the expropriation account of DPWH with
Nonetheless,
we find it necessary to emphasize that HTRDC is determined to be the owner of
only a part of the amount deposited in the expropriation account, in the sum of
P22,968,000.00. Hence, it
is entitled by right of accession to the interest that had accrued to the said
amount only.
We are not
persuaded by TRB’s citation of National
Power Corporation v. Angas and Land
Bank of the Philippines v. Wycoco, in support of its argument that the
issue on interest is merely part and parcel of the determination of just compensation
which should be determined in the second stage of the proceedings only. We find that neither case is applicable
herein.
The issue
in Angas is whether or not, in the
computation of the legal rate of interest on just compensation for expropriated
lands, the applicable law is Article 2209 of the Civil Code which prescribes a
6% legal interest rate, or Central Bank Circular No. 416 which fixed the legal
rate at 12% per annum. We ruled in Angas that since the kind of interest
involved therein is interest by way of damages for delay in the payment
thereof, and not as earnings from loans or forbearances of money, Article 2209
of the Civil Code prescribing the 6% interest shall apply. In Wycoco,
on the other hand, we clarified that interests in the form of damages cannot be
applied where there is prompt and valid payment of just compensation.
The case at
bar, however, does not involve interest as damages for delay in payment of just
compensation. It concerns interest
earned by the amount deposited in the expropriation account.
Under
Section 4 of Republic Act No. 8974, the implementing agency of the government
pays just compensation twice: (1) immediately upon the filing of the complaint,
where the amount to be paid is 100% of the value of the property based on the
current relevant zonal valuation of the BIR (initial payment); and (2) when the decision of the court in the
determination of just compensation becomes final and executory, where the
implementing agency shall pay the owner the difference between the amount
already paid and the just compensation as determined by the court (final payment).[19]
HTRDC never
alleged that it was seeking interest because of delay in either of the two
payments enumerated above. In fact,
HTRDC’s cause of action is based on the prompt initial payment of just compensation, which effectively
transferred the ownership of the amount paid to HTRDC. Being the owner of the amount paid, HTRDC is
claiming, by the right of accession, the interest earned by the same
while on deposit with the bank.
That the
expropriation account was in the name of DPWH, and not of HTRDC, is of no
moment. We quote with approval the
following reasoning of the Court of Appeals:
Notwithstanding that the amount was deposited
under the DPWH account, ownership over the deposit transferred by operation of
law to the [HTRDC] and whatever interest, considered as civil fruits, accruing
to the amount of Php22,968,000.00 should properly pertain to [HTRDC] as the
lawful owner of the principal amount deposited following the principle of
accession. Bank interest partake the
nature of civil fruits under Art. 442 of the New Civil Code. And since these are considered fruits,
ownership thereof should be due to the owner of the principal. Undoubtedly, being an attribute of ownership,
the [HTRDC’s] right over the fruits (jus
fruendi), that is the bank interests, must be respected.[20]
Considering
that the expropriation account is in the name of DPWH, then, DPWH should at
most be deemed as the trustee of the amounts deposited in the said accounts
irrefragably intended as initial payment for the landowners of the properties
subject of the expropriation, until said landowners are allowed by the RTC to
withdraw the same.
As a final
note, TRB does not object to HTRDC’s withdrawal of the amount of P22,968,000.00
from the expropriation account, provided that it is able to show (1) that the
property is free from any lien or encumbrance and (2) that it is the absolute
owner thereof.[21] The said conditions do not put in
abeyance the constructive delivery of the said amount to HTRDC pending the
latter’s compliance therewith. Article
1187[22]
of the Civil Code provides that the “effects of a conditional obligation to
give, once the condition has been fulfilled, shall retroact to the day of the
constitution of the obligation.” Hence,
when HTRDC complied with the given conditions, as determined by the RTC in its
Order[23]
dated
WHEREFORE, the Petition is DENIED.
The Court of Appeals Decision dated
SO ORDERED.
|
|
MINITA V. CHICO-NAZARIOAssociate Justice |
WE
CONCUR:
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson
Associate Justice
Associate Justice
TERESITA J. LEONARDO-DE CASTRO
Associate Justice
ATTESTATION
I attest that the conclusions in the above
Decision were reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson,
Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII
of the Constitution, and the Division Chairperson’s Attestation, it is hereby
certified that the conclusions in the above Decision were reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
REYNATO S.
PUNO
Chief
Justice
* Justice Teresita J. Leonardo-De
Castro was designated to sit as additional member replacing Justice Antonio
Eduardo B. Nachura per Raffle dated
[1] Penned by Associate Justice Bienvenido L. Reyes with Associate Justices Arturo D. Brion and Arcangelita M. Romilla-Lontok, concurring; rollo, pp. 32-39.
[2] Issued by Judge Ma. Belen Ringpis Liban.
[3] Rollo, pp. 155-156.
[4]
[5] AN ACT TO FACILITATE THE ACQUISITION OF RIGHT-OF-WAY, SITE OR LOCATION FOR NATIONAL GOVERNMENT INFRASTRUCTURE PROJECTS AND FOR OTHER PURPOSES.
[6] CA rollo, p. 146.
[7]
[8] Rollo, p. 143.
[9]
[10]
[11] We held in Heirs of Alberto Suguitan v. City of Mandaluyong, 384 Phil. 676, 691 (2000) that:
Rule 67 of the 1997 Revised Rules of Court reveals that expropriation proceedings are comprised of two stages:
(1) the first is concerned with the determination of the authority of the plaintiff to exercise the power of eminent domain and the propriety of its exercise in the context of the facts involved in the suit; it ends with an order if not in a dismissal of the action, of condemnation declaring that the plaintiff has a lawful right to take the property sought to be condemned, for the public use or purpose described in the complaint, upon the payment of just compensation to be determined as of the date of the filing of the complaint;
(2) the second phase is concerned with the determination by the court of the just compensation for the property sought to be taken; this is done by the court with the assistance of not more than three (3) commissioners.
[12] G.R. No. 140160,
[13] G.R. Nos. 60225-26,
[14] G.R. No. 166429,
[15] Rollo, p. 37.
[16] Supra note 14 at 519-520.
[17] Union Motor Corporation v. Court of Appeals, 414 Phil. 33, 43 (2001).
[18] CA rollo, pp. 141-143.
[19] The fourth paragraph of Section 4 of Rep. Act No. 8974 states: “In the event that the owner of the property contests the implementing agency’s proffered value, the court shall determine the just compensation to be paid the owner within sixty (60) days from the date of filing of the expropriation case. When the decision of the court becomes final and executory, the implementing agency shall pay the owner the difference between the amount already paid and the just compensation as determined by the court.”
[20] Rollo, p. 37.
[21] CA rollo, pp. 141-143.
[22] Art. 1187. The effects of a conditional obligation to give, once the condition has been fulfilled, shall retroact to the day of the constitution of the obligation. Nevertheless, when the obligation imposes reciprocal prestations upon the parties, the fruits and interests during the pendency of the condition shall be deemed to have been mutually compensated. If the obligation is unilateral, the debtor shall appropriate the fruits and interests received, unless from the nature and circumstances of the obligation it should be inferred that the intention of the person constituting the same was different.
In obligations to do and not to do, the courts shall determine, in each case, the retroactive effect of the condition that has been complied with.
[23] CA rollo, pp. 144-146.