GR 172410; (April, 2008) (Digest)
G.R. No. 172410 ; April 14, 2008
Republic of the Philippines, represented by the Toll Regulatory Board (TRB), petitioner, vs. Holy Trinity Realty Development Corp., respondent.
FACTS
The Republic, through the TRB, filed a complaint for expropriation over properties needed for the North Luzon Expressway expansion. To obtain a writ of possession, TRB deposited 100% of the zonal value with the Land Bank of the Philippines (LBP). The RTC issued the writ. Respondent Holy Trinity Realty (HTRDC) moved to withdraw its corresponding share of the deposit, which the RTC granted. A subsequent issue arose regarding the interest earned by the deposited amount while in the bank.
The RTC initially ruled that the accrued interest belonged to HTRDC by right of accession. Upon TRB’s motion for reconsideration, the RTC reversed itself, holding the interest issue should be determined later by the commissioners tasked with fixing just compensation. HTRDC filed a petition for certiorari with the Court of Appeals, which granted it, vacated the RTC’s reversal, and reinstated the order awarding the interest to HTRDC. The Republic elevated the case to the Supreme Court.
ISSUE
Whether the interest earned on the provisional deposit made for the issuance of a writ of possession belongs to the government/expropriating agency or to the property owner.
RULING
The Supreme Court ruled in favor of the Republic and reversed the Court of Appeals. The interest belongs to the government. The legal logic is anchored on the nature of the deposit under Republic Act No. 8974 . The deposit is not a final payment of just compensation but a provisional or advance payment to secure immediate possession for the public project. Just compensation is determined as of the date of the filing of the complaint. Any interest that accrues on the provisional deposit before the property owner makes a withdrawal is not considered a fruit of the property or part of the compensation. It is merely an incident of the deposit held in trust by the bank.
The Court clarified that the obligation to pay just compensation becomes due only after its exact amount is definitively determined by final court order. Since the deposit is merely provisional, the interest earned does not pertain to the owner by accession. To rule otherwise would unjustly enrich the owner at the expense of the government, as they would receive interest on money that was not yet legally due to them. The proper recourse for the owner is to claim legal interest on the final just compensation from the time of taking until full payment, not the bank interest on the provisional deposit.