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Case Title: (1) APO Fruits Corporation and Hijo Plantation, Inc. vs Land Bank of the Philippines

G.R. Number & Date: 164195. October 12, 2010

Nature of the Case:

Doctrine/Principle: Eminent Domain

Petitioners: APO Fruits Corporation and Hijo Plantation, Inc. (AFC and HPI) registered owners of
vast tracks of land. AFC owned 640.3483 hectares while HPI owned 805.5308 hectares.

Respondents: Land Bank of the Philippines (LBP)

Facts:

On October 12, 1995, the petitioners voluntarily offered to sell these landholdings to the
government via Voluntary Offer to Sell applications filed with the DAR.
On October 16, 1996, both the AFC and HPI received separate notices of land acquisition and
valuation of their properties from the DARs Provincial Agrarian Reform Officer (PARO).
P165,484.47 per hectare, AFCs land was valued at P86,900,925.88, while HPIs property was
valued at P164,478,178.14. Both the AFC and HPI rejected these valuations for being very
low.
DAR requested the LBP to deposit P26,409,549.86 in AFCs bank account and
P45,481,706.76 in HPIs bank account which amounts the petitioners withdrew. The titles over
AFC and HPIs properties were thereafter cancelled, and new ones were issued on December
9, 1996 in the name of the Republic of the Philippines.
On February 14, 1997: AFC and HPI filed separate petitions for determination of just
compensation with the DAR Adjudication Board (DARAB). DARAB failed to act on these
petitions for more than three years. AFC and HPI filed complaints for determination and
payment of just compensation with the RTC of Tagum City.
On September 25, 2001, the RTC fixed the just compensation for the petitioners 1,338.6047
hectares of land at P1,383,179,000.00, with interest on this amount at the prevailing market
interests rates, computed from the taking of properties on December 9, 1996 until fully paid
minus the amounts the petitioners already received under initial valuation.
The RTC modified its ruling and fixed the interest at the rate of 12% per annum from the time
the complaint was filed until finality of the decision. The third division of this court affirmed the
ruling of the RTC.
On MR, the Third Division issued its Resolution it Feb 6, 2007 decision by deleting the 12%
interest due on the balance of the awarded just compensation. They justified the deletion by
the finding that the LBP did not delay the payment of just compensation as it had deposited the
pertinent amounts due to AFC and HPI within fourteen months after they filed their complaints
for just compensation with the RTC.
All parties moved for reconsideration of the modified ruling. The Court uniformly denied all the
motions in its April 30, 2008 resolution. Entry of Judgment followed on May 16, 2008.
Notwithstanding the Entry of Judgment, AFC and HPI led the following motions on May 28,
2008: (1) Motion for Leave to File and Admit Second Motion for Reconsideration; (2) Second
Motion for Reconsideration, with respect to the denial of the award of legal interest and
attorney's fees; and (3) Motion to Refer the Second Motion for Reconsideration to the
Honorable Court En Banc. IC
 The Court by En Banc by a majority vote denied the petitioners second MR on two
considerations:
o The grant of second MR runs counter to the immutability of final decisions.
Moreover, the court saw no reason to recognize the case as an exception to the
immutability principle as the petitioners private claim for the payment of interest does
not qualify as either a substantial or transcendental matter or an issue of paramount
interest.
o Petitioners caused the delay of the payment hence they are not entitled to recover
interest on the just compensation and attorneys fees. They erroneously filed their
complaints with the DARAB when they should have directly filed these with the RTC
acting as an agrarian court.

The Chico-Nazario Dissent

o Issue of immutability of judgment, she pointed out that under extraordinary

circumstances, this Court has recalled entries of judgment on the ground of substantial
justice.
o In the exercise of the States inherent power of eminent domain, for the payment to be
just, the compensation must not only be the correct amount to be paid; it must also be
paid within a reasonable time from the time the land is taken from the owner. If not, the
State must pay the landowner interest, by way of damages, from the time the property
was taken until just compensation is fully paid. This interest, deemed a part of just
compensation due, has been established by prevailing jurisprudence to be 12% per
annum.
o On these premises, Justice Nazario pointed out that the government deprived the
petitioners of their property on December 9, 1996, and paid the balance of just
compensation due them only on May 9, 2008. The delay of almost 12 years earned the
petitioners interest in the total amount of P1,331,124,223.05

o The Court find the petitioners arguments meritorious and accordingly grant the present motion
for reconsideration.

Petitioners Arguments: (see facts)

Respondents Arguments: (see facts)

ISSUE: Whether or not the petitioners are entitled to the interest on the just compensation?

FALLO:

WHEREFORE, premises considered, we GRANT the petitioners' motion for reconsideration.

The Court En Banc's Resolution dated December 4, 2009, as well as the Third Division's
Resolutions dated April 30, 2008 and December 19, 2007, are hereby REVERSED and SET
ASIDE.

The respondent Land Bank of the Philippines is herebyORDERED to pay petitioners Apo Fruits
Corporation and Hijo Plantation, Inc. interest at the rate of 12% per annum on the unpaid balance
of the just compensation, computed from the date the Government took the properties on
December 9, 1996, until the respondent Land Bank of the Philippines paid on May 9, 2008 the
balance on the principal amount.
 Unless the parties agree to a shorter payment period, payment shall be in monthly installments
at the rate of P60,000,000.00 per month until the whole amount owing, including interest on the
outstanding balance, is fully paid.

Costs against the respondent Land Bank of the Philippines.

SO ORDERED.

HELD: YES. The amounts LBP deposited before although withdrawn by the petitioners were nothing
but partial payments that only amounted to 5% of the P1,383,179,000.00 actual value of the
expropriated properties. This could not be considered a fair exchange of values at the time of the
taking.

While the LBP immediately paid the remaining balance on the just compensation due to the petitioners
after this Court had fixed the value of the expropriated properties, it overlooks one essential fact from
the time that the State took petitioners properties until the time that the petitioners were fully paid,
almost 12 long years passed. This is the rationale for imposing the 12% interest in order to
compensate the petitioners for the income they would have made had they been properly compensated
for their properties at the time of the taking.

The interest, however erroneous it may be, cannot be inequitable and unconscionable because it
resulted directly from the application of law and jurisprudence standards that have taken into account
fairness and equity in setting the interest rates due for the use or forbearance of money.

Suffice it to say that public interest refers to what will benefit the public, not necessarily the government
and its agencies whose task it to contribute to the benefit of the public. Greater public benefit will result
if government agencies like the LBP are conscientious in undertaking its tasks in order to avoid the
situation facing it in this case. Greater public interest would be served if it can contribute to the credibility
of the governments land reform program through the conscientious handling of this program.

Just compensation is defined as the full and fair equivalent of the property taken from its owner by the
expropriator. It has been repeatedly stressed by this Court that the measure is not the takers gain but
the owners loss. The word just is used to intensify the meaning of the word compensation to convey
the idea that the equivalent to be rendered for the property to be taken shall be real, substantial, full,
and ample.

The power of expropriation is by no means absolute (as indeed no power is absolute). The limitation is
found in the constitutional injunction that private property shall not be taken for public use without just
compensation and in the abundant jurisprudence that has evolved from the interpretation of this
principle. Basically, the requirements for a proper exercise of the power are:

(1) public use and

(2) just compensation.

Notes:

Eminent domain is the power of the State to take private property for public use. It is an inherent power of State as it is a
power necessary for the State's existence; it is a power the State cannot do without. As an inherent power, it does not
need at all to be embodied in the Constitution; if it is mentioned at all, it is solely for purposes of limiting what is otherwise
an unlimited power. The limitation is found in the Bill of Rights that part of the Constitution whose provisions all aim at
the protection of individuals against the excessive exercise of governmental powers.
Section 9, Article III of the 1987 Constitution (which reads "No private property shall be taken for public use without just
compensation.") provides two essential limitations to the power of eminent domain, namely, that (1) the purpose of
taking must be for public use and (2) just compensation must be given to the owner of the private property.

"just" as the safeguard is there to ensure a balance property is not to be taken for public use at the expense of private
interests; the public, through the State, must balance the injury that the taking of property causes through compensation
for what is taken, value for value.

Case Title: (2) APO Fruits Corporation and Hijo Plantation, Inc. vs Land Bank of the Philippines

G.R. Number & Date: 164195. April 5, 2011

Facts:

The LBP submits the following arguments in support of its 2nd motion for reconsideration:

a. the test of "transcendental importance" does not apply to the present case;
b. the standard of "transcendental importance" cannot justify the negation of the doctrine of
immutability of a final judgment and the abrogation of a vested right in favor of the Government
that respondent LBP represents;
c. the Honorable Court ignored the deliberations of the 1986 Constitutional Commission showing
that just compensation for expropriated agricultural property must be viewed in the context of
social justice; and
d. granting arguendo that the interest payment has factual and legal bases, only six (6%) percent
interest per annum may be validly imposed. THIS WAS ADDRESSED IN THE FIRST DIGEST

Issue: Whether or not LBPs second motion for reconsideration must be granted?

Fallo: WHEREFORE, premises considered, the respondent's second motion for reconsideration and
the motion to set the case for oral arguments are hereby DENIED WITH ABSOLUTE FINALITY. The
motion for intervention led by the Office of the Solicitor General is, likewise, denied. We reiterate, under
pain of contempt if our directive is disregarded or disobeyed, that no further pleadings shall be
entertained. Let judgment be entered in due course.

Held: NO.

On its face, the staggering difference between the LBP's initial valuation of the petitioners' properties
(totaling P251,379,104.02) and the RTC's valuation (totaling P1,383,179,000.00) a difference of
P1,131,799,895.98 amounting to 81% of the total price betrays the lack of good faith on the part of
the government in dealing with the landowners. The sheer enormity of the difference between the two
amounts cannot but lead us to conclude that the LBP's error was grievous and amounted to nothing
less than gross negligence in the exercise of its duty in this case, to properly ascertain the just
compensation due to the petitioners.

In the present case, it is undisputed that the government took the petitioners lands on December 9,
1996 and the petitioners only received the full payment of the just compensation due on May 9, 2008.
The properties taken were fully operational and earning at the time. Thus the landowners lost not only
their properties, but the fruits of these properties. The interest is not only proper but the right form of
indemnity for the damages suffered by the petitioners.
We reject the basic premise of the LBP's and Mr. Justice Abad's arguments for being awed. The present
case goes beyond the private interests involved; it involves a matter of public interest the proper
application of a basic constitutionally-guaranteed right, namely, the right of a landowner to receive just
compensation when the government exercises the power of eminent domain in its agrarian reform
program.

Section 9, Article III of the 1987 Constitution expresses the constitutional rule on eminent domain
"Private property shall not be taken for public use without just compensation." While confirming the
State's inherent power and right to take private property for public use, this provision at the same time
lays down the limitation in the exercise of this power. When it takes property pursuant to its inherent
right and power, the State has the corresponding obligation to pay the owner just compensation for the
property taken. For compensation to be considered "just," it must not only be the full and fair equivalent
of the property taken; it must also be paid to the landowner without delay.