2/14/2019 G.R. No.

164195

Republic of the Philippines

SUPREME COURT
Manila
EN BANC

APO FRUITS CORPORATION and G.R. No. 164195

HIJO PLANTATION, INC.
Petitioners, Present:

PUNO, C.J.,
CARPIO,
CORONA,
CARPIO MORALES,
CHICO-NAZARIO,
- versus - VELASCO, JR.,
NACHURA,
LEONARDO-DE CASTRO,
BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
THE HON. COURT OF APPEALS ABAD, and
and LAND BANK OF THE VILLARAMA, JR., JJ.
PHILIPPINES, Promulgated:
Respondents. December 4, 2009
x-----------------------------------------------------------------------------------------x

RESOLUTION

BERSAMIN, J.:
This case originated from the Third Division, which rendered its decision on February 6, 2007
in favor of petitioners Apo Fruits Corporation (AFC) and Hijo Plantation, Inc. (HPI). On December
19, 2007, however, the Third Division modified its decision upon the motion for reconsideration of
respondent Land Bank of the Philippines (Land Bank), deleting the award of interest and attorneys
fees.
For consideration and resolution is the second motion for reconsideration (with respect to the denial
of the award of legal interest and attorney's fees) filed by AFC and HPI.

Antecedents

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On October 12, 1995, AFC and HPI voluntarily offered to sell the lands subject of this case pursuant
to Republic Act No. 6657 (Comprehensive Agrarian Reform Law, or CARL). The Department of
Agrarian Reform (DAR) referred their voluntary-offer-to-sell (VOS) applications to Land Bank for
initial valuation. Land Bank fixed the just compensation at P165,484.47/hectare, that is,
P86,900,925.88, for AFC, and P164,478,178.14, for HPI. The valuation was rejected, however,
prompting Land Bank, upon the advice of DAR, to open deposit accounts in the names of the
petitioners, and to credit in said accounts the sums of P26,409,549.86 (AFC) and P45,481,706.76
(HPI). Both petitioners withdrew the amounts in cash from the accounts, but afterwards, on
February 14, 1997, they filed separate complaints for determination of just compensation with the
DAR Adjudication Board (DARAB).

When DARAB did not act on their complaints for determination of just compensation after
more than three years, the petitioners filed complaints for determination of just compensation with
the Regional Trial Court (RTC) in Tagum City, Branch 2, acting as a special agrarian court (SAC),
docketed as Agrarian Cases No. 54-2000 and No. 55-2000. Summonses were served on May 23,
2000 to Land Bank and DAR, which respectively filed their answers on July 26, 2000 and August
18, 2000. The RTC conducted a pre-trial, and appointed persons it considered competent, qualified
and disinterested as commissioners to determine the proper valuation of the properties.

Ultimately, the RTC rendered its decision on September 25, 2001, disposing thus:

WHEREFORE, consistent with all the foregoing premises, judgment is hereby rendered by this
Special Agrarian Court where it has determined judiciously and now hereby fixed the just
compensation for the 1,388.6027 hectares of lands and its improvements owned by the plaintiffs:
APO FRUITS CORPORATION and HIJO PLANTATION, INC., as follows:

First Hereby ordering after having determined and fixed the fair, reasonable and just
compensation of the 1,338.6027 hectares of land and standing crops owned by plaintiffs
APO FRUITS CORPORATION and HIJO PLANTATION, INC., based at only P103.33
per sq. meter, ONE BILLION THREE HUNDRED EIGHTY-THREE MILLION ONE
HUNDRED SEVENTY-NINE THOUSAND PESOS (P1,383,179,000.00), Philippine
Currency, under the current value of the Philippine Peso, to be paid jointly and severally to
the herein PLAINTIFFS by the Defendants-Department of Agrarian Reform and its
financial intermediary and co-defendant Land Bank of the Philippines, thru its Land
Valuation Office;

Second Hereby ordering Defendants DEPARTMENT OF AGRARIAN REFORM and/or LAND

BANK OF THE PHILIPPINES, thru its Land Valuation Office, to pay plaintiffs-APO
FRUITS CORPORATION and HIJO PLANTATION, INC., interests on the above-fixed
amount of fair, reasonable and just compensation equivalent to the market interest rates
aligned with 91-day Treasury Bills, from the date of the taking in December 9, 1996, until
fully paid, deducting the amount of the previous payment which plaintiffs received as/and
from the initial valuation;

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Third Hereby ordering Defendants DEPARTMENT OF AGRARIAN REFORM and/or LAND

BANK OF THE PHILIPPINES, thru its Land Valuation Office, to pay jointly and
severally the Commissioners fees herein taxed as part of the costs pursuant to Section 12,
Rule 67 of the 1997 Rules of Civil Procedure, equivalent to, and computed at Two and
One-Half (2 ) percent of the determined and fixed amount as the fair, reasonable and just
compensation of plaintiffs land and standing crops plus interest equivalent to the interest of
the 91-Day Treasury Bills from date of taking until full payment;

Fourth - Hereby ordering Defendants DEPARTMENT OF AGRARIAN REFORM and/or

LAND BANK OF THE PHILIPPINES, thru its Land Valuation Office, to pay jointly and
severally the attorneys fees to plaintiffs equivalent to, and computed at ten (10%) Percent
of the determined and fixed amount as the fair, reasonable and just compensation of
plaintiffs land and standing crops, plus interest equivalent to the 91-Day Treasury Bills
from date of taking until the full amount is fully paid;

Fifth - Hereby ordering Defendants DEPARTMENT OF AGRARIAN REFORM and/or LAND

BANK OF THE PHILIPPINES, thru its Land Valuation Office to deduct from the total
amount fixed as fair, reasonable and just compensation of plaintiffs properties the initial
payment paid to the plaintiffs;

Sixth - Hereby ordering Defendants DEPARTMENT OF AGRARIAN REFORM and/or LAND

BANK OF THE PHILIPPINES, thru its Land Valuation Office, to pay the costs of the suit;
and

Seventh - Hereby ordering Defendants DEPARTMENT OF AGRARIAN REFORM and/or

LAND BANK OF THE PHILIPPINES, thru its Land Valuation Office, to pay all the
aforementioned amounts thru The Clerk of Court of this Court, in order that said Court
Officer could collect for payment any docket fee deficiency, should there be any, from the
plaintiffs.

Upon Land Banks motion for reconsideration, the RTC modified the decision by
promulgating its decision dated December 5, 2001, holding:

WHEREFORE, premises considered, IT IS HEREBY ORDERED that the following modifications as

they are hereby made on the dispositive portion of this Courts consolidated decision be made and
entered in the following manner, to wit:

On the Second Paragraph of the Dispositive Portion which now reads as follows, as modified:

Second - Hereby ordering Defendants DEPARTMENT OF AGRARIAN REFORM and/or

LAND BANK OF THE PHILIPPINES, thru its Land Valuation Office, to pay
plaintiffs-APO FRUITS CORPORATION and HIJO PLANTATION, INC., interest
at the rate of Twelve (12%) Percent per annum on the above-fixed amount of fair,
reasonable and just compensation computed from the time the complaint was filed
until the finality of this decision. After this decision becomes final and executory, the
rate of TWELVE (12%) PERCENT per annum shall be additionally imposed on the
total obligation until payment thereof is satisfied, deducting the amounts of the
previous payments by Defendant-LBP received as initial valuation;

On the Third Paragraph of the Dispositive Portion which Now Reads As Follows, As Modified:

Third - Hereby ordering Defendants DEPARTMENT OF AGRARIAN REFORM and/or

LAND BANK OF THE PHILIPPINES, thru its Land Valuation Office, to pay jointly
and severally the Commissioners fees herein taxed as part of the costs pursuant to
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Section 12, Rule 67 of the 1997 Rules of Civil Procedure, equivalent to, and
computed at Two and One-Half (2 ) percent of the determined and fixed amount as
the fair, reasonable and just compensation of plaintiffs land and standing crops and
improvements;

On the Fourth Paragraph of the Dispositive Portion which Now Reads As follows, As Modified:

Fourth - Hereby ordering Defendants DEPARTMENT OF AGRARIAN REFORM and/or

LAND BANK OF THE PHILIPPINES, thru its Land Valuation Office, to pay jointly
and severally the attorneys fees to plaintiffs equivalent to, and computed at ten (10%)
Percent of the determined and fixed amount as the fair, reasonable and just
compensation of plaintiffs land and standing crops and improvements.

Except for the above-stated modifications, the consolidated decision stands and shall remain in full
force and effect in all other respects thereof.

Land Bank appealed by notice of appeal. The RTC denied due course to the appeal, however,
holding that such mode was not proper in view of the ruling in Land Bank of the Philippines v. De
[1]
Leon, which held that the correct mode of appeal from a decision of the RTC acting as SAC was
by petition for review (Rule 43). The RTC denied Land Banks motion for reconsideration.

Land Bank was thus compelled to file in March 2003 a petition for certiorari in the Court of
Appeals (CA) to assail the RTCs order denying due course to its appeal and denying its motion for
reconsideration.

The CA granted the petition for certiorari on February 12, 2004, and nullified the assailed
orders of the RTC.

Following the CAs denial of their joint motion for reconsideration on June 21, 2004, AFC
and HPI appealed on certiorari, raising the following issues, to wit:

I.
WHETHER OR NOT THE QUESTIONED DECISION AND RESOLUTION ARE IN ACCORD
WITH LAW OR WITH THE APPLICABLE DECISIONS OF THE SUPREME COURT?

II.
WHETHER OR NOT RESPONDENT LBP IS BOUND BY THE DECISION OF COURT OF
APPEALS IN CA-G.R. SP NO. 74879 AND IS THEREFORE PRECLUDED FROM FILING CA-
G.R. SP NO. 76222?

III.
WHETHER OR NOT THE FILING BY RESPONDENT LBP OF CA-G.R. SP NO. 76222 IS
ALREADY BARRED BY RES JUDICATA?

IV.

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WHETHER OR NOT THE RULING OF THE SUPREME COURT IN THE ARLENE DE LEON
CASE, GIVING ONLY PROSPECTIVE EFFECT TO ITS EARLIER RESOLUTION AS TO THE
PROPER MODE OF APPEAL FROM DECISIONS OF SPECIAL AGRARIAN COURTS IS
APPLICABLE IN THE INSTANT CASE?

V.
WHETHER OR NOT RESPONDENT LBP WAS DEPRIVED OF DUE PROCESS AND/OR OF
ITS RIGHT TO APPEAL?

VI.
WHETHER OR NOT THE SUBJECT PETITION (CA-G.R. SP NO. 76222) WAS MERELY
INTERPOSED TO DELAY THE EXECUTION OF SPECIAL AGRARIAN COURTS DECISION
WHICH IS BASED ON EVIDENCE DULY PRESENTED AND PROVED?

AFC and HPI prayed that the decision and resolution of the CA be reversed and set aside, and
that the RTCs decision dated September 25, 2001 rendered in Agrarian Cases No. 54-2000 and No.
55-2000 be declared final and executory.

In its decision dated February 6, 2007, the Third Division decreed as follows:

WHEREFORE, premises considered, the instant Petition is PARTIALLY GRANTED. While the
Decision, dated 12 February 2004, and Resolution, dated 21 June 2004, of the Court of Appeals in
CA-G.R. SP No. 76222, giving due course to LBPs appeal, are hereby AFFIRMED, this Court,
nonetheless, RESOLVES, in consideration of public interest, the speedy administration of justice, and
the peculiar circumstances of the case, to give DUE COURSE to the present Petition and decide the
same on its merits. Thus, the Decision, dated 25 September 2001, as modified by the Decision, dated
5 December 2001, of the Regional Trial Court of Tagum City, Branch 2, in Agrarian Cases No. 54-
2000 and No. 55-2000 is AFFIRMED. No costs.

SO ORDERED.

Land Bank sought reconsideration upon the following grounds, viz:

A. THE HONORABLE COURT RULED IN THE FAIRLY RECENT CASE OF LAND BANK OF
THE PHILIPPINES v. CELADA, G.R. NO. 164876 THAT SPECIAL AGRARIAN COURTS
ARE NOT AT LIBERTY TO DISREGARD THE FORMULA DEVISED TO IMPLEMENT
SECTION 17 OF REPUBLIC ACT NO. 6657 OTHERWISE KNOWN AS THE
COMPREHENSIVE AGRARIAN REFORM LAW OF 1988.

B. RESPONDENT LBP SATISFIED OR COMPLIED WITH THE CONSTITUTIONAL

REQUIREMENT ON PROMPT AND FULL PAYMENT OF JUST COMPENSATION.

C. RESPONDENT LBP ENSURED THAT THE INTERESTS ALREADY EARNED ON THE

BOND PORTION OF THE REVALUED AMOUNTS WERE ALIGNED WITH 91-DAY
TRASURY BILL (T-BILL) RATES AND ON THE CASH PORTION THE NORMAL
BANKING INTEREST RATES.

D. PETITIONERS ARE NOT ENTITLED TO AN AWARD OF ATTORNEYS FEES AND

COMMISSIONERS FEES.

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E. RESPONDENT LBPS COUNSEL DID NOT UNNECESSARILY DELAY THE PROCEEDINGS.

F. THE IMMINENT MODIFICATION, IF NOT THE REVERSAL, OF THE SUPREME COURT

RULINGS IN BANAL AND CELADA BY THE QUESTIONED DECISION NECESSITATES
A REFERRAL OF THE INSTANT CASE TO THE HONORABLE COURT SITTING EN
BANC.

On December 19, 2007, the Third Division partially granted Land Banks motion for
reconsideration, ruling thus:
WHEREFORE, premises considered, the Motion for Reconsideration is PARTIALLY
GRANTED as follows:

(1) The award of 12% interest rate per annum in the total amount of just compensation is
DELETED.

(2) This case is ordered REMANDED to the RTC for further hearing on the amount of
Commissioners Fees.

(3) The award of attorneys fees is DELETED.

(4) The Motion for Referral of the case to the Supreme Court sitting En Banc and the request or
setting of the Omnibus Motion for Oral Arguments are all DENIED for lack of merit. In all other
respects, our Decision dated 6 February 2007 is MAINTAINED.

SO ORDERED.

Dissatisfied, the parties filed their respective motions for reconsideration, but the Third
Division denied their motions on December 19, 2007. Upon finality of the resolution, the entry of
judgment was issued on May 16, 2008.

Notwithstanding the issuance of the entry of judgment, AFC and HPI still filed on May 28,
2008 several motions, namely: (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.

The case was thereafter referred by the Third Division to the Court en banc. Hence, this
resolution.

Ruling

The second motion for reconsideration (with respect to the denial of the award of legal
interest and attorney's fees) is denied, because, firstly, to grant it is to jettison the immutability of a

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final decision a matter of public policy and public interest, as well as a time-honored principle of
procedural law; and secondly, to award interest and attorneys fees despite the fact that Land Bank
paid the just compensation without undue delay is legally and factually unwarranted.

Immutability of Judgment

The main role of the courts of justice is to assist in the enforcement of the law and in the
[2]
maintenance of peace and order by putting an end to judiciable controversies with finality.
Nothing better serves this role than the long established doctrine of immutability of judgments.

It is never a small matter to maintain that litigation must end and terminate sometime and
[3]
somewhere, even at the risk of occasional errors. A judgment that has acquired finality becomes
immutable and unalterable, and may no longer be modified in any respect even if the modification is
meant to correct erroneous conclusions of fact or law and whether it will be made by the court that
[4]
rendered it or by the highest court of the land. The reason for the rule is that if, on the application
of one party, the court could change its judgment to the prejudice of the other, it could thereafter, on
[5]
application of the latter, again change the judgment and continue this practice indefinitely. The
equity of a particular case must yield to the overmastering need of certainty and unalterability of
[6]
judicial pronouncements.

The doctrine of immutability and inalterability of a final judgment has a two-fold purpose: (1)
to avoid delay in the administration of justice and thus, procedurally, to make orderly the discharge
of judicial business and (2) to put an end to judicial controversies, at the risk of occasional errors,
which is precisely why courts exist. Controversies cannot drag on indefinitely. The rights and
[7]
obligations of every litigant must not hang in suspense for an indefinite period of time. The
doctrine is not a mere technicality to be easily brushed aside, but a matter of public policy as well as
a time-honored principle of procedural law.

The foregoing considerations show that granting the second motion for reconsideration (with
respect to the denial of the award of legal interest and attorney's fees) absolutely risks the
trivialization of the doctrine of immutability of a final and executory judgment, and, therefore, the
motion should be rejected.

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Although the immutability doctrine admits several exceptions, like: (1) the correction of
clerical errors; (2) the so-called nunc pro tunc entries that cause no prejudice to any party; (3) void
judgments; and (4) whenever circumstances transpire after the finality of the decision rendering its
[8]
execution unjust and inequitable, none of the exceptions applies herein, simply because the
matters involved herein are plainly different from those involved in the exceptional cases.

A sampling of decided cases that illustrate what the Court has heretofore recognized as
exceptional circumstances warranting the reopening of final and immutable judgments is proper to
be made.

[9]
In Tan Tiac Chiong v. Cosico, the Court, in dismissing the administrative complaint filed
against CA Justice Rodrigo Cosico, necessarily sustained the recall of the entry of judgment made
by Justice Cosico, as ponente, in a criminal case appealed to the CA. The Court explained that the
recall of entry of judgment might have been an error of judgment, for which no judge should be
administratively charged, in the absence of showing of any bad faith, malice, or corrupt purpose. It
noted that Justice Cosico had recalled the entry of judgment to afford due process to the accused,
because the CA decision had been sent to the house of the counsel of the accused but had been
returned with the notation Moved Out. The CA was thus prompted to resend the decision to the
counsels new address, thereby allowing the accused to file a motion for reconsideration.

[10]
In De Guzman v. Sandiganbayan, the Court had previously denied with finality the
petitioners motion for reconsideration of its decision affirming his conviction by the Sandiganbayan
of a violation of Section 3 (e) of Republic Act No. 3019. The petitioner nonetheless took a novel
recourse by filing a so-called omnibus motion for leave to vacate first motion for reconsideration in
the light of the present developments and to consider evidence presented herein and to set aside
conviction. Citing a transcendental reason, that the accused was then about to lose his liberty simply
because his former lawyers had pursued a carelessly contrived procedural strategy of insisting on
what has already become an imprudent remedy that had forbade him from offering his evidence
although all the while available for presentation, the Court used its pervasive and encompassing
power to alter even that which it had already declared final, and directed the remand of the case to
the Sandiganbayan, to allow the evidence of the accused to be received and appreciated, holding
that:

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xxx To cling to the general rule in this case is only to condone rather than rectify a serious
injustice to petitioner whose only fault was to repose his faith and entrust his innocence to his
previous lawyers. xxx

[11]
In Barnes v. Padilla, the Court reinstated the petition despite the judgment having become
final and executory due to the counsels filing in the CA of a motion for extension of time to file
motion for reconsideration (which was not allowed under the internal rules of the CA), instead of a
timely motion for reconsideration. Aside from observing that the petitioner, although bound by the
mistakes or neglect of his counsel, should not be allowed to suffer serious injustice from such
mistakes or neglect of counsel, the Court decided to rescind the assailed decision of the CA, and to
direct the Regional Trial Court to proceed with the hearing of the action for specific performance
that had been erroneously dismissed on the ground of forum-shopping in view of a previously filed
case for ejectment, considering that the ejectment action did not bar the action for specific
performance.

[12]
In Manotok IV v. Heirs of Homer L. Barque, the Court set aside the entry of judgment to
reopen the case on the merits, because the militating concern for the Court en banc in accepting
these cases is not so much the particular fate of the parties, but the stability of the Torrens system of
registration by ensuring clarity of jurisprudence on the field.

In contrast, the matter involved herein concerns only the petitioners mere private claim for
interest and attorneys fees, which cannot even be classified as unprecedented. Even worse is that the
petitioners private claim does not qualify either as a substantial or transcendental matter, or as an
issue of paramount public interest, for no special or compelling circumstance has been present to
warrant the relaxation of the doctrine of immutability in favor of the petitioners. That the Third
Division might have erred in deleting the award of interest is neither a special nor a compelling
reason to have the Court en banc favor the petitioners with a modification of the resolution dated
December 19, 2007, after it became final and immutable on May 16, 2008.

No Interest is Due Unless There is Delay

In Payment of Just Compensation

Even assuming, for the sake of argument, that the Court allows the reopening of a final judgment,
AFC and HPI are still not entitled to recover interest on the just compensation and attorneys fees.

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The taking of property under CARL is an exercise by the State of the power of eminent domain. A
basic limitation on the States power of eminent domain is the constitutional directive that private
[13]
property shall not be taken for public use without just compensation. Just compensation refers
to the sum equivalent to the market value of the property, broadly described to be the price fixed by
the seller in open market in the usual and ordinary course of legal action and competition, or the fair
value of the property as between one who receives and one who desires to sell. It is fixed at the time
of the actual taking by the State. Thus, if property is taken for public use before compensation is
deposited with the court having jurisdiction over the case, the final compensation must include
interests on its just value, to be computed from the time the property is taken up to the time when
[14]
compensation is actually paid or deposited with the court.

[15]
In Philippine Railway Company v. Solon, decided in 1909, the Court treated interest as part of
just compensation when the payment to the owner was delayed. There, the Court, relying heavily on
American jurisprudence, declared:

Our attention has not been called to any Act of the Commission
relating to the matter of interest. But that the owner is entitled to interest
from the time when the company took possession of the property on the
second day of February, 1907, until the decision of the court on the 16th day
of June, 1908, we think is clear. The statute requires just compensation to be
made to the owner for his property taken, and section 246 above cited
requires the court to make such final order and judgment as shall secure to
the plaintiff the property essential to the exercise of his rights under the law,
and to the defendant just compensation for the land so taken. The defendant,
the owner, was deprived of the use of his property from the 2d day of
February, 1907, until the 19th day of July, 1908. He lost the use of it for this
time, and it cannot be said that he has received just compensation for it if he
is not allowed interest upon the value of the property during that time. In the
case of The Pennsylvania Railroad Co. vs. Cooper (58 Penn. St., 408), the
court said at page 409:

It can hardly be made a question that the plaintiff below was

entitled to recover interest upon the value of his property taken by
the company defendants and appropriated for the purposes of their
road, from the time that it was taken. He is in the position of a
vendor of land, who has always been held to have a right to
interest on the purchase-money where possession has been
delivered to the vendee.

In the case of Warren vs. First Division of the St. Paul & Pacific
Railroad Co. (21 Minn., 424), the court said at page 427:

If, therefore, the allowance of interest upon the amount of the

assessment shall be necessary to make the compensation just, we
have no doubt of authority in the court to make it; and we think
that, generally, it is necessary to allow interest from the date of the
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award to give to the owner just compensation. While the assessed

value, if paid at the date taken for the assessment, might be just
compensation, it certainly would not be, if payment be delayed,
as might happen in many cases, and as did happen in this case,
till several years after that time. The difference is the same as
between as between a sale for cash in hand and sale on time.

In the case of Philipps vs. The South Park Commissioners (119 Ill.
626), the court said at page 645:

The court allowed interest on the amount decreed Mrs.

Philipps, from the 27th day of August, 1870, the time when the
commissioners took possession of the land, and this is relied upon
as error. Lands cannot be taken and appropriated to public use
without just compensation is made to the owner; and we think our
law of eminent domain requires the payment of the compensation,
or a tender, or deposit of the same with the county treasurer, before
possession of the land shall be taken. This seems manifest from
section 10 of the Eminent Domain Act, which, in substance,
provides that, when the report of the jury is brought in, the court or
judge shall make such order as to right and justice shall pertain,
ordering that petitioner enter upon such property, and the use of the
same, upon payment of full compensation, as ascertained as
aforesaid. The payment of the compensation, or the deposit of the
same, seems to be a condition precedent to the taking of possession.
When, therefore, the possession of the land is taken, the
compensation is due; and if due and payable, it, in justice, ought to
draw interest from that time.

But it is said that when the company took possession on the 2d day of
February, 1907, it deposited with the Insular Treasurer the value of the land
and therefore ought not to pay interest on that amount.

The order made on that date was at the request of the company and in
accordance with the provisions of section of Act No. 1592, which is as
follows:

When condemnation proceedings are brought by any railway

corporation, in any court of competent jurisdiction in the Philippine
Islands, for the purpose of the expropriation of land for the proper
corporate use of such railway corporation, said corporation shall
have the right to enter immediately upon the possession of the land
involved, after and upon the deposit by ascertained and fixed by the
court having jurisdiction of the proceedings, said sum to be held by
the Treasurer subject to the orders and final disposition of the court:
Provided, however, That the court may authorize the deposit with
the Insular Treasurer of a certificate of deposit of any depository of
the Government of the Philippine Islands in lieu of cash, such
certificate to be payable to the Insular Treasurer on demand in the
amount directed by the court to be deposited. The certificate and the
moneys represented thereby shall be subject to the orders and final
disposition of the court. And in case suit has already been
commenced on any land and the money deposited with the Insular
Treasurer at the date of the passage of this Act, the said money may,
upon proper order of the court, be withdrawn from the Treasury by
the railway corporation which deposited the same, and a certificate
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of deposit, as above described may be deposited in lieu thereof.

And the court is empowered and directed, by appropriate order and
writ if necessary, to place the railway corporation in possession of
the land, upon the making of the deposit.

The defendant having claimed that his damages would amount to

P19,398.42, the company deposited this sum, but it is very evident from
the terms of the Act that this deposit was in no sense a payment nor an
offer of payment by the company for the land. It simply guaranteed
that the plaintiff would pay whatever sum might eventually be awarded
to the defendant. The defendant had no right to withdraw this money
on the 3d day of February, 1907, nor did he acted upon the report of the
commissioners and entered its judgment, which it did on the 16th day
of June, 1908. We therefore hold that the defendant would not secure just
compensation for the property taken unless he received interest on its value
from the 2d day of February, 1907, until the 16th day of June, 1908.

Solon soon became the basis for the award of interest in expropriation cases, until the payment of
interest became an established part of every case in which the taking and payment were not
[16]
contemporaneously made.

[17]
In Land Bank of the Philippines v. Wycoco, however, the Court came to explicitly rule that
interest is to be imposed on the just compensation only in case of delay in its payment, which fact
must be sufficiently established. Significantly, Wycoco was moored on Article 2209, Civil Code,
which provides:

Article 2209. If the obligation consists in the payment of money and the debtor incurs in
delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of
the interest agreed upon, and in the absence of stipulation, the legal interest, which is six per cent per
annum. (1108)
`

The history of this case proves that Land Bank did not incur delay in the payment of the just
compensation. As earlier mentioned, after the petitioners voluntarily offered to sell their lands on
October 12, 1995, DAR referred their VOS applications to Land Bank for initial valuation. Land
Bank initially fixed the just compensation at P165,484.47/hectare, that is, P86,900,925.88, for AFC,
and P164,478,178.14, for HPI. However, both petitioners rejected Land Banks initial valuation,
prompting Land Bank to open deposit accounts in the petitioners names, and to credit in said
accounts the amounts equivalent to their valuations. Although AFC withdrew the amount of
P26,409,549.86, while HPI withdrew P45,481,706.76, they still filed with DARAB separate
complaints for determination of just compensation. When DARAB did not act upon their complaints

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for more than three years, AFC and HPI commenced their respective actions for determination of
just compensation in the Tagum City RTC, which rendered its decision on September 25, 2001.

It is true that Land Bank sought to appeal the RTCs decision to the CA, by filing a notice of
appeal; and that Land Bank filed in March 2003 its petition for certiorari in the CA only because
the RTC did not give due course to its appeal. Any intervening delay thereby entailed could not be
attributed to Land Bank, however, considering that assailing an erroneous order before a higher
court is a remedy afforded by law to every losing party, who cannot thus be considered to act in bad
faith or in an unreasonable manner as to make such party guilty of unjustified delay. As stated in
[18]
Land Bank of the Philippines v. Kumassie Plantation:

The mere fact that LBP appealed the decisions of the RTC and the Court of Appeals does not
mean that it deliberately delayed the payment of just compensation to KPCI. x x x It may disagree
with DAR and the landowner as to the amount of just compensation to be paid to the latter and may
also disagree with them and bring the matter to court for judicial determination. This makes LBP an
indispensable party in cases involving just compensation for lands taken under the Agrarian Reform
Program, with a right to appeal decisions in such cases that are unfavorable to it. Having only
exercised its right to appeal in this case, LBP cannot be penalized by making it pay for interest.

The Third Division justified its deletion of the award of interest thuswise:

AFC and HPI now blame LBP for allegedly incurring delay in the determination and
payment of just compensation. However, the same is without basis as AFC and HPIs proper
recourse after rejecting the initial valuations of respondent LBP was to bring the matter to the
RTC acting as a SAC, and not to file two complaints for determination of just compensation
with the DAR, which was just circuitous as it had already determined the just compensation of
the subject properties taken with the aid of LBP.

In Land Bank of the Philippines v. Wycoco, citing Reyes v. National Housing Authority and
Republic v. Court of Appeals, this Court held that the interest of 12% per annum on the just
compensation is due the landowner in case of delay in payment, which will in effect make the
obligation on the part of the government one of forbearance. On the other hand, interest in the form
of damages cannot be applied, where there was prompt and valid payment of just
compensation. Thus:

The constitutional limitation of just compensation is considered to be the sum equivalent

to the market value of the property, broadly described to be the price fixed by the seller in
open market in the usual and ordinary course of legal action and competition or the fair
value of the property as between one who receives, and one who desires to sell, it being
fixed at the time of the actual taking by the government. Thus, if property is taken for
public use before compensation is deposited with the court having jurisdiction over the
case, the final compensation must include interests on its just value to be computed
from the time the property is taken to the time when compensation is actually paid or
deposited with the court. In fine, between the taking of the property and the actual
payment, legal interests accrue in order to place the owner in a position as good as (but not
better than) the position he was in before the taking occurred.

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xxx This allowance of interest on the amount found to be the value of the property as of
the time of the taking computed, being an effective forbearance, at 12% per annum should
help eliminate the issue of the constant fluctuation and inflation of the value of the currency
over time. Article 1250 of the Civil Code, providing that, in case of extraordinary inflation
or deflation, the value of the currency at the time of the establishment of the obligation shall
be the basis for the payment when no agreement to the contrary is stipulated, has strict
application only to contractual obligations. In other words, a contractual agreement is
needed for the effects of extraordinary inflation to be taken into account to alter the value of
the currency.

It is explicit from LBP v. Wycoco that interest on the just compensation is imposed only in
case of delay in the payment thereof which must be sufficiently established. Given the foregoing,
we find that the imposition of interest on the award of just compensation is not justified and
should therefore be deleted.

It must be emphasized that pertinent amounts were deposited in favor of AFC and HPI within
fourteen months after the filing by the latter of the Complaint for determination of just compensation
before the RTC. It is likewise true that AFC and HPI already collected P149.6 and P262 million,
respectively, representing just compensation for the subject properties. Clearly, there is no
unreasonable delay in the payment of just compensation which should warrant the award of 12%
interest per annum in AFC and HPIs favor.

The foregoing justification remains correct, and is reiterated herein.

Lastly, approving the second motion for reconsideration will surely produce more harm than
good. In addition to the costly sacrifice of the long-standing doctrine of immutability, we will
thereby be sending the wrong impression that a private claim had primacy over public interest.
There are many other landowners already paid their just compensation by virtue of final judgments,
but who may believe themselves still entitled also to claim interest based on the supposed difference
between the desired valuations of their properties and the amounts of just compensation already paid
to them. To reopen their final judgments will definitely open the floodgates to petitions for the
resurrection of litigations long ago settled. This Court cannot allow such scenario to happen.

WHEREFORE, the Court denies the petitioners second motion for reconsideration (with
respect to the denial of the award of legal interest and attorney's fees), and reiterates the decision
dated February 6, 2007 and the resolution dated December 19, 2007 of the Third Division.

SO ORDERED.

LUCAS P. BERSAMIN
Associate Justice

WE CONCUR:

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REYNATO S. PUNO
Chief Justice

ANTONIO T. CARPIO RENATO C. CORONA

Associate Justice Associate Justice

CONCHITA CARPIO MORALES MINITA V. CHICO-NAZARIO

Associate Justice Associate Justice

PRESBITERO J. VELASCO, JR. ANTONIO EDUARDO B. NACHURA

Associate Justice Associate Justice

TERESITA J. LEONARDO-DE CASTRO ARTURO D. BRION

Associate Justice Associate Justice

DIOSDADO M. PERALTA MARIANO C. DEL CASTILLO

Associate Justice Associate Justice

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ROBERTO A. ABAD MARTIN S. VILLARAMA, JR.

Associate Justice Associate Justice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the
above resolution had been reached in consultation before the case was assigned to the writer of the
opinion of the Court.

REYNATO S. PUNO
Chief Justice

[1]
G.R. No. 143275, September 10, 2002, 388 SCRA 537.
[2]
Fariscal Vda. De Emnas v. Emnas, L-26095, January 28, 1980, 95 SCRA 470.
[3]
Gallardo-Corro v. Gallardo, G.R. No. 136228, January 30, 2001, 350 SCRA 568, 578; Gomez v. Presiding Judge, RTC Br. 15, Ozamis
City, 249 SCRA 432, 438-439.
[4]
Siy v. National Labor Relations Commission, G..R. No. 158971, August 25, 2005, 468 SCRA 154, 161-162.
[5]
Kline v. Murray, 257 P. 465, 79 Mont. 530.
[6]
Flores v. Court of Appeals, G.R. No. 97556 & 101152, July 29, 1996.
[7]
Land Bank of the Philippines v. Arceo, G.R. No. 158270, July 21, 2008, 559 SCRA 85.
[8]
Temic Semiconductors, Inc. Employees Union (TSIEU)-FFW v. Federation of Free Workers (FFW), G..R. No. 160993, May 20, 2008,
554 SCRA 122, 134.
[9]
A.M. No. CA-02-33, July 31, 2002, 385 SCRA 509.
[10]
G..R. No. 103276, April 11, 1996, 256 SCRA 171.
[11]
G..R. No. 160753, September 30, 2004, 439 SCRA 675.
[12]
G..R. Nos. 162335 & 162605, December 18, 2008, 574 SCRA 468.
[13]
Article III, Section 9 of the 1987 Constitution.
[14]
Republic v. Court of Appeals, G..R. No. 146587, July 2, 2002, 383 SCRA 611, 622-623.
[15]
13 Phil. 34.
[16]
Republic v. Juan, 92 SCRA 26, 57-58, G.R. No. L-24740, July 30, 1979..
[17]
G.R. No. 140160, January 13, 2004, 419 SCRA 67.
[18]
G.R. No. 177404, June 25, 2009.

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