G.R. No. 164195

Republic of the Philippines

SUPREME COURT

Manila

EN BANC

APO FRUITS CORPORATION and HIJO PLANTATION, INC.

Petitioners,

- versus -

THE HON. COURT OF APPEALS and LAND BANK OF THE PHILIPPINES,

Respondents.

G.R. No. 164195

Present:

PUNO, C.J.,

CARPIO,

CORONA,

CARPIO MORALES,

CHICO-NAZARIO,

VELASCO, JR.,

NACHURA,

LEONARDO-DE CASTRO,

BRION,

PERALTA,

BERSAMIN,

DEL CASTILLO,

ABAD, and

VILLARAMA, JR., JJ.

Promulgated:

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 attorney’s 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

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;

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 ½) 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 attorney’s 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 Bank’s 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 Court’s 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 Section 12, Rule 67 of the 1997 Rules of Civil Procedure, equivalent to, and computed at Two and One-Half (2 ½) 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:

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 Leon,[1] 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 Bank’s 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 RTC’s 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 CA’s denial of their joint motion for reconsideration on June 21, 2004, AFC and HPI appealed on certiorari, raising the following issues, to wit:

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.

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?

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 COURT’S “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 RTC’s 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 LBP’s 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 ATTORNEY’S FEES AND COMMISSIONERS’ FEES.

E. RESPONDENT LBP’S 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 Bank’s 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 attorney’s 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 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 attorney’s 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 maintenance of peace and order by putting an end to judiciable controversies with finality.[2] 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 somewhere, even at the risk of occasional errors.[3] 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 rendered it or by the highest court of the land.[4] 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 application of the latter, again change the judgment and continue this practice indefinitely.[5] The equity of a particular case must yield to the overmastering need of certainty and unalterability of judicial pronouncements.[6]

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 obligations of every litigant must not hang in suspense for an indefinite period of time.[7] 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.

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 execution unjust and inequitable,[8] 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.

In Tan Tiac Chiong v. Cosico,[9] 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 counsel’s new address, thereby allowing the accused to file a motion for reconsideration.

In De Guzman v. Sandiganbayan,[10] the Court had previously denied with finality the petitioner’s 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:

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

In Barnes v. Padilla,[11] the Court reinstated the petition despite the judgment having become final and executory due to the counsel’s 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.

In Manotok IV v. Heirs of Homer L. Barque,[12] 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 attorney’s 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 attorney’s fees.

The taking of property under CARL is an exercise by the State of the power of eminent domain. A basic limitation on the State’s power of eminent domain is the constitutional directive that private property shall not be taken for public use without just compensation.[13] 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 compensation is actually paid or deposited with the court.[14]

In Philippine Railway Company v. Solon,[15] 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 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 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 contemporaneously made.[16]

In Land Bank of the Philippines v. Wycoco,[17] 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 Bank’s 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 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 RTC’s 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 Land Bank of the Philippines v. Kumassie Plantation:[18]

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 HPI’s 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.

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 HPI’s 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:

REYNATO S. PUNO

Chief Justice

ANTONIO T. CARPIO RENATO C. CORONA