G.R.
No. 164195 (APO FRUITS CORPORATION and HIJO PLANTATION, INC. v. THE HON. COURT OF APPEALS and LAND BANK OF THE PHILIPPINES)
x - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
CHICO-NAZARIO,
J.:
For resolution by the Court En Banc are the (1) the Motion for Leave
to File and Admit Second Motion for Reconsideration, and (2) Second Motion for
Reconsideration filed by Apo Fruits Corporation (AFC) and Hijo Plantation, Inc.
(HPI).
To recall, the present Petition for Review on Certiorari originated from Agrarian
Cases No. 54-2000 and No. 55-2000, instituted by AFC and HPI, respectively,
before the Regional Trial Court (RTC), Branch 2, Tagum City (acting as a
Special Agrarian Court), praying for the determination and payment of just
compensation for their land, taken and distributed by the Government under the
Comprehensive Agrarian Reform Program (CARP).
On
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.[1]
Acting
on the Motion for Reconsideration of the Land Bank of the Philippines (LBP),
the RTC issued an Order dated
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:
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 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.[2]
LBP
filed its Notice of Appeal with the RTC.
In an Order dated 4 November 2002, the RTC refused to give due course to
the Notice of Appeal of LBP since ordinary appeal was not the proper remedy
from a decision on the determination of just compensation, rendered by a
special agrarian court, based on Land Bank of the Philippines v. De Leon.[3] The RTC, instead, ordered LBP to file a
Petition for Review within the reglementary period.
This prompted LBP to file a Petition
for Certiorari with the Court of
Appeals, docketed as CA-G.R. SP No. 76222.
In its Decision[4]
dated 12 February 2004, the appellate court granted the Petition of LBP,
finding that the RTC committed grave abuse of discretion in refusing to give
due course to the Notice of Appeal of LBP.
It ratiocinated that De Leon
should not be given retroactive effect so as to prejudice the remedy still
available to LBP under the law at the time it filed its appeal.
AFC and HPI then sought recourse from
this Court by filing the instant Petition for Review on Certiorari. On 6 February
2007, the Third Division of this Court promulgated its Decision, partially
granting the Petition for Review of AFC and HPI, at the same time, resolving
the case on the merits by affirming the Decision dated 12 February 2004 and
Resolution dated 21 June 2004 of the RTC.
According to the dispositive portion of the Decision of the Third
Division of this Court:
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
From
the foregoing Decision, LBP filed an Omnibus Motion for (a) reconsideration of
the said decision; (b) referral of the case to the Supreme Court sitting En Banc; and (c) setting of its motion
for oral argument.[6]
In
its Resolution dated
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
The Third Division of this Court
deleted the award for interest on the just compensation due AFC and HP, based
on the finding that petitioners were not entitled to interest because there was
no delay on the part of LBP.
The Third Division likewise deleted the award for attorney’s fees,
holding that:
Contracts for attorney’s services in this jurisdiction stand upon an entirely different footing from contracts for the payment of compensation for any other service.
x x x [A]n attorney is not entitled in the absence of express contract to recover more than a reasonable compensation for his services; and even when an express contract is made, the court can ignore it and limit the recovery to reasonable compensation if the amount of the stipulated fee is found by the court to be reasonable.
The general rule is that attorney’s fees cannot be recovered as part of damages because of the policy that no premium should be placed on the right to litigate. They are not to be awarded every time a party wins a suit. The power of the court to award attorney’s fees under Article 2208 of the Civil Code demands factual, legal and equitable justification. A perusal of Article 2208 of the Revised Civil Code will reveal that the award of attorney’s fees in the form of damages is the exception rather than the rule for it is predicated upon the existence of exceptional circumstances.
In all cases, it must be reasonable, just and equitable if the same is to be granted. It is necessary for the court to make findings of fact and law to justify the grant of such award. The matter of attorney’s fees must be clearly explained and justified by the trial court in the body of its decision.
In this case, the RTC failed to
substantiate its award of attorney’s fees which amounts to ten percent (10%) of
the award of P1,383,179,000 and is equivalent to P138,317,900.00.[8]
Dissatisfied with the
aforementioned Resolution, all the parties filed their respective Motions for
Reconsideration.
In its Resolution dated
Entry of Judgment was made in this
case on
Despite the entry of judgment, AFC and
HPI submitted the following pleadings on 28 May 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. [10]
AFC and
HPI maintained that there
were meritorious and compelling reasons to grant all three of their Motions. AFC and HPI basically argued in their
Second Motion for Reconsideration that:
I
WITH ALL DUE
RESPECT, THE HONORABLE COURT SHOULD RECONSIDER AND SET ASIDE ITS RESOLUTION
DATED
II
WITH ALL DUE RESPECT, MOVANTS AFC AND HPI WERE NOT THE REASON FOR THE DELAY IN THE DETERMINATIION OF THE JUST COMPENSATION FOR ITS PROPERTIES BECAUSE WHEN THEY FILED THE CASE BEFORE THE DEPARTMENT OF AGRARIAN REFORM ADJUDICATION BOARD (“DARAB”) IN 1997, THEY WERE MERELY AVAILING OF THE ADMINISTRATIVE REMEDIES UNDER THE COMPREHENSIVE AGRARIAN REFORM LAW (“CARL”). AT ANY RATE, EVEN IF ASSUMING THAT MOVANTS AFC AND HPI WERE WRONG IN RESORTING TO THE DARAB AND SHOULD HAVE GONE DIRECTLY TO THE REGIONAL TRIAL COURT ACTING AS A SPECIAL AGRARIAN COURT FOR THE DETERMINATION OF JUST COMPENSATION, THEN LEGAL INTEREST IS STILL DUE FROM THE DATE OF THE FILING BY THE MOVANTS AFC AND HPI OF THE COMPLAINT BEFORE THE REGIONAL TRIAL COURT IN TAGUM CITY, DAVAO DEL NORTE ON 17 MAY 2000.
III
WITH ALL DUE
RESPECT, THE HONORABLE COURT SHOULD RECONSIDER ITS RESOLUTION DATED
AFC
and HPI vigorously protested the deletion by the Third Division of the Court,
in the Resolution dated 19 December 2007, of the award for interest, contending
that in doing so, the Third Division departed from the well-settled ruling in Philippine Railway Company v. Solon,[12]
Republic v. Court of Appeals,[13] Land Bank of the Philippines v. Wycoco,[14] and Land Bank of the Philippines v. Imperial,[15]
which clearly recognized the entitlement of the landowner to legal
interest of twelve percent (12%) in cases of just compensation.[16] Even assuming that AFC and HPI were mistaken
in resorting to the Department of Agrarian Reform Adjudication Board instead of
raising the issue of just compensation directly before the RTC, acting as Special
Agrarian Court, they should, at the very least, be awarded legal interest from
the filing of the Complaint on 17 May 2000 until full payment on 16 May 2008.[17]
AFC and HPI asserted that the Third
Division of the Court also gravely erred in deleting the award for attorney’s
fees, insisting that they were able to establish their entitlement to the
same. Thus, AFC and HPI prayed in their
Second Motion for Reconsideration that the Court En Banc:
(1) Award legal interest at the rate of twelve percent (12%) per annum from the time of the taking on 09 December 1996 until respondent LBP’s payment on 09 May 2008 or alternatively, from the time of judicial demand on 17 May 2000 until respondent LBP’s payment on 09 May 2008; and
(2) Award attorney’s fees of ten percent (10%) or such amount as the Honorable Court may deem justified, reasonable and appropriate.[18]
In a Resolution[19]
dated
Extremely
assiduous, AFC and HPI still filed on
For its part, LBP filed a
Manifestation[21] with
the following contents:
RESPONDENT LAND BANK OF THE PHILIPPINES (LBP, for brevity), by counsel and to this Honorable Court, respectfully manifests that on 22 July 2008, it received a copy of the Entry of Judgment in the above-captioned case, stating inter alia that the Decision dated 06 February 2007 and the Resolution dated 19 February 2007 became final and executory on 16 May 2008.
In view of the foregoing, no further
action can be taken on the Urgent Motion to Resolve dated
WHEREFORE, it is respectfully prayed of this Honorable Court that this Manifestation be duly NOTED.
Upon closer
scrutiny, the Third Division of the Court found ample basis for the motion of
AFC and HPI to have their Motion for Leave to File and Admit Second Motion for
Reconsideration and Second Motion for Reconsideration referred to the Court En Banc.
Subsequently, the Court En Banc
accepted the referral on
MAJORITY OPINION
The Majority opinion raised the following arguments
for the denial of the second motion for reconsideration of AFC and HPI, to wit:
1) immutability of judgments, and
2) absence of delay does not entitle AFC
and HPI to be awarded legal interest.
As
to immutability of judgment, the majority opinion insists that 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,[22]
none of the exceptions applies herein, simply because the matters involved herein
are plainly different from those involved in the exceptional cases.
The
matter involved herein concerns only AFC and HPI’s mere private claim for
interest, which cannot even be classified even be classified as
unprecedented. Even worse is that AFC
and HPI’s 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 their favor.
The
majority next argue that AFC and HPI are not entitled to interest on the ground
that no interest is due unless there is delay in payment of just
compensation. They underscored that AFC
and HPI were paid about the time of the taking of the properties. Any delay in the resolution of the case is
attributable to them. The fixing of just
compensation could have been speeded up had AFC and HPI immediately brought the
complaints for that purpose to the proper RTC, acting as SAC. Nonetheless, AFC and HPI have not assailed
the RTC’s handling of their action for judicial determination of just
compensation.
In
all, the majority stress that LBP could not be held responsible for any delay
in the payment of just compensation due to AFC and HPI which would justify the
payment of legal interest to the latter.
DISSENTING OPINION
On
the propriety of reopening this case, the Court is well aware of the fact that
the Decision dated 6 February 2007 of the Third Division already became final
and executory with the entry of judgment on 16 May 2008.[23] Public policy and sound practice demand that,
at the risk of occasional errors, judgments of courts should become final at
some definite date fixed by law. When
judgments gain finality, they become inviolable and impervious to
modification. They may no longer be
reviewed or in any way modified directly or indirectly, even by this Court.[24]
Nonetheless, the recall of entries of
judgment, albeit rare, is not a novelty.[25] In Tan
Tiac Chiong v. Hon. Cosico,[26]
this Court already denied with finality two successive motions for
reconsideration of the judgment it earlier rendered; yet, it still recalled the
Entry of Judgment in the interest of substantial justice. The Court had also sanctioned the recall of
entries of judgment in cases such as Manotok
IV v. Barque[27] and Barnes v. Padilla,[28] again, on the ground of substantial
justice. Particularly, in Barnes, the Court justified the relaxation
of the procedural rule on finality of judgment, thus:
However, this Court has relaxed this rule in order to serve substantial justice considering (a) matters of life, liberty, honor or property, (b) the existence of special or compelling circumstances, (c) the merits of the case, (d) a cause not entirely attributable to the fault or negligence of the party favored by the suspension of the rules, (e) a lack of any showing that the review sought is merely frivolous and dilatory, and (f) the other party will not be unjustly prejudiced thereby.
Invariably, rules of procedure should be viewed as mere tools designed to facilitate the attainment of justice. Their strict and rigid application, which would result in technicalities that tend to frustrate rather than promote substantial justice, must always be eschewed. Even the Rules of Court reflects this principle. The power to suspend or even disregard rules can be so pervasive and compelling as to alter even that which this Court itself had already declared to be final. (Emphases ours.)
Indeed, the Court reserves the power
to suspend procedural rules and technicalities when they tend to defeat, rather
than serve, the interest of substantial justice. In Ginete
v. Court of Appeals,[29]
the Court expounded:
For when the operation of the Rules will lead to an
injustice we have, in justifiable instances, resorted to this extraordinary
remedy to prevent it. The rules have
been drafted with the primary objective of enhancing fair trials and expediting
justice. As a corollary, if their
application and operation tend to subvert and defeat, instead of promote and
enhance it, their suspension is justified.
In the words of Justice Antonio P. Barredo in his concurring opinion in Estrada v. Sto Domingo, “[T]his Court,
through the revered and eminent Mr. Justice Abad Santos, found occasion in the
case of C. Viuda de Ordoveza v. Raymundo,
to lay down for recognition in this jurisdiction, the sound rule in the
administration of justice holding that `it is always in the power of the court
(Supreme Court) to suspend its own rules or to except a particular case from
its operation, whenever the purposes of justice require it x x x.”
The Rules of Court were conceived and promulgated to set forth guidelines in the dispensation of justice but not to bind and chain the hand that dispenses it, for otherwise, courts will be mere slaves to or robots of technical rules, shorn of judicial discretion. That is precisely why courts, in rendering justice have always been, as they in fact ought to be, conscientiously guided by the norm that on the balance, technicalities take a backseat to substantive rights, and not the other way around. As applied to instant case, in the language of Justice Makalintal, technicalities “should give way to the realities of the situation.”
There
are special circumstances in this case which convince the Court to recall the
Entry of Judgment made herein, take a second hard look at the positions
espoused by AFC and HPI in their Second Motion for Reconsideration[30]
and act accordingly.
AFC and HPI are entitled to interest in the
payment of just compensation.
Nature of expropriation proceedings
Public
use and just compensation are the bedrock of eminent domain.
Republic v. Court of Appeals[31] very
well enucleated the nature of expropriation proceedings:
Expropriation
proceedings are not adversarial in the conventional sense, for the condemning
authority is not required to assert any conflicting interest in the
property. Thus, by filing the action,
the condemnor in effect merely serves notice that it is taking title and
possession of the property, and the defendant asserts title or interest in the
property, not to prove a right to possession, but to prove a right to compensation for the taking. (citing US vs.
Certain Lands in
Obviously, however, the power is not without its limits: first, the taking must be for public use, and second, that just compensation must be given to the private owner of the property. These twin proscriptions have their origin in the recognition of the necessity for achieving balance between the State interests, on the other hand, and private rights, upon the other hand, by effectively restraining the former and affording protection to the latter. x x x.
When the state wields its power of eminent domain, there arises a correlative obligation on its part to pay the owner of the expropriated property just compensation. If it fails, there is a clear case of injustice that must be redressed.[32] Though it is the duty of the court to protect the weak and the underprivileged, this duty shall not be carried out as to deny justice to the landowner.[33]
The Court was even more emphatic in Barangay Sindalan,
Stated
otherwise, the immediate taking of the property of the landowner, which
immediately deprives him of the possession of the same and its use, highlights
the exercise of the state’s power of eminent domain.
In
this case, AFC and HPI voluntarily offered to sell their properties to the DAR
on
JUST COMPENSATION; ACCRUAL OF LEGAL INTEREST
While
it is true that all private properties are subject to the need of the
government, and the government may take them whenever the necessity or exigency
of the occasion demands, however, the Constitution guarantees that when this
governmental right of expropriation is exercised, it shall be attended by just compensation.[38]
From
the taking of private property by the government under the power of eminent
domain, there arises an implied promise to compensate the owner for his
loss.
Significantly,
the above-mentioned provision of Section 9, Article III of the Constitution is
not a grant but a limitation of power.
This limiting function is in keeping with the philosophy of the Bill of
Rights against the arbitrary exercise of governmental powers to the detriment
of the individual’s rights. Given this
function, the provision should therefore be strictly interpreted against the
expropriator, the government, and liberally in favor of the property owner.[39]
In
our Decision, we have provided an elucidation on what constitutes just
compensation, thus:
The concept of just compensation embraces not only the correct determination of the amount to be paid to the owners of the land, but also the payment of the land within a reasonable time from its taking. Without prompt payment, compensation cannot be considered “just” inasmuch as the property owner is being made to suffer the consequences of being immediately deprived of his land while being made to wait for a decade or more before actually receiving the amount necessary to cope with his loss.[40] Just compensation is defined as the full and fair equivalent of the property taken from its owner by the expropriator.[41] It has been repeatedly stressed by this Court that the measure is not the taker’s gain but the owner’s loss.[42] 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.[43] (Emphases supplied.)
Republic v. Court of Appeals,[44]
further broadened the concept of “just compensation” when it underscored that:
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 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.
(Emphasis supplied.)
Just compensation, thus, must embrace not
only the correct (real, substantial, full and ample) determination of the
amount to be paid to the owners of the land but also its payment within a
reasonable time from the taking of the land to enable the landowners to cope
with the loss; otherwise, interest in the nature of damages from the time of
the taking of the property up to the actual payment of just compensation, is in
order.[45]
Verily,
jurisprudence has justifiably, wisely and correctly regarded the transaction
between the landowners and the government in expropriation proceedings, under
the foregoing circumstances, as one of loan or forbearance of money,[46]
which carries payment of interest in case of delay in payment.
The
legal interest for loan or forbearance of money is 12% per annum, citing Central
Bank Circular No. 416 dated
The
Court further explained, in Reyes v.
National Housing Authority,[49] that
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. The allowance of
interest – computed at 12% per annum -- on the amount found to be the value of the
property as of the time of the taking, being an effective forbearance, should
help eliminate the issue of the constant fluctuation and inflation of the value
of the currency over time. Such is
the true role or nature of interest in expropriation cases.
Said interest runs as a matter of law
and follows as a matter of course from the right of the landowner, to be placed
in as good a position as money can accomplish, as of the date of the taking.[50] Under this view, the interest awarded is
deemed part of the just compensation required to be paid to the owner.[51]
Republic v. Juan, [52] very succinctly synthesized our adherence to
the prevailing view when it expostulated:
In
this jurisdiction, a study of the cases decided by this Court with respect to
the award of interest to the condemnee where there is a gap of time between the
taking and the payment, shows that We tend to follow the view just
discussed. The first case – it would
appear – where the question of interest arose in this jurisdiction was the Philippine
Railway Co. vs. Solon,
“It remains to consider what interest the defendant is entitled to from the last named date. It appears from the record that the company opposed the confirmation of the award. Its objections were so far successful that the court reduced the amount awarded by the commissioners. The owner was compelled to appeal and in his appeal has been so far successful as to reverse the action of the court below. Under these circumstances we think he is entitled to interest on the award until the final determination of this proceeding. What the result would be if he had failed in his appeal, we do not decide. The interest thus allowed will be interest upon the amount awarded by the commissioners from the 2nd day of February 1907, until payment” (13 Phil. 40-44, italics supplied.)
The Solon case thereafter became the basis of award of interest on expropriation cases like Philippine Railway v. Duran, 33 Phil. 159 [1916]; Manila Railroad Co. v. Alano, 36 Phil. 501 [1917]; Manila Railroad Co. v. Attorney General, 41 Phil. 177 [1920]; Alejo v. Provincial Government of Cavite, 54 Phil. 304 [1930]; Tayabas v. Perez, 66 Phil. 470 [1938]; Republic v. Gonzales, 94 Phil. 957 [1954]; Republic v. Lara, 96 Phil. 172 [1954]; Phil. Executive Commission v. Estacio, 98 Phil. 219 [1956]; Republic of the Philippines v. Deleste, 46 al., 99 Phil. 1035 [1956]; Republic v. Garcellano, 103 Phil. 237 [1958]; Yaptinchay, 108 Phil. 1053 [1960]; Republic v. Tayengco, 19 SCRA 900 [1967], and many others, until the matter of payment of interest became an established part of every case where taking and payment were not contemporaneously made.
Hence, in Republic v. Court of Appeals,[53]
the Court simply imposed legal interest of 12% per annum in the just
compensation.
In Land Bank of the Philippines v. Imperial,[54] 12%
legal interest was awarded in favor of the landowner as damages for the delay
in the payment of the just compensation.
Nepomuceno v. City of Surigao[55] and Ansaldo
v. Tantuico, Jr.[56] invoked by AFC/HPI contain the
declaration that “the value of the property expropriated shall earn interest at
the legal rate until full payment is effected.”
All given, it now becomes clear that the
Court has consistently awarded the landowner legal interest of 12% per annum from the time of the taking of the property until fully paid of his just
compensation which must be “real, substantial, full and ample.”[57] We have constantly accentuated that the
property owner is made to suffer the consequences of being immediately deprived
of his land. Worse still, he is being
made to wait before actually receiving the just amount extremely necessary to
cope with his loss.
Applying the 12% rate on the balance
of just compensation due AFC and HPI, from the taking of their properties on 9
December 1996, until the full payment of said balance by the LBP on 9 May 2008,
AFC and HPI claim interest in the total amount of P1,331,124,223.05, computed as follows:
Just
Compensation
P971,409,831.68
Legal Interest from
To
Law and jurisprudence empower courts
to equitably reduce interest rates[59]
and penalty charges. Under Article 1229
of the Civil Code, “[t]he judge shall equitably reduce the penalty when
the principal obligation has been partly or irregularly complied with by the
debtor.” Article 1229 of the Civil Code provides that the court
shall equitably reduce the penalty when the principal obligation has been
partly or irregularly complied with by the debtor. And, even if there has been no performance,
the penalty may also be reduced if it is iniquitous or leonine. While there may be no more ceiling on
interest rates on obligations, it does not mean that creditors have carte blanche authority to impose
interest rates to levels which will either enslave the debtors or lead to a
hemorrhaging of the latter’s assets.[60]
In
the following cases, the court saw it fit to reduce interest charges.
In Palmares v. Court of Appeals,[61] the Court found that the penalty charge
of 3% per month and attorney’s fees equivalent to 25% of the total amount due
are highly inequitable and unreasonable, considering that from the principal
loan of P30,000.00, the amount of P16,300.00 had already been
paid even before the filing of the case.
Similarly, in Asia Trust Development v. Concept Trading Corporation,[62]
the Court, given that the principal obligation had been partially complied with
by the respondent, affirmed the reduction of the penalty charges from 36% to 3%
per annum. The Court, in Filinvest v. Court of Appeals,[63] deemed that the penalty of P15,000.00
per day, resulting in the aggregate amount of P3,990,000.00, was steep
and excessive, and reduced it to P1,881,867.66, considering that there
had been substantial compliance in good faith on the part of the party obliged
to pay penalty.
The Court decreased the 3% monthly or
36% annual interest penalty in Segovia
Development Corporation v. J.L. Dumatol,[64] to 12% interest per annum, consistent
with fairness and equity, taking into account that J.L. Dumatol had already
substantially complied with its contractual obligation.
In Patron v. Union Bank of the Philippines,[65] the Court found the 2% monthly or 24%
annual penalty charge unconscionable under the circumstances attendant to the
case; i.e., the spouses Patron had
made partial payments on their loan and had requested the restructuring of the
same. Consequently, the Court fixed the
interest rate in the case at 12% per annum.
In Diño v. Jardines,[66]
the Court found that 9% and 10% monthly interest rates (or 108% and 120% annual
interest rates) on the principal loan of P165,000.00 are void for being
clearly excessive, iniquitous, unconscionable and exorbitant. The Court brushed aside the fact that
Jardines agreed to the said rates, although she knew the same to be exorbitant,
and considered that she was constrained to do so, as she was badly in need of money
at that time. The Court reduced the
exorbitant rates to the 12% legal interest rate.
In the exercise of its sound
discretion, this Court, in Florentino v.
Supervalue, Inc.,[67] tempered the penalty for the breaches
committed by Florentino to 50% of the amount of the security deposits. The forfeiture of all the security deposits,
in the sum of P192,000.00, was clearly a usurious and iniquitous penalty
for the transgressions committed by petitioner therein. Supervalue, Inc. was, therefore, obligated to
return 50% of P192,000.00 to the petitioner.
The
Court likewise equitably reduced, in Bulos,
Jr. v. Yasuma,[68]
the excessive and unconscionable interest rate of 48% per annum to 12% per annum.[69]
In Barons Marketing Corporation v. Court of Appeals,[70]
the 12% annual interest alone amounted to P4,500,000.00, exceeding the
principal debt of P2,000,000.00.
On top of the interest, Barons Marketing Corp. was also held liable by
the Court of Appeals for attorney’s fees and collection fees equivalent to 25%
of the total amount due, which included interest. Finding the attorney’s fees and collection
fees manifestly exorbitant, the Court reduced the same to 10% of the
principal. The same situation was extant
in Development Bank of the Philippines v.
Court of Appeals.[71] The Court noted therein that the interests
paid by debtor spouses De la Peña, which amounted to P233,361.50,30
inclusive of the regular interest, additional interest, penalty charges, and interest
on advances, were already more than their principal obligation in the amount of
P207,000.00. The additional
interest of 18% alone amounted to P106,853.45,31 which was almost half
of what was already paid by the spouses De la Peña. Thus, the Court reduced the additional
interest of 18% per annum to 10% per annum.
In Lo v. Court of Appeals,[72] the stipulated penalty in the lease
agreement for failure by the lessee National Onion Growers Cooperative
Marketing Association, Inc. (NOGCMAI) to pay the rent on the leased property
was P5,000.00 for each day of delay or P150,000.00 per month, an
amount five times the monthly rent. This
penalty was not only exorbitant but also unconscionable, since NOGCMAI was delayed
in surrendering the leased property because of its well-founded belief that its
right of preemption to purchase the said property had been violated. Considering further that NOGCMAI was an
agricultural cooperative, collectively owned by farmers with limited resources,
ordering it to pay a penalty of P150,000.00 per month on top of the
monthly rent of P30,000.00 would seriously deplete its income and drive
it to bankruptcy. Consequently, the
Court reduced the reward of penalty damages from P5,000.00 to P1,000.00
for each day of delay.
Of
the same tenor is Rizal Commercial Banking
Corporation v. Court of Appeals.[73] The factory of therein debtor, Goyu &
Sons, Inc. (GSI), was gutted in a fire.
Its creditors, including the Rizal Banking Insurance Corporation (RCBC),
filed their respective claims upon the proceeds of the insurance policies of
GSI. Taking into account the pitiful
financial condition of GSI, the Court ruled the surcharge rate ranging anywhere
from 9% to 27%, plus the penalty charge of 36%, to be definitely iniquitous and
unconscionable. The Court tempered these rates to 2% and 3%, respectively.
In
all the aforementioned, the Court, in the exercise of its equity jurisdiction,
reduced interest rates on penalty charges with due regard to the particular
circumstances of each case.
We
recognize that we are not at liberty to overlook settled jurisprudence on the
appropriate amount of legal interest to be awarded in just compensation which
is due AFC and HPI, but for several reasons which we have taken stock of, it
would be unconscionable to apply the full force of the law on LBP.
We
award on the basis of fairness and equity a reduced amount of legal interest,
considering the following circumstances:
(1) Given that the LBP already fully paid a
considerable amount of just compensation to AFC and HPI, even prior to the
finality of the judgment against it, a reduced amount of legal interest would
be consistent with fairness and equity.[74] Jus
respicit acquitatem. Law regards
equity. In this case, LBP already made
a full payment of just compensation to AFC and HPI on P1,383,179,00 even before
the decision of this court became final and executory on
(2)
Even if there has been no performance, the penalty may also be reduced
by the courts if it is iniquitous or unconscionable.
Whether an interest rate is reasonable or iniquitous is addressed to the
sound discretion of the Court, depending on the circumstances of each case. Given that the legal interest which AFC and
HPI seek to recover amounts to P1,331,124,223.05, which amount is almost
equal to the cost of just compensation,[75]
legal interest may be reduced on this ground, as the Court has previously
reduced interest rates in cases where these were equal to or exceeded the
principal amount of the debt.[76]
(3) Iniquitous and unconscionable interest rates
are contrary to morals.[77]
(4) Interest rates should not be leonine or
result in a hemorrhaging of assets of the LBP.[78]
Thus,
given the particular circumstances of the instant petition, legal interest should
be awarded to AFC and HPI pro hac vice,[79] in
the amount of P400,000,000.00. To
the Court, 30% more or less of the total amount of legal interest that the
parties seek to recover is already a fair and just amount.
In
view of all the foregoing, LBP should be directed to pay AFC and HPI the legal
interest due the latter upon finality of this resolution within a period of six
(6) months.
As
to the issue of attorney’s fees, the minority finds no reason to reverse its
findings as stated in the Resolution dated
The
foregoing considered, I dissent from the view of the majority.
I
therefore vote to PARTIALLY GRANT
the Second Motion for Reconsideration of AFC and HPI, on the resolution of this
Court dated 19 December 2007 in that Land Bank of the Philippines be ORDERED to pay AFC and HPI the amount
of P400,000,000.00 as interest to the principal amount of P971,409,831.68
due the latter upon finality of this Resolution within a period of six (6) months.
|
|
MINITA V. CHICO-NAZARIOAssociate Justice |
[1] CA rollo, pp. 131-133.
[2]
[3] 437 Phil. 347 (2002).
[4] Rollo, p. 51.
[5]
[6]
[7]
[8] Apo Fruits Corporation v. Court of Appeals, G.R. No. 164195, 19 December 2007, 541 SCRA 117, 145-146.
[9] Rollo, p. 1362.
[10]
[11]
[12] 13 Phil. 34 (1909). The Supreme Court held in this case that the defendant, the owner, was deprived of the use of his property from the 2nd 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 received just compensation for it if he was not allowed interest upon the value of the property during that time.
[13] 433 Phil. 106 (2002). This Court held:
If property is taken for public use before compensation is deposited with the court having jurisdiction over the case, the final compensation must include interest on its just value, to be computed from the time property is taken to the time when compensation is actually paid or deposited with the court.
[14] 464 Phil. 83 (2004). In this case the Supreme Court held that the imposition of interest is in the nature of damages for delay in payment, which in effect makes the obligation on the part of the government one of forbearance.
[15] G.R. No. 157753,
[16] Rollo, p. 1326.
[17]
[18]
[19]
[20]
[21]
[22] Temic Seiconductories, Inc., Employees Union v. Federation of Free Workers, G.R. No. 160993, 20 May 2008, 554 SCRA 122, 134.
[23] Rollo, p. 1362.
[24] Ang
v. Republic, G.R. No. 175788,
[25] Tan Tiac Chiong v. Hon. Cosico, 434 Phil. 753, 762 (2002).
[26]
[27] G.R.
No. 162335 and No. 162605,
[28] 482 Phil. 903, 915 (2004).
[29] 357 Phil. 36, 52 (1998).
[30] The grant of a second or further
motion for reconsideration by this court in meritorious cases is not without
precedents. The Court reversed its
judgment on a second motion for reconsideration in San Miguel Corporation v. National Labor Relations Commission, G.R.
No. 82467, 29 June 1989, 174 SCRA 510; Galman
v. Sandiganbayan, 228 Phil. 42 (1986); Philippine
Consumers Foundation, Inc. v. National Telecommunications Commission, 216
Phil. 185 (1984); Republic v. De Los
Angeles, 148-B Phil. 902 (1971) and on a third motion for reconsideration
in Vir-Jen Shipping and Marine Services,
Inc. v. National Labor Relations Commission, 210 Phil. 482 (1983), the
Court modified or amended on a second motion for reconsideration its ruling in Cathay Pacific Airways, Ltd. v. Romillo,
Jr., G.R. No. L-64276,
[31] Supra note 13 at 118-119.
[32] Republic
v. Lim, G.R. No. 161656,
[33] Land
Bank of the
[34] G.R. No. 150640,
[35] Apo
Fruits Corporation v. Court of Appeals, G.R. No. 164195,
[36] Land
Bank of the
[37] Republic v. Gonzales, 94 Phil. 956, 963 (1954).
[38] Republic v. Lim, supra note 32.
[39]
[40] Estate
of Salud Jimenez v. Philippine Export Processing Zone, 402 Phil. 271
(2001); Land Bank of the
[41] Manila Railroad Co. v. Velasquez, 32 Phil. 286, 313 (1915).
[42]
[43]
[44] Supra note 13 at 122-123.
[45] Estate
of Salud Jimenez v. Philippine Export Processing Zone, G.R. No. 137285, 16
January 2001, 349 SCRA 240; Land Bank of
the Philippines v. Imperial, supra note 15; Barangay Sindalan, San Fernando, Pampanga v. Court of Appeals, supra
note 33; Republic v. Court of Appeals, supra
note 13; Land Bank of the Philippines v.
Lim, G.R. No. 171941, 2 August 2007, 529 SCRA 129, 136.
[46] Santos Ventura Hocorma Foundation,
Inc. v. Santos, 484 Phil. 447, 456 (2004); Land Bank of the
[47] Santos Ventura Hocorma Foundation,
Inc. v.
[48] In Sigaan v. Villanueva, G.R. No. 173227,
[49] Supra note 46.
[50] 30 CJS 230, cited in Benguet Consolidated, Inc. v. Republic, 227 Phil. 422, 436 (1986), citing Republic v. Juan, 180 Phil. 398 (1979).
[51] 27 Am Jur. 112; National Housing Authority v. Heirs of Isidro Guivelondo, G.R. No.
166518,
[52] Supra note 50 at 426-427.
[53] Supra note 13.
[54] Supra note 15.
[55] G.R. No. 146091,
[56] G.R. No. 50147,
[57]
[58] Rollo, p. 1337.
[59] Land Bank of the
[60] See Spouses Solangon v. Salazar, 412 Phil. 816, 822 (2001).
[61] G.R. No. 126490,
[62] G.R. No. 130759,
[63] Filinvest
v. Court of Appeals, G.R. No. 138980,
[64] 416 Phil. 528, 541 (2001).
[65] G.R. No. 177348,
[66] G.R. No. 145871,
[67] G.R. No. 172384,
[68] G.R. No. 164159,
[69] Ruiz
v. Court of Appeals, 449 Phil. 419, 433-434 (2003), which, in turn, cited Medel v. Court of Appeals, 359 Phil.
820, 829-830 (1998); Garcia v. Court of
Appeals, G.R. Nos. L-82282-83,
[70] 349 Phil. 769, 779 (1998).
[71] 398 Phil. 413 (2000).
[72] 458 Phil. 414 (2003).
[73] 352 Phil. 101 (1998).
[74] Spouses
Jose T. Valenzuela and Gloria Valenzuela v. Kalayaan Development and Industrial Corporation, G.R. No. 163244,
[75] Total
amount of just compensation is P1,383,179,00.
[76] Barons Marketing Corporation v. Court of
Appeals, supra note 70; Development
Bank of the Philippines v. Court of Appeals, supra note 71.
[77] Dino v. Jardines, G.R. No. 145871, 31
January 2006, 481 SCRA 226, 238.
[78] Spouses Solangon v. Salazar, supra note
60.
[79] Republic
v.