APO Fruits Corp. et al vs Court of Appeals, Land Bank of the Philippines

August 7, 2011
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514 SCRA 537 – Civil Law – Property – Eminent Domain – Determination of Just Compensation

APO Fruits Corporation, Inc. (AFC) and Hijo Plantation Inc. (HPI) were owners of 5 parcels of land (1338.60 has.) located in San Isidro, Tagum, Davao. On 12 October 1995, the two voluntarily offered to sell the properties to the DAR. DAR offered P86.9 million for AFC’s land and P164.40 million for HPI’s land (total of about P251.3 million). AFC, HPI and DAR cannot agree on a price hence the Complaint for Determination of Just Compensation was filed before the DAR Adjudication Board on 14 February 1997. The DARAB failed to render a decision on the valuation of the land for three years. But nevertheless, the government, through the Land Bank of the Philippines, deposited P26M into AFC’s account and P45M into HPI’s account as down payment in 1996. The DAR also caused the titling of the land in the name of the Republic of the Philippines in December 1996. Later, titles were given to farmers under the CARP (Comprehensive Agrarian Reform Program).

Due to DARAB’s failure to adjudicate, AFC and HPI filed a complaint for determination of just compensation before the RTC of Davao which rendered a decision in favor of AFC and HPI. The RTC ruled, based on the reports it gathered from assessors, that the purchase price should be higher than what was offered by DAR; that the purchase price should be at P103.33/ sq. m; that DAR is to pay AFC and HPI a total of P1.38 billion. DAR appealed to the CA, the CA reversed the RTC.

ISSUE: Whether or not there was just compensation.

HELD: No. AFC’s and HPI’s land were taken in 1996 without just compensation. DARAB, an agency of the DAR which was commissioned by law to determine just compensation, sat on the cases for three years, which was the reason that AFC and HPI filed the cases before the RTC. The RTC’s finding is to be sustained as it based it’s ruling on evidence. DAR was given chance to support its ruling on why the purchase price should be at a lower amount but DAR failed to present such evidence. To allow the taking of landowners’ properties, and to leave them empty-handed while government withholds compensation is undoubtedly oppressive.

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.

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

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

(1) public use and

(2) just compensation.

Section 57 of Republic Act No. 6657 (Comprehensive Agrarian Reform Law) provides:

SEC. 57. Special Jurisdiction. – The Special Agrarian Courts shall have original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners, and the prosecution of all criminal offenses under this Act. The Rules of Court shall apply to all proceedings before the Special Agrarian Courts, unless modified by this Act

Section 17 of Republic Act No. 6657, which is particularly relevant, providing as it does the guideposts for the determination of just compensation, reads, as follows:

Sec. 17. Determination of Just Compensation. – In determining just compensation, the cost of acquisition of the land, the current value of like properties, its nature, actual use and income, the sworn valuation by the owner, the tax declarations, and the assessment made by government assessors shall be considered. The social and economic benefits contributed by the farmers and the farm-workers and by the Government to the property as well as the non-payment of taxes or loans secured from any government financing institution on the said land shall be considered as additional factors to determine its valuation.

Note should be taken that in said Appraisal Report, permanent improvements on AFC’s and HPI’s lands have been introduced and found existing, e.g., all weather-road network, airstrip, pier, irrigation system, packing houses, among others, wherein substantial amount of capital funding have been invested in putting them up.

The agricultural properties of AFC and HPI are just a stone’s throw from the residential and/or industrial sections of Tagum City, a fact DAR should never ignore. The market value of the property (plus the consequential damages less consequential benefits) is determined by such factors as the value of like properties, its actual or potential use, its size, shape and location. Therefore, AFC and HPI is entitled to the amount of just compensation (Php 1.38 billion) as computed with 12% interest per annum plus attorney’s fees amounting to 10% of the just compensation or P138 million.

 

Read full text (February 6, 2007)

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541 SCRA 117 – Civil Law – Damages – Attorney’s Fees – Interest

Land Bank filed a motion for reconsideration averring, among others, that the award of attorney’s fees and interest is not proper because (1) it did not delay payment as proven by the fact that they already deposited payment into the accounts of AFC and HPI (see facts above), and (2) there’s no substantial factual basis for the award of the 10% attorney’s fees (P138 million in total for attorney’s fees!).

Land Bank, in the same motion, also prayed that the case be referred to the Supreme Court en banc.

ISSUE: Whether or not Land Bank is correct as far as the interest and attorney’s fees are concerned.

HELD: Yes. The Supreme Court agreed that indeed there was no delay in payment. It was just that there was no proper computation of the amount of just compensation. Anent the issue of attorney’s fees, Land Bank is also correct. Attorney’s fees as a rule is not recoverable except if so alleged in the complaint and properly justified. In this case, AFC’s and HPI’s allegation that they were “constrained to go to court” because of the delay of payment entitled them to receive attorney’s fees is not tenable. The SC determined that the delay in payment was not the fault of Land Bank but rather it was the fault of AFC and HPI for failing to follow the proper procedure in filing cases. What AFC/HPI should have done was when they did not agree with Land Bank’s valuation they should not have filed two complaints with DAR and waited for three years – they should have filed the complaint directly with the RTC which will sit as a Special Agrarian Court and should not have waited for three years. Hence, the delay and the expenses AFC/HPI incurred were a result of their own actions.

Land Bank’s prayer to refer the case to the SC en banc was denied by the SC 3rd Division.

 

Read full text (December 19, 2007)

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April 30, 2008 – Remedial Law – Prohibited Pleading (Second Motion for Reconsideration in the SC level)
Political Law – Constitutional Law – Division Cases vs En Banc Cases

Not satisfied with the decision (above), Land Bank filed an Omnibus Motion for Reconsideration. It avers that that this case should be referred to the Supreme Court sitting en banc because the decision on just compensation which was promulgated by the Third Division of the Supreme Court will practically reverse a doctrine handed down by another division and that as a rule no doctrine or principle of law laid down by the court in a decision rendered en banc or in division may be modified or reversed except by the court sitting en banc.

On the other hand, AFC and HPI also filed their (first) MFR contesting the deletion of the award of interest and attorney’s fees.

ISSUE: Whether or not Land Bank is correct.

HELD: No. In the first place, the Omnibus Motion for Reconsideration should be denied because it is already a second motion for reconsideration which is a prohibited pleading and against the Internal Rules of the SC. Second, this decision of the third division is different to the other cases cited by Land Bank as these other cases have different factual background, hence, the rule that only the SC en banc may reverse a doctrine or principle is not violated.

The MFR by AFC and HPI was denied.

NOTE: This ruling became final on May 16, 2008 (Read digest below)

 

Read full text (April 30, 2008)

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607 SCRA 200 – Remedial Law – Second Motion for Reconsideration – Immutability of Judgment

Not satisfied, on May 28, 2008, AFC and HPI filed a Motion for Leave to file and admit a Second Motion for Reconsideration (unlike Land Bank which filed a 2nd MFR without asking for leave of court first). This is notwithstanding the fact that the decision of the Thrid Division already became final on May 16, 2008. AFC and HPI readily attached their MFR.

AFC and HPI are assailing the deletion of the award of interest and attorney’s fees.

This time also, the Third Division of the Supreme Court referred this case to the Supreme Court en banc.

ISSUE: Whether or not the motion for leave should be granted.

HELD: No. The Supreme Court, via majority decision, reiterated the ruling of the Third Division of the Supreme Court – that AFC/HPI are not entitled to the award of interest and attorney’s fees.

It also emphasized that the parties cannot be allowed to file a second motion for reconsideration because of the doctrine of immutability of judgment. 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. In this case, the judgment already became final on May 16, 2008. Sure there are exceptions to this rule, to wit:

(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.

But none of these exceptions are applicable in this case. In fact, the private claim by AFC and HPI does not even qualify either as a substantial or transcendental matter, or as an issue of paramount public interest, for no special or compelling circumstance has been presented to warrant the relaxation of the doctrine of immutability in their favor.

 

Read full text (December 4, 2009)

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632 SCRA 727 – Civil Law – Award of Interest
Political Law – Constitutional Law – Eminent Domain – Just Compensation – Doctrine of Transcendental Importance

Still not satisfied with the December 4, 2009 Resolution, AFC and HPI filed a motion for reconsideration on the said Resolution. (Note: This is the third MFR but is technically the first MFR filed by AFC/HPI concerning the December 4, 2009 Resolution). In their Motion, AFC and HPI pointed out that the principle of immutability of judgment cannot be applied because in the first place, the entry of judgment  of the April 30, 2008 Resolution was made on May 16, 2008 which was still within the prescriptive period for them to file their MFR (though it was not indicated what date AFC and HPI received the April 30, ’08 Resolution); and second, this case involves a paramount public concern hence it should be taken as an exception to the rule (Doctrine of Transcendental Importance).

AFC and HPI invoked their right for their claim of interest and did not invoke anymore their claim for attorney’s fees.

ISSUE: Whether or not AFC’s and HPI’s motion for reconsideration should be granted.

HELD: Yes.  AFC and HPI is correct in asserting their right to interest. They rightfully argued that the interest is part of “just compensation”. Hence, the earlier Decision by the SC which states that there was no delay on the part of Land Bank because it actually made a downpayment, albeit for the wrongfully computed amount of  just compensation, is wrong. In fact, there is actually delay in payment.

It is to be noted that the government immediately took over the property of AFC and HPI without the full payment. In fact, AFC and HPI were immediately deprived of their property. And for 12 years, they were deprived of the payment of the correct amount of just compensation. It is therefore proper to award interest in this case. The rate of interest should be 12% per annum (legal rate, but note that we now have a new legal rate, see Nacar vs Gallery Frames) to be computed from the day the downpayment was made in 1996  until full payment of the just compensation. This is justified because when the land was taken away from AFC and HPI without being paid the proper amount, they were not only deprived of the land but were also deprived of the rightful profit and gains they would have had from their property and were made to wait for a long time just so to be paid the proper amount of just compensation.

So as a rule, the final compensation must include interest[s] 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 this case since downpayment was made, reckoning point shall be the day when downpayment was made; interest to be computed against unpaid balance).

 

Read full text (October 12, 2010)

Note: Land Bank filed another Motion for Reconsideration which was denied by the Supreme Court on November 23, 2010 (see the full text of the Resolution here).

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647 SCRA 207 – Political Law – Doctrine of Transcendental Importance – Eminent Domain

Still not satisfied, Land Bank filed a second motion for reconsideration with request for oral arguments. The Solicitor General also sought to intervene (rightly so because of the amount involved). Land Bank assails the applicability of the Doctrine of Transcendental Importance as applied by the SC in awarding interest in favor of AFC and HPI. Land Bank argues that the said doctrine cannot be applied because neither life nor liberty is involved in this case. Land Bank insisted that the real issue in this case is the mere payment of money, a private claim, which in no way affects public interest.

ISSUE: Whether or not Land Bank is correct.

HELD: No. This case goes beyond the private interests involved; it involves a matter of public interest – the proper application of a basic constitutionally-guaranteed right, namely, the right of a landowner to receive just compensation when the government exercises the power of eminent domain in its agrarian reform program. A proper computation of just compensation will encourage more people to participate in the land reform program of the government.

Note: Motion for oral arguments was denied. Sol-Gen’s motion to intervene was likewise denied because SC said the government was already well represented by Land Bank. Finally, SC ruled no further pleading on this case shall be entertained and parties may be subjected to disciplinary actions if further pleadings are filed.

 

Read full text (April 5, 2011)

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