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Apo Fruits Corporation v.

LBP
GR No. 164195, 12 October 2010

FACTS:

o Petitioners Apo Fruits Corporation (AFC) and Hijo Plantation, Inc. (HPI), were registered owners of vast
tracts of land. Both petitioners voluntarily offered to sell these landholdings to the government. Thereafter,
they received separate notices of land acquisition and valuation of their properties from the DARs PARO.
AFCs land was valued at P86,900,925.88, HPIs land was valued at P164,478,178.14. Both petitioners
rejected these valuations for being very low.
o In its follow through action, DAR requested the LBP to deposit a partial amount (26,409,549.86 for AFC;
45,481,706.76 for HPI) in the bank accounts of petitioners, which petitioners then withdrew. Titles over
the subject lands were subsequently cancelled and new ones were issued in favor of the Republic.
o Thereafter, both petitioners filed separate petitions for determination of just compensation with the
DARAB. After the DARAB failed to act on the petitions, they filed the same petitions with the RTC, and
the cases were consolidated.
o RTC resolved in the consolidated cases fixing the just compensation for the petitioners
(1,383,179,000.00) with 12% interest per annum. Upon appeal, the SC deleted the award of interest due
to the fact that LBP was not delayed in their payments due to deposits they made earlier. Both petitioners
thereafter filed a second motion of reconsideration with respect to the denial of the award of legal interest
and attorneys fees, and this was referred to SC En Banc.
o SC En Banc denied the petitioners second motion for consideration for it runs counter to the rule on the
immutability of final decisions, and that the Court saw no reason to recognize the case as an exception
to the immutability principle as the petitioners private claim does not qualify as either a substantial or
transcendental matter or an issue of paramount public interest.
o Here now comes the petitioners filing this present motion for reconsideration to decision of the SC En
Banc.

ISSUE:

Whether petitioners are entitled to the 12% interest on the balance of the just compensation belatedly
paid by the LBP

HELD: YES

RATIO:

o In the present case, while the DAR initially valued the petitioners landholdings at a total of
P251,379,104.02, the RTC, acting as a special agrarian court, determined the actual value of the
petitioners landholdings to be P1,383,179,000.00. This valuation, a finding of fact, has subsequently
been affirmed by this Court, and is now beyond question. In eminent domain terms, this amount is the
real, substantial, full and ample compensation the government must pay to be just to the landowners.

o Apart from the requirement that compensation for expropriated land must be fair and reasonable,
compensation, to be just must also be made without delay. Without prompt payment,
compensation cannot be considered just if the property is immediately taken as the property owner
suffers the immediate deprivation of both his land and its fruits or income.

o We recognized in Republic v. Court of Appeals, the need for prompt payment and the necessity of the
payment of interest to compensate for any delay in the payment of compensation for property already
taken. We ruled in this case that: x x x 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
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 fine, between the taking of the
property and the actual payment, legal interest[s] 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.
o In Republic, the Court recognized that the just compensation due to the landowners for their
expropriated property amounted to an effective forbearance on the part of the State. Applying the
Eastern Shipping Lines ruling, the Court fixed the applicable interest rate at 12% per annum, computed
from the time the property was taken until the full amount of just compensation was paid, in order to
eliminate the issue of the constant fluctuation and inflation of the value of the currency over time.

o Let it be remembered that shorn of its eminent domain and social justice aspects, what the agrarian land
reform program involves is the purchase by the government, through the LBP, of agricultural lands for
sale and distribution to farmers. As a purchase, it involves an exchange of values-the landholdings in
exchange for the LBPs payment. In determining the just compensation for this exchange, however,
the measure to be borne in mind is not the takers gain but the owners loss since what is involved
is the takeover of private property under the States coercive power. As mentioned above, in the
value-for-value exchange in an eminent domain situation, the State must ensure that the individual whose
property is taken is not shortchanged and must hence carry the burden of showing that the just
compensation requirement of the Bill of Rights is satisfied.

o That the legal interest due is now almost equivalent to the principal to be paid is not per se an inequitable
or unconscionable situation, considering the length of time the interest has remained unpaid-almost
twelve long years. From the perspective of interest income, twelve years would have been sufficient for
the petitioners to double the principal, even if invested conservatively, had they been promptly paid the
principal of the just compensation due them. Moreover, the interest, however enormous it may be,
cannot be inequitable and unconscionable because it resulted directly from the application of law
and jurisprudence- standards that have taken into account fairness and equity in setting the interest
rates due for the use or forbearance of money.