The Supreme Court recently ordered the Land Bank of the Philippines (Land Bank) to pay petitioners Apo Fruits Corporation (AFC) and Hijo Plantation, Inc. (HPI) 12% interest per annum on the unpaid balance of the just compensation due them computed from the date the Government took their landholdings on December 9, 1996 for agrarian reform purposes until May 9, 2008 when Land Bank paid the balance on the principal amount.

In a 32-page resolution penned by Justice Arturo D. Brion, the Court En Banc further directed that unless the parties agree to a shorter payment period, payment shall be in monthly installments at the rate of PhP60 million per month until the whole amount owing, including interest on the outstanding balance, is fully paid. 

In holding Land Bank liable for PhP1,331,124,223.05 in interest, the Court explained that “from the time that the State took the petitioners’ properties until the time that the petitioners were fully paid, almost 12 long years passed.  This is the rationale for imposing the 12% interest – in order to compensate the petitioners for the income they would have made had they been properly compensated for their properties at the time of the taking.” It stressed that if the compensation is considerable, still it is not undue because the landholdings petitioners gave up are similarly considerable, 640.3483 hectares in the case of AFC and 805.5308 hectares for HPI.

The Court thus set aside the December 19, 2007 resolution of the Third Division deleting the award in its February 6, 2007 decision of 12% interest per annum on the just compensation; the Third Division’s April 30, 2008 resolution denying the  parties’ respective motions for reconsideration of the said December 19, 2007 resolution; and the December 4, 2009 resolution of the Court En Banc denying petitioners’ second motion for reconsideration on the ground, among others, that granting the same would run counter to the immutability of final decisions as entry of judgment had already been made on May 16, 2008.

The Court found that in this case, its “primordial and most important duty” to render substantial justice compels it to re-examine even a final and executory judgment. It notes that a “constitutional limitation, guaranteed under no less than the all-important Bill of Rights, is at stake in this case: how can compensation in an eminent domain be ‘just’ when the payment for the compensation for property already taken has been unreasonably delayed?” It stressed that the consequences of such delay had already been settled in past cases imposing 12% interest such that a contrary ruling in this case “would unsettle, on the flimsiest of grounds, all the rulings we have established in the past.” Moreover, the Court pointed out that the subject matter in this case involved agrarian reform “which would suffer a major setback if the government falters or is seen to be faltering, wittingly or unwittingly, through lack of good faith in implementing the needed reforms.” (GR No. 164195, Apo Fruits Corporation and Hijo Plantation, Inc. v. Land Bank of the Philippines, October 12, 2010)