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G.R.No.183290

TodayisThursday,January01,2015

RepublicofthePhilippines
SUPREMECOURT
Manila
SECONDDIVISION
G.R.No.183290* July9,2014
DEPARTMENTOFAGRARIANREFORM,representedbySECRETARYNASSERC.PANGANDAMAN,
Petitioner,
vs.
SPOUSESDIOSDADOSTA.ROMANAandRESURRECCIONO.RAMOS,representedbyAURORASTA.
ROMANA,PURIFICACIONC.DAEZ,representedbyEFREND.VILLALUZandROSAUROD.VILLALUZ,and
SPOUSESLEANDROC.SEVILLAandMILAGROSC.DAEZ,Respondents.
RESOLUTION
PERLASBERNABE,J.:
Assailedinthispetitionforreviewoncertiorari1aretheDecision2datedMarch27,2008andtheResolution3dated
June12,2008renderedbytheCourtofAppeals(CA)inCAG.R.SPNos.93132and93240whichaffirmedthe
Decision4datedOctober18,2005oftheRegionalTrialCourtofGuimba,NuevaEcija,Branch33(RTC)inAGR.
CaseNo.1163G,5fixingthejustcompensationforrespondents21.2192hectare(ha.)landatP2,576,829.94or
P121,438.60/ha., and ordering the Land Bank of the Philippines (LBP) to pay the said amount in the manner
providedbylaw.
TheFacts
Respondents, spouses Diosdado Sta. Romana and Resurreccion O. Ramos, represented by Aurora Sta.
Romana,PurificacionC.Daez,representedbyEfrenD.VillaluzandRosauroD.Villaluz,andspousesLeandroC.
SevillaandMilagrosC.Daez,aretheownersofa27.5307ha.agriculturallandsituatedinSanJoseCity,Nueva
Ecija, covered by Transfer Certificate of Title No. NT66211.6 Petitioner, the Department of Agrarian Reform
(DAR), compulsorily acquired a 21.2192ha. portion (subject land) of respondents property pursuant to the
governments Operation Land Transfer Program7 under Presidential Decree No. (PD) 27,8 otherwise known as
the "Tenants Emancipation Decree," as amended. On November 29, 1995, the DAR caused the generation of
emancipation patents (EPs) in favor of the farmerbeneficiaries,9 and, in 1996, the LBP fixed the value of the
subjectlandatP361,181.8710(LBPvaluation)usingtheformula11underExecutiveOrderNo.(EO)22812andDAR
AdministrativeOrderNo.(AO)13,seriesof1994,13i.e.,LV=(2.5xAGPxP35.00)x(1.06)n14.Underthisformula,
thegovernmentsupportprice(GSP)forone(1)cavanofpalaywaspeggedatP35.00,whichistheGSPpriceset
onthedateofPD27seffectivityonOctober21,1972.15
DissatisfiedwiththeLBPvaluation,respondentsfiledaPetitionforApprovalandAppraisalofJustCompensation
beforetheRTC,docketedasAGR.CaseNo.1163G,averringthat:(a)theLBPvaluationwasgrosslyinadequate
consideringthesubjectlandsproximitytosubdivisionlotsandcommercialestablishmentsand(b)thefairmarket
valueofthesubjectlandshouldbefixedintheamountofatleastP300,000.00/ha. as some beneficiaries were
evensellingtheirlandstosubdivisiondevelopersatthepriceofP1,000,000.00/ha.16
On the other hand, the LBP insisted on the correctness of the valuation, having been computed in accordance
with the formula under EO 228 which governs the determination of just compensation due a landowner whose
property was seized under PD 27. For its part, the DAR maintained that the proper procedure relevant to the
determinationofthevaluationwasfollowed,hence,theamountofP361,181.87orP4,719.77/ha.wasinkeeping
withthemandateofPD27.17
TheRTCappointedtwo18(2)commissionersforthepurpose.OnAugust27,2004,thecommissionerssubmitted
theirreport,recommendingtheamountofP300,000.00/ha.asreasonablecompensationforthesubjectland.19
TheRTCRuling
OnOctober18,2005,theRTCrenderedaDecision20rejectingtheLBPvaluationandfixingthejustcompensation
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ofthesubjectlandatP2,576,829.94orP121,438.60/ha. It explained that while respondents land was acquired

pursuant to PD 27, the same is covered by Republic Act No. (RA) 6657,21 otherwise known as the
"Comprehensive Agrarian Reform Law of 1988," as amended, which provides that in determining just
compensation,thefactorsunderSection17ofRA6657,asamended,shouldbeconsidered.22Itlikewisepointed
outthattheCourt,inthecaseofLBPv.SpousesBanal,23haddeclaredthattheabovementionedfactorshave
alreadybeentranslatedintoabasicformulainDARAO6,seriesof1992,24asamendedbyDARAO11,seriesof
1994,25i.e.,LV=(CNI+0.6)+(CSx0.3)+(MVx0.1).26ConsideringtheavailabilityofonlytheCS27 and MV28
factors,theRTCappliedtheformulaLV=(CSx0.9)+(MVx0.1)infixingthejustcompensationforthesubject
land.29
The DAR and the LBP filed separate motions for reconsideration which were, however, denied by the RTC.
Hence,theyfiledseparateappealsbeforetheCA,respectivelydocketedasCAG.R.SPNos.93132and93240,
thatwere,thereafter,consolidatedbytheCAonAugust31,2006.30
TheCARuling
InaDecision31 dated March 27, 2008, the CA affirmed the RTC Decision, explaining that the expropriation of a
landholding covered by PD 27, such as that of the subject land, is not considered to have taken place on the
effectivityofthesaiddecree,oronOctober21,1972,butatthetimepaymentofjustcompensationismade,as
judicially determined. Thus, it would be inequitable to base the amount of just compensation on the guidelines
providedbyPD27andEO228whentheseizureofthesubjectlandtookplaceaftertheenactmentofRA665732
onJune15,1988.Theacquisitionofthesubjectlandhavingbeeninitiatedonlyin1995,theLBPvaluationusing
theformulaunderEO228wasconfiscatory,asjustcompensationshouldconstitutethefullandfairequivalentof
thepropertywhenitistaken.Consideringthattheagrarianreformprocessremainedincompleteasthepayment
ofthejustcompensationforthesubjectlandhasyettobemade,andinviewofthepassageofRA6657inthe
interim,theCAupheldtheRTCvaluationashavingbeencomputedinaccordancewithSection17ofRA6657,as
amended.33
ThemotionsforreconsiderationfiledbytheDARandtheLBPweredeniedinaResolution34datedJune12,2008,
hence,theinstantpetitionbytheDARwhichwassubsequentlyconsolidated35withtheLBPspetitioninG.R.Nos.
18329899.
TheIssueBeforetheCourt
TheessentialissuefortheCourtsresolutioniswhetherornotthesubjectlandwasproperlyvaluedinaccordance
withthefactorssetforthinSection17ofRA6657,asamended.TheProceedingsBeforetheCourt
InaResolution36datedOctober12,2009,thepartiesweredirectedtofiletheirrespectivememoranda.Inlieuofa
memorandum,however,theLBPfiledamanifestationandmotion37(motiontowithdrawandtoremand)inG.R.
Nos.18329899(a)averringthatthematterofcomputationofjustcompensationhadbeenrenderedmootand
academicbytheenactmentofRA9700,38whichordainsthatwhenthevaluationofpreviouslyacquiredlandsis
challenged by the landowner, the same shall be completed and finally resolved pursuant to Section 17 of RA
6657,asamended39and(b)prayingthatitbeallowedtowithdrawitspetitionandthatthecaseberemandedto
the RTC for recomputation of the just compensation of the subject land40 based on the factors set forth under
Section17ofRA6657,asamended,inrelationtoSection541ofRA9700.
Therespondentsinthesaidcases,whoarethesamerespondentsintheinstantcase,didnotopposethemotion
towithdrawandtoremand,whichtheCourtgrantedinaResolution42datedJanuary18,2010.Neitherdidthey
fileanymotionforreconsiderationtherefrom.
Ontheotherhand,theDARfiledamemorandum,43prayingfortheadoptionoftheLBPvaluationforthesubject
land,orinthealternative,forasimilarremandofthecasetotheRTCforfurtherproceedingstodeterminethe
valueofthelandinaccordancewithexistingprovisionsoflawandapplicableadministrativeissuances.
TheCourtsRuling
Settled is the rule that when the agrarian reform process is still incomplete, as in this case where the just
compensation for the subject land acquired under PD 27 has yet to be paid, just compensation should be
determinedandtheprocessconcludedunderRA6657,44withPD27andEO228havingmeresuppletoryeffects.
ThismeansthatPD27andEO228onlyapplywhentherearegapsinRA6657whereRA6657issufficient,PD
27andEO228aresuperseded.45
Forpurposesofdeterminingjustcompensation,thefairmarketvalueofanexpropriatedpropertyisdetermined
byitscharacteranditspriceatthetimeoftaking.46Inaddition,thefactorsenumeratedunderSection17ofRA
6657,47i.e.,(a)theacquisitioncostoftheland,(b)thecurrentvalueoflikeproperties,(c)thenatureandactual
useoftheproperty,andtheincometherefrom,(d)theowner'sswornvaluation,(e)thetaxdeclarations,(f)the
assessmentmadebygovernmentassessors,(g)thesocialandeconomicbenefitscontributedbythefarmersand
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thefarmworkers,andbythegovernmenttotheproperty,and(h)thenonpaymentoftaxesorloanssecuredfrom
anygovernmentfinancinginstitutiononthesaidland,ifany,mustbeequallyconsidered.
TheCourthasgoneovertherecordsandobservedthattheonlyfactorsconsideredbytheRTCindetermining
the just compensation for the subject land were (a) the acquisition price of a 5.5825ha. landholding situated in
the same locality paid to the owner on November 17, 1997,48 and (b) the market value of the subject land
declaredbytherespondents,withoutashowingthattheotherfactorsunderSection17ofRA6657,asamended,
were even taken into account or, otherwise, found to be inapplicable , contrary to what the law requires.
Consequently,theCAerredinupholdingtheRTCsvaluationashavingbeenmadeinaccordancewithSection17
ofRA6657,asamended.
This,consideringtoothattherecordsofAGR.CaseNo.1163GonLBPspetitionforreview,docketedasG.R.
Nos.18329899,hadalreadybeenremandedtotheRTC,theCourtfindsthatthereisaneedtomakeasimilar
remandofDARspresentpetitioninthiscasealsostemmingfromAGR.CaseNo.1163GtothesameRTCfor
thedeterminationofjustcompensationinaccordancewithSection17ofRA6657,asamended.Asidefromthe
requirementandneedtoapplythefactorsunderSection17ofRA6657,asamended,thiscourseofactionisalso
meanttoavoidthepossibilityofanyconflictorinconsistencywithanyeventualrulinginAGR.CaseNo.1163G.
Tothisend,theRTCisherebydirectedtoobservethefollowingguidelinesintheremandofthecase:
1.Justcompensationmustbevaluedatthetimeoftaking,orthetimewhenthelandownerwasdeprivedofthe
useandbenefitofhisproperty,suchaswhentitleistransferredinthenameoftheRepublicofthePhilippines.49
Hence,theevidencetobepresentedbythepartiesbeforethetrialcourtforthevaluationofthesubjectlandmust
bebasedonthevaluesprevalentonsuchtimeoftakingforlikeagriculturallands.50
2.TheevidencemustconformwithSection17ofRA6657,asamended,priortoitsamendmentbyRA9700.It
bearspointingoutthatwhileCongresspassedRA9700onJuly1,2009,amendingcertainprovisionsofRA6657,
as amended, among them, Section 17, and declaring "(t)hat all previously acquired lands wherein valuation is
subjecttochallengebylandownersshallbecompletedandfinallyresolvedpursuanttoSection17of[RA6657],
asamended,"51thelawshouldnotberetroactivelyappliedtopendingclaims/cases.Infact,DARAO2,seriesof
2009,52 implementing RA 9700, expressly excepted from the application of the amended Section 17 all claim
foldersreceivedbyLBPpriortoJuly1,2009,whichshallbevaluedinaccordancewithSection17ofRA6657,as
amended,priortoitsfurtheramendmentbyRA9700.53
Withthisinmind,theCourt,cognizantofthefactthattheinstantpetitionforreviewoncertiorariwasfiledonJuly
21,2008,54 or long before the passage of RA 9700, finds that Section 17 of RA 6657, as amended, prior to its
furtheramendmentbyRA9700,shouldcontrolthechallengedvaluation.Intheeventthattherespondentshad
already withdrawn the amount deposited by the LB P, the withdrawn amount should be deducted from the final
landvaluationtobepaidbyLBP.55
3. The Regional Trial Court may impose interest on the just compensation award as may be warranted by the
circumstancesofthecase.56Inpreviouscases,theCourthasallowedthegrantoflegalinterestinexpropriation
caseswherethereisdelayinthepaymentsincethejustcompensationduetothelandownerswasdeemedtobe
aneffectiveforbearanceonthepartoftheState.57Legalinterestshallbepeggedattherateof12%interestper
annum (p.a.). from the time of taking until June 30, 2013 only. Thereafter, or beginning July 1, 2013, until fully
paid,thejustcompensationduethelandownersshallearninterestatthenewlegalrateof6%interestp.a.inline
withtheamendmentintroducedbyBSPMBCircularNo.799,58seriesof2013.59
4. The Regional Trial Court is reminded, however, that while it should take into account the different formula
created by the DAR in arriving at its just compensation valuation, it is not strictly bound thereto if the situations
beforeitdonotwarranttheirapplication.AsheldinLBPv.HeirsofMaximoPuyat:60
[T]hedeterminationofjustcompensationisajudicialfunctionhence,courtscannotbeundulyrestrictedintheir
determination thereof. To do so would deprive the courts of their judicial prerogatives and reduce them to the
bureaucratic function of inputting data and arriving at the valuation. While the courts should be mindful of the
different formulae created by the DAR in arriving at just compensation, they are not strictly bound to adhere
thereto if the situations before them do not warrant it. Apo Fruits Corporation v. Court of Appeals thoroughly
discussesthisissue,towit:
"xxx[T]hebasicformulaanditsalternativesadministrativelydetermined(asitisnotfoundinRepublicActNo.
6657,butmerelysetforthinDARAONo.5,Seriesof1998)althoughreferredtoandevenappliedbythecourts
incertaininstances,doesnotandcannotstrictlybindthecourts.Toinsistthattheformulamustbeappliedwith
utmostrigiditywherebythevaluationisdrawnfollowingastrictmathematicalcomputationgoesbeyondtheintent
and spirit of the law. The suggested interpretation is strained and would render the law inutile. Statutory
constructionshouldnotkillbutgivelifetothelaw.Aswehaveestablishedinearlierjurisprudence,thevaluationof
propertyineminentdomainisessentiallyajudicialfunctionwhichisvestedintheregionaltrialcourtactingasa
SAC,andnotinadministrativeagencies.TheSAC,therefore,muststillbeabletoreasonablyexerciseitsjudicial
discretionintheevaluationofthefactorsforjustcompensation,whichcannotbearbitrarilyrestrictedbyaformula
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dictatedbytheDAR,anadministrativeagency.Surely,DARAONo.5didnotintendtostraightjacketthehandsof
thecourtinthecomputationofthelandvaluation.Whileitprovidesaformula,itcouldnothavebeenitsintention
to shackle the courts into applying the formula in every instance. The court shall apply the formula after an
evaluation of the three factors, or it may proceed to make its own computation based on the extended list in
Section17ofRepublicActNo.6657,whichincludesotherfactors[.]xxx."61
WHEREFORE,thepetitionisDENIEDinsofarasitseekstosustainthevaluationofthe21.2192hectareportionof
respondents' property made by the Land Bank of the Philippines. The Decision dated March 27, 2008 and the
Resolution dated June 12, 2008 rendered by the Court of Appeals in CAG.R. SP Nos. 93132 and 93240
upholdingthesaidvaluationwhichdidnotconsiderthefactorsenumeratedunderSection17ofRepublicActNo.
6657, as amended, are hereby REVERSED and SET ASIDE. The Department of Agrarian Reform's petition
stemming from AGR. Case No. 1163G is REMANDED to the Regional Trial Court of Guimba, Nueva Ecija,
Branch33forreceptionofevidenceontheissueofjustcompensationinaccordancewiththeguidelinessetinthis
Decision. The trial court is directed to conduct the proceedings in said case with reasonable dispatch and to
submit to the Court a report on its findings and recommended conclusions within sixty (60) days from notice of
thisDecision.
SOORDERED.
ESTELAM.PERLASBERNABE
AssociateJustice
WECONCUR:
ANTONIOT.CARPIO
AssociateJustice
Chairperson
DIOSDADOM.PERALTA**
AssociateJustice

ARTUROD.BRION
AssociateJustice

JOSEPORTUGALPEREZ
AssociateJustice
ATTESTATION
I attest that the conclusions in the above Resolution had been reached in consultation before the case was
assignedtothewriteroftheopinionoftheCourt'sDivision.
ANTONIOT.CARPIO
AssociateJustice
Chairperson,SecondDivision
CERTIFICATION
PursuanttoSection13,ArticleVIIIoftheConstitution,andtheDivisionChairperson'sAttestation,Icertifythatthe
conclusionsintheaboveResolutionhadbeenreachedinconsultationbeforethecasewasassignedtothewriter
oftheopinionoftheCourt'sDivision.
MARIALOURDESP.A.SERENO
ChiefJustice

Footnotes
*

The instant petition was consolidated with G.R. Nos. 18329899 which, however, was subsequently
withdrawnbythepetitionerinthesaidcases.SeeResolutionsdatedSeptember29,2008andJanuary18,
2010rollo(G.R.No.183290),pp.95and161.
**/a>DesignatedAdditionalMemberperRaffledatedDecember9,2013.
1

Rollo(G.R.No.183290),pp.928.

Id. at 3347. Penned by Associate Justice Ricardo R. Rosario, with Associate Justices Mariano C. Del
Castillo(nowSupremeCourtAssociateJustice)andArcangelitaRomillaLontok,concurring.
3

Id.at4950.

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