SECOND DIVISION

HEIRS OF FRANCISCO R. TANTOCO, G.R. No. 149621

SR., MARIA R. TANTOCO, ZOSIMO
TANTOCO, MARGARITA R. TANTOCO,
AND PACITA R. TANTOCO, Petitioners, Present:
PUNO,* J., Chairperson,
- versus - SANDOVAL-GUTIERREZ,**
CORONA,
AZCUNA, and
HON. COURT OF APPEALS, HON. GARCIA, JJ.
DEPARTMENT OF AGRARIAN
REFORM ADJUDICATION BOARD
(DARAB), AGRARIAN REFORM Promulgated:
BENEFICIARIES ASSOCIATION OF
SAN FRANCISCO, GEN. TRIAS,
CAVITE, REGISTER OF DEEDS FOR May 5, 2006
THE PROVINCE OF CAVITE AND
THE DAR REGION IV DIRECTOR,
Respondents.
x-----------------------------------------------------------------------------------------x

DECISION

AZCUNA, J.:
Before this Court is a petition for review on certiorari under Rule 45 of the Rules of
Court seeking the annulment of the Decision, dated December 15, 2000, and
Resolution, dated May 25, 2001, of the Court of Appeals in CA-G.R. SP No. 54970
entitled Heirs of Francisco R. Tantoco, Sr. et al., vs. Hon. Department of Agrarian
Reform Adjudication Board (DARAB), Agrarian Reform Beneficiaries Association
of San Francisco, Gen. Trias, Cavite, et al.
Petitioners seek the cancellation of the collective Certificate of Land Ownership
Award (CLOA) or TCT No. CLOA-1424 issued by the Department of Agrarian
Reform (DAR) to the Agrarian Reform Beneficiaries Association (ARBA) of San
Francisco, Gen. Trias,Cavite, on the ground that TCT No. CLOA-1424 is null and
void for having been issued illegally and unlawfully. Consequently, petitioners pray
for the reinstatement of TCT No. T-402203 in their favor over the property involved
in this case.

The facts[1] of the case are as follows:

Francisco R. Tantoco, Sr., Marta R. Tantoco, Zosimo Tantoco, Margarita

R. Tantoco and Pacita R. Tantoco owned a vast tract of land with a total land area of
106.5128 hectares in San Francisco, General Trias, Cavite. This land was registered
in their names under Transfer Certificate of Title (TCT) No. T-33404 of the Register
of Deeds for the Province of Cavite.
A portion of said property consisting of 9.6455 hectares was declared exempt
from the coverage of Presidential Decree (PD) No. 27, hence the Certificates Land
Transfer (CLTs) that had been previously issued to several people were cancelled in
an Order issued by then Minister of Agrarian Reform Heherson T. Alvarez.

On April 21, 1989, petitioners donated 6.5218 hectares to Caritas de Manila, Inc.,
thereby leaving an estimated area of 100 hectares to their landholding under TCT
No. T-402203, which is now the subject matter of the controversy.

Meanwhile, the Department of Agrarian Reform (DAR) had been considering the
land in question for compulsory acquisition pursuant to Republic Act (R.A.) No.
6657, as amended, otherwise known as the Comprehensive Agrarian Reform Law
(CARL) of 1988.

On May 8, 1989, Francisco R. Tantoco, Sr., as owner and for and in behalf of the
other co-owners, wrote to DAR declaring the productive nature and agricultural
suitability of the land in dispute, and offering the same for acquisition under the
Voluntary Offer to Sell (VOS) scheme of the governments Comprehensive Agrarian
Reform Program (CARP). The land was offered for sale at P500,000 per hectare or
for a sum of P53,256,400.[2] According to petitioners, they never heard anything
from DAR thereafter.
It was only on June 25, 1993 that petitioners received a Notice of Land Valuation
from DAR valuing the land in question, which had now been accurately measured
to have a total land area of 99.3 hectares, in the amount of P4,826,742.35.

On July 8, 1993, petitioners rejected the amount offered by DAR as compensation

for the subject property for being unreasonably below the fair market value of said
lot. Petitioners likewise withdrew their voluntary offer to sell adding that the land is
not suitable for agriculture anymore and that it had been classified in 1981 for use
by the Human Settlements Regulatory Commission (now HLURB) as land for
residential, commercial or industrial purposes. Nevertheless, petitioners expressed
that in the event that the DAR would still insist on acquiring the land, petitioners
will be exercising their right of retention over an area aggregating to 79 hectares,
divided among the co-owners at five (5) hectares each, and three (3) hectares each
to their thirteen (13) children qualified to be beneficiaries under the CARP. [3]

In a letter dated July 16, 1993, after rejecting the aforestated land valuation,
petitioners requested that the offer of P4,826,742.35 for the subject property be
applied instead to their other irrigated landholding consisting of 9.25 hectares
in Brgy. Pasong Camachile, General Trias, Cavite which is covered by TCT No.
33407.[4]

In view of petitioners rejection of the offer, the DAR, through its Regional Director
Percival C. Dalugdug, requested the Land Bank of the Philippines (LBP) on July 22,
1993 to open a Trust Account in favor of petitioners for the amount of FOUR
MILLION EIGHT HUNDRED TWENTY-SIX AND SEVEN HUNDRED
FORTY-TWO AND THIRTY-TWO CENTAVOS (P4,826,742.32) representing the
assessed value of the subject property. [5]
A Certification was subsequently issued by the LBP Bonds Servicing
Department on July 27, 1993 stating that the sum of P4,826,742.35 in cash
(P1,834,162.10) and in bonds (P2,992,580.25) had been reserved or earmarked as
compensation for petitioners 99.3 hectares of land under the CARPs VOS
scheme.[6] The cash portion of P1,834, 162.10 was placed with the Trust
Departmentbut no release of payment in cash or in bonds had been effected.[7]
Thereafter, or on August 30, 1993, the DAR issued a collective Certificate of Land
Ownership Award (CLOA) over the subject property to

private respondent Agrarian Reform Beneficiaries Association (ARBA) of San

Francisco, General Trias, Cavite.[8] Public respondent Register of Deeds
consequently issued TCT No. CLOA-1424 in favor of ARBA and its 53 members,
and accordingly cancelled petitioners TCT No. T-402203.

Upon learning of the cancellation of their TCT on the above property, petitioners
filed an action for Cancellation of TCT No. CLOA-1424, and the reinstatement of
their TCT No. T-402203 before the Adjudication Board for Region IV of the
Department of Agrarian Reform on November 11, 1994.[9]
Docketed as DARAB Case No. IV-Ca-003-94, the petition alleged, inter alia,
that the land in question was covered by an ongoing industrial estate development
site per land use plan of the Municipality of General Trias, Cavite; that the land had
been planted with sugar and declared as such for taxation purposes under Tax
Declaration No. 12502-A; that in an Order dated September 1, 1986, of then Minister
of Agrarian Reform Heherson Alvarez, the same land was declared outside the ambit
of PD No. 27; and that the property is within the portion of Cavite that had been
declared as an industrial zone in the CALABARZON area, hence, the value of real
properties included therein had greatly appreciated.[10]

Petitioners alleged that as a result of the implementation of the CARL in June of

1988, and coupled with the knowledge that the area had been declared part of the
industrial zone of Cavite, persons unknown to petitioners began to claim to be
tenants or farmholderson said land, when in truth and in fact, petitioners never had
any tenant or farmworker at any time on their land, and neither did petitioners give
their consent for anyone to farm the same which is suitable for sugarcane, residential
or industrial purposes and not for rice or corn or other industrial products.[11]

Petitioners added that due to the annoying persistence of DAR officials and
employees who kept on coming back to the residence of Francisco R. Tantoco, Sr.,
in Quezon City, the latter was constrained to offer to sell the subject land under the
VOS scheme for P5 million originally per hectare; that, thereafter, petitioners did
not receive any reply from DAR, hence, they paid the real property tax due on the
land for 1994 on March 28, 1994; that, afterwards, their title to the land under TCT
No. T-402203 dated April 19, 1994 was cancelled without prior notice and in lieu
thereof, TCT No. CLOA-1424 dated August 30, 1993 was issued by the Register of
Deeds in favor of ARBA whose 53 members are not tenants and are unknown to
them and are likewise not qualified or are disqualified to be beneficiaries under
Republic Act (R.A.) No. 6657.[12]

Finally, petitioners claimed that some officials and employees of DAR Region
IV, the MARO of General Trias, Cavite, the Land Bank of the Philippines, and the
Register of Deeds of Cavite, with intent to gain, conspired with other private persons
and several members of ARBA to deprive petitioners of said land or its fair market
value or proceeds thereof, and committed the crime of falsification of public
documents by making it appear that the offer to sell was at P500,000 per hectare
instead of P5,000,000 per hectare; that the value of adjacent lands to petitioners
property were disregarded in determining just compensation; that no notices were
received and the alleged receipts of notice were falsified; that no trust account was
ever opened in favor petitioners and neither payment in cash or bond was ever made
by DAR; that ARBA and its members are not actually tilling the land for productive
farming and have not paid LBP the assigned valuation of the land; and, that the
former are negotiating to sell the land to land developers and industrial companies,
among others, in the hope of making a windfall profit.

Thus, petitioners prayed for the cancellation of the TCT No. CLOA-1424, and that
TCT No-402203 in the name of petitioners should be reinstated. They likewise
prayed for the issuance of a preliminary injunction to restrain ARBA from
negotiating to sell the property in question to any interested parties.

ARBA, in its Answer, denied the allegations contained in the petition, maintaining
that the farmer beneficiaries listed in TCT No. CLOA-1424 are qualified
beneficiaries as provided for in Section 22 of RA No. 6657; that due process was
observed in the documentation and processing of the CARP coverage of subject
parcel of land in accordance with DAR Administrative Orders and that the issuance
of TCT No. CLOA-1424 was in accordance with the provisions of R.A. No. 6657;
and, that the subject property is classified as agricultural land, hence, regardless
of tenurial arrangement and commodity produced, the land is considered to be
within the coverage of the CARL or R.A. No. 6657.
In its Supplemental Answer of December 29, 1994, ARBA further stated that after
the land had been voluntarily offered for sale to DAR the only matter to be
determined is the just compensation to be given to the landowners. Therefore, the
only issue to be resolved is the valuation of the property and not the cancellation of
the CLOA.

In addition, ARBA posited that the injunctive relief prayed for in the petition is
unnecessary because the property is automatically subject to the prohibition against
transfer under R.A. No. 6657 which prohibition is indicated in TCT No. CLOA-
1424.

Incidentally, petitioner Francisco R. Tantoco, Sr., died during the course of

the proceedings on September 2, 1995, and was duly substituted by his surviving
heirs.[13]

On June 17, 1997, the DAR Regional Adjudicator for Region IV, Fe Arche-
Manalang, rendered a Decision, the dispositiveportion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered:

1) Declaring the subject property more particularly described

in Paragraph 5 of the Petition as properly covered under the
VOS (Voluntary Offer to Sell) scheme of the governments
Comprehensive Agrarian Reform Program (CARP) pursuant
to the provisions of RA 6657, as amended, without prejudice
to the exercise by the Petitioners/co-owners of their
respective right of retention upon proper
application therefor;

2) Voiding and annulling TCT No. CLOA-1424 derived from

CLOA (Certificate of Land Ownership Award) No.
00193535 issued and registered on August 27, 1995 and
August 30, 1993, respectively, in the name of the
Respondent ARBA (Agrarian Reform Beneficiaries
Association) and its 53 Farmers-members;

3) Directing the Respondent Register of Deeds of Cavite to:

 a) effect the immediate cancellation of TCT No.
CLOA-1424 mentioned in the preceding paragraph;

b) revalidate and reinstate TCT No. T-402203 in the

joint names of Petitioners/co-owners, subject to its
eventual coverage under CARP after the Landowners
retention areas have been properly
determined/segregated and/or expressly waived;

c) annotate at the back of Petitioners title, their lawyers

lien thereon equivalent to five percent (5%) of the
market value of the subject property as and by way of
an adverse claim.

4) Directing the local MARO (Municipal Agrarian Reform

Officer) of General Trias, Cavite and PARO (Provincial
Agrarian Reform Officer) of Cavite to:

a) undertake another identification and screening

process and reallocate the remaining CARPable areas
to patented qualified ARBs (Agrarian Reform
Beneficiaries) in the area;

b) generate individual CLOAS (Certificate of Land

Ownership Awards) in favor of such identified ARBs.

5) Denying all other claims for lack of basis;

6) Without pronouncement as to cost.

SO ORDERED.[14]

From the aforestated decision, petitioners and respondent ARBA separately

appealed to the DAR Adjudication Board (DARAB) in Quezon City. Said appeals
were consolidated and docketed as DARAB Case No. 6385.

The issues were summarized by DARAB as follows:

1. Whether or not the property co-owned by Petitioners under Title No. T-

33404 located at San Francisco, General Trias, Cavite with an
 original area of 106.5128 hectares was properly subjected to CARP
coverage pursuant to the provisions of RA 6657, as amended,
otherwise known as the Comprehensive Agrarian Reform Law of
1988 (CARL);

2. In the affirmative, whether or not fatal infirmities or irregularities

were committed in the valuation of the subject property and its
subsequent titling and award in favor of Respondent ARBA;

3. Whether or not the Petitioners are entitled to the ancillary remedy

of injunction and other specific reliefs sought viz: cancellation of
TCT No. CLOA-1424 registered in the name of Respondent ARBA
on August 30, 1993 and reinstatement of TCT No. 402203 in favor
of Petitioners; [and,]

4. Whether or not the Petitioners and private Respondent ARBA are

entitled to their separate claims for damages and attorneys fees.[15]
In resolving the controversy, DARAB condensed the issues posed by the respective
parties by addressing the question: Can a Collective Certificate of Land Ownership
Award validly issued pursuant to a Voluntary Offer to Sell scheme acquisition of the
Comprehensive Agrarian Reform Program (CARP) be cancelled on the petition of
the former owner on the mere suspicion that some of the names listed therein are
not really qualified farmer-beneficiaries?[16]

On July 1, 1998, the DARAB rendered its ruling modifying the appealed
decision of the Regional Adjudicator, to wit:

WHEREFORE, premises considered, judgment is hereby rendered:

1) Affirming paragraphs 1, 5, and 6 (Nos. 1, 5 and 6) of

the dispositive portion of the decision dated June 17, 1997 of the
Honorable Adjudicator a quo but;

2) Reversing paragraph Nos. 2, 3 and 4 thereof;

3) Affirming the validity, legality and efficacy of TCT- CLOA No.

1424 issued to Respondent Agrarian Reform Beneficiaries
Association of San Francisco, Gen. Trias, Cavite.

SO ORDERED.[17]
Petitioners filed a Motion for Reconsideration and a Supplemental Motion for
Reconsideration which was denied by DARAB for lack of merit in a Resolution,
dated September 6, 1999, as no new matters were adduced by the movants which
will warrant a reversal of the Boards decision.[18]

Claiming that respondent DARAB acted with grave abuse of discretion in rendering
the aforementioned decision and resolution, petitioners appealed the same to the
Court of Appeals.

On December 15, 2000, the court a quo rendered its assailed decision,
the dispositive portion of which reads:

WHEREFORE, the instant petition is hereby DENIED and is

accordingly DISMISSED for lack of merit.
SO ORDERED.[19]

Petitioners Motion for Reconsideration was likewise denied by the Court of Appeals
in a resolution dated May 25, 2001.[20]

Hence, this petition assigning the following errors:

I
RESPONDENT COURT OF APPEALS ACTED WITHOUT OR
IN EXCESS OF ITS JURISDICTION AND WITH GRAVE ABUSE OF
DISCRETION WHEN IT RENDERED THE QUESTIONED DECISION
DATED DECEMBER 15, 2000, IN COMPLETE DISREGARD OF
LAW AND UNDISPUTED FINDINGS OF FACTS BY THE
REGIONAL ADJUDICATOR IN HER DECISION DATED JUNE 17,
1997.

II
RESPONDENT COURT OF APPEALS ACTED WITHOUT OR
IN EXCESS OF ITS JURISDICTION AND WITH GRAVE ABUSE OF
DISCRETION WHEN IT REVERSED THE DECISION OF THE
REGIONAL ADJUDICATOR A QUO DECLARING ALL
PROCEEDINGS BY DAR VOID FOR FAILURE TO OBSERVE DUE
PROCESS CONSIDERING THAT RESPONDENTS BLATANTLY
 DISREGARDED THE PROCEDURE FOR THE ACQUISITION OF
PRIVATE LANDS UNDER R.A. 6657, MORE PARTICULARLY, IN
GIVING DUE NOTICE TO THE PETITONERS AND TO PROPERLY
IDENTIFY THE SPECIFIC AREAS FOR EACH LISTED FARMERS-
BENEFICIARIES OF RESPONDENT ARBA.

III
RESPONDENT COURT OF APPEALS ACTED WITHOUT OR
IN EXCESS OF ITS JURISDICTION AND WITH GRAVE ABUSE OF
DISCRETION WHEN IT FAILED TO RECOGNIZE THAT
PETITIONERS WERE BRAZENLY AND ILLEGALLY DEPRIVED
OF THEIR PROPERTY WITHOUT JUST COMPENSATION,
CONSIDERING THAT PETITIONERS WERE NOT PAID JUST
COMPENSATION BEFORE THEY WERE UNCEREMONIOUSLY
STRIPPED OF THEIR LANDHOLDING THROUGH THE DIRECT
ISSUANCE OF TCT NO. CLOA -1424 TO RESPONDENT ARBA IN
GROSS VIOLATION OF R.A. 6657.
IV
RESPONDENT COURT OF APPEALS ACTED WITHOUT OR
IN EXCESS OF ITS JURISDICTION AND WITH GRAVE ABUSE OF
DISCRETION WHEN IT RENDERED ITS QUESTIONED
RESOLUTION DATED MAY 25, 2001, DENYING THE MOTION
FOR RECONSIDERATION DESPITE THE UNDISPUTED FACTUAL
FINDINGS OF FACTS ON RECORD AND OF JURISPRUDENCE
LAID DOWN BY THIS HONORABLE SUPREME COURT IN G.R.
NO. 127876 ENTITLED ROXAS & CO., INC. VS. HON. COURT OF
APPEALS, ET AL. PROMULGATED ON DECEMBER 17, 1999.[21]

In sum, the principal issue to be resolved is whether or not the CLOA that had been
issued by the DAR to ARBA may be cancelled based on the following grounds:

1. The land in question is exempt from the coverage of CARP by

reason of its inclusion in the industrial zone of CALABARZON;

2. The DAR failed to conform strictly to the procedure for the

acquisition of private agricultural lands laid down in RA 6657,
hence, violating due process and consequently denying petitioners
just compensation;
 3. ARBA and all its members have not paid the amortizations for the
landholdings awarded to them as required under RA 6657 and DAR
Administrative Order No. 6, Series of 1993;

4. All 53 members of ARBA manifested their intent to negotiate for

payment of disturbance compensation in exchange for the
voluntary surrender of their rights over the awarded property which
is a prohibited transaction under Section 73 of R.A. No. 6657, as
amended, and in gross violation of DAR Administrative Order No.
2, Series of 1994; and,

5. The ARBs did not cultivate the awarded property to make it

productive in violation of Section 22[22] of the Act.

At the outset, petitioners claim that the subject property had been classified to
be within the industrial zone of General Trias, Cavite even before the effectivity of
R.A. No. 6657 in 1988, therefore, it should be outside the coverage of CARP.[23]

On this, the Court accords respect to the findings of the Regional Adjudicator
who has the primary jurisdiction and competence to establish the agricultural
character of the land in question which is properly within the coverage of CARP,
thus:

Even the petitioners own evidence serves to buttress and affirm the
inherent nature and character of the subject property as an agricultural
land. The same ha[d] been previously devoted to sugarcane production but
at the time it was considered for acquisition by the DAR under the VOS
scheme, it was found to be planted to various crops such as rice, corn
and camote. Petitioner Francisco R. Tantoco, Sr.himself in his letter of
intent dated May 8, 1989 declared that the land offered for acquisition
under [the] VOS was productive and suitable [for] agricultural production.
It seems rather peculiar that after all these years when the subject property
had already been awarded and distributed to its intended beneficiaries, it
is only now that petitioners are belatedly heard to sing a different tune by
claiming that the same had always been industrial. Petitioners apparently
relied on the flip-flopping certifications of one Engr. Alfredo M. Tan II of
the HLURB Region IV who could not seem to make up his mind as to the
exact zoning location of the subject property. On July 10, 1990, he
certified that the subject property is within the Agricultural Zone based on
the Municipalitys approved Zoning Ordinance under HSRC Resolution
No. 42-A-3 dated 09 February 1981. After the lapse of several years or
on January 10, 1995 to be precise, in a dramatic turn-around, he suddenly
became vague and tentative. He then proceeded to certify that the same
property appears to be within the Industrial Area based on HSRC (now
HLURB) Approved Land Use Map of General Trias per HSRC
Resolution No. R-42-A-3 dated February 11, 1981.(Vide, Exhibit R). A
more classic display of bureaucratic ineptitude and incompetence is hard
to find and simply boggles the mind. Thus, no weight of credence at all
can be attributed to either certification due to the vacillating tenor used
which is not even worth the paper it is written on. Petitioners heavy
reliance on such an irresolute document is rather pathetic and certainly
misplaced. Resolution Nos. 105 and 125 enacted by the
local Sangguniang Panlalawigan on March 25, 1988 and September 8,
1988, respectively are similarly rejected since there is no showing that the
same were duly approved by the HLURB (Housing and Land Use
Regulatory Board) or its preceding competent authorities prior to June
15, 1988 which is the date of effectivity of the CARL and cut-off period for
automatic reclassifications or rezoning of agricultural lands that no
longer require any DAR conversion clearance or authority. (Emphasis
supplied) Still, owners of such agricultural lands which have been
previously reclassified or rezoned to non-agricultural uses
by LGUs (Local Government Units) and approved by the HLURB before
June 15, 1988 are nonetheless required to secure exemption clearances
from the DAR based on Section 3 (c) of RA 6657, as amended, and DOJ
(Department of Justice) Opinion No. 44, series of 1990 (Vide, Dar
Administrative Order No. 12, series of 1994 in relation to Administrative
Order No. 6, series of 1994). As stated in the aforecited DOJ Opinion, the
legal requirement for the DAR clearance in cases of land use conversion
from agricultural to non-agricultural uses applies only to conversions
made on or after June 15, 1988, the date of the agrarian reform
laws effectivity. Prior thereto, the powers of the HLURB and the
Department of Finance to [re-categorize] lands for land use and taxation
purposes, respectively, were exclusive. It is noted that the definition of
agricultural land in RA 6657 excludes lands which have previously been
classified as mineral, forest, residential, commercial and industrial areas.
Viewed against this context, the subject property cannot be considered
[as] falling within the category of reclassified lands as envisioned in
Section 3(c) of RA 6657, as amended, and so specified in the
aforementioned DOJ Opinion. (Emphasis supplied) Neither can
petitioners hope [to] find any relief from the Order of then
Minister Heherson T. Alvarez dated September 1, 1986 since it merely
 exempts the subject property from OLT (Operation land Transfer)
coverage pursuant to PD 27 which embraces tenanted rice and corn
lands only. If at all, the said Order even serves to bolster the agricultural
nature of the subject property because of its long history as sugar land.
Sugarcane production is certainly an agricultural activity by any norm or
standard. The law defines the term as referring to the cultivation of the
soil, planting of crops, growing of fruit trees including the harvesting of
such farm products and other farm activities and practices performed by a
farmer in conjunction with such farming operations done by persons
whether natural or juridical. The scope and coverage of the CARL is so
broad and all-embracing as to include all lands devoted to or suitable for
agriculture regardless of tenurial arrangement and commodity
produced.[24]

xxx

The inarguable [sic] fact remains that independent of such choice

by the petitioners to voluntarily offer the subject property, the same would
still be under the CARL which allows landowners a retention limit of only
five (5) hectares and an additional three (3) hectares for each qualified
child who at the time of the effectivity of the law is: 1) at least 15 years of
age; and, 2) actually tilling the land or directly managing the farm.[25]

As pointed out, the property in question can be properly subjected to CARP.

It was not re-classified nor converted from agricultural to non-agricultural use with
the approval of the HLURB prior to the effectivity of the Comprehensive Agrarian
Reform Law (CARL) on June 15, 1988.

Having established that the land in question can be properly subjected to

CARP, the next question is whether the DAR officials, in acquiring said property,
performed their functions properly and strictly in accordance with the law.

A perusal of the records reveal that the DAR officials or its employees failed
to comply strictly with the guidelines and operating procedures provided by law in
acquiring the property subject to CARP.

Firstly, there were certain inconsistencies in the manner of selection by the

DAR of the CARP beneficiaries who are members of ARBA. As found by the
Regional Adjudicator:
As to the screening and identification of qualified potential CARP
[b]eneficiaries, DAR field personnel are presumed to be properly guided
by existing law and implementing rules and regulations (Vide, Section 22
of R.A. 6657, as amended; DAR Administrative Order No. 10, series of
1990). Redistribution of CARPable lands to the intended
[b]eneficiaries may be done collectively or individually, whatever is
economically feasible. In the instant case, however, all the
42 ARBs (Agrarian Reform Beneficiaries)/Applicants opted for
individual ownership and the corresponding VOCF (Voluntary Offer
Claim Folder) apparently processed as such (Vide, Exhibits 26 UU to 26
DDD). But surprisingly, in some inexplicable manner, the assailed CLOA
(Certificate of Land Ownership Award) that was finally generated turned
out to be collective in favor of the [r]espondent ARBA which failed to
show notwithstanding the assurances of its counsel (Vide, TSN, Hearing
of February 23, 1995, pp. 18-19) that it is duly registered with the
appropriate government and non-government agencies. Moreover, the
collective title suddenly sprouted 53 names when only 43 duly applied as
[p]otential CARP [b]eneficiaries (Vide, CARP Form No. 3; Exhibits 26
EEE to 26UUU; Exhibits V-57 to V-99. What is even more mysterious is
that among the 53 ARBs listed in the aforementioned CLOA,
only 29 accomplished the required application forms and 30 signed the
corresponding APFUS. There is thus no basis for the MARO Certification
of August 19, 1993 declaring all the 53 named FBs therein as having met
all the qualifications for Potential Beneficiaries under Section 22 of RA
6657 (Vide, Exhibits 27 to 27-F). Such unfounded action by the said
official can only be described as whimsical and capricious. A re-screening
is therefore imperative in order to prevent a grave miscarriage of justice
especially on the part of those who applied and were excluded in the final
award for no apparent reason at all. Upon the other hand, the MARO
Claim Folder Transmittal Memo to the PARO dated May 15, 1991 carried
a total of 42 signatories in the corresponding Application to Purchase and
Farmers Undertaking (Vide, CARP Form No. 4, Exhibits 26-UU to 26-
DD, Exhibits V-47 to V-56 inclusive). When called to the witness stand,
the local MARO and PARO could not adequately explain or justify the
existence of such discrepancies (Vide, TSN Hearing of February 23, 1995
pp. 62-64; 89-92) which can only give rise to the speculation that
verification and validation was done arbitrarily or in a haphazard manner.
In thus committing a substantial deviation from the procedural mandate of
the law Respondent DAR official in effect tolerated the insidious
actuations of his subordinates who acted with grave abuse of discretion
 amounting to lack of jurisdiction. The resultant CLOA therefore and its
derivative TCT is fatally flawed for having been issued without
jurisdiction. The same does not even reflect the fractional share of each
ARB as required in DAR Administrative Order No. 3, series of 1993.[26]

Secondly, the TCT No. CLOA-1424 was directly issued by the DAR in the name of
ARBA without: (a) payment of just compensation; and, (b) initial transfer of title to
the land in the name of the Republic of the Philippines, in contravention to Section
16(e) of R.A. No. 6657 which states:
(e) Upon receipt by the landowner of the corresponding payment
or, in case of rejection or no response from the landowner, upon the
deposit with an accessible bank designated by the DAR of the cash or in
LBP bonds in accordance with this Act, the DAR shall take immediate
possession of the land and shall request the proper Register of Deeds to
issue a Transfer Certificate of Title (TCT) in the name of the Republic of
the Philippines. (Emphasis supplied) The DAR shall thereafter proceed
with the redistribution of the land to the qualified beneficiaries.

As already mentioned, the DAR immediately issued the CLOA to ARBA without
first registering the property with the Registry of Deeds in favor of the Philippine
Government. This administrative irregularity was made even worse by the fact that
petitioners were not given just compensation which, under the law, is a prerequisite
before the property can be taken away from its owners.
The case of Roxas & Co., Inc. v. Court of Appeals,[27] illustrates that a transfer
of ownership over a property within the coverage of CARP can only be effected
when just compensation has been given to the owners, thus:

Respondent DAR issued Certificates of Land Ownership Award

(CLOA) to farmer beneficiaries over portions of petitioners land without
just compensation to petitioner. A Certificate of Land Ownership Award
(CLOA) is evidence of ownership of land by a beneficiary under R.A.
6657, the Comprehensive Agrarian Law of 1988. Before this may be
awarded to a farmer beneficiary, the land must first be acquired by the
State from the landowner and ownership transferred to the former. The
transfer of possession and ownership of the land to the government are
conditioned upon the receipt by the landowner of the corresponding
payment or deposit by DAR of the compensation with an accessible bank.
Until then, title remains with the landowner. There was no receipt by
 petitioner of any compensation for any of the lands acquired by the
government.

In the instant case, the Notice of Land Valuation that was sent by the DAR to
petitioners on June 14, 1993, offered to compensate petitioners for their property in
the total amount of P4,826,742.35 based on the valuation made by the LBP. Said
amount was rejected by petitioners, prompting the DAR to open a Trust Account in
the aforestated amount with the LBP in favor of petitioners. Pursuant to this, the LBP
certified that the amount of P4,826,742.35 had been reserved/earmarked to cover the
value of the subject property. This, however, did not operate to effect payment for
petitioners property in question as the law requires payment of just compensation in
cash or Land Bank of the Philippines (LBP) bonds, not by trust account.[28]

This is in line with the pronouncement made by this Court in the case of Land
Bank of the Philippines v. Court of Appeals,[29]wherein it upheld the decision of the
Court of Appeals in ordering the LBP to immediately deposit not merely earmark,
reserve or deposit in trust with an accessible bank designated by respondent DAR in
the names of the following petitioners the following amounts in cash and in
government financial instruments.[30]

A similar ruling was articulated by the Court in the aforementioned case of Roxas v.
Court of Appeals,[31] to wit:
The kind of compensation to be paid the landowner is also specific. The
law provides that the deposit must be made only in cash or LBP bonds.
Respondent DARs opening of trust account deposits in petitioners name
with the Land Bank of the Philippines does not constitute payment under
the law. Trust account deposits are not cash or LBP bonds. The
replacement of the trust account with cash or LBP bonds did not ipso
facto cure the lack of compensation; for essentially, the determination of
this compensation was marred by lack of due process. In fact, in the entire
acquisition proceedings, respondent DAR disregarded the basic
requirement of administrative due process. Under these circumstances, the
issuance of the CLOAs to farmer beneficiaries necessitated immediate
judicial action on the part of the petitioner.

In the implementation of the CARP, the Special Agrarian Courts which are
the Regional Trial Courts, are given original and exclusive jurisdiction over two
categories of cases, to wit: (1) all petitions for the determination of just compensation
to landowners; and, (2) the prosecution of all criminal offenses under R.A. No.
6657.[32] What agrarian adjudicators are empowered to do is only to determine in a
preliminary manner the reasonable compensation to be paid to the landowners,
leaving to the courts the ultimate power to decide the question.[33]

The New Rules of Procedure of the DARAB, which was adopted on May 30,
1994, provides that in the event a landowner is not satisfied with the decision of an
agrarian adjudicator, the landowner can bring the matter directly to the Regional
Trial Court sitting as a Special Agrarian Court. Thus, Rule XIII, Section 11 of the
aforementioned Rules states:

Section 11. Land Valuation and Preliminary Determination and

Payment of Just Compensation. -- The decision of the Adjudicator on land
valuation and preliminary determination and payment of just
compensation shall not be appealable to the Board but shall be brought
directly to the Regional Trial Courts designated as Special Agrarian
Courts within fifteen (15) days from receipt of the notice thereof. Any
party shall be entitled to only one motion for reconsideration.

The procedure for the determination of the compensation for the landowners
under the land reform program was likewise outlined by this Court in Republic v.
Court of Appeals:[34]

Thus, under the law, the Land Bank of the Philippines is charged
with the initial responsibility of determining the value of the lands placed
under land reform and the compensation to be paid for their
taking.[35] Through notice sent to the landowner pursuant to [Section]
16(a) of R.A. No. 6657, the DAR makes an offer. In case the landowner
rejects the offer, a summary administrative proceeding is held[36]and
afterward the provincial (PARAD), the regional (RARAD), or the central
(DARAB) adjudicator, as the case may be, depending on the value of the
land, fixes the price to be paid for the land. If the landowner does not agree
to the price fixed, he may bring the matter to the RTC acting as [a] Special
Agrarian Court. This in essence is the procedure for the determination of
compensation cases under R.A. No. 6657.
 Also, Section 17 of R.A. No. 6657 provides guidance on land valuation, to
wit:
Section 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 assessments made by the government
assessors shall be considered. The social and economic benefits
contributed by the farmers and the farmworkers 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.

Simply put, just compensation is the fair market value or the price which a
buyer will pay without coercion and a seller will accept without
compulsion.[37] Evidently, the law recognizes that the lands exact value, or the just
compensation to be given the landowner, cannot just be assumed; it must be
determined with certainty before the land titles are transferred.[38] Expropriation of
landholdings covered by R.A. No. 6657 take place, not on the effectivity of the Act
on June 15, 1988, but on the payment of just compensation.

The determination of just compensation under Section 16(d)[39] of R.A. 6657

or the CARP Law, is not final or conclusive -- unless both the landowner and the
tenant-farmer accept the valuation of the property by the DAR, and the parties may
bring the dispute to court in order to determine the appropriate amount of
compensation, a task unmistakably within the prerogative of the court.[40]

Hence, petitioners recourse in this case is to bring the matter to the Regional
Trial Court acting as a Special Agrarian Court for the adjudication of just
compensation. The price or value of the land and its character at the time it was taken
by the Government will be the criteria for determining just compensation.[41]

As to the other grounds posited by petitioners for the cancellation of the

CLOA issued to ARBA, Section IV-B of DAR Administrative Order No. 2, Series
of 1994 enumerates some of the grounds for the cancellation of registered CLOAs,
namely:
1) Misuse or diversion of financial support services extended to
the ARBs (Section 37 of R.A. No. 6657);
2) Misuse of the land (Section 22 of R.A. No. 6657);

3) Material misrepresentation of the ARBs basic qualification as provided

under Section 22 of R.A. No. 6657, P.D. No. 27, and other agrarian
laws;

4) Illegal conversion by the ARB (Section 73, Paragraph C and E of

R.A. No. 6657);

5) Sale, transfer, lease or other form of conveyance by a beneficiary of the

right to use or any other usufructuary right over the land acquired
by virtue of being a beneficiary in order to circumvent the
provisions of Section 73 of R.A. No. 6657, P.D. No. 27, and other
agrarian laws. However, if the land has been acquired under P.D.
No.27/E.O. No. 228, ownership may be transferred after full
payment of amortization by the beneficiary (Section 6 of E.O. No.
228);

6) Default in the obligation to pay an aggregate of three (3) consecutive

amortization in case of voluntary land transfer/direct payment
scheme, except in cases of fortuitous events and
force majeure (Section 26 of R.A. No. 6657);

7) Failure of the ARBs to pay at least three (3) annual amortization to the
LBP, except in cases of fortuitous events and force majeure;
(Section 26 of R.A. No. 6657);

8) Neglect or abandonment of the awarded land continuously for a period

of two (2) calendar years as determined by the Secretary or his
authorized representatives (Section 22 of R.A. No. 6657);

9) The land is found to be exempt/excluded from P.D. No. 27/E.O. No.

228 or CARP coverage or to be part of the landowners retained area
as determined by the Secretary or his authorized representative;
and,

10) Other grounds that will circumvent laws related to the implementation
of agrarian reform program.
 Petitioners ascribe the specific prohibited acts stated in Nos. 5, 7 and 8 of the
above Administrative Order to ARBA and its member-beneficiaries which the
Regional Adjudicator confirmed, thus:

What is worse is that except for certain sporadic plantings, the land has
been generally left to lie fallow and uncultivated even with the award of
the CLOA in Respondent ARBAs favor as revealed by the ocular
inspection conducted on March 23, 1993 (Vide, TSN of same date). Such
neglect can only toll the death knell for erring ARBs who also have been
remiss in the payment of the annual amortization due which should have
commenced within one year from the date of CLOA registration
on August 30, 1993 (Vide, DAR Administrative Order NO. 6, series of
1993). In an undated instrument captioned as Authorization entered into
sometime in 1993 (Vide, Annex A, Petitioners Ex-ParteManifestation, etc.
dated June 13, 1997, all the 53 FB-awardees manifested their intent to
negotiate for payment of disturbance compensation in exchange for the
voluntary surrender of their rights[42] which is a prohibited transaction
under Section 73 of RA 6657, as amended, and DAR Administrative
Order No. 02, series of 1994. Not only that. Strangely enough, in the
protracted hearings that were conducted in this case, not one CLOA
Beneficiary/ARBA member was presented to at least defend himself
orally or by means of countervailing documentary evidence.[43]

Based on the above, it is clear that the ARBA and its members have committed acts
to justify the revocation of the collective CLOA that had been issued by the DAR to
the latter. The doctrine of primary jurisdiction, however, does not warrant a court to
arrogate unto itself authority to resolve a controversy the jurisdiction over which is
initially lodged with an administrative body of special competence.[44]

The failure of the DAR to comply with the requisites prescribed by law in the
acquisition proceedings does not give this Court the power to nullify the CLOA that
had been issued to ARBA. To assume the power is to short-circuit the administrative
process, which has yet to run its regular course. DAR must be given a chance to
correct its administrative and procedural lapses in the acquisition proceedings.[45]

It is also worth noting at this juncture that the resolution of this case by the
Department of Agrarian Reform is to the best advantage of petitioners since it is in
a better position to resolve agrarian disputes, being the administrative agency
possessing the necessary expertise on the matter and vested with primary jurisdiction
to determine and adjudicate agrarian reform controversies. Further, the proceedings
therein are summary and the department is not bound by technical rules of procedure
and evidence, to the end that agrarian reform disputes and other issues will be
adjudicated in a just, expeditious and inexpensive action or proceeding.[46]

WHEREFORE, in view of the foregoing, the petition is GRANTED and the

Decision dated December 15, 2000 and the Resolution dated May 25, 2001 of the
Court of Appeals in CA-G.R. SP No. 54970 are SET ASIDE. The case is
hereby REMANDED to respondent Department of Agrarian Reform Adjudication
Board (DARAB) for proper acquisition proceedings in accordance with the
applicable administrative procedure.

No pronouncement as to costs.

SO ORDERED.

SECOND DIVISION

LAND BANK OF G.R. Nos. 180772

THE PHILIPPINES [LBP],
and 180776
Petitioner,

Present:
- versus -
CARPIO, J.,
Chairperson,
CORONA,*

DEL CASTILLO,
DOMINGO AND MAMERTO
SORIANO, ABAD, and

Respondents.
 PEREZ, JJ.

Promulgated:

May 6, 2010

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

PEREZ, J.:

For consideration is a Petition for Review on Certiorari under Rule 45 of the Rules
of Court filed by the Land Bank of the Philippines (LBP) seeking the annulment of
the Decision[1] dated 9 October 2007 and the Resolution[2] dated 12 December
2007issued by the Court of Appeals in CA-G.R. SP Nos. 89005 and 89288.

The controversy is hinged on the determination of just compensation for land

covered by the Comprehensive Agrarian Reform Program (CARP).
First, the antecedents.

Domingo and Mamerto Soriano (respondents) are the registered owners of several
parcels of rice land situated in Oas, Albay. Out of the 18.9163 hectares of
land[3] owned by the respondents, 18.2820 hectares were placed under the
Operations Land Transfer and the CARP pursuant to Presidential Decree No.
27[4] and Republic Act No. 6657, otherwise known as the Comprehensive Agrarian
Reform Law.[5]

The LBP[6] pegged the value of 18.0491 hectares of land

[7]
at P482,363.95 (P133,751.65 as land value plus P348,612.30 incremental
interest), while the remaining 0.2329 hectare was computed at P8,238.94.[8] Not
satisfied with the valuation, respondents, on 23 November 2000, instituted a
Complaint[9] for judicial determination of just compensation with
the Regional TrialCourt of Legazpi City,[10] sitting as a Special Agrarian Court
(SAC). Respondents alleged that they are entitled to an amount of not less
than P4,500,000.00 as just compensation.[11]

On 21 February 2005, the SAC rendered a judgment, ordering LBP to pay the
respondents P894,584.94. The dispositive portion reads:

ACCORDINGLY, the just compensation of the 18.0491 hectares of

irrigated riceland is P133,751.79, plus increment of 6% per annum
computed annually beginning October 21, 1972, until the value is fully
paid, and of the 0.2329 hectare of rain fed riceland is P8,238.94 plus 12%
interest per annum, beginning August 17, 1998, until the value is fully
paid or a total of P894,584.94 as of this date. Land Bank is ordered to pay
the landowners Domingo Soriano and Mamerto Soriano said
amount/land value in accordance with law.[12]

The SAC applied the formula prescribed under Executive Order No. 228 in
determining the valuation of the property, i.e., Land value = Average Gross
Production x 2.5 x Government Support Price. It likewise granted compounded
interest pursuant to Department of Agrarian Reform (DAR) Administrative Order
No. 13, series of 1994, as amended by DAR Administrative Order No. 2, series of
2004.

Both parties disagreed with the trial courts valuation, prompting them to file
their respective appeals with the Court of Appeals. The appellate court, however,
affirmed the judgment of the trial court. It also upheld the award of compounded
interest, thus:

In the case at bar, the subject lands were taken under PD 27 and
were covered by Operation Land Transfer, making the aforecited
Administrative Order applicable. Hence, the Petitioners SORIANOs are
entitled to the 6% compounded interest per annum from the date of
taking on 21 October 1972 until full payment of the just compensation.[13]

LBP moved for reconsideration but it was denied by the Court of Appeals
on 12 December 2007.

LBP filed the instant petition seeking to nullify the appellate courts decision
and resolution, particularly the amount awarded to respondents as just
compensation.

Basic is the tenet that since respondents were deprived of their land, they
are entitled to just compensation. Under Executive Order No. 228, the formula
used to compute the land value is:

Land value = Average Gross Production (AGP) x 2.5

x Government Support Price (GSP)

 With the passage of Republic Act (R.A.) No. 6657 or the CARL in 1988, new
guidelines were set for the determination of just compensation. In particular,
Section 17 provides, thus:

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 farmworkers 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.

Consequently, two divergent formulae arose which prompted the Court to

come up with a categorical pronouncement that, if just compensation is not settled
prior to the passage of Republic Act No. 6657, it should be computed in accordance
with the said law, although the property was acquired under Presidential Decree
No. 27. The fixing of just compensation should therefore be based on the
parameters set out in Republic Act No. 6657, with Presidential Decree No. 27 and
Executive Order No. 228 having only suppletory effect.[14]

In the instant case, while the subject lands were acquired under Presidential
Decree No. 27, the complaint for just compensation was only lodged before the
court on 23 November 2000 or long after the passage of Republic Act No. 6657 in
1988.Therefore, Section 17 of Republic Act No. 6657 should be the principal basis
of the computation for just compensation. As a matter of fact, the factors
enumerated therein had already been translated into a basic formula by the DAR
pursuant to its rule-making power under Section 49 of Republic Act No. 6657. The
formula outlined in DAR Administrative Order No. 5, series of 1998 should be
applied in computing just compensation, thus:

LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)

Where: LV = Land Value

CNI = Capitalized Net Income

CS = Comparable Sales

MV = Market Value per Tax Declaration[15]

As much as this Court would like to determine the proper valuation based on
the formula cited above, the records of this case are bereft of adequate
data. To write finis to this case, we uphold the amount derived from the old
formula. However, since the application of the new formula is a matter of law and
thus, should be made applicable, the parties are not precluded from asking for any
additional amount as may be warranted by the new formula.

On to the more pertinent issue. LBP assails the imposition of 6% interest rate
on the 18.0491 hectares of lot valued at P133,751.65. It avers that the incremental
interest due to the respondents should be computed from the date of taking on 21
October 1972, not up to full payment of just compensation but up to the time LBP
approved the payment of their just compensation claim and a corresponding
deposit of the compensation proceeds was made by the bank. LBP relies on the
provisions of DAR Administrative Order No. 13, series of 1994, as amended, which
substantially provides that the grant of 6% yearly interest compounded annually
shall be reckoned from 21 October 1972 up to the time of actual payment but not
later than December 2006.LBP stresses that under said Administrative Order, time
of actual payment is defined as the date when LBP approves the payment of the
land transfer claim and deposits the compensation proceeds in the name of the
landowner in cash and in bonds. In sum, LBP posits that the appellate court
departed from the express provision of DAR Administrative Order No. 13, as
amended, by imposing an interest to be reckoned from the time of taking up to the
actual payment of just compensation.[16]

Respondents counter that the award of interest until full payment of just
compensation was correctly adhered to by the lower courts in line with the Courts
ruling in Land Bank of the Philippines v. Imperial,[17] which found it inequitable to
determine just compensation based solely on the formula provided by DAR
Administrative Order No. 13, as amended. According to respondents, the award of
interest until full payment of just compensation is to ensure prompt
payment. Moreover, respondents claim that the date LBP approves the payment of
the land transfer claim and deposits the proceeds in the name of the landowner is
not tantamount to actual payment because on said date, the release of the amount
is conditioned on certain requirements.[18]
This issue has already been raised before the Court of Appeals by LBP, first,
in its petition for review and, second, in its motion for reconsideration. The Court
of Appeals, however, neglected to give a definitive ruling on the issue of
computation of interest and merely echoed the trial courts ruling that respondents
are entitled to the 6% compounded interest per annum from the date of taking on
21 October 1972 until full payment of just compensation.

At any rate, we cannot subscribe to the arguments of LBP.

Section 4, Article XIII of the 1987 Constitution, mandates that the

redistribution of agricultural lands shall be subject to the payment of just
compensation. The deliberations of the 1986 Constitutional Commission on this
subject reveal that just compensation should not do violence to the Bill of Rights,
but should also not make an insurmountable obstacle to a successful agrarian
reform program. Hence, the landowner's right to just compensation should be
balanced with agrarian reform.[19]
Administrative Order No. 13, as amended, was issued to compensate those who
were effectively deprived of their lands by expropriation. LBP relies on said
Administrative Order to justify its own computation of interest. A literal reading of
this Administrative Order seems to favor LBPs interpretation with respect to the
period covered by the interest rate. We quote the relevant portion of the
Administrative Order:

The grant of six percent (6%) yearly interest compounded annually

shall be reckoned as follows:

3.1 Tenanted as of 21 October 1972 and covered under OLT

- From 21 October 1972 up to the time of actual payment but not

later than December 2006

3.2 Tenanted after 21 October 1972 and covered under OLT

-From the date when the land was actually tenanted (by virtue of
Regional Order of Placement issued prior to August 18, 1987) up
to the time of actual payment but not later than December 2006

Time of actual payment is the date when the Land Bank of the Philippines
(LBP) approves payment of the land transfer claim and deposits the
compensation proceeds in the name of the landowner (LO) in cash and
in bonds. The release of payment can be claimed by the landowner upon
compliance with the documentary requirements for release of
payment.[20]
However, as embodied in its Prefatory Statement, the intent of the Administrative
Order was precisely to address a situation where a number of landholdings remain
unpaid in view of the non-acceptance by the landowners of the compensation due
to low valuation.Had the landowner been paid from the time of taking his land and
the money deposited in a bank, the money would have earned the same interest
rate compounded annually as authorized under banking laws, rules and
regulations.[21] 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
payment within a reasonable time from its taking. Without prompt payment,
compensation cannot be considered "just" inasmuch as the property owner is
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.[22] To condition the payment upon LBPs approval
and its release upon compliance with some documentary requirements would
render nugatory the very essence of prompt payment.Therefore, to expedite the
payment of just compensation, it is logical to conclude that the 6% interest rate be
imposed from the time of taking up to the time of full payment of just
compensation.

Certainly, the trend of recent rulings bolsters this interpretation. In Forform

Development Corporation v. Philippine National Railways,[23] the Philippine
National Railways was directed to file the appropriate expropriation action over the
land in question, so that just compensation due to its owner may be determined in
accordance with the Rules of Court, with interest at the legal rate of 6% per annum
from the time of taking until full payment is made. The Court in Manila
International Airport Authority v. Rodriguez[24]ordered just compensation for the
portion of respondents lot actually occupied by the runway, with interest thereon
at the legal rate of 6% per annum from the time of taking until full payment is made.

LBP also proffers that just compensation pertaining to the 0.2329 hectare
valued at P8,238.94 with no pronouncement as to interest per the Department of
Agrarian Reform Adjudication Board (DARAB) decision has already attained finality,
hence, it cannot be modified.[25]

Anent the DARAB decision relating to the 0.2329 hectare, suffice it to say
that the determination of just compensation is a judicial function.[26] The DAR's land
valuation is only preliminary and is not, by any means, final and conclusive upon
the landowner or any other interested party. In the exercise of their functions, the
courts still have the final say on what the amount of just compensation will
be.[27] Hence, we sustain the computation reached by the trial court.

WHEREFORE, the petition is DENIED. The Decision dated 9 October 2007 and
the Resolution dated 12 December 2007 of the Court of Appeals in CA-G.R. SP Nos.
89005 and 89288 are hereby AFFIRMED without prejudice to the right of the
parties for additional claims that may arise in the application of DAR Administrative
Order No. 5, series of 1998 in relation to R.A. No. 6657.
SO ORDERED.

THIRD DIVISION

LAND BANK OF THE G.R. No. 167809

PHILIPPINES,
Petitioner, Present:
YNARES-SANTIAGO, J.,
- versus - Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
JOSEFINA R. DUMLAO, NACHURA, and
A. FLORENTINO R. DUMLAO, REYES, JJ.
JR., STELLA DUMLAO-ATIENZA,
and NESTOR R. DUMLAO,
represented by Attorney-In-Fact, Promulgated:
A. Florentino R. Dumlao, Jr.,
 Respondents. November 27, 2008

x--------------------------------------------------x

DECISION

REYES, R.T., J.:

IN determining just compensation for lands covered by the governments Operation

Land Transfer, which law applies Presidential Decree (PD) No. 27[1] or Republic Act
(RA) No. 6657[2] known as the Comprehensive Agrarian Reform (CARP) Law?

This and other related questions are brought to the Court via this petition for review
on certiorari[3] of the Decision[4] of the Court of Appeals (CA) granting each of
respondents a five-hectare retention area and ordering petitioner to pay them One
Hundred Nine Thousand Pesos (P109,000.00) per hectare for the excess of the
retained area.

The Facts

Respondents Josefina R. Dumlao, A. Florentino R. Dumlao, Jr., Stella

Dumlao-Atienza, and Nestor R. Dumlao, heirs of the deceased Florentino G.
Dumlao, were the co-owners of several parcels of agricultural land with an aggregate
area of 32.2379 hectares situated at Villaverde, Nueva Vizcaya.

The properties are covered by: (1) Transfer Certificate of Title (TCT) No. T-
1180 with an area of 11.33 hectares;[5] (2) TCTNo. 41508 consisting of 6.2201
hectares;[6] (3) TCT No. 41507 with an area of 4.0001 hectares;[7] (4) TCT No.
41506 consisting of 3.9878 hectares;[8] (5) TCT No. 41504 consisting of 5.0639
hectares; and (6) TCT No. 41505 with an area of 1.6360 hectares.

The properties were placed under Operation Land Transfer by the Department
of Agrarian Reform (DAR).[9] However, the definite time of actual taking was not
stated.[10]
 Pursuant to PD No. 27 and Executive Order (EO) No. 228,[11] a preliminary
valuation was made by the DAR on the landholdings covered by TCT Nos. 41504
and T-1180 with a total area of 16.3939 hectares. Finding the valuation to be correct,
petitioner bank informed respondents of the said valuation.[12] Payments were then
deposited in the name of the landowners.[13]Meanwhile, processing of the properties
covered by the other four (4) titles, namely, TCT Nos. 41505, 41506, 41507 and
41508, remains pending with the DAR.[14]

On July 9, 1995, respondents filed a Complaint[15] before the Regional Trial

Court (RTC) in Nueva Vizcaya, Branch 28,[16]for determination of just
compensation for their properties. It was claimed, inter alia, that they were not paid
their just compensation for the properties despite issuance of certificates of land
transfer to farmer-beneficiaries by the DAR.[17] They prayed for the appointment of
three (3) competent and disinterested commissioners who would determine and
report to the court the just compensation of their landholdings based on their current
fair market value, without prejudice to their retention rights. They also asked for
payment of actual and moral damages, attorneys fees, and costs of suit.[18]

In its Answer, the DAR, represented by the Municipal Agrarian Reform

Office (MARO) and Provincial Agrarian Reform Office (PARO), posited that the
complaint lacked a cause of action and that the RTC did not have jurisdiction. Under
Section 50 of RA No. 6657, it is the Department of Agrarian Reform Adjudication
Board (DARAB) which is vested with primary and original jurisdiction over land
valuation, while the RTC as a Special Agrarian Court may review the DARABs
decision.[19]

Petitioner, which was impleaded as defendant in the valuation case before the trial
court, likewise filed its Answer, raising a similar line of defense.[20] Petitioner added
that while payment for the properties covered by TCT Nos. T-1180 and T-41504
were already deposited in trust for respondents, the claimfolders for the remaining
four properties is still with the DAR. Thus, the filing of the complaint against
petitioner was premature.
After the termination of pre-trial conference, respondent Atty. A. Florentino
Dumlao, Jr. submitted his affidavit on which he was cross-examined. Following the
submission of their testimonial and documentary evidence, respondents rested their
case.

Upon motion of respondents, the RTC, on April 15, 1998, appointed Atty.
John D. Balasya, Clerk of Court, as commissioner. He was mandated to receive,
examine, and ascertain valuation of the properties.[21] Believing that the valuation of
the properties is not commensurate to their true value and, hence, not a just
compensation, Atty. Balasya stated in his Commissioners Report dated July 21,
1998,[22] that:

The evidences submitted by the parties as well as those gathered

by the undersigned show that only two (2) parcels of land were valued
under Presidential Decree No. 27. The parcels of land are located in
Nagbitin, Villaverde, Nueva Vizcaya and per Exhibit O, the unirrigated
riceland in Nagbitin are considered first class agricultural lands. Under
Tax Ordinance No. 96-45 adopting and authorizing the 1996 Schedule of
Fair Market Values for the Different Classes of Real Property in Nueva
Vizcaya (Exhibit G and Exhibit G-1) the market value of first class
unirrigated Riceland in the Municipality of Villaverde is P109,000.00 Per
Department Order No. 56-97 dated May 27, 1997 issued by the
Department of Finance, Re: Implementation of the Revised Zonal Values
of Real Properties in all Municipalities under the jurisdiction of Revenue
District Office No. 14 (Bayombong, Nueva Vizcaya), Revenue Region
No. 3, Tuguegarao, Cagayan for Internal Revenue Tax purposes, the zonal
value of land in other Barangays in Villaverde is P60.00/square meter.

In summary, the undersigned believes that the valuation of

respondents Land Bank of the Philippines and the Department of Agrarian
Reform is not commensurate to the definition of just compensation x x
x.[23]
RTC Ruling

On October 14, 1998, the RTC issued a decision,[24] the fallo of which reads:

WHEREFORE, the Court hereby orders the remand of the case

with respect to TCT Nos. 1180 and T-41504 to the proper DARagency for
further proceedings and orders the dismissal of the case with respect
 to TCT Nos. T-41508, T-41507, T-41506, and T-41505 for having been
prematurely filed, there being no preliminary valuation made yet on the
said parcels of land. No pronouncement as to costs.

SO ORDERED.[25]

Respondents moved for reconsideration. Consequently, on December 21,

1998, the trial court modified[26] its decision in the following manner:

WHEREFORE, premises considered, in the higher interest of

justice, the Court MODIFIES its October 14, 1998 decision by ordering
plaintiffs to adduce additional evidence to support their contentions under
PD 27/EO 228 within 30 days from receipt of this Order furnishing a copy
thereof to the defendants who are given 15 days from receipt to comment
thereon. Thereafter, the matter shall be deemed submitted for resolution.

SO ORDERED.[27]

Instead of adducing additional evidence, respondents filed a motion for

reconsideration of the trial courts December 21, 1998order. Positing that the
additional evidence required by the court pertains to the formula under PD No. 27,
respondents insisted on P109,000.00 per hectare, the market value of the properties,
as just compensation.[28] Accordingly, the trial court, on March 18, 1999, issued
another order,[29] the dispositive portion of which states:

WHEREFORE, premises considered, the Court hereby sets the just

compensation in the amount of P6,912.50 per hectare for lot covered
by TCT No. T-1180 and the amount provided for in the Land Valuation
Summary and Farmers Undertaking for lot covered by TCTNo. T-41504
to be paid to the plaintiffs with interest from the time of the taking until
fully paid.

SO ORDERED.[30]

CA Disposition
Dissatisfied with the March 18, 1999 RTC Order, respondents appealed to the
CA. On February 16, 2005, the CA rendered a decision[31] modifying the trial courts
ruling, viz.:

WHEREFORE, in view of the foregoing, the trial courts decision

is hereby MODIFIED. The plaintiffs-appellants right of retention is
recognized. Plaintiffs-appellants Josefina, A. Florentino, Jr. and Stella, all
surnamed Dumlao are each entitled to retain five (5) hectares pursuant to
the provisions of R.A. 6657.

The excess in area after application of the right of retention is

valued at One Hundred Nine Thousand (P109,000.00) Pesos per hectare
with interest at the prevailing rate from the time of taking until fully paid.

No costs.

SO ORDERED.[32]

The CA declared that the definite time of the actual taking of the subject
properties is not certain.[33] Further, there is no doubt that the transfer of the subject
landholdings is governed by PD No. 27.[34] However, after the passage of RA No.
6657, the formula relative to valuation under PD No. 27 no longer applies. [35] The
appellate court held:

The trial court, therefore, in the determination of just compensation

is not confined within the valuation provisions of P.D. 27. It can depart
from it so long as the valuation assigned on the land transferred is within
the meaning of the phrase just compensation provided for in J.M. Tuazon
Co. vs. Land Tenure Administration (31 SCRA 413).[36]

Relying on the Commissioners Report, the CA assigned the lower value

of P109,000.00 per hectare as just compensation for the subject properties.[37]

Issues

Petitioner bank has resorted to the present recourse, imputing to the CA the
following errors:
 A.
WHEN THE CHALLENGED DECISION ADHERED TO THE
COMMISSIONERS REPORT AND FIXED THE VALUE OF THE
LANDHOLDINGS AT P109,000.00 PER HECTARE WITH
INTEREST AT THE PREVAILING RATE FROM THE TIME OF
TAKING UNTIL FULLY PAID, WORKING A MODIFICATION OF
THE LEGALLY PRESCRIBED BASIC FORMULA FOR
DETERMINING THE JUST COMPENSATION OF LANDS
ACQUIRED THROUGH OPERATION LAND TRANSFER (OLT),
CONTRARY TO THE CLEAR MANDATE OF PD 27/EO 228.

B.
WHEN THE CHALLENGED DECISION DECLARED
THAT OCTOBER 21, 1972 CANNOT BE DEEMED AS THE DATE
OF TAKING OF THE SUBJECT PROPERTIES.

C.
WHEN THE CHALLENGED DECISION DECLARED THAT
RESPONDENTS ENTIRE LANDHOLDINGS ARE COVERED BY PD
27AND THAT RESPONDENTS JOSEFINA, A. FLORENTINO,
JR., AND STELLA ARE ENTITLED TO RETAIN FIVE (5)
[38]
HECTARES EACH. (Underscoring supplied)

Our Ruling

The just compensation due to respondents should be determined under the

provisions of RA No. 6657.

Petitioner asserts that since the properties were acquired pursuant to PD No.
27, the formula for computing just compensation provided by said decree and EO
No. 228 should apply. Respondents, on the other hand, insist on the application of
RA No. 6657 with respect to the computation.

Petitioner is mistaken. The 1987 Constitution, specifically Article XIII on

Social Justice and Human Rights, mandates the States adoption of an agrarian reform
program for the benefit of the common people.[39] The recognition of the need for
genuine land reform, however, started earlier. PD No. 27, issued on October 21,
1972, more than a decade before the enactment of the 1987 Constitution, provided
for the compulsory acquisition of private lands for distribution among tenant-farmers
and specified the maximum retention limits for landowners.[40]

The agrarian reform thrust was further energized with the enactment of EO
No. 228 on July 17, 1987, when full land ownership was declared in favor of the
beneficiaries of PD No. 27. The executive issuance also provided for the valuation
of still unvalued covered lands, as well as the manner of their payment. On July 22,
1987, Presidential Proclamation No. 131, instituting a comprehensive agrarian
reform program, as well as EO No. 229[41] providing the mechanics for its
implementation, were likewise enacted.[42]

When the Philippine Congress was formally reorganized, RA No. 6657,

otherwise known as the Comprehensive Agrarian Reform Law of 1988, was
immediately enacted. It was signed by President Corazon Aquino on June 10,
1988. This law, while considerably changing the earlier
presidential issuances, including PD No. 27 and EO No. 228, nevertheless gave them
suppletory effect insofar as they are not inconsistent with its provisions.[43]

On one hand, PD No. 27 provides the formula to be used in arriving at the

exact total cost of the acquired lands:[44]

For the purpose of determining the cost of the land to be transferred

to the tenant-farmer pursuant to this Decree, the value of the land shall
be equivalent to two and one half (2-1/2) times the average harvest of
three normal crop years immediately preceding the promulgation of
this Decree.

The total cost of the land, including interest at the rate of six (6) per
centum per annum, shall be paid by the tenant in fifteen (15) years of
fifteen (15) equal annual amortizations. (Emphasis supplied)

Implementing the formula under PD No. 27, EO No. 228 states:

SECTION 2. Henceforth, the valuation of rice and corn lands

covered by P.D. No. 27 shall be based on the average gross production
determined by the Barangay Committee on Land Production in
accordance with Department Memorandum Circular No. 26, series of
 1973 and related issuances and regulation of the Department of Agrarian
Reform. The average gross production per hectare shall be multiplied
by two and a half (2.5), the product of which shall be multiplied by
Thirty-Five Pesos (P35.00), the government support price for one
cavan of 50 kilos of palay on October 21, 1972, or Thirty-One Pesos
(P31.00), the government support price for one cavan of 50 kilos of corn
on October 21, 1972, and the amount arrived at shall be the value of
the rice and corn land, as the case may be, for the purpose of
determining its cost to the farmer and compensation to the
landowner. (Emphasis supplied)

Thus, under PD No. 27 and EO No. 228, the formula for computing the Land
Value (LV) or Price Per Hectare (PPH) of rice and corn lands is:

2.5 x AGP[45] x GSP[46] = LV or PPH

The parameters of PD No. 27 and EO No. 228 are manifestly different from
the guidelines provided by RA No. 6657 for determining just compensation. Section
17 of RA No. 6657 is explicit:

Sec. 17. Determination of Just Compensation. In determining just

compensation, the cost of acquisition of the land, the current value of the
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 farmworkers 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.

Due to the divergent formulae or guidelines presented by these laws, a number

of cases have already been brought to the Court regarding which law applies in
computing just compensation for landholdings acquired under PD No. 27. On this
score, the Court has repeatedly held that if just compensation was not settled prior
to the passage of RA No. 6657, it should be computed in accordance with said law,
although the property was acquired under PD No. 27.
 In the recent Land Bank of the Philippines v. Heirs of Angel T.
Domingo,[47] We rejected the DARs valuation of just compensation based on the
formula provided by PD No. 27 and EO No. 228. We held then that Section 17 of
RA No. 6657 is applicable. The latter law, being the latest law in agrarian reform,
should control.

When RA 6657 was enacted into law in 1988, the agrarian reform
process in the present case was still incomplete as the amount of just
compensation to be paid to Domingo had yet to be settled. Just
compensation should therefore be determined and the expropriation
process concluded under RA 6657.

Guided by this precept, just compensation for purposes of

agrarian reform under PD 27 should adhere to Section 17 of RA
6657 x x x.

In Land Bank of the Philippines v. Estanislao,[48] the Court ruled that taking
into account the passage of RA No. 6657 in 1988 pending the settlement of just
compensation, it is that law which applies to landholdings seized under PD No. 27,
with said decree and EO No. 288 having only suppletory effect. Prior to that
declaration, the Court already decreed in Land Bank of the Philippines v.
Natividad,[49] citing Paris v. Alfeche,[50] that:

Under the factual circumstances of this case, the agrarian reform

process is still incomplete as the just compensation to be paid private
respondents has yet to be settled. Considering the passage of Republic Act
No. 6657 (6657) before the completion of the process, the just
compensation should be determined and the process concluded under the
said law. Indeed, RA 6657 is the applicable law, with PD 27 and EO 228
having only suppletory effect, conformably with our ruling in Paris v.
Alfeche.[51]

Agrarian reform is a revolutionary kind of expropriation.[52] The recognized

rule in expropriation is that title to the expropriated property shall pass from the
owner to the expropriator only upon full payment of the just compensation.[53] Thus,
payment of just compensation to the landowner is indispensable.
 In fact, Section 4, Article XIII of the 1987 Constitution mandates that the
redistribution of agricultural lands shall be subject to the payment of just
compensation. The deliberations of the 1986 Constitutional Commission on this
subject reveal that just compensation should not do violence to the Bill of Rights but
should also not make an insurmountable obstacle to a successful agrarian reform
program. Hence, the landowners right to just compensation should be balanced with
agrarian reform.[54]

In the case under review, the agrarian reform process was not completed. The
just compensation to be paid respondents was not settled prior to the enactment of
RA No. 6657, the law subsequent to PD No. 27 and EO No. 228. In fact, the non-
payment of just compensation is precisely the reason why respondents filed a
petition for the determination of just compensation before the RTC on July 13, 1995.

The records do not show when respondents or their father, Florentino Dumlao,
was formally notified of the expropriation. The records, however, bear out that the
bank sent Florentino Dumlao a letter stating that it had approved the land transfer
claim involving that property covered by TCT No. T-1180 on November 5,
1990. Moreover, the various Land Valuation Summary and Farmers Undertakings
showing the valuation of the land transferred to the farmers-beneficiaries were
approved on May 17, 1989[55] and July 21, 1989.[56] It is thus crystal clear that even
after the passage of RA No. 6657 in 1988, neither petitioner nor the DAR had settled
the matter of just compensation with respondents as landowners.

Besides, RA No. 6657 applies to rice and corn lands covered by PD No.
27. In Paris v. Alfeche,[57] the Court explained:

Considering the passage of RA 6657 before the completion of the

application of the agrarian reform process to the subject lands, the same
should now be completed under the said law, with PD 27 and EO 228
having only suppletory effect. This ruling finds support in Land Bank of
the Philippines v. CA, wherein the Court stated:
We cannot see why Sec. 18 of RA 6657 should not
apply to rice and corn lands under PD 27. Section 75 of
RA 6657 clearly states that the provisions of PD 27 and EO
 228 shall only have a suppletory effect. Section 7 of the Act
also provides

Sec. 7. Priorities. The DAR, in

coordination with the PARC shall plan and
program the acquisition and distribution of all
agricultural lands through a period of ten (10)
years from the effectivity of this Act. Lands
shall be acquired and distributed as follows:

Phase One: Rice and Corn lands under

P.D. 27; all idle or abandoned lands; all private
lands voluntarily offered by the owners for
agrarian reform; x x x and all other lands
owned by the government devoted to or
suitable for agriculture, which shall be
acquired and distributed immediately upon the
effectivity of this Act, with the implementation
to be completed within a period of not more
than four (4) years.

This eloquently demonstrates that RA 6657

includes PD 27 lands among the
properties which the DAR shall acquire and distribute
to the landless. And to facilitate the acquisition and
distribution thereof, Secs. 16, 17, and 18 of the Act should
be adhered to. In Association of Small Landowners of the
Philippines v. Secretary of Agrarian Reform, this Court
applied the provisions (of) RA 6657 to rice and corn lands
when it upheld the constitutionality of the payment of just
compensation for PD 27 lands through the different modes
stated in Sec. 18. (Emphasis supplied)

Verily, there is nothing to prevent Section 17 of RA No. 6657 from being

applied to determine the just compensation for lands acquired under PD No. 27.

In Natividad,[58] the Court ruled that the DARs failure to determine the just
compensation for a considerable length of time made it inequitable to follow the
guidelines provided by PD No. 27 and EO No. 228. Hence, RA No. 6657 should
apply. The same rationale was followed in Meneses v. Secretary of Agrarian
Reform.[59] There, the Court noted that despite the lapse of more than thirty (30) years
since the expropriation of the property in 1972, petitioners had yet to benefit from
it, while the farmer-beneficiaries were already harvesting the propertys
produce. Thus, RA No. 6657 was applied instead of PD No. 27 in determining just
compensation.

In Meneses, the Court compared the conflicting rulings in Gabatin v. Land

Bank of the Philippines,[60] cited by petitioner, and Land Bank of the Philippines v.
Natividad.[61] This Court affirmed Natividad, stating that it would be more equitable
to apply the same due to the circumstances obtaining, i.e. the more than 30-year
delay in the payment of just compensation.

The application of RA No. 6657 due to the inequity faced by landowners

continued in Lubrica v. Land Bank of the Philippines.[62] The landowners were also
deprived of their properties in 1972 but had yet to receive their just compensation
even after the passage of RA No. 6657. Since the landholdings were already
subdivided and distributed to the farmer-beneficiaries, the Court, speaking through
Justice Consuelo Ynares-Santiago, deemed it unreasonable to compute just
compensation using the values at the time of taking in 1972 as dictated by PD No.
27, and not at the time of payment pursuant to RA No. 6657.

We find no cogent reason not to apply the same ratiocination here. In the case
at bar, emancipation patents, and eventually, transfer certificates of title, were issued
to the farmer-beneficiaries[63] at least twenty-eight (28) years ago. On March 16,
1990, the DAR acknowledged that the property covered by TCT No. T-1180 had
already been distributed to farmer-beneficiaries through emancipation patents. As
early as June 10, 1975, a portion of the same property was conveyed to a certain
Rosalina Abon, although this was not annotated on the owners title.[64]

Needless to say, respondents have already been deprived of the use and
dominion over their landholdings for a substantial period of time. In the interim,
petitioner bank has abjectly failed to pay, much less to determine, the just
compensation due to respondents. The law clearly recognizes that the exact value of
lands taken under PD No. 27, or the just compensation to be given to the landowner
must be determined with certainty before the land titles are transferred.[65] Petitioners
gross failure to compensate respondents for loss of their land, while transferring the
same to the farmer-beneficiaries, make it unjust to determine just compensation
based on the guidelines provided by PD No. 27 and EO No. 228.

Accordingly, just compensation should be computed in accordance with RA

No. 6657 in order to give full effect to the principle that the recompense due to the
landowner should be the full and fair equivalent of the property taken from the owner
by the expropriator. The measure is not the takers gain but the owners 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.[66]

The determination of just compensation is a function addressed to the courts

of justice and may not be usurped by any other branch or official of the
government.[67] However, the determination made by the trial court, which relied
solely on the formula prescribed by PD No. 27 and EO No. 228, is grossly
erroneous. The amount of P6,912.50 per hectare, which is based on
the DARvaluation of the properties at the time of their taking in the 1970s, [68] does
not come close to a full and fair equivalent of the property taken from respondents.

Meanwhile, the CAs act of setting just compensation in the amount

of P109,000.00 would have been a valid exercise of this judicial function, had it
followed the mandatory formula prescribed by RA No. 6657. However, the appellate
court merely chose the lower of two (2) values specified by the commissioner as
basis for determining just compensation, namely: (a) P109,000.00 per hectare as
the market value of first class unirrigated rice land in the Municipality of
Villaverde; and (b) P60.00 per square meter as the zonal value of the land in
other barangays in Villaverde. This is likewise erroneous because it does not adhere
to the formula provided by RA No. 6657.

It cannot be overemphasized that the just compensation to be given to the

owner cannot be assumed and must be determined with certainty. [69] Its
determination involves the examination of the following factors specified in Section
17 of RA No. 6657, as amended, namely: (1) the cost of acquisition of the land; (2)
the current value of the properties; (3) its nature, actual use, and income; (4) the
sworn valuation by the owner; (5) the tax declarations; (6) the assessment made by
government assessors; (7) the social and economic benefits contributed by the
farmers and the farmworkers and by the government to the property; and (8) the non-
payment of taxes or loans secured from any government financing institution on the
said land, if any.[70]

Section 17 was converted into a formula by the DAR through Administrative

Order (AO) No. 6, Series of 1992,[71] as amended by AO No. 11, Series of
1994,[72] the pertinent portions of which provide:

A. There shall be one basic formula for the valuation of lands

covered by [Voluntary Offer to Sell] or [Compulsory Acquisition]
regardless of the date of offer or coverage of the claim:

LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)

Where: LV = Land Value

CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration
The above formula shall be used if all the three factors are present,
relevant and applicable.
A.1 When the CS factor is not present and CNI and MV are applicable,
the formula shall be:

LV = (CNI x 0.9) + (MV x 0.1)

A.2 When the CNI factor is not present, and CS and MV are
applicable, the formula shall be:

LV = (CS x 0.9) + (MV x 0.1)

A.3 When both the CS and CNI are not present and only MV is
applicable, the formula shall be:

LV = MV x 2

In no case shall the value of the land using the formula MV x 2

exceed the lowest value of land within the same estate under
consideration or within the same barangay or municipality (in
 that order) approved by LBP within one (1) year from receipt of
claimfolder.

xxxx

A.6 The basic formula in the grossing-up of valuation inputs such as

LOs Offer, Sales Transaction (ST), Acquisition Cost (AC),
Market Value Based on Mortgage (MVM) and Market Value per
Tax Declaration (MV) shall be:

Grossed-up = Valuation input x

Valuation Input Regional Consumer Price
Index (RCPI) Adjustment
Factor
The RCPI Adjustment Factor shall refer to the ratio of RCPI for the
month issued by the National Statistics Office as of the date when
the claimfolder (CF) was received by LBP from DAR for
processing or, in its absence, the most recent available RCPI for the
month issued prior to the date of receipt of CF from DAR and the
RCPI for the month as of the date/effectivity/registration of the
valuation input. Expressed in equation form:

RCPI for the Month as of the

Date of Receipt of Claimfolder
by LBP from DAR or the Most
recent RCPI for the Month
Issued Prior to the Date of
RCPI Receipt of CF
Adjustment =
Factor RCPI for the Month Issued as of
the Date/Effectivity/Registration
of the Valuation Input

B. Capitalized Net Income (CNI) This shall refer to the difference

between the gross sales (AGP x SP) and total cost of operations (CO)
capitalized at 12%.

Expressed in equation form:

CNI = (AGP x SP) - CO

.12
Where: CNI = Capitalized Net Income
AGP = Latest available 12-month's gross production
immediately preceding the date of offer in case
of VOS or date of notice of coverage in case of
CA.

SP = The average of the latest available 12

months selling prices prior to the date of receipt
of the claimfolder by LBP for processing, such
prices to be secured from the Department of
Agriculture (DA) and other appropriate
regulatory bodies or, in their absence, from the
Bureau of Agricultural Statistics. If possible,
SP data shall be gathered from the barangay or
municipality where the property is located. In
the absence thereof, SP may be secured within
the province or region.

CO = Cost of Operations
Whenever the cost of operations could not be
obtained or verified, an assumed net income
rate (NIR) of 20% shall be used. Landholdings
planted to coconut which are productive at the
time of offer/coverage shall continue to use the
70% NIR. DAR and LBP shall continue to
conduct joint industry studies to establish the
applicable NIR for each crop covered under
CARP.

.12 = Capitalization Rate

xxxx

C. CS shall refer to any one or the average of all the applicable sub-
factors, namely, ST, AC and MVM:

Where: ST = Sales Transactions as defined under Item C.2

AC = Acquisition Cost as defined under Item C.3
MVM = Market Value Based on Mortgage as defined
under Item C.4
 xxxx

D. In the computation of Market Value per Tax Declaration (MV), the

most recent Tax Declaration (TD) and Schedule of Unit Market Value
(SMV) issued prior to receipt of claimfolder by LBP shall be
considered. The Unit Market Value (UMV) shall be grossed up from
the date of its effectivity up to the date of receipt of claimfolder by
LBP from DAR for processing, in accordance with item
II.A.A.6. (Emphasis and underscoring supplied)

While the determination of just compensation involves the exercise of judicial

discretion, such discretion must be discharged within the bounds of the
law.[73] The DAR, as the government agency principally tasked to implement the
agrarian reform program, has the duty to issue rules and regulations to carry out the
object of the law. The DAR administrative orders precisely filled in the details of
Section 17 of RA No. 6657 by providing a basic formula by which the factors
mentioned in the provision may be taken into account.[74] Special agrarian courts are
not at liberty to disregard the formula devised to implement the said provision
because unless an administrative order is declared invalid, courts have no option but
to apply it.[75]

In his Report, the Commissioner merely specified the market value of first
class unirrigated ricelands in the municipality where the properties are located, as
well as the zonal value of lands in other barangays in the same municipality. For
their part, respondents attempted to prove the following: market value of unirrigated
ricelands for the Municipality of Villaverde, set at P109,000.00 per hectare, pursuant
to Sangguniang Bayan Tax Ordinance No. 96-45;[76] annual production of
unirrigated ricefields in Villaverde, at 80 cavans during palagad cropping, and 101
cavans under regular cropping;[77] government support price for palay for the
period October 1, 1990 to October 1995 at P6.00 per kilo, and from November 1,
1995 to the time of the filing of the petition at P8.00 per kilo.[78]

However, the records do not bear out if these factors are the only
ones relevant, present and applicable in this case, so that just compensation can
now be computed by the Court based on the formula provided by
the DAR administrative orders. Based on the evidence adduced, it appears that
market value and comparable net income (CNI) are being
proved. However, CNI cannot be computed in the absence of information regarding
cost of operations.[79]

We are thus compelled to remand the case to the court a quo to determine the
final valuation of respondents properties. The trial court is mandated to consider the
factors provided under Section 17 of RA No. 6657, as translated into the formula
prescribed by DAR AO No. 6-92, as amended by DAR AO No. 11-94.

Furthermore, upon its own initiative, or at the instance of any of the parties,
the RTC may again appoint one or more commissioners to examine, investigate and
ascertain facts relevant to the dispute including the valuation of properties and to file
a written report with the RTC.[80]

We next address the second issue date of taking.

The taking of the properties for the purpose of computing just compensation
should be reckoned from the date of issuance of emancipation patents, and not
on October 21, 1972, as petitioner insists. The nature of the
land at that time determines the just compensation to be paid.[81]

We cannot sustain petitioners position that respondents properties were

statutorily taken on October 21, 1972, the date of effectivity of PD No. 27; that on
that date, respondents were effectively deprived of possession and dominion over
the land; and that when EO No. 228 fixed the basis in determining land valuation
using the government support price of P35.00 for one cavan of 50 kilos of palay
on October 21, 1972, it was consistent with the settled rule that just compensation is
the value of the property at the time of the taking.[82]

In Association of Small Landowners v. Secretary of Agrarian Reform,[83] the

Court held that title to the property expropriated shall pass from the
owner to the expropriator only upon full payment of just compensation. The Court
further held that:
 It is true that P.D. No. 27 expressly ordered the emancipation of
tenant-farmer as [of] October 21, 1972 and declared that he shall be
deemed the owner of a portion of land consisting of a family-sized farm
except that no title to the land owned by him was to be actually issued to
him unless and until he had become a full-fledged member of a duly
recognized farmers cooperative. It was understood, however, that full
payment of just compensation also had to be made first, conformably
to the constitutional requirement.[84] (Emphasis supplied)

In Land Bank of the Philippines v. Estanislao,[85] the Court declared that seizure of
landholdings or properties covered by PD No. 27 did not take place on October 21,
1972, but upon the payment of just compensation.

Land Banks contention that the property was acquired for purposes
of agrarian reform on October 21, 1972, the time of the effectivity of PD
27, ergo just compensation should be based on the value of the property
as of that time and not at the time of possession in 1993, is likewise
erroneous. In Office of the President, Malacaang, Manila v. Court of
Appeals, we ruled that the seizure of the landholding did not take place on
the date of effectivity of PD 27 but would take effect on the payment of
just compensation.[86] (Emphasis in the original)

However, for purposes of computing just compensation, this Court recently declared
in Land Bank of the Philippines v. Heirs of Angel T. Domingo[87] that the time of
taking should be reckoned from the issue dates of emancipation patents.

The date of taking of the subject land for purposes of

computing just compensation should be reckoned from the issuance
dates of the emancipation patents. An emancipation patent constitutes
the conclusive authority for the issuance of a Transfer Certificate of Title
in the name of the grantee. It is from the issuance of an emancipation
patent that the grantee can acquire the vested right of ownership in the
landholding, subject to the payment of just compensation to the
landowner.[88] (Emphasis supplied)

It is undisputed that emancipation patents were issued to the farmer-

beneficiaries. However, their issuance dates are not shown. As such, the trial court
should determine the date of issuance of these emancipation patents in order to
ascertain the date of taking and proceed to compute the just compensation due to
respondents, in accordance with RA No. 6657.

Now, to the third and final issue.

Respondents are entitled to payment of just compensation even on those

properties which have not been processed by the DAR.

Petitioner admits that of respondents landholdings, only those covered

by TCT Nos. T-1180 and T-41504, totaling 16.3939 hectares, were processed and
initially valued by the DAR. Pending initial processing by the DAR of the remaining
landholdings, petitioner posits that it cannot be made to pay the amount
of P109,000.00 per hectare for those covered by TCT Nos. 41508, 41507, 41506,
and 41505, with an aggregate area of 17.2379 hectares.

The argument is specious for three reasons.

First, the determination of just compensation is judicial in nature. The DARs

land valuation is only preliminary and is not, by any means, final and conclusive
upon the landowner or any other interested party. In the exercise of its functions, the
courts still have the final say on what the amount of just compensation will be.[89]

In Natividad, the Court held that:

[T]here is nothing contradictory between the DARs primary

jurisdiction to determine and adjudicate agrarian reform matters and
exclusive original jurisdiction over all matters involving the
implementation of agrarian reform, which includes the determination of
questions of just compensation, and the original and exclusive
jurisdiction of regional trial courts over all petitions for the
determination of just compensation. The first refers to administrative
proceedings, while the second refers to judicial proceedings.

In accordance with settled principles of administrative law, primary

jurisdiction is vested in the DAR to determine in a preliminary manner
the just compensation for the lands taken under the agrarian reform
 program, but such determination is subject to challenge before the courts.
The resolution of just compensation cases for the taking of lands under
agrarian reform is, after all, essentially a judicial function.

Thus, the trial court did not err in taking cognizance of the case as
the determination of just compensation is a function addressed to the
courts of justice.[90] (Emphasis supplied)

In fact, the law does not make the DAR valuation absolutely binding as the
amount payable by petitioner. A reading of Section 18[91] of RA No. 6657 shows that
it is the courts, not the DAR, which make the final determination of just
compensation.

Accordingly, RA No. 6657 directs petitioner to pay the DARs land valuation
only if the landowner, the DAR and petitioner agree on the amount of just
compensation. Otherwise, the amount determined by the special agrarian court as
just compensation shall be paid by petitioner. Corollarily,
there is no reason for petitioner to wait for the DAR valuation of the properties, if
the court has already determined the just compensation due to respondents.

Second, to wait for the DAR valuation despite its unreasonable neglect and
delay in processing the four properties claimfolders is to violate the elementary rule
that payment of just compensation must be within a reasonable period from the
taking of property. Cosculluela v. Court of Appeals[92] could not have been clearer:

Just compensation means not only the correct determination of

the amount to be paid to the owner 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 for the property owner
is made to suffer the consequence 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. x x x.[93] (Emphasis
supplied)

In the case at bar, the properties have long been expropriated by the
government and their fruits enjoyed by the farmer-beneficiaries. Respondent have
been made to wait for decades for payment of their recompense. They were not even
allowed to withdraw the amount claimed to have been deposited with petitioner bank
on their behalf. It would certainly be iniquitous to wait for the DAR to process the
properties covered by the four other titles before the special agrarian court can finally
determine the amount of their just compensation.[94]

Third, while the DAR is vested with primary jurisdiction to determine in

a preliminary manner the amount of just compensation, the circumstances of this
case militate against the application of the doctrine of primary jurisdiction.

The principle of exhaustion of administrative remedies is a relative one and is

flexible depending on the peculiarity and uniqueness of the factual and
circumstantial settings of a case. It is disregarded: (1) when there is a violation of
due process; (2) when the issue involved is purely a legal question; (3) when the
administrative action is patently illegal and amounts to lack or excess of jurisdiction;
(4) when there is estoppel on the part of the administrative agency concerned; (5)
when there is irreparable injury; (6) when respondent is a department secretary
whose acts, as an alter ego of the President, bears the implied and assumed approval
of the latter; (7) when to require exhaustion of administrative remedies would
be unreasonable; (8) when it would amount to a nullification of a claim; (9) when
the subject matter is a private land in land case proceedings; (10) when the rule does
not provide a plain, speedy and adequate remedy; (11) when there are
circumstances indicating the urgency of judicial intervention, and
unreasonable delay would greatly prejudice the complainant; (12) when no
administrative review is provided by law; (13) where the rule of qualified political
agency applies; and (14) when the issue of non-exhaustion of administrative
remedies has been rendered moot.[95]

Here, to require exhaustion of administrative remedies would be

unreasonable. What is more, judicial intervention is necessary so as not to unduly
prejudice the landowners. Respondents have long been deprived of their
landholdings, yet compensation has been withheld from them. Accordingly, to make
respondents wait for the DAR to process the claimfolders of the remaining four
properties would be unreasonable, unjust and manifestly prejudicial to them.
 Respondents are entitled to the right of retention over their lands.

The right of retention is constitutionally guaranteed, subject to qualification

by the legislature. It serves to mitigate the effects of compulsory land acquisition by
balancing the rights of the landowner and the tenant and by implementing the
doctrine that social justice was not meant to perpetrate an injustice against the
landowner. A retained area, as its name denotes, is land which is not supposed to
anymore leave the landowners dominion, thus sparing the government from the
inconvenience of taking land only to return it to the landowner afterwards, which
would be a pointless process.[96]

The opinion of the MARO[97] that respondents are not entitled to retain areas
out of their landholdings because they applied for the same after the grace period set
by the government[98] fails to persuade. A landowner whose land was taken pursuant
to PD No. 27 has a right to retain seven hectares of land, provided that the landowner
is cultivating the area or will now cultivate it.[99]Those who did not avail of their
rights of retention under PD No. 27 are entitled to exercise the same under Section
6[100] of RA No. 6657.[101] Landowners may still avail of their retention rights
notwithstanding the August 27, 1985 deadline imposed by DAR AO No. 1, Series
of 1985. In Daez v. Court of Appeals,[102] the Court, citing Association of Small
Landowners, Inc. v. Secretary of Agrarian Reform,[103] disregarded said deadline and
sustained the landowners retention rights. Notably, under RA No. 6657, landowners
who do not personally cultivate their lands are no longer required to do so in order
to qualify for the retention of an area not exceeding five hectares. Instead, they are
now required to maintain the actual tiller of the area retained, should the latter choose
to remain in those lands.[104] Verily, there is no impediment to the exercise by
respondents of their retention rights under RA No. 6657.

In sum, We rule that:

1. The provisions of RA No. 6657 apply in determining the just compensation due
to respondents for the taking of their property.However, the value of P109,000.00,
based on the propertys market value and assigned by the CA as just compensation,
is erroneous.The trial court is thus directed to receive evidence pertaining to the
factors to be considered in determining just compensation, in accordance
with DAR AO No. 6, Series of 1992, as amended by AO No. 11, Series of 1994.

2. For purposes of computing just compensation, the date of issuance of

emancipations is deemed the date of taking, not October 21, 1972.

3. Respondents are entitled to payment of just compensation on their entire

landholdings covered by Operation Land Transfer, except for the five hectares of
retention area each of them are entitled to.

WHEREFORE, the petition is DENIED. The case is REMANDED to the

court a quo for final determination of just compensation due to respondents.

SO ORDERED.

THIRD DIVISION

LAND BANK OF THE PHILIPPINES, G.R. No. 157206

Petitioner,
Present:

YNARES-SANTIAGO, J.,

Chairperson,

AUSTRIA-MARTINEZ,
- versus -
CHICO-NAZARIO,

NACHURA, and

REYES, JJ.
 Promulgated:

SPOUSES PLACIDO ORILLA and CLARA DY

ORILLA,
June 27, 2008
Respondents.

x------------------------------------------------------------------------------------x

DECISION

NACHURA, J.:

Without doubt, justice is the supreme need of man. Man can endure without food
for days, but if he is deprived even with the least injustice, he can be that violent to
give up his life for it. History will tell us that many great nations had emerged in the
past, yet they succumbed to downfall when their leaders had gone so immorally
low that they could not anymore render justice to their people. In our times, we
are witnesses to radical changes in our society rooted on alleged injustice. The only
hope is in the courts as the last bulwark of democracy being the administrator of
justice and the legitimate recourse of their grievances.[1]

The Facts
This is an appeal via a petition[2] for review on certiorari under Rule 45 of the Rules
of Court of the Decision[3] of the Court of Appeals dated July 29, 2002 in CA-G.R. SP
No. 63691 entitled Land Bank of the Philippines v. Hon. Venancio J. Amila, in his
capacity as Presiding Judge, Regional Trial Court, Branch 3, Tagbilaran City, Spouses
Placido Orilla and Clara Dy Orilla. Said Decision affirmed the
Order[4] dated December 21, 2000 of the Regional Trial Court (RTC), Branch
3, Tagbilaran City, sitting as a Special Agrarian Court (SAC) in Civil Case No. 6085.

Spouses Placido and Clara Orilla (respondents) were the owners of Lot No. 1, 11-
12706, situated in Bohol, containing an area of 23.3416 hectares and covered by
Transfer Certificate of Title No. 18401. In the latter part of November 1996, the
Department of Agrarian Reform Provincial Agrarian Reform Office (DAR-PARO) of
Bohol sent respondents a Notice of Land Valuation and Acquisition dated
November 15, 1996 informing them of the compulsory acquisition of 21.1289
hectares of their landholdings pursuant to the Comprehensive Agrarian Reform
Law (Republic Act [RA] 6657) for P371,154.99 as compensation based on the
valuation made by the Land Bank of the Philippines (petitioner).

Respondents rejected the said valuation. Consequently, the Provincial Department

of Agrarian Reform Adjudication Board (Provincial DARAB) conducted a summary
hearing on the amount of just compensation. Thereafter, the Provincial DARAB
affirmed the valuation made by the petitioner.

Unsatisfied, respondents filed an action for the determination of just compensation

before the Regional Trial Court (as a Special Agrarian Court [SAC])
of Tagbilaran City. The case was docketed as Civil Case No. 6085 and was raffled to
Branch 3.

After trial on the merits, the SAC rendered a Decision[5] dated November 20, 2000,
the dispositive portion of which reads
 WHEREFORE, judgment is hereby rendered fixing the just compensation
of the land of petitioner subject matter of the instant action at P7.00 per
square meter, as only prayed for, which shall earn legal interest from the
filing of the complaint until the same shall have been fully
paid. Furthermore, respondents are hereby ordered to jointly and
solidarily indemnify the petitioners their expenses for attorneys fee and
contract fee in the conduct of the appraisal of the land by a duly licensed
real estate appraiser Angelo G. Fajardo of which petitioner shall submit
a bill of costs therefor for the approval of the Court.

SO ORDERED.[6]

On December 11, 2000, petitioner filed a Notice of Appeal.[7] Subsequently,

on December 15, 2000, respondents filed a Motion for Execution Pending
Appeal[8] pursuant to Section 2, Rule 39 of the 1997 Rules of Civil Procedure and
the consolidated cases of Landbank of the Philippines v. Court of Appeals, et
al.[9] and Department of Agrarian Reform v. Court of Appeals, et al.[10]Respondents
claimed that the total amount of P1,479,023.00 (equivalent to P7.00 per square
meter for 21.1289 hectares), adjudged by the SAC as just compensation, could then
be withdrawn under the authority of the aforementioned case.

Meanwhile, on December 18, 2000, the DAR filed its own Notice of Appeal[11] from
the SAC Decision dated November 20, 2000.The DAR alleged in its Notice that it
received a copy of the SAC Decision only on December 6, 2000.

On December 21, 2000, the SAC issued an Order[12] granting the Motion for
Execution Pending Appeal, the decretal portion of which reads
 WHEREFORE, the herein motion is granted and the petitioners are
hereby ordered to post bond equivalent to one-half of the amount due
them by virtue of the decision in this case. The respondent Land Bank of
the Philippines, is therefore, ordered to immediately deposit with any
accessible bank, as may be designated by respondent DAR, in cash or in
any governmental financial instrument the total amount due the
petitioner-spouses as may be computed within the parameters of Sec.
18(1) of RA 6657. Furthermore, pursuant to the Supreme Court decisions
in Landbank of the Philippines vs. Court of Appeals, et al. G.R. No.
118712, promulgated on October 6, 1995 and Department of Agrarian
Reform vs. Court of Appeals, et al., G.R. No. 118745, promulgated on
October 6, 1995, the petitioners may withdraw the same for their use
and benefit consequent to their right of ownership thereof.[13]

On December 25, 2000, respondents filed a Motion for Partial

Reconsideration[14] of the amount of the bond to be posted, which was later denied
in an Order[15] dated January 11, 2001.

Petitioner filed a Motion for Reconsideration[16] on December 27, 2000, which was
likewise denied in an Order[17] dated December 29, 2000.

On March 13, 2001, petitioner filed with the Court of Appeals a special civil
action[18] for certiorari and prohibition under Rule 65 of the Rules of Court with
prayer for issuance of a temporary restraining order and/or preliminary
injunction. It questioned the propriety of the SAC Order granting the execution
pending appeal. Respondents and the presiding judge of the SAC, as nominal party,
filed their respective comments[19] on the petition.
In its Decision dated July 29, 2002, the Court of Appeals dismissed the petition on
the ground that the assailed SAC Order dated December 21, 2000 granting
execution pending appeal was consistent with justice, fairness, and equity, as
respondents had been deprived of the use and possession of their property
pursuant to RA 6657 and are entitled to be immediately compensated with the
amount as determined by the SAC under the principle of prompt payment of just
compensation.

Petitioner filed a Motion for Reconsideration of the Court of Appeals Decision, but
the same was denied in a Resolution dated February 5, 2003. Hence, this appeal.

Petitioner anchors its petition on the following grounds:

I. THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE

RESPONDENTS WERE ENTITLED TO EXECUTION PENDING APPEAL
OF THE COMPENSATION FIXED BY THE SAC BASED ON THE
PRINCIPLE OF PROMPT PAYMENT OF JUST COMPENSATION, EVEN
THOUGH THE PRINCIPLE OF PROMPT PAYMENT IS SATISFIED BY
THE PAYMENT AND IMMEDIATE RELEASE OF THE PROVISIONAL
COMPENSATION UNDER SECTION 16(E) OF RA 6657, UPON
SUBMISSION OF THE LEGAL REQUIREMENTS, IN ACCORDANCE
WITH THE RULING OF THIS HONORABLE COURT IN THE CASE
OF LAND BANK OF THE PHILIPPINES V. COURT OF APPEALS, PEDRO
L. YAP, ET AL., G.R. NO. 118712, OCTOBER 6, 1995 AND JULY 5,
1996, AND NOT BY EXECUTION PENDING APPEAL OF THE
COMPENSATION FIXED BY THE SAC.

II. THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN

UPHOLDING THE SAC ORDER FOR EXECUTION PENDING APPEAL
WHICH WAS ISSUED WITHOUT ANY GOOD REASON RECOGNIZED
UNDER EXISTING JURISPRUDENCE AND PROPER HEARING AND
 RECEPTION OF EVIDENCE IN VIOLATION OF SECTION 2(A), RULE 39
OF THE RULES OF COURT.

For its first ground, petitioner asserts that, according to our ruling in Land Bank
of the Philippines v. Court of Appeals,[20] the principle of prompt payment of just
compensation is already satisfied by the concurrence of two (2) conditions: (a) the
deposits made by petitioner in any accessible bank, equivalent to the DAR/LBP
valuation of the expropriated property as provisional compensation, must be in
cash and bonds as expressly provided for by Section 16(e) of RA 6657, not merely
earmarked or reserved in trust; and (b) the deposits must be immediately released
to the landowner upon compliance with the legal requirements under Section
16[21] of RA 6657, even pending the final judicial determination of just
compensation.

Anent the second ground, petitioner argues that the good reasons cited by the SAC,
as affirmed by the Court of Appeals, namely: (1) that execution pending appeal
would be in consonance with justice, fairness, and equity considering that the land
had long been taken by the DAR; (2) that suspending the payment of compensation
will prolong the agony that respondents have been suffering by reason of the
deprivation of their property; and (3) that it would be good and helpful to the
economy are not valid reasons to justify the execution pending appeal, especially
because the execution was granted without a hearing.

This appeal should be denied.

As the issues raised are interrelated, they shall be discussed jointly.

Execution of a judgment pending appeal is governed by Section 2(a) of Rule 39 of
the Rules of Court, to wit:

SEC. 2. Discretionary execution.

(a) Execution of a judgment or a final order pending appeal. -- On motion

of the prevailing party with notice to the adverse party filed in the trial
court while it has jurisdiction over the case and is in possession of either
the original record or the record on appeal, as the case may be, at the
time of the filing of such motion, said court may, in its discretion, order
execution of a judgment or final order even before the expiration of the
period to appeal.

xxxx

Discretionary execution may only issue upon good reasons to be

stated in a special order after due hearing.

As provided above, execution of the judgment or final order pending appeal is

discretionary. As an exception to the rule that only a final judgment may be
executed, it must be strictly construed. Thus, execution pending appeal should not
be granted routinely but only in extraordinary circumstances.

The Rules of Court does not enumerate the circumstances which would justify the
execution of the judgment or decision pending appeal. However, we have held that
good reasons consist of compelling or superior circumstances demanding urgency
which will outweigh the injury or damages suffered should the losing party secure
a reversal of the judgment or final order. The existence of good reasons is what
confers discretionary power on a court to issue a writ of execution pending
appeal. These reasons must be stated in the order granting the same. Unless they
are divulged, it would be difficult to determine whether judicial discretion has been
properly exercised.[22]

In this case, do good reasons exist to justify the grant by the SAC of the motion for
execution pending appeal? The answer is a resounding YES.

The expropriation of private property under RA 6657 is a revolutionary kind of

expropriation,[23] being a means to obtain social justice by distributing land to the
farmers, envisioning freedom from the bondage to the land they actually till. As an
exercise of police power, it puts the landowner, not the government, in a situation
where the odds are practically against him. He cannot resist it.His only consolation
is that he can negotiate for the amount of compensation to be paid for the property
taken by the government. As expected, the landowner will exercise this right to the
hilt, subject to the limitation that he can only be entitled to just
compensation.Clearly therefore, by rejecting and disputing the valuation of the
DAR, the landowner is merely exercising his right to seek just compensation.[24]

In this case, petitioner valued the property of respondents at P371,154.99 for the
compulsory acquisition of 21.1289 hectares of their landholdings. This amount
respondents rejected. However, the same amount was affirmed by the DAR after
the conduct of summary proceedings. Consequently, respondents brought the
matter to the SAC for the determination of just compensation. After presentation
of evidence from both parties, the SAC found the valuation of the LBP and the DAR
too low and pegged the just compensation due the respondents at P7.00 per
square meter, or a total of P1,479,023.00 for the 21.1289 hectares. In determining
such value, the SAC noted the following circumstances:
1. the nearest point of the land is about 1.5 kilometers from Poblacion
Ubay;

2. the total area of the land based on the sketch-map presented by the
MARO is 23.3416 hectares.

3. the land is generally plain, sandy loam, without stones, rocks or

[pebbles];

4. the land is adjoining the National Highway of Ubay-Trinidad, Bohol;

5. 11.4928 hectares of the land is devoted to planting rice, which

portion is rain-fed and produces 60-80 cavans of rice per hectare with
two (2) harvest seasons a year;

6. four (4) hectares is planted with 210 fruit-bearing coconut trees,

which private respondents used to receive a share of P1,500.00 per
harvest four (4) times a year;

7. five (5) hectares is cogonal but now most area is planted with cassava;

8. the area is traversed with electricity providing electric power to some

occupants;

9. across the National Highway, about 200 meters away from the
landholding, is an irrigation canal of the National Irrigation
Administration (NIA);

10. the Ubay Airport is about two (2) kilometers from the landholding;

11. fruit trees like mangoes and jackfruits were also planted on the
property;

12. north of the landholding, about a kilometer away, is the seashore;

13. the market value of the land per Tax Declaration No. 45-002-00084
is P621,310.00 for the entire 23.2416 hectares but representing only
48% of the actual value of the property;
 14. that the real estate appraiser Angelo Z. Fajardo appraised the land
at P80,000.00 per hectare for the Riceland and P30,000.00 for all
other portions thereof;

15. testimony of the representative from petitioner that the factors

considered in the appraisal of land are the cost of acquisition of the
land, the current value, its nature, its actual use and income, the
sworn valuation of the owner, and the assessment by the government
functionary concerned;

16. petitioners contention that the main basis for the valuation it made
was the very low price that the petitioners had paid for the land when
they acquired it along with other parcels from the Development Bank
of the Philippines in a foreclosure sale;

17. the testimony of the Municipal Agrarian Reform Officer for DAR that
it was contemplated that the property be disposed to farmer-
beneficiaries at a relatively higher price; and

18. the fact that Ubay town is a fast-growing municipality being a

consistent recipient of government projects and facilities in view of
its natural resources and favorable geographical locationBohol
Circumferential Road Improvement Project Phase I, the Leyte-Bohol
Interconnection Project Phase I, the Ilaya Reservior Irrigation Project,
the Metro San Pascual Rural and Waterworks System, the 250-
hectare Central Visayas Coconut Seeds Production Center, the
Philippine Carabao Center at the Ubay Stock Farm, and several other
public and private business facilities.[25]

In light of these circumstances, the SAC found that the valuation made by
petitioner, and affirmed by the DAR, was unjustly way below the fair valuation of
the landholding at the time of its taking by the DAR. The SAC, mindful also of the
advanced age of respondents at the time of the presentation of evidence for the
determination of just compensation, deemed it proper to grant their motion for
execution pending appeal with the objective of ensuring prompt payment of just
compensation.

Contrary to the view of petitioner, prompt payment of just compensation is

not satisfied by the mere deposit with any accessible bank of the provisional
compensation determined by it or by the DAR, and its subsequent release to the
landowner after compliance with the legal requirements set by RA 6657.

Constitutionally, just compensation is the sum equivalent to the market

value of the property, broadly described as 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 the one who receives and the one who desires to
sell, it being fixed at the time of the actual taking by the government. [26]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 true measure is not the takers gain but the owners loss. The word just is used
to modify the meaning of the word compensation to convey the idea that the
equivalent to be given for the property to be taken shall be real, substantial, full,
and ample.[27]

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
payment within a reasonable time from its taking. Without prompt payment,
compensation cannot be considered just inasmuch as the property owner is 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.[28]

Put differently, while prompt payment of just compensation requires the

immediate deposit and release to the landowner of the provisional compensation
as determined by the DAR, it does not end there. Verily, it also encompasses the
payment in full of the just compensation to the landholders as finally determined
by the courts. Thus, it cannot be said that there is already prompt payment of just
compensation when there is only a partial payment thereof, as in this case.

While this decision does not finally resolve the propriety of the
determination of just compensation by the SAC in view of the separate appeal on
the matter, we find no grave abuse of discretion on the part of the SAC judge in
allowing execution pending appeal. The good reasons cited by the SACthat it would
be in consonance with justice, fairness, and equity, and that suspending payment
will prolong the agony of respondents suffered due to the deprivation of their
landare eloquently elucidated in the Comment filed by SAC Judge Venancio J.
Amila, as nominal party, on the petition for certiorari and prohibition of petitioner
before the Court of Appeals, viz.:

In addition to the Comment of private respondents, through counsel

Hilario C. Baril, which the undersigned has just received a copy today, it
is well to state here that respondent Placido Orilla is already an old man
just as his wife. The appealed Decision will show that Orilla was already
71 years old at the time he testified in this case and the transcripts would
further show that the money that he used in buying the DBP foreclosed
property herein subject of compulsory acquisition by the DAR came from
his retirement benefits evidently thinking that his investment would
afford him security and contentment in his old age. But, luckily or
unluckily, the land was taken from him by the DAR at a price so low that
he could not swallow, thus, he brought the issue to court. Yet, all along,
the land has been under the enjoyment of farmer-beneficiaries without
him yet being paid therefor. In the mind of the Court, if payment for the
land would be delayed further, it would not be long that death would
overtake him. What a misfortune to his long years of service to acquire
that hard-earned savings only to be deprived therefrom at the time when
he needed it most.[29]
 The SAC, aware of the protracted proceedings of the appeal of its November
20, 2000 Decision, but without imputing any dilatory tactics on the part of
petitioner, thus deemed it proper, in its sound discretion, to grant the execution
pending appeal. Moreover, the execution of the judgment of the SAC was
conditioned on the posting of a bond by the respondents, despite pleas to reduce
the same, in the amount of one-half of the just compensation determined by the
said court or P739,511.50.

To reiterate, good reasons for execution pending appeal consist of

compelling or superior circumstances demanding urgency which will outweigh the
injury or damages suffered should the losing party secure a reversal of the
judgment or final order. In the case at bar, even with the procedural flaw in the
SACs grant of execution without a hearing, the injury that may be suffered by
respondents if execution pending appeal is denied indeed outweighs the damage
that may be suffered by petitioner in the grant thereof. As correctly pointed out by
respondents, the reversal of the November 20, 2000 SAC Decision, in the sense that
petitioner will pay nothing at all to respondents, is an impossibility, considering the
constitutional mandate that just compensation be paid for expropriated
property. The posting of the required bond, to our mind, adequately insulates the
petitioner against any injury it may suffer if the SAC determination of just
compensation is reduced.

Suffice it to say that, given the particular circumstances of this case, along
with the considerable bond posted by respondents, the assailed SAC Order
of December 21, 2000 and the Decision of the Court of Appeals dated July 29,
2002 are justified.

WHEREFORE, the Decision of the Court of Appeals dated July 29,

2002 is AFFIRMED.
 SO ORDERED.

FIRST DIVISION

JOSEFINA S. LUBRICA, in her G.R. No. 170220

capacity as Assignee of FEDERICO
C. SUNTAY, NENITA SUNTAY
TAEDO and EMILIO A.M.
SUNTAY III,
Petitioners, Present:
Panganiban, C.J. (Chairperson),
- versus - Ynares-Santiago,
Austria-Martinez,
Callejo, Sr., and
Chico-Nazario, JJ.
LAND BANK OF THE PHILIPPINES,
Respondent. Promulgated:

November 20, 2006

x ---------------------------------------------------------------------------------------- x

DECISION
YNARES-SANTIAGO, J.:

This Petition for Review on Certiorari under Rule 45 of the Rules of Court assails
the October 27, 2005 Amended Decision[1] of the Court of Appeals in CA-G.R. SP
No. 77530, which vacated its May 26, 2004 Decision affirming (a) the Order of the
Regional Trial Court of San Jose, Occidental Mindoro, Branch 46, acting as Special
Agrarian Court, in Agrarian Case Nos. R-1339 and R-1340, dated March 31, 2003
directing respondent Land Bank of the Philippines (LBP) to deposit the provisional
compensation as determined by the Provincial Agrarian Reform Adjudicator
(PARAD); (b) the May 26, 2003 Resolution denying LBPs motion for
reconsideration; and (c) the May 27, 2003 Order requiring Teresita V. Tengco, LBPs
Land Compensation Department Manager, to comply with the March 31, 2003
Order.
The facts of the case are as follows:

Petitioner Josefina S. Lubrica is the assignee[2] of Federico C. Suntay over certain

parcels of agricultural land located at Sta. Lucia, Sablayan, Occidental Mindoro,
with an area of 3,682.0285 hectares covered by Transfer Certificate of Title (TCT)
No. T-31 (T-1326)[3] of the Registry of Deeds of Occidental Mindoro. In 1972, a
portion of the said property with an area of 311.7682 hectares, was placed under the
land reform program pursuant to Presidential Decree No. 27 (1972)[4] and Executive
Order No. 228 (1987).[5] The land was thereafter subdivided and distributed to
farmer beneficiaries. The Department of Agrarian Reform (DAR) and the LBP fixed
the value of the land at P5,056,833.54 which amount was deposited in cash and
bonds in favor of Lubrica.

On the other hand, petitioners Nenita Suntay-Taedo and Emilio A.M. Suntay III
inherited from Federico Suntay a parcel of agricultural land located at Balansay,
Mamburao, Occidental Mindoro covered by TCT No. T-128[6] of the Register of
Deeds of Occidental Mindoro, consisting of two lots, namely, Lot 1 with an area of
45.0760 hectares and Lot 2 containing an area of 165.1571 hectares or a total of
210.2331 hectares. Lot 2 was placed under the coverage of P.D. No. 27 but only
128.7161 hectares was considered by LBP and valued the same at P1,512,575.05.
Petitioners rejected the valuation of their properties, hence the Office of the
Provincial Agrarian Reform Adjudicator (PARAD) conducted summary
administrative proceedings for determination of just compensation. On January 29,
2003, the PARAD fixed the preliminary just compensation at P51,800,286.43 for
the 311.7682 hectares (TCT No. T-31) and P21,608,215.28 for the 128.7161
hectares (TCT No. T-128).[7]

Not satisfied with the valuation, LBP filed on February 17, 2003, two separate
petitions[8] for judicial determination of just compensation before the Regional Trial
Court of San Jose, Occidental Mindoro, acting as a Special Agrarian Court, docketed
as Agrarian Case No. R-1339 for TCT No. T-31 and Agrarian Case No. R-1340 for
TCT No. T-128, and raffled to Branch 46 thereof.
Petitioners filed separate Motions to Deposit the Preliminary Valuation Under
Section 16(e) of Republic Act (R.A.) No. 6657 (1988)[9] and Ad Cautelam Answer
praying among others that LBP deposit the preliminary compensation determined
by the PARAD.

On March 31, 2003, the trial court issued an Order[10] granting petitioners motion,
the dispositive portion of which reads:

WHEREFORE, Ms. Teresita V. Tengco, of the Land Compensation

Department I (LCD I), Land Bank of the Philippines, is hereby ordered
pursuant to Section 16 (e) of RA 6657 in relation to Section 2,
Administrative Order No. 8, Series of 1991, to deposit the provisional
compensation as determined by the PARAD in cash and bonds, as follows:

1. In Agrarian Case No. R-1339, the amount of P 51,800,286.43, minus

the amount received by the Landowner;
2. In Agrarian Case No. R-1340, the amount of P 21,608,215.28, less the
amount of P 1,512,575.16, the amount already deposited.

Such deposit must be made with the Land Bank of

the Philippines, Manila within five (5) days from receipt of a copy of this
order and to notify this court of her compliance within such period.

Let this order be served by the Sheriff of this Court at the expense of the
movants.

SO ORDERED.[11]

LBPs motion for reconsideration was denied in a Resolution[12] dated May 26,
2003. The following day, May 27, 2003, the trial court issued an Order[13] directing
Ms. Teresita V. Tengco, LBPs Land Compensation Department Manager, to deposit
the amounts.

Thus, on June 17, 2003, LBP filed with the Court of Appeals a Petition for Certiorari
and Prohibition under Rule 65 of the Rules of Court with application for the issuance
of a Temporary Restraining Order and Writ of Preliminary Injunction docketed as
CA-G.R. SP No. 77530.[14]
On June 27, 2003, the appellate court issued a 60-day temporary restraining
order[15] and on October 6, 2003, a writ of preliminary injunction.[16]

On May 26, 2004, the Court of Appeals rendered a Decision[17] in favor of the
petitioners, the dispositive portion of which reads:

WHEREFORE, premises considered, there being no grave abuse of

discretion, the instant Petition for Certiorari and Prohibition is DENIED.
Accordingly, the Order dated March 31, 2003, Resolution dated May 26,
2003, and Order dated May 27, 2003 are hereby AFFIRMED. The
preliminary injunction We previously issued is hereby LIFTED and
DISSOLVED.

SO ORDERED.[18]

The Court of Appeals held that the trial court correctly ordered LBP to deposit the
amounts provisionally determined by the PARAD as there is no law which prohibits
LBP to make a deposit pending the fixing of the final amount of just compensation. It
also noted that there is no reason for LBP to further delay the deposit considering
that the DAR already took possession of the properties and distributed the same to
farmer-beneficiaries as early as 1972.

LBP moved for reconsideration which was granted. On October 27, 2005, the
appellate court rendered the assailed Amended Decision,[19] the dispositive portion
of which reads:

Wherefore, in view of the prescription of a different formula in the case

of Gabatin which We hold as cogent and compelling justification
necessitating Us to effect the reversal of Our judgment herein sought to
be reconsidered, the instant Motion for Reconsideration is GRANTED,
and Our May 26, 2004 Decision is hereby VACATED and
ABANDONED with the end in view of giving way to and acting in
harmony and in congruence with the tenor of the ruling in the case of
Gabatin. Accordingly, the assailed rulings of the Special Agrarian Court
is (sic) commanded to compute and fix the just compensation for the
expropriated agricultural lands strictly in accordance with the mode of
computation prescribed (sic) Our May 26, 2004 judgment in the case of
Gabatin.
 SO ORDERED.[20]

In the Amended Decision, the Court of Appeals held that the immediate deposit of
the preliminary value of the expropriated properties is improper because it was
erroneously computed. Citing Gabatin v. Land Bank of the Philippines,[21] it held
that the formula to compute the just compensation should be: Land Value = 2.5 x
Average Gross Production x Government Support Price.Specifically, it held that the
value of the government support price for the corresponding agricultural produce
(rice and corn) should be computed at the time of the legal taking of the subject
agricultural land, that is, on October 21, 1972 when landowners were effectively
deprived of ownership over their properties by virtue of P.D. No. 27. According to
the Court of Appeals, the PARAD incorrectly used the amounts of P500 and P300
which are the prevailing government support price for palay and corn, respectively,
at the time of payment, instead of P35 and P31, the prevailing government support
price at the time of the taking in 1972.

Hence, this petition raising the following issues:

A. THE COURT A QUO HAS DECIDED THE CASE IN A WAY NOT

IN ACCORD WITH THE LATEST DECISION OF THE SUPREME
COURT IN THE CASE OF LAND BANK OF THE PHILIPPINES VS.
HON. ELI G.C. NATIVIDAD, ET AL., G.R. NO. 127198, PROM. MAY
16, 2005; and[22]

B. THE COURT A QUO HAS, WITH GRAVE GRAVE ABUSE OF

DISCRETION, SO FAR DEPARTED FROM THE ACCEPTED AND
USUAL COURSE OF JUDICIAL PROCEEDINGS, DECIDING
ISSUES THAT HAVE NOT BEEN RAISED, AS TO CALL FOR AN
EXERCISE OF THE POWER OF SUPERVISION.[23]

Petitioners insist that the determination of just compensation should be based on the
value of the expropriated properties at the time of payment. Respondent LBP, on the
other hand, claims that the value of the realties should be computed as of October
21, 1972when P.D. No. 27 took effect.
The petition is impressed with merit.
In the case of Land Bank of the Philippines v. Natividad,[24] the Court ruled thus:

Land Banks contention that the property was acquired for purposes
of agrarian reform on October 21, 1972, the time of the effectivity of PD
27, ergo just compensation should be based on the value of the property
as of that time and not at the time of possession in 1993, is likewise
erroneous. In Office of the President, Malacaang, Manila v. Court of
Appeals, we ruled that the seizure of the landholding did not take place on
the date of effectivity of PD 27 but would take effect on the payment of
just compensation.

The Natividad case reiterated the Courts ruling in Office of the President v.
Court of Appeals[25] that the expropriation of the landholding did not take place on
the effectivity of P.D. No. 27 on October 21, 1972 but seizure would take effect on
the payment of just compensation judicially determined.

Likewise, in the recent case of Heirs of Francisco R. Tantoco, Sr. v. Court of

Appeals,[26] we held that expropriation of landholdings covered by R.A. No. 6657
take place, not on the effectivity of the Act on June 15, 1988, but on the payment of
just compensation.

In the instant case, petitioners were deprived of their properties in 1972 but
have yet to receive the just compensation therefor.The parcels of land were already
subdivided and distributed to the farmer-beneficiaries thereby immediately
depriving petitioners of their use. Under the circumstances, it would be highly
inequitable on the part of the petitioners to compute the just compensation using the
values at the time of the taking in 1972, and not at the time of the payment,
considering that the government and the farmer-beneficiaries have already benefited
from the land although ownership thereof have not yet been transferred in their
names.Petitioners were deprived of their properties without payment of just
compensation which, under the law, is a prerequisite before the property can be taken
away from its owners.[27] The transfer of possession and ownership of the land to the
government are conditioned upon the receipt by the landowner of the corresponding
payment or deposit by the DAR of the compensation with an accessible bank. Until
then, title remains with the landowner.[28]
 Our ruling in Association of Small Landowners in the Philippines, Inc. v.
Secretary of Agrarian Reform[29] is instructive, thus:

It is true that P.D. No. 27 expressly ordered the emancipation of

tenant-farmer as October 21, 1972 and declared that he shall be deemed
the owner of a portion of land consisting of a family-sized farm except
that no title to the land owned by him was to be actually issued to him
unless and until he had become a full-fledged member of a duly
recognized farmers cooperative. It was understood, however, that full
payment of the just compensation also had to be made first, conformably
to the constitutional requirement.

When E.O. No. 228, categorically stated in its Section 1 that:

All qualified farmer-beneficiaries are now deemed full

owners as of October 21, 1972 of the land they acquired by
virtue of Presidential Decree No. 27 (Emphasis supplied.)

it was obviously referring to lands already validly acquired under the said
decree, after proof of full-fledged membership in the farmers cooperatives
and full payment of just compensation. x x x

The CARP Law, for its part, conditions the transfer of possession
and ownership of the land to the government on receipt by the landowner
of the corresponding payment or the deposit by the DAR of the
compensation in cash or LBP bonds with an accessible bank.Until then,
title also remains with the landowner. No outright change of ownership is
contemplated either.

We also note that the expropriation proceedings in the instant case was
initiated under P.D. No. 27 but the agrarian reform process is still incomplete
considering that the just compensation to be paid to petitioners has yet to be
settled. Considering the passage of R.A. No. 6657 before the completion of this
process, the just compensation should be determined and the process concluded
under the said law. Indeed, R.A. No. 6657 is the applicable law, with P.D. No. 27
and E.O. No. 228 having only suppletory effect.[30]

In Land Bank of the Philippines v. Court of Appeals,[31] we held that:

 RA 6657 includes PD 27 lands among the properties which the
DAR shall acquire and distribute to the landless. And to facilitate the
acquisition and distribution thereof, Secs. 16, 17 and 18 of the Act should
be adhered to.

Section 18 of R.A. No. 6657 mandates that the LBP shall compensate the
landowner in such amount as may be agreed upon by the landowner and the DAR
and the LBP or as may be finally determined by the court as the just compensation
for the land. In determining just compensation, the cost of the 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 farmworkers and by the government to the
property as well as the nonpayment of taxes or loans secured from any government
financing institution on the said land shall be considered as additional factors to
determine its valuation.[32]

Corollarily, we held in Land Bank of the Philippines v. Celada[33] that the

above provision was converted into a formula by the DAR through Administrative
Order No. 05, S. 1998, to wit:

Land Value (LV) = (Capitalized Net Income x 0.6) + (Comparable Sales x

0.3) + (Market Value per Tax Declaration x 0.1)

Petitioners were deprived of their properties way back in 1972, yet to date, they have
not yet received just compensation. Thus, it would certainly be inequitable to
determine just compensation based on the guideline provided by P.D. No. 227 and
E.O. No. 228 considering the failure to determine just compensation for a
considerable length of time. That just compensation should be determined in
accordance with R.A. No. 6657 and not P.D. No. 227 or E.O. No. 228, is important
considering that just compensation should be the full and fair equivalent of the
property taken from its owner by the expropriator, the equivalent being real,
substantial, full and ample.[34]

WHEREFORE, premises considered, the petition is GRANTED. The assailed

Amended Decision dated October 27, 2005 of the Court of Appeals in CA-G.R. SP
No. 77530 is REVERSED and SET ASIDE. The Decision dated May 26, 2004 of
the Court of Appeals affirming (a) the March 31, 2003 Order of the Special Agrarian
Court ordering the respondent Land Bank of the Philippines to deposit the just
compensation provisionally determined by the PARAD; (b) the May 26, 2003
Resolution denying respondents Motion for Reconsideration; and (c) the May 27,
2003 Order directing Teresita V. Tengco, respondents Land Compensation
Department Manager to comply with the March 31, 2003 Order,
is REINSTATED. The Regional Trial Court of San Jose, Occidental Mindoro,
Branch 46, acting as Special Agrarian Court is ORDERED to proceed with dispatch
in the trial of Agrarian Case Nos. R-1339 and R-1340, and to compute the final
valuation of the subject properties based on the aforementioned formula.

SO ORDERED.