Land Bank v. Estanislao
REITERATIONFacts
The Antecedents: Respondents, Spouses Vicente M. Estanislao and Luz B. Hermosa, are the registered owners of eight parcels of land totaling 10.8203 hectares. In 1996, 1997, and 1999, 10.5321 hectares of these lands were awarded to tenant-beneficiaries under the Operation Land Transfer Program (OLT) pursuant to Presidential Decree (P.D.) No. 27. The Land Bank of the Philippines (petitioner), together with the Department of Agrarian Reform (DAR), valued the subject lots at P97,895.00 or P1.075 per square meter, applying Executive Order (E.O.) 228 and DAR Administrative Order 13, series of 1994, which included an interest increment. Petitioner deposited P237,089.02 in favor of respondents, but respondents rejected this valuation. Procedural History: Respondents filed a complaint before the Special Agrarian Court (SAC) for the determination of fair market value and just compensation, praying for P20 per square meter. The SAC, after appointing commissioners, fixed the just compensation at P20 per square meter, considering the lots' location along the Roman Super-Highway, irrigation systems, and high yield. Petitioner moved for reconsideration, which was denied. Petitioner appealed to the Court of Appeals, which affirmed the SAC's decision. Petitioner's subsequent motion for reconsideration was also denied, leading to the present petition for review. The Petition: Petitioner Land Bank of the Philippines challenges the Court of Appeals' decision, raising the issue of whether the Special Agrarian Court can disregard the formula prescribed under P.D. No. 27 and E.O. 228 in fixing the just compensation for P.D. 27-covered land.
Issue(s)
Whether the Special Agrarian Court can disregard the formula prescribed under P.D. No. 27 and E.O. 228 in fixing the just compensation of P.D. 27-covered land. Whether the taking of the subject lots for agrarian reform purposes occurred on October 21, 1972, the effectivity date of P.D. No. 27, or upon payment of just compensation.
Ruling
The petition is bereft of merit. The Court of Appeals' Decision dated October 13, 2004, and Resolution dated January 19, 2005, are hereby AFFIRMED.
Ratio Decidendi
On whether the Special Agrarian Court can disregard the formula prescribed under P.D. No. 27 and E.O. 228 in fixing the just compensation of P.D. 27-covered land: The Supreme Court affirmed the SAC's decision to fix just compensation at P20 per square meter, disregarding the formula under P.D. No. 27 and E.O. 228. The Court reiterated its ruling in Land Bank of the Philippines v. Natividad that when the agrarian reform process remains incomplete due to the pending settlement of just compensation, and Republic Act No. 6657 (R.A. 6657) has been enacted, R.A. 6657 becomes the applicable law. Presidential Decree No. 27 and Executive Order No. 228 are considered to have only suppletory effect in such circumstances. The Court emphasized that it would be inequitable to determine just compensation based on the guidelines of P.D. 27 and E.O. 228, especially given the DAR's delay in determining compensation. The determination must be in accordance with R.A. 6657 to ensure full and fair equivalent of the property taken. On whether the taking of the subject lots for agrarian reform purposes occurred on October 21, 1972, or upon payment of just compensation: The Court reiterated that the "seizure" or taking of landholdings covered by P.D. No. 27 does not take place on its effectivity date of October 21, 1972, but rather upon the payment of just compensation. This principle was established in Office of the President, Malacañang, Manila v. Court of Appeals. Consequently, since R.A. No. 6657 was enacted before the completion of the agrarian reform process and the settlement of just compensation, it is the governing law for determining such compensation. The Court found that the trial court correctly considered various factors under Section 17 of R.A. No. 6657, including the land's nature, location, market value, and assessment by government assessors, in arriving at the P20 per square meter valuation. This valuation was deemed just and reasonable, taking into account the subject lots' classification as first-class agricultural land, their location along the Roman Super-Highway, and proximity to an industrial zone.
Main Doctrine
The determination of just compensation for lands covered by Presidential Decree No. 27, when the agrarian reform process is still incomplete and Republic Act No. 6657 has already been enacted, must be made in accordance with Republic Act No. 6657, with Presidential Decree No. 27 and Executive Order No. 228 having only suppletory effect. The 'taking' of the property for purposes of agrarian reform occurs upon the payment of just compensation, not on the date of the effectivity of Presidential Decree No. 27.