Land Bank v. Cruz
REITERATIONFacts
The Antecedents: Eleuterio Cruz was the registered owner of a riceland. A portion of this landholding, 13.5550 hectares out of 13.7320 hectares, was placed under the coverage of the operation land transfer program under Presidential Decree (P.D.) No. 27. The Land Bank of the Philippines (LBP) pegged the value of the acquired landholding at P106,935.76. The Heirs of Eleuterio Cruz rejected this valuation and initiated a summary proceeding before the Provincial Agrarian Reform Adjudicator (PARAD), who fixed the just compensation at P80,000.00 per hectare. Procedural History: The LBP filed a petition for the determination of just compensation before the Regional Trial Court (RTC) of Tuguegarao City, sitting as a Special Agrarian Court (SAC). The SAC, on December 7, 2005, fixed the just compensation at P80,000.00 per hectare, ordering the LBP to pay P1,098,560.00. The SAC disregarded the LBP's valuation based on P.D. No. 27 and the landowners' claim for valuation based on current market value due to lack of evidence. The SAC affirmed the PARAD's valuation, stating it was guided by Section 17 of R.A. No. 6657. The LBP's motion for reconsideration was denied. The Court of Appeals (CA) partly granted the LBP's appeal, correcting the land area to 13.5550 hectares but affirming the P80,000.00 per hectare valuation. The CA denied the LBP's motion for reconsideration. The Petition: The LBP filed a Petition for Review on Certiorari, arguing that the formula set forth in P.D. No. 27/E.O. No. 228 should be applied since the landholding was acquired under P.D. No. 27, and that just compensation should be determined at the time of taking, October 21, 1972.
Issue(s)
Whether the determination of just compensation for lands acquired under P.D. No. 27 should be based on the formula provided in P.D. No. 27 and E.O. No. 228, or on the parameters set forth in R.A. No. 6657. Whether the valuation of P80,000.00 per hectare fixed by the PARAD, SAC, and CA is supported by sufficient evidence and legal basis.
Ruling
The petition is denied. The decision and resolution of the Court of Appeals are reversed and set aside. The case is remanded to the Regional Trial Court, Branch 1, Tuguegarao City, Cagayan, for the determination of just compensation strictly in accordance with DAR A.O. No. 5, series of 1998.
Ratio Decidendi
On the applicable law for determining just compensation: The Court reiterated that for lands acquired under P.D. No. 27, where the process of agrarian reform was not completed before the effectivity of R.A. No. 6657, the determination of just compensation must be based on the parameters set out in R.A. No. 6657. Presidential Decree No. 27 and Executive Order No. 228 are only suppletory in such cases. This is because it would be inequitable to determine just compensation based on older guidelines when there has been a considerable delay in its determination, and just compensation must be the full and fair equivalent of the property taken. The Court emphasized that the factors enumerated under Section 17 of R.A. No. 6657 have been translated into a basic formula by the Department of Agrarian Reform (DAR) pursuant to its rule-making power, specifically DAR A.O. No. 5, series of 1998, which should be applied. On the valuation of the land: The Court found that the valuation of P80,000.00 per hectare, as fixed by the PARAD and affirmed by the SAC and CA, was sorely lacking in evidentiary or legal basis. While the SAC referred to DAR A.O. No. 6, series of 1992, as amended, it noted that no evidence was presented by the respondents on the required parameters (Capitalized Net Income, Comparable Sales, and Market Value based on tax declaration). The SAC then adopted the PARAD's finding without sufficient basis. The Court acknowledged that while it generally upholds factual findings of lower courts affirmed by the CA, this rule admits exceptions when such findings are grounded on speculation or lack citation of specific evidence. Given the insufficiency of evidence on record to determine just compensation in accordance with DAR A.O. No. 5, series of 1998, the Court deemed it necessary to remand the case for proper determination.
Main Doctrine
The determination of just compensation for lands acquired under Presidential Decree No. 27, when the process was not completed before the effectivity of Republic Act No. 6657, must 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. The formula prescribed in DAR Administrative Order No. 5, series of 1998, must be strictly applied.