Department of Agrarian Reform v. Spouses Sta. Romana
REITERATIONFacts
The Antecedents: The Department of Agrarian Reform (DAR) compulsorily acquired a 21.2192-hectare portion of the respondents' 27.5307-hectare agricultural land under Presidential Decree No. 27 (PD 27). The Land Bank of the Philippines (LBP) initially fixed the value of the subject land at ₱361,181.87 using the formula under Executive Order No. 228 (EO 228). Procedural History: Dissatisfied with the LBP valuation, the respondents filed a Petition for Appraisal of Just Compensation before the Regional Trial Court (RTC). The RTC, considering the factors under Section 17 of Republic Act No. 6657 (RA 6657), fixed the just compensation at ₱2,576,829.94. The Court of Appeals (CA) affirmed the RTC Decision. The DAR and LBP appealed to the Supreme Court. The Petition: The DAR filed a petition for review on certiorari, assailing the CA Decision and Resolution. The LBP also filed a petition, which was later withdrawn and remanded to the RTC for re-computation based on Section 17 of RA 6657, as amended. The DAR, in its memorandum, prayed for the adoption of the LBP valuation or, alternatively, for a remand to the RTC.
Issue(s)
Whether the subject land was properly valued in accordance with the factors set forth in Section 17 of RA 6657, as amended, considering the interplay between RA 6657, PD 27, and EO 228. Whether the RTC and CA erred in applying RA 6657 to determine just compensation for land acquired under PD 27, specifically regarding the timing of expropriation and the completeness of the agrarian reform process.
Ruling
The Supreme Court denied the DAR's petition insofar as it sought to sustain the LBP valuation. The Court reversed and set aside the CA Decision and Resolution, remanding the case to the RTC for reception of evidence on the issue of just compensation in accordance with Section 17 of RA 6657, as amended.
Ratio Decidendi
On the proper valuation of the subject land under RA 6657: The Court reiterated that when the agrarian reform process is incomplete, just compensation should be determined under RA 6657, with PD 27 and EO 228 having only suppletory effects. RA 6657 supersedes PD 27 and EO 228 where RA 6657 is sufficient. The fair market value is determined by its character and price at the time of taking, considering the factors under Section 17 of RA 6657 (acquisition cost, current value of like properties, nature and actual use, income, owner's sworn valuation, tax declarations, government assessments, social and economic benefits, and non-payment of taxes or loans). The Court found that the RTC only considered the acquisition price of another landholding and the respondents' market value declaration, failing to consider other factors under Section 17 of RA 6657. Consequently, the CA erred in upholding the RTC's valuation. On the application of RA 6657 to land acquired under PD 27: The Court clarified that the expropriation of a landholding covered by PD 27 is not considered to have taken place on the decree's effectivity date but at the time of payment of just compensation. Therefore, it would be inequitable to base just compensation on PD 27 and EO 228 when the seizure of the land occurred after the enactment of RA 6657. Since the agrarian reform process remained incomplete and RA 6657 was enacted in the interim, the CA correctly ruled that the RTC valuation, computed in accordance with Section 17 of RA 6657, should be upheld. However, the Court found that the RTC did not fully consider all the factors under Section 17 of RA 6657, necessitating a remand.
Main Doctrine
When the agrarian reform process is still incomplete, as in this case where the just compensation for the subject land acquired under PD 27 has yet to be paid, just compensation should be determined and the process concluded under RA 6657, with PD 27 and EO 228 having mere suppletory effects. For purposes of determining just compensation, the fair market value of an expropriated property is determined by its character and its price at the time of taking, considering the factors enumerated under Section 17 of RA 6657, as amended.