Philippine Supreme Court Jurisprudence > Year 2012 > March 2012 Decisions > [G.R. No. 188670 : March 07, 2012] DEPARTMENT OF AGRARIAN REFORM, REPRESENTED BY OIC-SECRETARY JOSE MARI B. PONCE, NOW BY SECRETARY NASSER C. PANGANDAMAN, PETITIONER, VS. HEIRS OF ANGEL T. DOMINGO, RESPONDENTS. :

This is a petition for review on certiorari under Rule 45 of the Rules of Court filed by the Department of Agrarian Reform (DAR) assailing the Decision^[1] dated June 30, 2009 issued by the Court of Appeals (CA) in the consolidated cases of CA-G.R. SP Nos. 83765 and 84791 entitled �Land Bank of the Philippines v. Heirs of Angel T. Domingo� and �Department of Agrarian Reform v. Heirs of Angel T. Domingo,� respectively.cralaw

The late Angel T. Domingo (Domingo) is the registered owner of a 70.3420-hectare rice land situated at Macapabellag, Guimba, Nueva Ecija, covered by Transfer Certificate of Title No. NT-97157.

On October 21, 1972, Presidential Decree No. 27^[2] (P.D. No. 27) was issued, pursuant to which actual tenant farmers of private agricultural lands devoted to rice and corn were deemed as full owners of the land they till. The land transfer program under P.D. No. 27 was subsequently implemented by Executive Order No. 228^[3] (E.O. No. 228) which was issued on July 17, 1987.

Consequently, out of the 70.3420 hectares of the said rice land, 34.9128 hectares (subject land) were taken by the government under its land transfer program and awarded the same to tenant farmers. Several Emancipation Patents were then issued to qualified tenant farmers on various dates, to wit:

Date Issued	Number Emancipation Patents Issued	Total Area Covered
April 29, 1988	11	21.8520 hectares
October 4, 1994	3	2.9372 hectares
July 29, 1997	3	7.3997 hectares
February 21, 2001	1	2.7245 hectares

On April 26, 2000, Domingo filed with the Regional Trial Court (RTC) of Guimba, Nueva Ecija a complaint for determination and payment of just compensation against the Land Bank of the Philippines (LBP) and DAR. Apparently, the LBP and DAR initially pegged the amount of just compensation for the subject land at P127,298.61.

Domingo opposed the said valuation and claimed that the just compensation for the subject land should be computed using the parameters set forth under Republic Act No. 6657^[4] (R.A. No. 6657). Thus, Domingo claimed that the just compensation for the subject land should not be less than P5,236,920.00 for the whole 34.9128 hectares or P150,000.00 per hectare. He asserted that the subject land is a fully irrigated rice land capable of one-half harvest in two years, yielding an average harvest of 50 cavans per hectare. He likewise claimed that he has yet to receive the just compensation for the subject land.

The LBP and DAR disputed Domingo�s valuation and claimed that the determination of just compensation should be governed by the provisions of P.D. No. 27 in relation to E.O. No. 228, i.e. Land Value = Average Gross Production (AGP) x 2.5 x P35.00,^[5] the latter amount representing the Government Support Price (GSP) on October 21, 1972. Thus, using this formula, they claimed that the just compensation for the subject land should be P459,091.60 inclusive of the benefit of DAR Administrative Order No. 13^[6] (A.O. No. 13).

Further, the LBP asserted that it had already paid Domingo the just compensation for the subject land, the latter having withdrawn the amounts of P419,438.17 and P39,653.43.

On January 21, 2004, the RTC rendered a Decision which, inter alia, fixed the just compensation for the subject land at P3,709,999.49. Evidently, the RTC used the method set forth under P.D. No. 27 in relation to E.O. No. 228 except that it used the GSP rate at the time of issuance of the various Emancipation Patents. The RTC computed the just compensation as follows:

a. For the 21.8520 hectare portion taken in 1988

=  91.42 x 2.5 x 175
=  P39,996.25 x 21.8520
=  P873,998.05 x 2.397 (Annual compounding rate of 6% p/a for 15 years)
=  P2,094,973.32

b.  For the 2.9372 hectare portion taken in 1994

=  91.42 x 2.5 x 300
=  P68,565.00 per hectare x 2.9372
=  P201,389.11 x 1.689 (Annual compounding rate of 6% pa)
=  P340,146.20

c. For the 7.3997 hectare portion taken in 1997

=  91.42 x 2[.]5 x 400
=  91.420 (sic) per hectare x 7.3997
=  676,480.74 x 1.419 (Annual compounding rate of 6% pa for 6 years)
=  P959,926.17

d.  For the 2.7245 hectare portion taken in 2001

=  91.42 x 2.5 x 450
=  P102,847.50 per hectare x 2.72^[4]5
=  P280,208.01 x 1.124 (Annual compounding rate of 6% for 2 years)
=  P314,953.80
or a total of P3,709,999.49 x x x^[7]

The LBP and DAR filed their respective motions for reconsideration, which were partially granted by the RTC in its Order dated March 29, 2004. Accordingly, the RTC, after deleting the 6% additional increment it imposed, directed the LBP and DAR to pay Domingo the total amount of P2,032,075.91 as just compensation for the subject land.

The LBP and DAR then appealed from the foregoing disposition of the RTC. On June 30, 2009, the CA rendered the herein assailed Decision, the decretal portion of which reads:

WHEREFORE, the decision of the RTC is AFFIRMED with MODIFICATION. Conformably, the RTC of Guimba, Nueva Ecija, Branch 33, acting as a Special Agrarian Court, is DIRECTED to compute the final valuation of the subject land with deliberate dispatch in accordance with this Decision.

SO ORDERED.^[8]

In remanding the case to the RTC for the computation of the just compensation due on the subject land, the CA ruled that:

In fine, the RTC did not commit an error when it applied the provisions of R.A. 6657 and that the date of taking of Domingo�s rice land for purposes of computing just compensation should be reckoned from the issuance dates of emancipation patents. However, the just compensation for the subject land in the present case should be computed in accordance with Lubrica vs. Land Bank x x x. In said case, it was held that:

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 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.

In the case of Land Bank of the Philippines v. Celada x x x, 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)^[9]

Undaunted, the DAR instituted the instant petition for review on certiorari before this Court alleging that the CA erred when it affirmed the ruling of the RTC that, for purposes of determining the just compensation for lands covered by P.D. No. 27, the provisions of R.A. No. 6657 must be applied.

In their comment,^[10] the respondents Heirs of Angel T. Domingo asserted that the instant petition ought to be denied, asserting that this Court, in a long line of cases, had established that the method of computing for just compensation set forth under R.A. No. 6657 applies to lands taken by the government under P.D. No. 27 in relation to E.O. No. 228.

Basically, this Court is called upon to determine this issue: whether the method set forth under R.A. No. 6657 in the computation of just compensation may be applied to private agricultural lands taken by the government under the auspices of P.D. No. 27 in relation to E.O. No. 228.

We rule in the affirmative.

The issue presented by the instant case is not novel. In Land Bank of the Philippines v. Natividad,^[11] this Court held that just compensation for private agricultural lands acquired by the government under the auspices of P.D. No. 27 in relation to E.O. No. 228 should be computed in accordance with the method set forth under R.A. No. 6657. Thus:

Land Bank�s 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, Malaca�ang, 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.

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 (RA 6657) before the completion of this 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.

x x x

It would certainly be inequitable to determine just compensation based on the guideline provided by PD 27 and EO 228 considering the DAR�s failure to determine the just compensation for a considerable length of time. That just compensation should be determined in accordance with RA 6657, and not PD 27 or EO 228, is especially imperative 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.^[12] (Citations omitted and emphasis supplied)

Likewise, in the cognate case of Land Bank of the Philippines v. Heirs of Angel T. Domingo,^[13] this court held that:

LBP�s contention that the property was taken on 21 October 1972, the date of effectivity of PD 27, thus just compensation should be computed based on the GSP in 1972, is erroneous. 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.

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 which states:

�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.�

x x x

In sum, we affirm the rulings of the trial court and the appellate court that the provisions of RA 6657 apply to the present case and that the date of taking of Domingo�s riceland for purposes of computing just compensation should be reckoned from the issuance dates of emancipation patents.^[14] x x x (Citations omitted and emphasis supplied)

Indeed, it would be the height of inequity if we are to compute the just compensation for the subject land using the values at the time when P.D. No. 27 was issued. Admittedly, the expropriation of the subject land was initiated under P.D. No. 27. Nevertheless, with the passage of R.A. No. 6657, the CA aptly ruled that the method set forth thereunder should be adopted in computing just compensation for the subject land.

In sum, 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 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.^[15]cralaw

WHEREFORE, in consideration of the foregoing disquisitions, the petition is DENIED. The assailed Decision dated June 30, 2009 issued by the Court of Appeals in CA-G.R. SP Nos. 83765 and 84791 are AFFIRMED.

SO ORDERED.

Carpio, Brion, Perez, and Sereno, JJ., concur.

Endnotes:

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^[1] Penned by Associate Justice Romeo F. Barza, with Associate Justices Josefina Guevara-Salonga and Arcangelita M. Romilla-Lontok, concurring; rollo, pp. 25-37.

^[2] �Decreeing the Emancipation of Tenants From the Bondage of the Soil, Transferring to Them the Ownership of the Land They Till and Providing the Instruments and Mechanism Therefor.�

^[3] �Declaring Full Land Ownership to Qualified Farmer Beneficiaries Covered by Presidential Decree No. 27; Determining the Value of Remaining Unvalued Rice and Corn Lands Subject to P.D. No. 27; and Providing for the Manner of Payment by the Farmer Beneficiary and Mode of Compensation to the Landowner.�

^[4] �An Act Instituting a Comprehensive Agrarian Reform Program to Promote Social Justice and Industrialization, Providing the Mechanism for its Implementation and for Other Purposes�.

^[5] Section 2 of E.O. No. 228 reads:

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 regulations of the Department of Agrarian Reform.  The average gross production shall be multiplied by two and a half (2.5), the product of which shall be multiplied by Thirty-Five Pesos (P35), the government support price for one cavan of 50 kilos of palay on October 21, 1972, or Thirty-One Pesos (P31), 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.

^[6] �Rules and Regulations Governing Grant of Increment of Six Percent (6%) Yearly Interest Compounded Annually on Lands Covered by P.D. No. 27 and E.O. No. 228�.

^[7] Rollo, pp. 28-29.

^[8] Id. at 36.

^[9] Id. at 34-35.

^[10] Id. at 64-74.

^[11] 497 Phil. 738 (2005).

^[12] Id. at 746-747.

^[13] G.R. No. 168533, February 4, 2008, 543 SCRA 627.

^[14] Id. at 642-643.

^[15] Section 17, R.A. No. 6657.