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619 Phil. 359


[ G.R. No. 180803, October 23, 2009 ]




Subject of the present controversy is a 27.3808-hectare portion (the property) of two (2) parcels of tenanted rice land located at Barangay Magallon Cadre, Moises Padilla, Negros Occidental, covered by Transfer Certificates of Title (TCT) Nos. T-72323 and T-72324 registered in the name of J. L. Jocson and Sons[1] (respondent).

The property was placed under the coverage of the government's Operation Land Transfer[2] (OLT) pursuant to Presidential Decree (P.D.) No. 27[3] and awarded to the tenant-beneficiaries by the Department of Agrarian Reform (DAR), which valued the compensation therefor in the total amount of P250,563.80 following the formula prescribed in P.D. No. 27 and Executive Order (E.O.) No. 228.[4]

The valuation was later increased to P903,637.03 after computing the 6% annual interest increment[5] due on the property per DAR Administrative Order No. 13, series of 1994, which amount respondent withdrew in 1997, without prejudice to the outcome of the case it had filed hereunder to fix just compensation.

Finding the DAR's offer of compensation for the property to be grossly inadequate, respondent filed a complaint[6] on July 18, 1997 before the Regional Trial Court of Bacolod City, Br. 46, sitting as a Special Agrarian Court (SAC), against the Land Bank (petitioner),[7] the DAR, and the tenant-beneficiaries, for "Determination and Fixing of Just Compensation for the Acquisition of Land and Payment of Rentals."

The complaint prayed that petitioner and the DAR be ordered to compute the just compensation for the property in accordance with the guidelines laid down in Section 17 of Republic Act (R.A.) No. 6657[8] or the Comprehensive Agrarian Reform Law of 1988.

In their respective Answers, petitioner and the DAR claimed that the property was acquired by the government under its OLT program and their valuation thereof constituted just compensation, having been made pursuant to the guidelines set by E.O. No. 228 and P.D. No. 27.

By Decision[9] of May 19, 2003, the SAC, after noting the report contained in a Compliance[10] submitted on February 29, 2000 of the Commissioners[11] appointed to receive and evaluate evidence on the amount of compensation to be paid to respondent, fixed the just compensation at P2,564,403.58[12] (inclusive of the P903,637.03 earlier withdrawn).

In arriving at the just compensation, the SAC adopted a higher valuation (P93,657.00/hectare) which the DAR had applied to a similar landholding belonging to one Pablo Estacion adjacent to respondent's. Thus the SAC disposed:

WHEREFORE, premises considered, judgment is hereby rendered ordering defendant Land Bank of the Philippines to pay plaintiff the total amount of P1,660,766.55.

No pronouncement as to costs.


Both petitioner and the DAR filed motions for reconsideration of the SAC Decision but the same were denied,[14] prompting petitioner to appeal to the Court of Appeals[15] via petition for review[16] pursuant to Section 60[17] of R.A. No. 6657 vis a vis Rule 42 of the Revised Rules of Court.

Assailing the SAC's decision fixing the amount of just compensation for respondent's properties at P2,564,403.58 as a violation of P.D. No. 27 and E.O. No. 228, petitioner insisted that the SAC erred in using P300.00 as the government support price (GSP) in 1992, instead of P35.00 as provided under E.O. No. 228, considering that respondent's property was acquired under OLT pursuant to P.D. No. 27.

The appellate court dismissed petitioner's petition for review for lack of jurisdiction. It held that aside from the fact that the SAC's factual findings were not controverted, the main issue - whether P.D. No. 27 and E.O. No. 228, as claimed by petitioner, or R.A. No. 6657, as claimed by respondent, should govern in determining the value of the property - involved pure questions of law and, as such, cognizable only by this Court.[18]

Its Motion for Reconsideration having been denied,[19] the present petition for review was filed, petitioner arguing that "the allegations in petitioner LBP's Petition for Review filed with the Court of Appeals raise mixed questions of fact and law, . . . [hence,] cognizable by the Court of Appeals."[20]

The petition is partly impressed with merit.

Gabatin v. Land Bank of the Philippines[21] reiterated the settled rule that a petition for review under Rule 42 of the Revised Rules of Court, and not an ordinary appeal under Rule 41, is the appropriate mode of appeal from decisions of RTCs acting as SACs. In Gabatin, the Court sustained the appellate court's assumption of jurisdiction over an appeal from the SAC even if its dismissal had been sought on the ground that the issues presented before the appellate court were purely legal in nature. Also apropos is this Court's ruling in Land Bank of the Philippines v. De Leon:[22]

Third, far from being in conflict, Section 61 of RA 6657 can easily be harmonized with Section 60. The reference to the Rules of Court means that the specific rules for petitions for review in the Rules of Court and other relevant procedures in appeals filed before the Court of Appeals shall be followed in appealed decisions of Special Agrarian Courts. Considering that RA 6657 cannot and does not provide the details on how the petition for review shall be conducted, a suppletory application of the pertinent provisions of the Rules of Court is necessary. In fact, Section 61 uses the word "review" to designate the mode by which the appeal is to be effected. The reference therefore by Section 61 to the Rules of Court only means that the procedure under Rule 42 for petitions for review is to be followed for appeals in agrarian cases. (Underlining supplied.)

Clearly, jurisdiction over appeals from decisions of the SAC resides in the Court of Appeals via a Rule 42 petition for review, which may raise either questions of fact, or of law, or mixed questions of fact and law.[23]

AT ALL EVENTS, this Court resolves to exercise its mandate as a court of justice and equity,[24] taking into account that more than a decade has passed since the case was filed before the SAC, and thus disposes of the lone substantive issue raised - whether the SAC erred in using P300.00 as the GSP in 1992.

Petitioner maintains that the SAC erred in adopting such GSP rate in determining just compensation for rice and corn lands; and that the factual question brought before the appellate court for resolution is: "What is the GSP that must be used in valuing subject property? Is it THIRTY FIVE PESOS (Php 35.00), as mandated under P.D. No. 27/E.O. No. 228? Or THREE HUNDRED PESOS (Php 300.00), the alleged GSP for 1992?"[25]

What petitioner essentially assails is the SAC's application of R.A. No. 6657 in the valuation of properties acquired under P.D. No. 27's OLT.

Citing National Power Corp. v. Gutierrez,[26] petitioner argues that the determination of just compensation should be based on the value of the land at the time it was taken by the government, and since it is not disputed that respondent's property falls under the coverage of OLT, then P.D. No. 27 should apply vis a vis Section 2 of E.O. No. 228 which laid down the formula for determining the value of remaining unvalued rice and corn lands subject to P.D. No. 27, to wit:

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 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.

Petitioner's interpretation is flawed. In the recent case of Land Bank of the Philippines v. Chico,[27] the Court declared in no uncertain terms that R.A. No. 6657 is the relevant law for determining just compensation after noting several decided cases[28] where the Court found it more equitable to determine just compensation based on the value of the property at the time of payment. This was a clear departure from the Court's earlier stance in Gabatin v. Land Bank of the Philippines[29] where it declared that the reckoning period for the determination of just compensation is the time when the land was taken applying P.D. No. 27 and E.O. No. 228.

P.D. No. 27/E.O. No. 228 vis a vis R.A. No. 6657 was applied to cases involving lands placed under the coverage of P.D. No. 27/E.O. No. 228 where payment of just compensation had not been completed. When in the interim R.A. No. 6657 was passed before the full payment of just compensation, as in the case at bar, the provisions of R.A. No. 6657 on just compensation control.[30]

Discussing the retroactive application of the provisions of R.A. No. 6657 for lands yet to be paid by the government although expropriated under P.D. No. 27, this Court in Land Bank of the Philippines v. Estanislao[31] ratiocinated:

Petitioner, citing Gabatin v. Land Bank of the Philippines, contends that the taking of the subject lots was deemed effected on October 21, 1972, when respondents were, under P.D. No. 27 deprived of ownership over the subject lands in favor of qualified beneficiaries.

Petitioner further contends that the fixing of the value of the land under E.O. 228, using the government support price of P35 for one cavan of 50 kilos of palay as of October 21, 1972, was in keeping with the settled rule that just compensation should be based on the value of the property at the time of taking.

The petition is bereft of merit.

This Court held in Land Bank of the Philippines v. Natividad that seizure of landholdings or properties covered by P.D. No. 27 did not take place on October 21, 1972, but upon the payment of just compensation. Taking into account the passage in 1988 of R.A. No. 6657 pending the settlement of just compensation, this Court concluded that it is R.A. No. 6657 which is the applicable law, with P.D. No. 27 and E.O. 228 having only suppletory effect.

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, MalacaƱang, 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 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.

In this case, the trial court arrived at the just compensation due private respondents for their property, taking into account its nature as irrigated land, location along the highway, market value, assessor's value and the volume and value of its produce. This Court is convinced that the trial court correctly determined the amount of just compensation due private respondents in accordance with, and guided by, RA 6657 and existing jurisprudence." (Emphasis and italics supplied; citations omitted)

The SAC's adoption of P300.00 as GSP for one cavan of 50 kilos of palay for 1992 is thus in order, petitioner not having adduced any evidence that a different or contrary figure should apply for that period.

The determination of just compensation in eminent domain cases is a judicial function, and the Court does not find the SAC to have acted capriciously or arbitrarily in setting the price at P93,657.00 per hectare as the said amount does not appear to be grossly exorbitant or otherwise unjustified. For the Court notes that the SAC properly took into account various factors such as the nature of the land, when it is irrigated, the average harvests per hectare (expressed as AGP based on three normal crop years) at 117.73 cavans per hectare, and the higher valuation applied by the DAR to a similar adjacent landholding belonging to Estacion. Petitioner itself admits that a higher land valuation formula was applied to Estacion's property because it had been acquired under R.A. No. 6657.[32]

WHEREFORE, the assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 79663 are SET ASIDE. The May 19, 2003 Decision of the Bacolod City RTC, Br. 46, sitting as a SAC in Special Carp Case No. 97-9886, is REINSTATED.


Quisumbing, (Chairperson), Carpio*, Brion, and Abad, JJ., concur.


* Additional member per Special Order No. 757 dated October 12, 2009.

[1] A partnership with offices in Bacolod City.

[2] The records do not indicate exactly what year the property was acquired and distributed to the tenant-beneficiaries by the DAR.

[3] 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, Promulgated On October 21, 1972.

[4] 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, issued on July 17, 1987.

[5] Increment at 6% interest compounded from 1972 to 1994 (22 years) totaling P653,073.23.

[6] Records, pp. 1-6.

[7] A government financial institution, organized and existing under Republic Act (R.A.) No. 3844, as the duly designated financial intermediary of the Comprehensive Agrarian Reform Program under R.A. No. 6657, as amended.

[8] An Act Instituting A Comprehensive Agrarian Reform Program To Promote Social Justice And Industrialization, Providing The Mechanism For Its Implementation, And For Other Purposes, approved on June 10, 1988.

[9] Records, pp. 179-187.

[10] Id. at 79-81.

[11] Commissioners Carlito R. Mamon and Serlito M. De Los Santos.

[12] Land value (LV) was arrived at by multiplying 117.73 cavans per hectare, the average gross production (AGP) as determined by the Barangay Committee on Land Production, by 2.5, the result of which was multiplied by P300, the government support price (GSP) for one cavan of 50 kilos of palay as of 1992, equals P88,297.50 multiplied by 27.3808 hectares; Records, p. 186.

[13] Vide note 9 at 187.

[14] Vide September 12, 2003 Order; Records, pp. 246-247.

[15] Records indicate that the DAR had filed a separate petition for review with the CA docketed as CA-G.R. SP No. 80153 which had already been decided on November 23, 2006 and awaiting entry of judgment, Vide May 10, 2007 Resolution; CA Rollo, pp. 227-228.

[16] CA rollo, pp. 8-32.

[17] Section 60. Appeals. - An appeal may be taken from the decision of the Special Agrarian Courts by filing a petition for review with the Court of Appeals within fifteen (15) days (from) receipt of notice of the decision; otherwise, the decision shall become final.

[18] Vide Decision of July 11, 2007; penned by Associate Justice Stephen C. Cruz, concurred in by Associate Justices Isaias P. Dicdican and Antonio L. Villamor, CA rollo, pp. 235-236.

[19] Vide, Resolution of November 29, 2007, id at 274-279.

[20] Rollo, pp. 35-36.

[21] G.R. No. 148223, November 25, 2004, 444 SCRA 176, 182 citing Land Bank v. De Leon, G.R. No. 143275, September 10, 2002, 388 SCRA 537.

[22] Supra note 21 at 545.

[23] Section 2, Rule 42 of the Revised Rules of Court.

[24] Republic v. Ballocanag, G.R. No. 163794, November 28, 2008, 572 SCRA 436, 453.

[25] Rollo, p. 38.

[26] G.R. No. 60077, January 18, 1991, 193 SCRA 1 (1991).

[27] G.R. No. 168453, March 13, 2009.

[28] Lubrica v. Land Bank of the Philippines, G.R. No. 170220, November 20, 2006, 507 SCRA 415; Meneses v. Secretary of Agrarian Reform, G.R. No. 156304, October 23, 2006, 505 SCRA 90; Land Bank of the Philippines v. Natividad, G.R. No. 127198, May 16, 2005, 458 SCRA 441.
[29] Supra note 21.

[30] Land Bank of the Philippines v. Heirs of De Leon, G.R. No. 164025, May 8, 2009; Land Bank of the Philippines v. Gallego, Jr., G.R. No. 173226, January 20, 2009 citing Paris v. Alfeche, 416 Phil. 473 (2001) and Land Bank of the Philippines v. Court of Appeals, 378 Phil. 1248 (1999).

[31] G.R. No. 166777, July 10, 2007, 527 SCRA 181, 186-188.

[32] Vide Petition for Review, CA rollo, pp. 19-20.

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