In the case of Land Bank of the Philippines v. Carolina B. Vda. de Abello, the Supreme Court ruled that just compensation for land acquired under Presidential Decree (PD) 27 should be determined in accordance with Republic Act (RA) 6657, also known as the Comprehensive Agrarian Reform Law (CARL), and not solely on the older PD 27 and Executive Order (EO) 228. This means that the valuation of the land must consider its value at the time of payment, not just at the time of taking in 1972, ensuring landowners receive fair compensation reflecting current market values and conditions. The decision emphasizes the importance of a full and fair equivalent of the property taken, acknowledging that landowners have the right to just compensation that reflects the true value of their property.

From Tenant Emancipation to Fair Valuation: The Abello Heirs’ Fight for Just Compensation

This case revolves around a parcel of land owned by Carolina Vda. de Abello and the heirs of Eliseo Abello, located in San Jose City. A portion of their land was placed under the government’s Operation Land Transfer program, pursuant to PD 27, aimed at emancipating tenant farmers. The Land Bank of the Philippines (LBP) initially assessed the compensation for the expropriated land based on the guidelines of PD 27 and EO 228, which consider the government support price for palay in 1972. The respondents, however, argued that the compensation offered was insufficient, considering the current market value of agricultural land in their area. This discrepancy led to a legal battle over the proper valuation of the land and the applicable laws to be used.

The respondents filed a Petition for Just Compensation before the Special Agrarian Court (SAC), seeking a significantly higher valuation than that offered by LBP. They argued that the land was highly productive and that the prevailing market prices should be taken into account. The LBP, on the other hand, maintained that the valuation should be based on PD 27 and EO 228, as the land was taken under that decree. The SAC appointed commissioners to investigate and ascertain the facts, who recommended a valuation higher than LBP’s initial assessment but lower than what the respondents sought.

The SAC ultimately ruled in favor of a higher compensation, adopting the commissioners’ recommendation and fixing the just compensation at P200,000 per hectare. LBP appealed this decision, arguing that the SAC erred in not following the valuation formula prescribed under PD 27 and EO 228, and in applying valuation factors from RA 6657 to land acquired under PD 27. The Court of Appeals (CA) affirmed the SAC’s decision, holding that RA 6657 was the controlling law, with PD 27 and EO 228 having only suppletory effect. Dissatisfied, LBP elevated the matter to the Supreme Court, raising the core issue of whether the SAC could disregard the formula prescribed under PD 27 and EO 228 in fixing the just compensation.

The Supreme Court, in resolving the issue, emphasized that while PD 27 initiated the land reform program, the process must align with the constitutional right to just compensation. The Court cited Section 4 of RA 6657, which states that the CARL covers all public and private agricultural lands, and Section 75, which provides that PD 27 and EO 228 shall have suppletory effect, meaning RA 6657 takes precedence.

The Court referenced several precedents to bolster its decision. In Office of the President, Malacañang, Manila v. Court of Appeals, it was held that the seizure of land for agrarian reform does not occur on the date of PD 27’s effectivity but upon payment of just compensation. Furthermore, in Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform, the Court affirmed that title to expropriated property passes only upon full payment of just compensation. Most significantly, the Court cited Land Bank of the Philippines v. Natividad, where it was ruled that just compensation should be determined according to RA 6657, which ensures a full and fair equivalent of the property taken, aligning with the constitutional mandate.

Ultimately, the Supreme Court sided with the respondents. It held that since the agrarian reform process was still incomplete when RA 6657 took effect, the just compensation should be determined and concluded under RA 6657. This ensured a more equitable valuation, taking into account the current value of the land and its potential.

Sec. 17. Determination of Just Compensation. – 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.

The Court concluded that the SAC and CA committed no reversible error in applying the provisions of RA 6657. The just compensation was correctly determined, taking into account the commissioners’ report on the land’s nature, proximity to the city, use, production, and prevailing land values. The Abello case underscores that while PD 27 initiated the agrarian reform, RA 6657 provides the framework for ensuring just compensation, protecting landowners’ rights while promoting social justice. The practical implication of this ruling is that landowners whose properties were taken under PD 27 are entitled to a re-evaluation of their compensation based on current market values and other factors outlined in RA 6657. The State has the responsibility to ensure not only land redistribution but also fairness in compensating landowners for their properties.

FAQs

What was the key issue in this case?	The central issue was whether just compensation for land acquired under PD 27 should be determined based solely on PD 27 and EO 228, or whether RA 6657 should also be considered. The Court settled that RA 6657 should govern.
What is PD 27?	PD 27, or Presidential Decree No. 27, decreed the emancipation of tenants from the bondage of the soil, transferring land ownership to them and providing instruments and mechanisms. It was issued by then President Ferdinand Marcos.
What is RA 6657?	RA 6657, also known as the Comprehensive Agrarian Reform Law (CARL), promotes social justice to landless farmers and provides for a more equitable distribution and ownership of land. It respects landowners’ rights to just compensation and considers the ecological needs of the nation.
Why did the landowners argue that they should be compensated based on RA 6657?	The landowners argued that RA 6657 provides for a more accurate and fair valuation of their land. It accounts for current market values, whereas PD 27 relies on outdated pricing, resulting in significantly lower compensation.
What factors does RA 6657 consider when determining just compensation?	RA 6657 considers the cost of land acquisition, the current value of similar properties, the land’s nature, its actual use and income, the owner’s sworn valuation, tax declarations, and government assessments. It also factors in social and economic benefits provided by farmers and the government, as well as non-payment of taxes or loans.
When is the “time of taking” considered for just compensation purposes?	The Supreme Court has clarified that the “time of taking” is not the date of effectivity of PD 27. Instead, it’s the time when just compensation is fully paid.
What is the role of the Special Agrarian Court (SAC) in these cases?	The SAC is a specialized court that handles agrarian disputes, including those related to just compensation. It appoints commissioners to investigate and recommend fair land valuations, which it then uses to make its final determination.
How does this ruling impact other landowners affected by agrarian reform?	This ruling sets a precedent that just compensation under agrarian reform should be based on RA 6657. Other landowners can seek re-evaluation based on current market values.

In conclusion, the Supreme Court’s decision reinforces the principle that landowners are entitled to fair and current compensation for properties taken under agrarian reform. It harmonizes the goals of agrarian reform with constitutional rights, ensuring that both land redistribution and landowner compensation are justly balanced.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Land Bank of the Philippines vs. Carolina B. Vda. de Abello, G.R. No. 168631, April 07, 2009