The Supreme Court ruled that even if land was initially acquired under Presidential Decree No. 27 (P.D. No. 27), the just compensation for that land must be determined under Republic Act No. 6657 (R.A. 6657) if the compensation wasn’t fully paid by June 15, 1988, the date R.A. 6657 took effect. This means landowners are entitled to a valuation of their land based on current standards, not the outdated formulas of P.D. No. 27, ensuring fairer compensation for lands taken under agrarian reform.
From Sultan’s Land to Farmer’s Field: Determining Fair Value in Agrarian Reform
This case revolves around a parcel of land in Bataraza, Palawan, originally owned by Rokaya Narrazid-Bona through inheritance from her ancestor, Sultan Narrazid. The land became subject to agrarian reform, with portions being distributed to farmer-beneficiaries. The central legal question is: Which law should govern the determination of just compensation for the land—the older P.D. No. 27, or the more recent R.A. 6657?
Land Bank of the Philippines (LBP), the financial intermediary for the Comprehensive Agrarian Reform Program (CARP), argued that the land was acquired under P.D. No. 27, also known as the Tenant Emancipation Act, and therefore, the compensation should be computed based on its formula. LBP presented Orders of Placement from the Department of Agrarian Reform (DAR) and a Deed of Assignment, Warranties, and Undertaking (DAWU) signed by Rokaya, seemingly acknowledging the acquisition under P.D. No. 27. Rokaya, however, sought a higher valuation, arguing that the land should be valued similarly to another portion of her property that was compensated at a higher rate. This prompted the need for the court to determine the applicability of each law.
The Supreme Court acknowledged the initial acquisition of the land under P.D. No. 27, recognizing the DAR’s Orders of Placement and Rokaya’s DAWU as evidence of this fact. However, the Court emphasized that the acquisition under P.D. No. 27 did not automatically mean that the determination of just compensation must also be governed by the same decree. The pivotal factor, according to the Court, is whether just compensation had been fully paid by June 15, 1988, the date R.A. 6657 took effect. The Court reasoned that if the agrarian reform process, particularly the payment of just compensation, remained incomplete by this date, then R.A. 6657 would govern the compensation process. This is based on Section 75 of R.A. 6657, which provides for the suppletory application of existing legislation.
Section 75. Suppletory Application of Existing Legislation. — The provisions of Republic Act No. 3844 as amended, Presidential Decree Nos. 27 and 266 as amended, Executive Order Nos. 228 and 229, both Series of 1987; and other laws not inconsistent with this Act shall have suppletory effect.
Building on this principle, the Court cited its previous ruling in Paris v. Alfeche, which held that the passage of R.A. 6657 before the completion of agrarian reform processes initiated under P.D. No. 27 necessitates that the compensation be completed under the new law, with P.D. No. 27 and E.O. 228 having only a suppletory effect. This approach contrasts with a strict interpretation of P.D. No. 27, which would have locked in the valuation at the time of initial acquisition. This ruling highlights the importance of completing agrarian reform processes, including the timely payment of just compensation, to avoid the application of subsequent laws that may provide for different valuation methods.
The Court also referenced Land Bank of the Philippines v. Hon. Natividad, where it was established that the seizure of landholdings covered by P.D. No. 27 did not occur on October 21, 1972, but upon the payment of just compensation. Consequently, with R.A. 6657 taking effect in 1988 while just compensation remained unsettled, R.A. 6657 became the applicable law, with P.D. No. 27 and E.O. 228 serving only a supplementary role. This jurisprudence firmly establishes that the valuation of lands under agrarian reform is not static but can be influenced by subsequent legislation enacted before the completion of the compensation process.
In determining the applicable formula for just compensation under R.A. 6657, the Court referred to Section 17 of the Act, which outlines the factors to be considered. These factors include 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. Further, the Court recognized the formula outlined in DAR Administrative Order No. 5, Series of 1998, which provides a detailed methodology for computing just compensation for lands acquired under both voluntary offer to sell (VOS) and compulsory acquisition (CA).
Administrative Order No. 5, Series of 1998, provides the following formula:
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)
Where: LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration
The Court emphasized that this formula should be used if all three factors (Capitalized Net Income, Comparable Sales, and Market Value) are present, relevant, and applicable. The decision underscores the importance of a comprehensive valuation that takes into account various economic factors and market conditions. This ensures that landowners receive just compensation that reflects the true value of their property at the time of valuation, rather than relying on outdated formulas that may not accurately reflect current market conditions.
Ultimately, the Supreme Court partially denied LBP’s appeal and ordered the case to be remanded to the trial court for the computation of just compensation based on the formula under Section 17 of R.A. No. 6657 and Administrative Order No. 5, Series of 1998. This decision reinforces the principle that just compensation under agrarian reform must be fair and equitable, taking into account current market conditions and economic factors. It also clarifies that the applicable law for determining just compensation is the law in effect at the time the compensation process is completed, rather than the law in effect at the time the land was initially acquired.
FAQs
| What was the key issue in this case? | The key issue was determining which law, P.D. No. 27 or R.A. 6657, should govern the computation of just compensation for land acquired under agrarian reform. The Supreme Court clarified that R.A. 6657 applies if just compensation was not fully paid before its effectivity. |
| What is P.D. No. 27? | P.D. No. 27, also known as the Tenant Emancipation Act, is a decree that aimed to emancipate tenants from the bondage of the soil by transferring ownership of the land they till. It provided a specific formula for computing just compensation based on the land’s annual gross production. |
| What is R.A. 6657? | R.A. 6657, also known as the Comprehensive Agrarian Reform Law of 1988, is a law that instituted a comprehensive agrarian reform program to promote social justice and industrialization. It provides a broader range of factors to be considered in determining just compensation. |
| When does R.A. 6657 apply to lands acquired under P.D. No. 27? | R.A. 6657 applies to lands acquired under P.D. No. 27 if the payment of just compensation was not completed before June 15, 1988, the date R.A. 6657 took effect. In such cases, the valuation of the land must be determined in accordance with R.A. 6657 and its implementing guidelines. |
| What factors are considered in determining just compensation under R.A. 6657? | Under R.A. 6657, the factors to be considered in determining just compensation include 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, tax declarations, and government assessments. |
| What is the significance of the DAWU in this case? | The Deed of Assignment, Warranties, and Undertaking (DAWU) signed by Rokaya was significant because it acknowledged the acquisition of her land under P.D. No. 27. However, the Court clarified that this acknowledgment did not preclude the application of R.A. 6657 for determining just compensation. |
| What is Administrative Order No. 5, Series of 1998? | Administrative Order No. 5, Series of 1998, is a DAR issuance that outlines the rules and regulations governing the valuation of lands voluntarily offered or compulsorily acquired under R.A. 6657. It provides a specific formula for computing just compensation based on various economic factors. |
| What is the effect of this ruling on landowners? | This ruling generally benefits landowners whose lands were acquired under P.D. No. 27 but not yet fully compensated before R.A. 6657 took effect. It ensures that they receive just compensation based on current market conditions and economic factors, potentially resulting in higher valuations than under the old P.D. No. 27 formula. |
The Supreme Court’s decision in this case provides crucial clarification on the applicable law for determining just compensation in agrarian reform cases. It affirms that landowners are entitled to a fair valuation of their property, taking into account current market conditions and economic factors. This decision promotes social justice by ensuring that landowners receive just compensation for their lands, while also facilitating the effective implementation of agrarian reform programs.
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. SPS. ROKAYA AND SULAIMAN BONA, G.R. No. 180804, November 12, 2012
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