Wednesday, February 16, 2011

Just compensation in agrarian cases: what law applies; how computed.

LAND BANK OF THE PHILIPPINES vs. Vs. MAGIN FERRER, ANTONIO V. FERRER, and RAMON V. FERRER, represented by their Attorney-in-fact, ATTY. RAFAEL VILLAROSA, GR No. 172230, Feb. 2, 2011; with companion case - DEPARTMENT OF AGRARIAN REFORM, represented by Secretary NASSER C. PANGANDAMAN vs. ANTONIO V. FERRER and RAMON V. FERRER, GR No. 179421, Feb. 2, 2011.


X x x.


ISSUE


Whether or not the Court of Appeals erred in ruling that RA 6657, rather than P.D. No. 27/E.O. No. 228, is the law that should apply in the determination of just compensation for the subject agricultural land.


Positions of the Parties

The LBP and the DAR basically argue that P.D. No. 27, as reaffirmed by E.O. No. 228, should be applied in determining the just compensation for the subject property. They contend that P.D. No. 27 and E.O. No. 228 prescribe the formula in determining the just compensation of rice and corn lands tenanted as of October 21, 1972. As the subject property was tenanted and devoted to rice production in 1972, the just value should be fixed at the prevailing rate at that time, when the emancipation of the tenant-farmers from the bondage of the soil was declared in P.D. No. 27.

As to R.A. No. 6657, both the LBP and the DAR insist that it applies only to ricelands and cornlands not tenanted as of October 21, 1972. R.A. No. 6657 does not cover ricelands and cornlands acquired under P.D. No. 27 and E.O. No. 228. The government’s OLT program on tenanted privately-owned rice and corn lands pursuant to P.D. No. 27 continues separately and distinctly from the Comprehensive Agrarian Reform Program (CARP) acquisition and distribution program under R.A. No. 6657 because 1) R.A. No. 6657 operates prospectively; and 2) Congress intended that lands subject to or governed by existing government programs such as the OLT and homestead under P.D. No. 27 are to be treated distinctly.

With respect to the appointment of commissioners, the LBP and the DAR argue that there was no legal basis therefor because 1) there were no long accounts or difficult questions of fact that required the expertise and know-how of the commissioners; and 2) the formula for just compensation was already provided under P.D. No. 27 and E.O. No. 228.

On the other hand, the Ferrers adopted the common ruling of the CA stating that it did not err in applying the provisions of R.A. No. 6657 in fixing the just compensation for the subject property.

The Court’s Ruling


The issue as to which agrarian law between P. D. No. 27/E.O. No. 228 and R.A. No. 6657 should apply in the determination of just compensation has been laid to rest in a number of cases. In the case of Land Bank of the Philippines v. Hon. Eli G. C. Natividad, 497 Phil 738 (2005). it was ruled that:
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.
Section 17 of RA 6657 which is particularly relevant, providing as it does the guideposts for the determination of just compensation, reads as follows:
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 farm-workers 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.
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. [Emphases supplied]

In Land Bank of the Philippines v. Manuel O Gallego, Jr., G.R. No. 173226, January 20, 2009, 576 SCRA 680, the Court handed down the same ruling. Thus:
The Court has already ruled on the applicability of agrarian laws, namely, P.D. No. 27/E.O. No. 228 in relation to Republic Act (R.A.) No. 6657, in prior cases concerning just compensation.
In Paris v. Alfeche, 416 Phil 473 (2001), the Court held that the provisions of R.A. No. 6657 are also applicable to the agrarian reform process of lands placed under the coverage of P.D. No. 27/E.O. No. 228, which has not been completed upon the effectivity of R.A. No. 6657. Citing Land Bank of the Philippines v. Court of Appeals, 378 Phil. 1248 (1999), the Court in Paris held that P.D. No. 27 and E.O. No. 228 have suppletory effect to R.A. No. 6657, to wit:
We cannot see why Sec. 18 of RA [No.] 6657 should not apply to rice and corn lands under PD [No.] 27. Section 75 of RA [No.] 6657 clearly states that the provisions of PD [No.] 27 and EO [No.] 228 shall only have a suppletory effect. Section 7 of the Act also provides –

Sec. 7. Priorities.—The DAR, in coordination with the PARC shall plan and program the acquisition and distribution of all agricultural lands through a period of (10) years from the effectivity of this Act. Lands shall be acquired and distributed as follows:

Phase One: Rice and Corn lands under P.D. 27; all idle or abandoned lands; all private lands voluntarily offered by the owners of agrarian reform; x x x and all other lands owned by the government devoted to or suitable for agriculture, which shall be acquired and distributed immediately upon the effectivity of this Act, with the implementation to be completed within a period of not more than four (4) years (emphasis supplied).

This eloquently demonstrates that RA [No.] 6657 includes PD [No.] 27 lands among the properties which the DAR shall acquire and distribute to the landless. And to facilitate the acquisition and distribution thereof, Secs. 16, 17 and 18 of the Act should be adhered to. In Association of Small Landowners of the Philippines v. Secretary of Agrarian Reform, this Court applied the provisions (of) RA 6657 to rice and corn lands when it upheld the constitutionality of the payment of just compensation for PD [No.] 27 lands through the different modes stated in Sec. 18. [Association of Small Landowners in the Philippines, Inc. v. Hon. Secretary of Agrarian Reform, 256 Phil. 777 (1989)].
Particularly, in Land Bank of the Philippines v. Natividad, 497 Phil. 738 (2005), where the agrarian reform process in said case “is still incomplete as the just compensation to be paid private respondents has yet to be settled,” the Court held therein that just compensation should be determined and the process concluded under R.A. No. 6657.
The retroactive application of R.A. No. 6657 is not only statutory but is also founded on equitable considerations. In Lubrica v. Land Bank of the Philippines, G.R. No. 170220, November 20, 2006, 507 SCRA 415, the Court declared that it would be highly inequitable on the part of the landowners therein to compute just compensation using the values at the time of taking in 1972, and not at the time of payment, considering that the government and the farmer-beneficiaries have already benefited from the land although ownership thereof has not yet been transferred in their names. The same equitable consideration is applicable to the factual milieu of the instant case. The records show that respondents’ property had been placed under the agrarian reform program in 1972 and had already been distributed to the beneficiaries but respondents have yet to receive just compensation due them. [Emphases supplied]

The above rulings were reiterated in the recent cases of Land Bank of the Philippines v. Rizalina Gustilo Barrido and Heirs of Romeo Barrido, G.R. No. 183688, April 18, 2010, and Land Bank of the Philippines v. Enrique Livioc, G.R. No. 170685, September 22, 2010.

The CA was, therefore, correct in ruling that the agrarian reform process in this particular case was still incomplete because the just compensation due to the Ferrers had yet to be settled. Since R.A. No. 6657 was already in effectivity before the completion of the process, the just compensation should be determined and the process concluded under this law.

With respect to the appointment of the commissioners, it is an issue not properly brought and ventilated in the trial courts below and only raised for the first time on appeal. At any rate, the appointment was proper because the applicable law is R.A. No. 6657.

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