G.R. No. 168631 ; April 7, 2009
LAND BANK OF THE PHILIPPINES, Petitioner, vs. CAROLINA B. VDA. DE ABELLO and HEIRS OF ELISEO ABELLO, NAMELY: NENITA, SULITA, ROLANDO, IMELDA and ELISEO, JR., all surnamed ABELLO, Respondents.

FACTS

Respondents are the owners of a 12.1924-hectare parcel of land in San Jose City. The Department of Agrarian Reform (DAR) and the Land Bank of the Philippines (LBP) placed 10.3476 hectares under Operation Land Transfer pursuant to Presidential Decree No. 27 (PD 27). Using the formula under PD 27 and Executive Order No. 228 (EO 228), and applying a 6% incremental increase per DAR Administrative Order No. 13, series of 1994, the LBP valued the land at ₱146,938.54. Respondents rejected this valuation, claiming the prevailing market value was ₱300,000 to ₱400,000 per hectare, and filed a Petition for Just Compensation before the Special Agrarian Court (SAC), praying for compensation of not less than ₱4,267,340.00. The SAC appointed commissioners who, after ocular inspection, recommended a valuation of ₱200,000 per hectare. The SAC adopted this recommendation in its Decision, fixing just compensation at ₱200,000 per hectare or a total of ₱2,068,520.00, and ordered LBP to pay respondents. The Court of Appeals affirmed the SAC Decision. LBP filed this petition, arguing that the SAC erred in disregarding the PD 27 and EO 228 formula and in applying the valuation factors under Republic Act No. 6657 (Comprehensive Agrarian Reform Law of 1988) to a PD 27-covered land.

ISSUE

Whether or not the Special Agrarian Court can disregard the formula prescribed under PD No. 27 and EO 228 in fixing the just compensation of PD 27-covered land.

RULING

No, the Special Agrarian Court cannot disregard the formula under PD 27 and EO 228, but it is not bound to use it exclusively as the sole basis for determining just compensation. The Court ruled that for lands covered by PD 27 and EO 228, just compensation should be determined pursuant to the factors enumerated in Section 17 of RA 6657, taking into account PD 27 and EO 228. The Court held that the seizure of the landholding is deemed to take effect only upon payment of just compensation, not on the date of effectivity of PD 27 (October 21, 1972). Therefore, just compensation must be determined as of the time of payment, not the time of taking. The SAC correctly considered the factors under RA 6657, such as the land’s nature, actual use, income, sworn valuation, tax declarations, and the commissioners’ findings on its location, accessibility, topography, irrigation, and production capacity. The valuation of ₱200,000 per hectare was upheld as a valid exercise of judicial discretion in determining just compensation. The petition was denied for lack of merit.