G.R. No. 171674 ; August 4, 2009
DEPARTMENT OF AGRARIAN REFORM, represented by HON. NASSER C. PANGANDAMAN, Petitioner, vs. CARMEN S. TONGSON, Respondent.

FACTS

Respondent Carmen Tongson owned four parcels of agricultural land in Davao City devoted to rice and corn, placing them under the coverage of Presidential Decree No. 27 (PD 27). In 1988, the Department of Agrarian Reform (DAR) offered compensation, but Tongson did not act due to travel abroad. Upon her return in 1989, she discovered that, except for portions with orchards, her properties had been taken over by DAR, which fixed acquisition costs at ₱1,500 and ₱800 per hectare and subsequently issued Emancipation Patents to farmer-beneficiaries. Tongson filed a petition for determination of just compensation before the Special Agrarian Court (SAC) in 1993.
The SAC formed a Board of Commissioners, which, using a market-data approach, appraised the lands at ₱75,000 and ₱90,000 per hectare. The SAC rendered a decision ordering DAR to pay Tongson ₱25,000 and ₱40,000 per hectare, respectively, with legal interest from June 1, 1989. The Court of Appeals affirmed the SAC decision, ruling that Republic Act No. 6657 (Comprehensive Agrarian Reform Law of 1988) governed the determination of just compensation, not PD 27 and Executive Order No. 228.

ISSUE

Whether the Special Agrarian Court and the Court of Appeals correctly applied Republic Act No. 6657 , instead of Presidential Decree No. 27, in determining the just compensation for the subject agricultural lands.

RULING

The Supreme Court affirmed the applicability of RA 6657. The legal logic is anchored on the principle that just compensation must be the full and fair equivalent of the property taken at the time of its taking. The Court held that where the agrarian reform process under PD 27 was not completed prior to the effectivity of RA 6657, the latter law governs the determination of just compensation. RA 6657 provides a more comprehensive formula under Section 17, considering factors such as market value, current land use, and cost of acquisition to ensure the compensation is not arbitrary or confiscatory.
The Court rejected DAR’s argument that valuation should be pegged to October 21, 1972, under PD 27. It emphasized that the “taking” for just compensation purposes is deemed to have occurred upon the issuance of the Emancipation Patents, which in this case transpired after RA 6657 took effect. Consequently, the valuation must reflect the property’s value at that later time, not its value in 1972. The SAC correctly employed the market-data approach, which aligns with the factors enumerated in RA 6657, to arrive at a fair valuation. The case was remanded to the SAC solely to receive evidence on the specific date of the Emancipation Patents’ issuance to serve as the precise basis for final computation.