G.R. No. 173226 ; July 29, 2013
LAND BANK OF THE PHILIPPINES, Petitioner, vs. MANUEL O. GALLEGO, JR., JOSEPH L. GALLEGO and CHRISTOPHER L. GALLEGO, Respondents.

FACTS

Respondents are co-owners of agricultural lands in Cabiao, Nueva Ecija. A portion was placed under the land reform program pursuant to Presidential Decree No. 27 (P.D. No. 27) in 1972. The parties failed to agree on just compensation, prompting respondents to file a petition before the Regional Trial Court acting as a Special Agrarian Court (RTC-SAC). The RTC-SAC fixed compensation at ₱52,209,720.00 based on an Average Gross Production (AGP) of 121.6 cavans per hectare. The Court of Appeals (CA) modified this, reducing the amount to ₱30,711,600.00, applying the government support price of ₱35.00 per cavan as mandated under P.D. No. 27 and Executive Order No. 228.
In a January 20, 2009 Decision, the Supreme Court denied Land Bank’s petition, reversed the CA, and remanded the case to the CA for proper determination of just compensation. The Court directed that compensation must be computed under Section 17 of Republic Act No. 6657 (Comprehensive Agrarian Reform Law) and the applicable DAR Administrative Order, not solely under the P.D. No. 27 formula, as the taking was not completed until after the effectivity of R.A. No. 6657 . The CA subsequently submitted a Report recommending alternative computations.

ISSUE

What is the correct amount of just compensation for the respondents’ 120-hectare property acquired under the agrarian reform program?

RULING

The Supreme Court granted the petition, setting aside the CA’s recommended computations. The Court held that just compensation must be determined as of the time of actual taking, which is the date when the landowner was effectively deprived of ownership and control. In this case, the taking was deemed completed only upon the issuance and registration of emancipation patents to the farmer-beneficiaries, which occurred from 1988 to 2000. Therefore, R.A. No. 6657 , not P.D. No. 27, is the applicable law, as the taking was consummated after its enactment.
The legal logic requires that just compensation be based on the property’s full and fair market value at the time of taking, considering all relevant factors under Section 17 of R.A. No. 6657 and DAR A.O. No. 05-98. The Court found the CA’s recommended values, which were based on tax declarations and market values from years 2000 to 2008, to be erroneous as they did not correspond to the actual years of taking (1988-2000). Consequently, the Court remanded the case to the RTC-SAC for the final and exact computation of just compensation. The RTC-SAC was ordered to compute the value using the specific factors for each year the land was taken, deducting any amounts already received by the respondents, and to complete the proceedings with deliberate dispatch.