G.R. No. 206026 , July 10, 2019
JMA Agricultural Development Corporation, Petitioner vs. Land Bank of the Philippines, Respondent

FACTS

Petitioner JMA Agricultural Development Corporation owned a 106.0416-hectare sugarland in Negros Occidental voluntarily offered for Comprehensive Agrarian Reform Program (CARP) coverage. The Department of Agrarian Reform (DAR) initially acquired 97.1232 hectares, with title transferred to the Republic and farmer-beneficiaries on July 31, 2002. Land Bank offered ₱17,500,914.92 as compensation, which petitioner rejected. The DAR Adjudication Board later fixed compensation at ₱21,584,218.06. An additional 6.3480 hectares were subsequently acquired, bringing the total taken area to 103.4712 hectares.
Petitioner filed a petition before the Regional Trial Court, sitting as a Special Agrarian Court (SAC), praying for just compensation of ₱252,218.90 per hectare. The SAC ruled in favor of petitioner, adopting its valuation. It held that just compensation should be based on the property’s value at the time of taking—July 31, 2002—and not at the time of the field inspection in May 2001. The Court of Appeals reversed the SAC decision, reinstating Land Bank’s valuation computed using DAR formulas and data from the time of the field inspection.

ISSUE

Whether the Special Agrarian Court correctly based its determination of just compensation on the value of the property at the time of the transfer of title, rather than adhering to the valuation framework and formulas prescribed under Section 17 of Republic Act No. 6657 and related DAR administrative orders.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals’ decision. The legal logic is anchored on the mandatory nature of the factors and formulas under Section 17 of R.A. No. 6657 , as amended. The Court emphasized that these formulas provide a uniform framework to prevent arbitrary compensation and partake of the nature of statutes, enjoying a presumption of legality. Courts are not at liberty to disregard them. The SAC erred in relying solely on the date of title transfer as the reckoning point for valuation. The correct approach requires the application of the DAR formula, which inherently considers the “time of taking.” For the Capitalized Net Income (CNI) factor, this means using the average of the 12-month gross production and selling prices immediately preceding the date of the field inspection, as mandated by DAR Administrative Order No. 5, series of 1998. The SAC’s deviation from this prescribed structure, by using different data periods, was unjustified. Consequently, Land Bank’s computation, which faithfully applied the formula using the Sugar Regulatory Administration data from the period prior to the May 2001 inspection, is upheld as the correct valuation for just compensation.