G.R. No. 208004 , July 30, 2019
LAND BANK OF THE PHILIPPINES, Petitioner vs. PRADO VERDE CORPORATION, Respondent

FACTS

Prado Verde Corporation owned an agricultural land placed under the agrarian reform coverage of P.D. No. 27. A portion of 2.4975 hectares was transferred to farmer-beneficiaries in 1988, but Prado had not been paid just compensation. Land Bank initially valued the property at ₱38,885.04 under P.D. No. 27, later revalued to ₱59,457.05, and finally to ₱214,026.38 using a two-factor formula under DAR Administrative Order (A.O.) No. 1, Series of 2010. Prado rejected this and filed a case before the Regional Trial Court (RTC), acting as a Special Agrarian Court (SAC).
The SAC fixed just compensation at ₱294,495.20, applying the three-factor formula (Capitalized Net Income, Comparable Sales, and Market Value per Tax Declaration) under A.O. No. 5, Series of 1998, as amended, using data from the 12-month period preceding June 30, 2009, as the presumptive date of taking. Both parties appealed. The Court of Appeals affirmed the SAC decision. Land Bank elevated the case, arguing the SAC erred in using the three-factor formula and the June 30, 2009 reckoning date for a property covered by P.D. No. 27.

ISSUE

Whether the SAC correctly determined just compensation by applying the three-factor formula under A.O. No. 5, Series of 1998, as amended, and using June 30, 2009 as the presumptive date of taking for a property acquired under P.D. No. 27.

RULING

Yes, the Supreme Court affirmed the SAC’s determination. The Court held that for properties covered by P.D. No. 27 but where just compensation was not settled prior to the effectivity of Republic Act (R.A.) No. 9700 in 2009, the formula and factors under Section 17 of R.A. No. 6657 , as amended, must be applied. This is explicitly mandated by Section 7 of R.A. No. 9700 . The DAR’s A.O. No. 1, Series of 2010, which prescribed a two-factor formula for P.D. No. 27 lands, was declared invalid in the Luz Farms case for contravening the comprehensive factors in Section 17 of R.A. No. 6657 . Therefore, the SAC correctly disregarded Land Bank’s revaluation based on the invalid A.O. and properly applied the valid three-factor formula under A.O. No. 5, Series of 1998, which incorporates the Section 17 factors.
Regarding the date of taking, the Court ruled that for unvalued or unsettled P.D. No. 27 claims, the date of taking is when the landowner was deprived of ownership, which here was when titles were issued to farmer-beneficiaries in 1988. However, for determining the applicable data for valuation, the SAC correctly used the condition of the property and relevant figures within the 12-month period preceding June 30, 2009, as provided under R.A. No. 9700 . This ensures compensation is based on the property’s fair and equivalent value at a time proximate to the law’s enactment, not its value decades prior. The SAC’s computation, being supported by evidence and in accordance with law, was upheld.