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Agra - Landbank v Dumlao

LAND BANK OF THE G.R. No. 167809 The properties were placed under Operation Land Transfer by the Department of
PHILIPPINES, Agrarian Reform (DAR).[9] However, the definite time of actual taking was not stated. [10]
Petitioner, Present:  
YNARES-SANTIAGO, J., Pursuant to PD No. 27 and Executive Order (EO) No. 228, [11] a preliminary valuation was
- versus - Chairperson, made by the DAR on the landholdings covered by TCT Nos. 41504 and T-1180 with a total area
AUSTRIA-MARTINEZ, of 16.3939 hectares. Finding the valuation to be correct, petitioner bank informed respondents of
CHICO-NAZARIO, the said valuation.[12] Payments were then deposited in the name of the landowners.
[13]
JOSEFINA R. DUMLAO, NACHURA, and  Meanwhile, processing of the properties covered by the other four (4) titles, namely, TCT Nos.
A. FLORENTINO R. DUMLAO, REYES, JJ. 41505, 41506, 41507 and 41508, remains pending with the DAR.[14]
JR., STELLA DUMLAO-ATIENZA,  
and NESTOR R. DUMLAO, On July 9, 1995, respondents filed a Complaint [15] before the Regional Trial Court (RTC)
represented by Attorney-In-Fact, Promulgated: in Nueva Vizcaya, Branch 28,[16] for determination of just compensation for their properties. It
A. Florentino R. Dumlao, Jr., was claimed, inter alia, that they were not paid their just compensation for the properties despite
Respondents. November 27, 2008 issuance of certificates of land transfer to farmer-beneficiaries by the DAR.[17] They prayed for
  the appointment of three (3) competent and disinterested commissioners who would determine
x--------------------------------------------------x and report to the court the just compensation of their landholdings based on their current fair
  market value, without prejudice to their retention rights. They also asked for payment of actual
DECISION and moral damages, attorneys fees, and costs of suit. [18]
   
  In its Answer, the DAR, represented by the Municipal Agrarian Reform
REYES, R.T., J.: Office (MARO) and Provincial Agrarian Reform Office (PARO), posited that the complaint lacked
  a cause of action and that the RTC did not have jurisdiction. Under Section 50 of RA No. 6657, it
IN determining just compensation for lands covered by the governments Operation Land is the Department of Agrarian Reform Adjudication Board (DARAB) which is vested with primary
Transfer, which law applies Presidential Decree (PD) No. 27 [1] or Republic Act (RA) No. and original jurisdiction over land valuation, while the RTC as a Special Agrarian Court may
6657[2] known as the Comprehensive Agrarian Reform (CARP) Law? review the DARABs decision.[19]
   
   
This and other related questions are brought to the Court via this petition for review Petitioner, which was impleaded as defendant in the valuation case before the trial court,
on certiorari[3]  of the Decision[4] of the Court of Appeals (CA) granting each of respondents a five- likewise filed its Answer, raising a similar line of defense. [20] Petitioner added that while payment
hectare retention area and ordering petitioner to pay them One Hundred Nine Thousand Pesos for the properties covered by TCT Nos. T-1180 and T-41504 were already deposited in trust for
(P109,000.00) per hectare for the excess of the retained area. respondents, the claimfolders for the remaining four properties is still with the DAR. Thus, the
  filing of the complaint against petitioner was premature.
The Facts  
  After the termination of pre-trial conference, respondent Atty. A. Florentino Dumlao, Jr. submitted
Respondents Josefina R. Dumlao, A. Florentino R. Dumlao, Jr., Stella Dumlao-Atienza, his affidavit on which he was cross-examined. Following the submission of their testimonial and
and Nestor R. Dumlao, heirs of the deceased Florentino G. Dumlao, were the co-owners of documentary evidence, respondents rested their case.
several parcels of agricultural land with an aggregate area of 32.2379 hectares situated at  
Villaverde, Nueva Vizcaya. Upon motion of respondents, the RTC, on April 15, 1998, appointed Atty. John D.
  Balasya, Clerk of Court, as commissioner. He was mandated to receive, examine, and ascertain
The properties are covered by: (1) Transfer Certificate of Title (TCT) No. T-1180 with an valuation of the properties.[21] Believing that the valuation of the properties is not commensurate
area of 11.33 hectares;[5] (2) TCT No. 41508 consisting of 6.2201 hectares; [6](3) TCT No. 41507 to their true value and, hence, not a just compensation, Atty. Balasya stated in his
with an area of 4.0001 hectares; [7] (4) TCT No. 41506 consisting of 3.9878 hectares; Commissioners Report dated July 21, 1998,[22] that:
[8]
 (5) TCT No. 41504 consisting of 5.0639 hectares; and (6) TCT No. 41505 with an area of  
1.6360 hectares. The evidences submitted by the parties as well as those gathered by the
  undersigned show that only two (2) parcels of land were valued under
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Agra - Landbank v Dumlao
Presidential Decree No. 27. The parcels of land are located in Nagbitin, hectare, the market value of the properties, as just compensation. [28]Accordingly, the trial court,
Villaverde, Nueva Vizcaya and per Exhibit O, the unirrigated riceland in Nagbitin on March 18, 1999, issued another order,[29] the dispositive portion of which states:
are considered first class agricultural lands. Under Tax Ordinance No. 96-45  
adopting and authorizing the 1996 Schedule of Fair Market Values for the WHEREFORE, premises considered, the Court hereby sets the just
Different Classes of Real Property in Nueva Vizcaya (Exhibit G and Exhibit G-1) compensation in the amount of P6,912.50 per hectare for lot covered
the market value of first class unirrigated Riceland in the Municipality of by TCT No. T-1180 and the amount provided for in the Land Valuation Summary
Villaverde is P109,000.00 Per Department Order No. 56-97 dated May 27, and Farmers Undertaking for lot covered by TCT No. T-41504 to be paid to the
1997 issued by the Department of Finance, Re: Implementation of the Revised plaintiffs with interest from the time of the taking until fully paid.
Zonal Values of Real Properties in all Municipalities under the jurisdiction of  
Revenue District Office No. 14 (Bayombong, Nueva Vizcaya), Revenue Region SO ORDERED.[30]
No. 3, Tuguegarao, Cagayan for Internal Revenue Tax purposes, the zonal  
value of land in other Barangays in Villaverde is P60.00/square meter. CA Disposition
   
In summary, the undersigned believes that the valuation of respondents Dissatisfied with the March 18, 1999 RTC Order, respondents appealed to the CA. On February
Land Bank of the Philippines and the Department of Agrarian Reform is not 16, 2005, the CA rendered a decision[31] modifying the trial courts ruling, viz.:
commensurate to the definition of just compensation x x x. [23]  
RTC Ruling WHEREFORE, in view of the foregoing, the trial courts decision is
  hereby MODIFIED. The plaintiffs-appellants right of retention is
On October 14, 1998, the RTC issued a decision,[24] the fallo of which reads: recognized. Plaintiffs-appellants Josefina, A. Florentino, Jr. and Stella, all
  surnamed Dumlao are each entitled to retain five (5) hectares pursuant to the
WHEREFORE, the Court hereby orders the remand of the case with provisions of R.A. 6657.
respect to TCT Nos. 1180 and T-41504 to the proper DAR agency for further  
proceedings and orders the dismissal of the case with respect to TCT Nos. T- The excess in area after application of the right of retention is valued at
41508, T-41507, T-41506, and T-41505 for having been prematurely filed, there One Hundred Nine Thousand (P109,000.00) Pesos per hectare with interest at
being no preliminary valuation made yet on the said parcels of land. No the prevailing rate from the time of taking until fully paid.
pronouncement as to costs.  
  No costs.
SO ORDERED.[25]  
  SO ORDERED.[32]
Respondents moved for reconsideration. Consequently, on December 21, 1998, the trial  
court modified[26] its decision in the following manner: The CA declared that the definite time of the actual taking of the subject properties is not
  certain.[33] Further, there is no doubt that the transfer of the subject landholdings is governed by
WHEREFORE, premises considered, in the higher interest of justice, PD No. 27.[34] However, after the passage of RA No. 6657, the formula relative to valuation under
the Court MODIFIES its October 14, 1998 decision by ordering plaintiffs to PD No. 27 no longer applies.[35] The appellate court held:
adduce additional evidence to support their contentions under PD 27/EO 228  
within 30 days from receipt of this Order furnishing a copy thereof to the The trial court, therefore, in the determination of just compensation is
defendants who are given 15 days from receipt to comment thereon. Thereafter, not confined within the valuation provisions of P.D. 27. It can depart from it so
the matter shall be deemed submitted for resolution. long as the valuation assigned on the land transferred is within the meaning of
  the phrase just compensation provided for in J.M. Tuazon Co. vs. Land Tenure
SO ORDERED.[27] Administration (31 SCRA 413).[36]
   
Instead of adducing additional evidence, respondents filed a motion for reconsideration  
of the trial courts December 21, 1998 order. Positing that the additional evidence required by the Relying on the Commissioners Report, the CA assigned the lower value of P109,000.00 per
court pertains to the formula under PD No. 27, respondents insisted on P109,000.00 per hectare as just compensation for the subject properties. [37]
 
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Agra - Landbank v Dumlao
Issues 27. The executive issuance also provided for the valuation of still unvalued covered lands, as
  well as the manner of their payment. On July 22, 1987, Presidential Proclamation No. 131,
Petitioner bank has resorted to the present recourse, imputing to the CA the following errors: instituting a comprehensive agrarian reform program, as well as EO No. 229 [41] providing the
  mechanics for its implementation, were likewise enacted.[42]
A.  
WHEN THE CHALLENGED DECISION ADHERED TO THE COMMISSIONERS When the Philippine Congress was formally reorganized, RA No. 6657, otherwise known
REPORT AND FIXED THE VALUE OF THE LANDHOLDINGS as the Comprehensive Agrarian Reform Law of 1988, was immediately enacted.It was signed by
AT P109,000.00 PER HECTARE WITH INTEREST AT THE President Corazon Aquino on June 10, 1988. This law, while considerably changing the earlier 
PREVAILING RATE FROM THE TIME OF TAKING UNTIL FULLY PAID, presidential issuances, including PD No. 27 and EO No. 228, nevertheless gave them suppletory
WORKING A MODIFICATION OF THE LEGALLY PRESCRIBED BASIC effect insofar as they are not inconsistent with its provisions. [43]
FORMULA FOR DETERMINING THE JUST COMPENSATION OF LANDS  
ACQUIRED THROUGH OPERATION LAND TRANSFER (OLT), CONTRARY On one hand, PD No. 27 provides the formula to be used in arriving at the exact total
TO THE CLEAR MANDATE OF PD 27/EO 228. cost of the acquired lands:[44]
   
B. For the purpose of determining the cost of the land to be transferred to
WHEN THE CHALLENGED DECISION DECLARED THAT OCTOBER 21, the tenant-farmer pursuant to this Decree, the value of the land shall be
1972 CANNOT BE DEEMED AS THE DATE OF TAKING  OF THE SUBJECT equivalent to two and one half (2-1/2) times the average harvest of three
PROPERTIES. normal crop years immediately preceding the promulgation of this Decree.
   
C. The total cost of the land, including interest at the rate of six (6) per
WHEN THE CHALLENGED DECISION DECLARED THAT RESPONDENTS centum per annum, shall be paid by the tenant in fifteen (15) years of fifteen (15)
ENTIRE LANDHOLDINGS ARE COVERED BY PD 27 AND THAT equal annual amortizations. (Emphasis supplied)
RESPONDENTS JOSEFINA, A. FLORENTINO,  
JR., AND STELLA ARE ENTITLED TO RETAIN FIVE (5) HECTARES EACH. Implementing the formula under PD No. 27, EO No. 228 states:
[38]
 (Underscoring supplied)  
  SECTION 2. Henceforth, the valuation of rice and corn lands covered by
Our Ruling P.D. No. 27 shall be based on the average gross production determined by
  the Barangay Committee on Land Production in accordance with Department
The just compensation due to respondents should be determined under the provisions of Memorandum Circular No. 26, series of 1973 and related issuances and
RA No. 6657. regulation of the Department of Agrarian Reform. The average gross
  production per hectare shall be multiplied by two and a half (2.5), the
Petitioner asserts that since the properties were acquired pursuant to PD No. 27, the product of which shall be multiplied by Thirty-Five Pesos (P35.00), the
formula for computing just compensation provided by said decree and EO No. 228 should government support price for one cavan of 50 kilos of palay on October
apply. Respondents, on the other hand, insist on the application of RA No. 6657 with respect to 21, 1972, or Thirty-One Pesos (P31.00), the government support price for one
the computation. cavan of 50 kilos of corn on October 21, 1972, and the amount arrived at shall
  be the value of the rice and corn land, as the case may be, for the purpose
Petitioner is mistaken. The 1987 Constitution, specifically Article XIII on Social Justice of determining its cost to the farmer and compensation to the
and Human Rights, mandates the States adoption of an agrarian reform program for the benefit landowner. (Emphasis supplied)
of the common people.[39] The recognition of the need for genuine land reform, however, started  
earlier. PD No. 27, issued on October 21, 1972, more than a decade before the enactment of the Thus, under PD No. 27 and EO No. 228, the formula for computing the Land Value (LV)
1987 Constitution, provided for the compulsory acquisition of private lands for distribution among or Price Per Hectare (PPH) of rice and corn lands is:
tenant-farmers and specified the maximum retention limits for landowners. [40]  
  2.5 x AGP[45] x GSP[46] = LV or PPH
The agrarian reform thrust was further energized with the enactment of EO No. 228  
on July 17, 1987, when full land ownership was declared in favor of the beneficiaries of PD No.  
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Agra - Landbank v Dumlao
The parameters of PD No. 27 and EO No. 228 are manifestly different from the be determined and the process concluded under the said law. Indeed, RA 6657
guidelines provided by RA No. 6657 for determining just compensation. Section 17 of RA No. is the applicable law, with PD 27 and EO 228 having only suppletory effect,
6657 is explicit: conformably with our ruling in Paris v. Alfeche.[51]
   
Sec. 17. Determination of Just Compensation. In determining just Agrarian reform is a revolutionary kind of expropriation. [52] The recognized rule in
compensation, the cost of acquisition of the land, the current value of the like expropriation is that title to the expropriated property shall pass from the owner to the
properties, its nature, actual use and income, the sworn valuation by the owner, expropriator only upon full payment of the just compensation. [53] Thus, payment of just
the tax declarations, and the assessment made by government assessors shall compensation to the landowner is indispensable.
be considered. The social and economic benefits contributed by the farmers and  
the farmworkers and by the Government to the property as well as the non- In fact, Section 4, Article XIII of the 1987 Constitution mandates that the redistribution of
payment of taxes or loans secured from any government financing institution on agricultural lands shall be subject to the payment of just compensation. The deliberations of the
the said land shall be considered as additional factors to determine its valuation. 1986 Constitutional Commission on this subject reveal that just compensation should not do
  violence to the Bill of Rights but should also not make an insurmountable obstacle to a
Due to the divergent formulae or guidelines presented by these laws, a number of cases successful agrarian reform program. Hence, the landowners right to just compensation should
have already been brought to the Court regarding which law applies in computing just be balanced with agrarian reform. [54]
compensation for landholdings acquired under PD No. 27. On this score, the Court has  
repeatedly held that if just compensation was not settled prior to the passage of RA No. 6657, it  
should be computed in accordance with said law, although the property was acquired under PD In the case under review, the agrarian reform process was not completed. The just
No. 27. compensation to be paid respondents was not settled prior to the enactment of RA No. 6657, the
  law subsequent to PD No. 27 and EO No. 228. In fact, the non-payment of just compensation is
In the recent Land Bank of the Philippines v. Heirs of Angel T. Domingo,[47] We rejected precisely the reason why respondents filed a petition for the determination of just compensation
the DARs valuation of just compensation based on the formula provided by PD No. 27 and EO before the RTC on July 13, 1995.
No. 228. We held then that Section 17 of RA No. 6657 is applicable. The latter law, being  
the latest law in agrarian reform, should control. The records do not show when respondents or their father, Florentino Dumlao, was
  formally notified of the expropriation. The records, however, bear out that the bank sent
When RA 6657 was enacted into law in 1988, the agrarian reform Florentino Dumlao a letter stating that it had approved the land transfer claim involving that
process in the present case was still incomplete as the amount of just property covered by TCT No. T-1180 on November 5, 1990. Moreover, the various Land
compensation to be paid to Domingo had yet to be settled. Just compensation Valuation Summary and Farmers Undertakings showing the valuation of the land transferred to
should therefore be determined and the expropriation process concluded under the farmers-beneficiaries were approved on May 17, 1989[55] and July 21, 1989.[56] It is thus
RA 6657. crystal clear that even after the passage of RA No. 6657 in 1988, neither petitioner nor
  the DAR had settled the matter of just compensation with respondents as landowners.
Guided by this precept, just compensation for purposes of  
agrarian reform under PD 27 should adhere to Section 17 of RA 6657 x x x. Besides, RA No. 6657 applies to rice and corn lands covered by PD No. 27.  In Paris v.
  Alfeche,[57] the Court explained:
   
In Land Bank of the Philippines v. Estanislao,[48] the Court ruled that taking into account Considering the passage of RA 6657 before the completion of the
the passage of RA No. 6657 in 1988 pending the settlement of just compensation, it is that law application of the agrarian reform process to the subject lands, the same should
which applies to landholdings seized under PD No. 27, with said decree and EO No. 288 having now be completed under the said law, with PD 27 and EO 228 having only
only suppletory effect. Prior to that declaration, the Court already decreed in Land Bank of the suppletory effect. This ruling finds support in Land Bank of the Philippines v.
Philippines v. Natividad,[49] citing Paris v. Alfeche,[50] that: CA, wherein the Court stated:
  We cannot see why Sec. 18 of RA 6657 should not
Under the factual circumstances of this case, the agrarian reform apply to rice and corn lands under PD 27. Section 75 of RA
process is still incomplete as the just compensation to be paid private 6657 clearly states that the provisions of PD 27 and EO 228
respondents has yet to be settled. Considering the passage of Republic Act No. shall only have a suppletory effect. Section 7 of the Act also
6657 (6657) before the completion of the process, the just compensation should provides
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Agra - Landbank v Dumlao
  In Meneses, the Court compared the conflicting rulings in Gabatin v. Land Bank of the
Sec. 7. Priorities.  The DAR, in Philippines,[60] cited by petitioner, and Land Bank of the Philippines v. Natividad.[61] This Court
coordination with the PARC shall plan and affirmed Natividad, stating that it would be more equitable to apply the same due to the
program the acquisition and distribution of all circumstances obtaining, i.e. the more than 30-year delay in the payment of just compensation.
agricultural lands through a period of ten (10)  
years from the effectivity of this Act. Lands shall The application of RA No. 6657 due to the inequity faced by landowners continued
be acquired and distributed as follows: in Lubrica v. Land Bank of the Philippines.[62] The landowners were also deprived of their
  properties in 1972 but had yet to receive their just compensation even after the passage of RA
Phase One: Rice and Corn lands under No. 6657. Since the landholdings were already subdivided and distributed to the farmer-
P.D. 27; all idle or abandoned lands; all private beneficiaries, the Court, speaking through Justice Consuelo Ynares-Santiago, deemed it
lands voluntarily offered by the owners for unreasonable to compute just compensation using the values at the time of taking in 1972 as
agrarian reform; x x x and all other lands owned dictated by PD No. 27, and not at the time of payment pursuant to RA No. 6657.
by the government devoted to or suitable for  
agriculture, which shall be acquired and We find no cogent reason not to apply the same ratiocination here. In the case at bar,
distributed immediately upon the effectivity of emancipation patents, and eventually, transfer certificates of title, were issued to the farmer-
this Act, with the implementation to be beneficiaries[63] at least twenty-eight (28) years ago. On March 16, 1990, the DAR acknowledged
completed within a period of not more than four that the property covered by TCT No. T-1180 had already been distributed to farmer-
(4) years. beneficiaries through emancipation patents. As early as June 10, 1975, a portion of the same
  property was conveyed to a certain Rosalina Abon, although this was not annotated on the
This eloquently demonstrates that RA 6657 owners title.[64]
includes PD 27 lands among the  
properties which the DAR shall acquire and distribute to Needless to say, respondents have already been deprived of the use and dominion over
the landless. And to facilitate the acquisition and their landholdings for a substantial period of time. In the interim, petitioner bank has abjectly
distribution thereof, Secs. 16, 17, and 18 of the Act should failed to pay, much less to determine, the just compensation due to respondents. The law clearly
be adhered to. In Association of Small Landowners of the recognizes that the exact value of lands taken under PD No. 27, or the just compensation to be
Philippines v. Secretary of Agrarian Reform, this Court applied given to the landowner must be determined with certainty before the land titles are transferred.
[65]
the provisions (of) RA 6657 to rice and corn lands when it  Petitioners gross failure to compensate respondents for loss of their land, while transferring
upheld the constitutionality of the payment of just compensation the same to the farmer-beneficiaries, make it unjust to determine just compensation based on
for PD 27 lands through the different modes stated in Sec. the guidelines provided by PD No. 27 and EO No. 228.
18. (Emphasis supplied)  
  Accordingly, just compensation should be computed in accordance with RA No. 6657 in
Verily, there is nothing to prevent Section 17 of RA No. 6657 from being applied to order to give full effect to the principle that the recompense due to the landowner should be the
determine the just compensation for lands acquired under PD No. 27. full and fair equivalent of the property taken from the owner by the expropriator.  The measure is
  not the takers gain but the owners loss. The word just is used to intensify the meaning of the
In Natividad,[58] the Court ruled that the DARs failure to determine the just compensation word compensation to convey the idea that the equivalent to be rendered for the property to be
for a considerable length of time made it inequitable to follow the guidelines provided by PD No. taken shall be real, substantial, full, and ample.[66]
27 and EO No. 228. Hence, RA No. 6657 should apply. The same rationale was followed  
in Meneses v. Secretary of Agrarian Reform.[59] There, the Court noted that despite the lapse of The determination of just compensation is a function addressed to the courts of justice
more than thirty (30) years since the expropriation of the property in 1972, petitioners had yet to and may not be usurped by any other branch or official of the government. [67]However, the
benefit from it, while the farmer-beneficiaries were already harvesting the propertys determination made by the trial court, which relied solely on the formula prescribed by PD No.
produce. Thus, RA No. 6657 was applied instead of PD No. 27 in determining just 27 and EO No. 228, is grossly erroneous. The amount of P6,912.50 per hectare, which is based
compensation. on the DAR valuation of the properties at the time of their taking in the 1970s, [68] does not come
  close to a full and fair equivalent of the property taken from respondents.
   
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Meanwhile, the CAs act of setting just compensation in the amount of P109,000.00 A.3 When both the CS and CNI are not present and only MV is applicable,
would have been a valid exercise of this judicial function, had it followed the mandatory formula the formula shall be:
prescribed by RA No. 6657. However, the appellate court merely chose the lower of two (2)  
values specified by the commissioner as basis for determining just compensation, namely: LV = MV x 2
(a) P109,000.00 per hectare as the market value of first class unirrigated rice land in the  
Municipality of Villaverde; and (b) P60.00 per square meter as the zonal value of the land in In no case shall the value of the land using the formula MV x 2 exceed
other barangays in Villaverde. This is likewise erroneous because it does not adhere to the the lowest value of land within the same estate under consideration or
formula provided by RA No. 6657. within the same barangay or municipality (in that order) approved by
  LBP within one (1) year from receipt of claimfolder.
It cannot be overemphasized that the just compensation to be given to the owner cannot  
be assumed and must be determined with certainty. [69] Its determination involves the examination xxxx
of the following factors specified in Section 17 of RA No. 6657, as amended, namely: (1) the cost  
of acquisition of the land; (2) the current value of the properties; (3) its nature, actual use, and A.6 The basic formula in the grossing-up of valuation inputs such as LOs
income; (4) the sworn valuation by the owner; (5) the tax declarations; (6) the assessment made Offer, Sales Transaction (ST), Acquisition Cost (AC), Market Value
by government assessors; (7) the social and economic benefits contributed by the farmers and Based on Mortgage (MVM) and Market Value per Tax Declaration
the farmworkers and by the government to the property; and (8) the non-payment of taxes or (MV) shall be:
loans secured from any government financing institution on the said land, if any. [70]  
  Grossed-up = Valuation input x
Section 17 was converted into a formula by the DAR through Administrative Order (AO) Valuation Input Regional Consumer Price
No. 6, Series of 1992,[71] as amended by AO No. 11, Series of 1994, [72] the pertinent portions of Index (RCPI) Adjustment
which provide: Factor
  The RCPI Adjustment Factor shall refer to the ratio of RCPI for the
A. There shall be one basic formula for the valuation of lands covered month issued by the National Statistics Office as of the date when the
by [Voluntary Offer to Sell] or [Compulsory Acquisition] regardless of the date of claimfolder (CF) was received by LBP from DAR for processing or, in its
offer or coverage of the claim: absence, the most recent available RCPI for the month issued prior to
  the date of receipt of CF from DAR and the RCPI for the month as of the
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1) date/effectivity/registration of the valuation input. Expressed in equation
  form:
Where: LV = Land Value  
CNI = Capitalized Net Income RCPI for the Month as of the
CS = Comparable Sales Date of Receipt of Claimfolder
MV = Market Value per Tax Declaration by LBP from DAR or the Most
The above formula shall be used if all the three factors are present, recent RCPI for the Month
relevant and applicable. Issued Prior to the Date of
A.1 When the CS factor is not present and CNI and MV are applicable, the RCPI Receipt of CF
formula shall be: Adjustment =
  Factor RCPI for the Month Issued as of
LV = (CNI x 0.9) + (MV x 0.1) the Date/Effectivity/Registration
  of the Valuation Input
A.2 When the CNI factor is not present, and CS and MV are applicable, the  
formula shall be: B. Capitalized Net Income (CNI) This shall refer to the difference between
  the gross sales (AGP x SP) and total cost of operations (CO) capitalized at
LV = (CS x 0.9) + (MV x 0.1) 12%.
   
Expressed in equation form:
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Agra - Landbank v Dumlao
  xxxx
CNI = (AGP x SP) - CO  
.12 D. In the computation of Market Value per Tax Declaration (MV), the most
  recent Tax Declaration (TD) and Schedule of Unit Market Value (SMV)
Where: CNI = Capitalized Net Income issued prior to receipt of claimfolder by LBP shall be considered. The Unit
AGP = Latest available 12-month's gross production Market Value (UMV) shall be grossed up from the date of its effectivity up to
immediately preceding the date of offer in case the date of receipt of claimfolder by LBP from DAR for processing, in
of VOS or date of notice of coverage in case of accordance with item II.A.A.6. (Emphasis and underscoring supplied)
CA.  
  While the determination of just compensation involves the exercise of judicial discretion,
SP = The average of the latest available 12 such discretion must be discharged within the bounds of the law. [73] The DAR, as the government
months selling prices prior to the date of receipt agency principally tasked to implement the agrarian reform program, has the duty to issue rules
of the claimfolder by LBP for processing, such and regulations to carry out the object of the law. The DARadministrative orders precisely filled
prices to be secured from the Department of in the details of Section 17 of RA No. 6657 by providing a basic formula by which the factors
Agriculture (DA) and other appropriate mentioned in the provision may be taken into account.[74] Special agrarian courts are not at liberty
regulatory bodies or, in their absence, from the to disregard the formula devised to implement the said provision because unless an
Bureau of Agricultural Statistics. If possible, SP administrative order is declared invalid, courts have no option but to apply it. [75]
data shall be gathered from the barangay or  
municipality where the property is located. In In his Report, the Commissioner merely specified the market value of first class
the absence thereof, SP may be secured within unirrigated ricelands in the municipality where the properties are located, as well as the zonal
the province or region. value of lands in other barangays in the same municipality. For their part, respondents attempted
  to prove the following: market value of unirrigated ricelands for the Municipality of Villaverde, set
CO = Cost of Operations at P109,000.00 per hectare, pursuant to Sangguniang Bayan Tax Ordinance No. 96-45;
[76]
Whenever the cost of operations could not be  annual production of unirrigated ricefields in Villaverde, at 80 cavans during palagad cropping,
obtained or verified, an assumed net income and 101 cavans under regular cropping;[77] government support price for palay for the
rate (NIR) of 20% shall be used. Landholdings period October 1, 1990 to October 1995 at P6.00 per kilo, and from November 1, 1995 to the
planted to coconut which are productive at the time of the filing of the petition at P8.00 per kilo.[78]
time of offer/coverage shall continue to use the  
70% NIR. DAR and LBP shall continue to  
conduct joint industry studies to establish the However, the records do not bear out if these factors are the only ones relevant,
applicable NIR for each crop covered under present and applicable in this case, so that just compensation can now be computed by the
CARP. Court based on the formula provided by the DAR administrative orders. Based on the evidence
  adduced, it appears that market value and comparable net income (CNI) are being
.12 = Capitalization Rate proved. However, CNI cannot be computed in the absence of information regarding cost of
  operations.[79]
xxxx  
  We are thus compelled to remand the case to the court a quo to determine the final
C. CS shall refer to any one or the average of all the applicable sub-factors, valuation of respondents properties. The trial court is mandated to consider the factors provided
namely, ST, AC and MVM: under Section 17 of RA No. 6657, as translated into the formula prescribed by DAR AO No. 6-
  92, as amended by DAR AO No. 11-94.
Where: ST = Sales Transactions as defined under Item C.2  
AC = Acquisition Cost as defined under Item C.3 Furthermore, upon its own initiative, or at the instance of any of the parties,
MVM = Market Value Based on Mortgage as defined the RTC may again appoint one or more commissioners to examine, investigate and ascertain
under Item C.4 facts relevant to the dispute including the valuation of properties and to file a written report with
  the RTC.[80]
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  The date of taking of the subject land for purposes of computing
We next address the second issue date of taking. just compensation should be reckoned from the issuance dates of the
  emancipation patents. An emancipation patent constitutes the conclusive
The taking of the properties for the purpose of computing just compensation should be authority for the issuance of a Transfer Certificate of Title in the name of the
reckoned from the date of issuance of emancipation patents, and not on October 21, 1972, grantee. It is from the issuance of an emancipation patent that the grantee can
as petitioner insists. The nature of the land at that time determines the just compensation to be acquire the vested right of ownership in the landholding, subject to the payment
paid.[81] of just compensation to the landowner.[88] (Emphasis supplied)
   
We cannot sustain petitioners position that respondents properties were statutorily taken It is undisputed that emancipation patents were issued to the farmer-beneficiaries. However,
on October 21, 1972, the date of effectivity of PD No. 27; that on that their issuance dates are not shown. As such, the trial court should determine the date of
date,respondents were effectively deprived of possession and dominion over the land; and that issuance of these emancipation patents in order to ascertain the date of taking and proceed to
when EO No. 228 fixed the basis in determining land valuation using the government support compute the just compensation due to respondents, in accordance with RA No. 6657.
price of P35.00 for one cavan of 50 kilos of palay on October 21, 1972, it was consistent with the  
settled rule that just compensation is the value of the property at the time of the taking. [82] Now, to the third and final issue.
   
In Association of Small Landowners v. Secretary of Agrarian Reform,[83] the Court held Respondents are entitled to payment of just compensation even on those
that title to the property expropriated shall pass from the owner to the expropriator only upon full properties which have not been processed by the DAR.
payment of just compensation. The Court further held that:  
  Petitioner admits that of respondents landholdings, only those covered by TCT Nos. T-
It is true that P.D. No. 27 expressly ordered the emancipation of tenant- 1180 and T-41504, totaling 16.3939 hectares, were processed and initially valued by
farmer as [of] October 21, 1972 and declared that he shall be deemed the owner the DAR. Pending initial processing by the DAR of the remaining landholdings, petitioner posits
of a portion of land consisting of a family-sized farm except that no title to the that it cannot be made to pay the amount of P109,000.00 per hectare for those covered
land owned by him was to be actually issued to him unless and until he had by TCT Nos. 41508, 41507, 41506, and 41505, with an aggregate area of 17.2379 hectares.
become a full-fledged member of a duly recognized farmers cooperative. It was  
understood, however, that full payment of just compensation also had to The argument is specious for three reasons.
be made first, conformably to the constitutional requirement.[84] (Emphasis  
supplied)  
  First, the determination of just compensation is judicial in nature. The DARs land
In Land Bank of the Philippines v. Estanislao,[85] the Court declared that seizure of landholdings valuation is only preliminary and is not, by any means, final and conclusive upon the landowner
or properties covered by PD No. 27 did not take place on October 21, 1972, but upon the or any other interested party. In the exercise of its functions, the courts still have the final say on
payment of just compensation. what the amount of just compensation will be.[89]
   
Land Banks contention that the property was acquired for purposes of In Natividad, the Court held that:
agrarian reform on October 21, 1972, the time of the effectivity of PD 27, ergo  
just compensation should be based on the value of the property as of that time [T]here is nothing contradictory between the DARs primary jurisdiction
and not at the time of possession in 1993, is likewise erroneous. In Office of the to determine and adjudicate agrarian reform matters and exclusive original
President, Malacaang, Manila v. Court of Appeals,  we ruled that the seizure  of jurisdiction over all matters involving the implementation of agrarian reform,
the landholding did not take place on the date of effectivity of PD 27 but  would which includes the determination of questions of just compensation, and
take effect on the payment of just compensation.[86] (Emphasis in the the original and exclusive jurisdiction of regional trial courts over all
original) petitions for the determination of just compensation. The first refers to
  administrative proceedings, while the second refers to judicial proceedings.
However, for purposes of computing just compensation, this Court recently declared in Land  
Bank of the Philippines v. Heirs of Angel T. Domingo[87] that the time of taking should be In accordance with settled principles of administrative law, primary
reckoned from the issue dates of emancipation patents. jurisdiction is vested in the DAR to determine in a preliminary manner the just
  compensation for the lands taken under the agrarian reform program, but
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Agra - Landbank v Dumlao
such determination is subject to challenge before the courts. The resolution of The principle of exhaustion of administrative remedies is a relative one and is flexible
just compensation cases for the taking of lands under agrarian reform is, after depending on the peculiarity and uniqueness of the factual and circumstantial settings of a
all, essentially a judicial function. case. It is disregarded: (1) when there is a violation of due process; (2) when the issue involved
  is purely a legal question; (3) when the administrative action is patently illegal and amounts to
Thus, the trial court did not err in taking cognizance of the case as the lack or excess of jurisdiction; (4) when there is estoppel on the part of the administrative agency
determination of just compensation is a function addressed to the courts of concerned; (5) when there is irreparable injury; (6) when respondent is a department secretary
justice.[90] (Emphasis supplied) whose acts, as an alter ego of the President, bears the implied and assumed approval of the
  latter; (7) when to require exhaustion of administrative remedies would be unreasonable;
In fact, the law does not make the DAR valuation absolutely binding as the amount (8) when it would amount to a nullification of a claim; (9) when the subject matter is a private
payable by petitioner. A reading of Section 18[91] of RA No. 6657 shows that it is the courts, not land in land case proceedings; (10) when the rule does not provide a plain, speedy and
the DAR, which make the final determination of just compensation. adequate remedy; (11) when there are circumstances indicating the urgency of judicial
  intervention, and unreasonable delay would greatly prejudice the complainant; (12) when
Accordingly, RA No. 6657 directs petitioner to pay the DARs land valuation only if the no administrative review is provided by law; (13) where the rule of qualified political agency
landowner, the DAR and petitioner agree on the amount of just compensation. Otherwise, the applies; and (14) when the issue of non-exhaustion of administrative remedies has been
amount determined by the special agrarian court as just compensation shall be paid by rendered moot.[95]
petitioner. Corollarily, there is no reason for petitioner to wait for the DARvaluation of the  
properties, if the court has already determined the just compensation due to respondents. Here, to require exhaustion of administrative remedies would be unreasonable. What is
  more, judicial intervention is necessary so as not to unduly prejudice the
Second, to wait for the DAR valuation despite its unreasonable neglect and delay in landowners. Respondents have long been deprived of their landholdings, yet compensation has
processing the four properties claimfolders is to violate the elementary rule that payment of just been withheld from them. Accordingly, to make respondents wait for the DAR to process the
compensation must be within a reasonable period from the taking of property. Cosculluela v. claimfolders of the remaining four properties would be unreasonable, unjust and manifestly
Court of Appeals[92] could not have been clearer: prejudicial to them.
   
Just compensation means not only the correct determination of  
the amount to be paid to the owner of the land but also the payment of the  
land within a reasonable time from its taking. Without prompt payment,  
compensation cannot be considered just for the property owner is made to suffer Respondents are entitled to the right of retention over their lands.
the consequence of being immediately deprived of his land while being made to  
wait for a decade or more before actually receiving the amount necessary to The right of retention is constitutionally guaranteed, subject to qualification by the
cope with his loss. x x x.[93] (Emphasis supplied) legislature. It serves to mitigate the effects of compulsory land acquisition by balancing the rights
  of the landowner and the tenant and by implementing the doctrine that social justice was not
In the case at bar, the properties have long been expropriated by the government and meant to perpetrate an injustice against the landowner. A retained area, as its name denotes, is
their fruits enjoyed by the farmer-beneficiaries. Respondent have been made to wait for decades land which is not supposed to anymore leave the landowners dominion, thus sparing the
for payment of their recompense. They were not even allowed to withdraw the amount claimed government from the inconvenience of taking land only to return it to the landowner afterwards,
to have been deposited with petitioner bank on their behalf. It would certainly be iniquitous to which would be a pointless process.[96]
wait for the DAR to process the properties covered by the four other titles before the special  
agrarian court can finally determine the amount of their just compensation. [94] The opinion of the MARO[97] that respondents are not entitled to retain areas out of their
  landholdings because they applied for the same after the grace period set by the
Third, while the DAR is vested with primary jurisdiction to determine in a preliminary government[98] fails to persuade. A landowner whose land was taken pursuant to PD No. 27 has
manner the amount of just compensation, the circumstances of this case militate against the a right to retain seven hectares of land, provided that the landowner is cultivating the area or will
application of the doctrine of primary jurisdiction. now cultivate it.[99] Those who did not avail of their rights of retention under PD No. 27 are
  entitled to exercise the same under Section 6 [100] of RA No. 6657.[101] Landowners may still avail
  of their retention rights notwithstanding the August 27, 1985 deadline imposed by DAR AO No.
  1, Series of 1985. In Daez v. Court of Appeals,[102] the Court, citing Association of Small
Landowners, Inc. v. Secretary of Agrarian Reform,[103] disregarded said deadline and sustained
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Agra - Landbank v Dumlao
the landowners retention rights.Notably, under RA No. 6657, landowners who do not personally
cultivate their lands are no longer required to do so in order to qualify for the retention of an area
not exceeding five hectares. Instead, they are now required to maintain the actual tiller of the
area retained, should the latter choose to remain in those lands. [104] Verily, there is no
impediment to the exercise by respondents of their retention rights under RA No. 6657.
 
In sum, We rule that:
 
1. The provisions of RA No. 6657 apply in determining the just compensation due to respondents
for the taking of their property. However, the value of P109,000.00, based on the propertys
market value and assigned by the CA as just compensation, is erroneous. The trial court is thus
directed to receive evidence pertaining to the factors to be considered in determining just
compensation, in accordance with DAR AO No. 6, Series of 1992, as amended by AO No. 11,
Series of 1994.
 
2. For purposes of computing just compensation, the date of issuance of emancipations is
deemed the date of taking, not October 21, 1972.
 
3. Respondents are entitled to payment of just compensation on their entire landholdings
covered by Operation Land Transfer, except for the five hectares of retention area each of them
are entitled to.
 
WHEREFORE, the petition is DENIED. The case is REMANDED to the court a quo for
final determination of just compensation due to respondents.
 
SO ORDERED.