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More equitable

Posted in CARP, DAR, Laws, LBP, Supreme Court Decisions by Erineus on February 12, 2009

This is another case of agricultural lands subjected to land reform. The issue arising here is the time of determination of just compensation: is it at the time of taking or at the time of payment?

The case involved 8 parcels of lands containing an aggregate area of 34.95 hectares all duly titled in the name of an agricultural cooperative (AAC). Sometime in 1972 the DAR acquired the said property under its Operation Land Transfer Program pursuant to PD 27. The properties were thereafter distributed to farmer beneficiaries who were subsequently issued certificates of land transfer and emancipation patent between the years 1978 to 1990.

However, the Land Bank of the Philippines (LBP) paid AAC for only two parcel of land on February 10, 1986 and March 3, 1987 in the total sum of P35,778.70. The other 6 parcels of rice land with an area of 28.2514 hectares remained unpaid.

On May 28, 1987, AAC sold the said properties to another cooperative (PAMC). The latter thus inquired from the LBP about the balance of payment for the six other parcels of land. LBP then sent a letter to PAMC pegging the value of the 6 remaining parcels at P 148,172. 21. The latter however refused to accept their valuation.

In the meantime, R.A. 6657 or the Comprehensive Agrarian Reform Act was signed into law on June 15, 1988. The said R.A. mandates that the LBP shall compensate the landowner in such amount as may be agreed upon by the landowner, the DAR and LBP or as may be determined by the court as just compensation taking into consideration the cost of the acquisition of the land, the current value of like properties, its nature, actual use, income, sworn valuation by the owner, the tax declarations and the assessments by government assessors.

On August 12, 1994 LBP reiterated its valuation of P148,172.21 and requested PAMC to submit some documents so that full payment could be effected. But PAMC again protested and requested for a revaluation. In October 1994 DAR issued A.O.13 imposing an increment of 6% yearly interest compounded from the date of coverage on the value of lands not yet paid. So LBP adjusted its proposed valuation by adding said increment thus increasing the amount to P537,538.34. PAMC still rejected the amount and instead subsequently filed a petition before the RTC acting as Special Agrarian Court (SAC) for the valuation and determination of just compensation pursuant to R.A. 6657.

LBP however contested the said petition contending that the said law should not be applied retroactively to this case as it did not provide for retroactive application. According to LBP, the taking of the lands in this case was deemed effected on October 21, 1972 when PD 27 took effect and when AAC was deprived of ownership over its lands in favor of farmer beneficiaries. Hence in computing the value of land for payment of just compensation, the valuation of the land at the time of the taking in 1972 pursuant to PD 27, should be made the basis. There is no injustice here since there would be an increment of 6% per annum, according to LBP. Was LBP correct?

No. Under the factual circumstances of this case, the agrarian reform process is still incomplete as the just compensation has yet to be settled. Considering the passage of R.A. 6657 before the completion of this process, the just compensation should be determined and the process concluded under said law. R.A. 6657 is the applicable law with PD 27 and its corresponding E.O. 228 having suppletory effect only. It would certainly be inequitable to determine just compensation based on the guideline provided by PD 27 and E.O. 228 considering the DAR’s failure to determine just compensation for a considerable length of time. More than 30 years have passed and the landowner is yet to benefit from it while the farmer-beneficiaries have already been harvesting its produce for the longest time. The seizure of the landholding did not take place on the date of effectivity of PD 27 but on date of payment of just compensation.

Hence it is more equitable for the SAC to determine just compensation for the reminder of the property using the values at the time of its payment and considering the full and fair equivalent of the property taken from its owner by the expropriator, equivalent being real, substantial, full and ample (LBP vs. Pacita Agricultural Multi Purpose Coop. etc. G.R. 177607, January 19, 2009).

Note: Books containing compilation of my articles on Labor Law and Criminal Law (Vols. I and II) are now available. Call tel. 7249445.

A LAW EACH DAY (Keeps Trouble Away) By Jose C. Sison
Updated February 12, 2009 12:00 AM