Philippine Constitution Article XIII, Section 4 Article III Section 9

Philippine Constitution Article XIII, Section 4; Article III Section 9
Urban Land Reform and Housing
SECTION 9. The State shall, by law, and for the common good, undertake, in cooperation
with the public sector, a continuing program of urban land reform and housing which will
make available at affordable cost decent housing and basic services to underprivileged and
homeless citizens in urban centers and resettlements areas. It shall also promote adequate
employment opportunities to such citizens. In the implementation of such program the State
shall respect the rights of small property owners.
EO 228 1987 Section 2-5
DECLARING FULL LAND OWNERSHIP TO QUALIFIED FARMER BENEFICIARIES COVERED BY

PRESIDENTIAL DECREE NO. 27: DETERMINING THE VALUE OF REMAINING UNVALUED RICE
AND CORN LANDS SUBJECT TO P.D. NO. 27; AND PROVIDING FOR THE MANNER OF PAYMENT
BY THE FARMER BENEFICIARY AND MODE OF COMPENSATION TO THE LANDOWNER
Sec. 2. Henceforth, the valuation of rice and corn lands covered by P.D. No. 27 shall be
based on the average gross production determined by the Barangay Committee on Land
Production in accordance with Department Memorandum Circular No. 26, Series of 1973,
and related issuances and regulations of the Department of Agrarian Reform. The average
gross production per hectare shall be multiplied by two and a half (2.5), the product of which
shall be multiplied by Thirty Five Pesos (P35.00), the government support price for one
cavan of 50 kilos of palay on October 21, 1972, or Thirty One Pesos (P31.00), the
government support price for one 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 of determining its cost to the farmer and compensation to the landowner.
Lease rentals paid to the landowner by the farmer beneficiary after October 21, 1972, shall
be considered as advance payment for the land. In the event of dispute with the land owner
regarding the amount of lease rental paid by the farmer beneficiary, the Department of
Agrarian Reform and the Barangay Committee on Land Production concerned shall resolve
the dispute within thirty (30) days from its submission pursuant to Department of Agrarian
Reform Memorandum Circular No. 26, Series of 1973, and other pertinent issuances. In the
event a party questions in court the resolution of the dispute, the landowner's compensation
claim shall still be processed for payment and the proceeds shall be held in trust by the Trust
Department of the Land Bank in accordance with the provisions of Section 5 hereof, pending
the resolution of the dispute before the court.
Sec. 3. Compensation shall be paid to the landowners in any of the following modes, at the
option of the landowners:
(a) Bond payment over ten (10) years, with ten percent (10%) of the value of the land
payable immediately in cash, and the balance in the form of LBP bonds bearing
market rates of interest that are aligned with 90-day treasury bills rates, net of
applicable final withholding tax. One-tenth of the face value of the bonds shall
mature every year from the date of issuance until the tenth year.
The LDP bonds issued hereunder shall be eligible for the purchase of government
assets to be privatized.
(b) Direct payment in cash or in kind by the farmer-beneficiaries with the terms to be
mutually agreed upon by the beneficiaries and landowners and subject to the
approval of the Department of Agrarian Reform; and
(c) Other modes of payment as may be prescribed or approved by the Presidential

Agrarian Reform Council.
Sec. 4. All outstanding Land Bank bonds that are retained by the original landowners-payee
or by their heirs, are deemed matured up to on-twenty fifth (1/25) of their yearly face value
from their date of issue to the date of this Executive Order and may be claimed by the
original landowner-payee by surrendering the bonds to the Land Bank. The original
landowner-payee may claim payment for the remaining unmatured period of the
surrendered bonds under any of the modes of compensation provided in Section 3,
subsections (a) (b) or (c) hereof.
In order to meet the financial requirements mentioned in this Section, the Central Bank shall
remit to the Land Bank such sums as may b necessary from the Sinking Fund established by
the Land Bank from the retirement of its bonds and other long-term obligations and which
Sinking Fund is administered by the Central Bank: Provided, however, That there is no
change in maturity of other outstanding Land Bank bonds acquired and held by transferees
from original bondholders.
The landowner is exempt from capital gains tax on the compensation paid to him under this
Executive Order.
Sec. 5. In the event that the landowner does not accept payment of the compensation due
him, his compensation shall be held in trust for him by the Trust Department of the Land
Bank. The cash portion of the compensation and such portions that mature yearly shall be
invested by the Trust Department only in government securities fully guaranteed by the
Republic of the Philippines. All the net earnings of the investment shall be for the benefit of
the landowner, his heirs or successors in interest.
The rights of the landowners may be exercised by his heirs upon his death.
RA 6657 17-19
SECTION 17. Determination of Just Compensation. In determining just compensation, the

cost of acquisition of the land, the current value of the like properties, its nature, actual use
and income, the sworn valuation by the owner, the tax declarations, and the assessment
made by government assessors shall 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-payment of taxes or loans secured from any government financing
institution on the said land shall be considered as additional factors to determine its
valuation.
SECTION 18. Valuation and Mode of Compensation. The LBP shall compensate the
landowner in such amounts as may be agreed upon by the landowner and the DAR and the
LBP, in accordance with the criteria provided for in Sections 16 and 17, and other pertinent
provisions hereof, or as may be finally determined by the court, as the just compensation for
the land.
The compensation shall be paid on one of the following modes, at the option of the
landowner:
(1) Cash payment, under the following terms and conditions;
(a) For lands above Twenty-five percent fifty (50) hectares, insofar (25%) cash, the
balance to as the excess hectarage is be paid in government concerned. financial
instruments negotiable at any time.
(b) For lands above Thirty percent (30%) cash, twenty-four (24) hectares the balance to
be paid in and up to fifty (50) hectares. government financial instruments negotiable at any
time.
(c) For lands twenty-four Thirty-five percent (35%) (24) hectares and below. cash, the
balance to be paid in government financial instruments negotiable at any time.
(2) Shares of stock in government-owned or controlled corporations, LBP preferred shares,

physical assets or other qualified investments in accordance with guidelines set by the
PARC;
(3) Tax credits which can be used against any tax liability;
(4) LBP bonds, which shall have the following features:

(a) Market interest rates aligned with 91-day treasury bill rates. Ten percent (10%) of the
face value of the bonds shall mature every year from the date of issuance until the tenth
(10th) year: Provided, That should the landowner choose to forego the cash portion, whether
in full or in part, he shall be paid correspondingly in LBP bonds;
(b) Transferability and negotiability. Such LBP bonds may be used by the landowner, his
successors in interest or his assigns, up to the amount of their face value, for any of the
following:
(i) Acquisition of land or other real properties of the government, including assets under the
Asset Privatization Program and other assets foreclosed by government financial institutions
in the same province or region where the lands for which the bonds were paid are situated;
(ii) Acquisition of shares of stock of governmentowned or -controlled corporations or shares
of stocks owned by the government in private corporations;
(iii) Substitution for surety or bail bonds for the provisional release of accused persons,
or performance bonds;
(iv) Security for loans with any government financial institution, provided the proceeds of
the loans shall be invested in an economic enterprise, preferably in a small-and medium-
scale industry, in the same province or region as the land for which the bonds are paid;
(v) Payment for various taxes and fees to government; Provided, That the use of these
bonds for these purposes will be limited to a certain percentage of the outstanding balance
of the financial instruments: Provided, further, That the PARC shall determine the percentage
mentioned above;
(vi) Payment for tuition fees of the immediate family of the original bondholder in
government universities, colleges, trade schools, and other institutions;
(vii) Payment for fees of the immediate family of the original bondholder in government
hospitals; and
(viii) Such other uses as the PARC may from time to time allow.
In case of extraordinary inflation, the PARC shall take appropriate measures to protect the
economy.
SECTION 19. Incentives for Voluntary Offers for Sales. Landowners, other than banks and
other financial institutions, who voluntarily offer their lands for sale shall be entitled to an
additional five percent (5%) cash payment.
EO 405 1990
VESTING IN THE LAND BANK OF THE PHILIPPINES THE PRIMARY RESPONSIBILITY TO

DETERMINE THE LAND VALUATION AND COMPENSATION FOR ALL LANDS COVERED UNDER
REPUBLIC ACT NO. 6657, KNOWN AS THE COMPREHENSIVE AGRARIAN REFORM LAW OF
1988
DAR AO No. 5 1998
RA 9700 Sec 7
SECTION 7. Section 17 of Republic Act No. 6657, as amended, is hereby further amended to
read as follows: CSTEHI "SEC. 17. Determination of Just Compensation. In determining just
compensation, the cost of acquisition of the land, the value of the standing crop, the current
value of like properties, its nature, actual use and income, the sworn valuation by the owner,
the tax declarations, the assessment made by government assessors, and seventy percent
(70%) of the zonal valuation of the Bureau of Internal Revenue (BIR), translated into a basic
formula by the DAR shall be considered, subject to the final decision of the proper court. The
social and economic benefits contributed by the farmers and the farmworkers and by the
Government to the property as well as the nonpayment of taxes or loans secured from any
government financing institution on the said land shall be considered as additional factors to
determine its valuation."
DAR AO 1 2010
DAR AO 7 2011 Sec 85
Association of Small Land Owners vs Secretary of Agrarian Reform
Facts: Squarely raised in this petition is the constitutionality of P.D. No. 27, E.O. Nos. 228
and 229, and R.A. No. 6657.
G.R. No. 78742: (Association of Small Landowners vs Secretary)

The Association of Small Landowners in the Philippines, Inc. sought exception from the land
distribution scheme provided for in R.A. 6657. The Association is comprised of landowners of
ricelands and cornlands whose landholdings do not exceed 7 hectares. They invoke that
since their landholdings are less than 7 hectares, they should not be forced to distribute
their land to their tenants under R.A. 6657 for they themselves have shown willingness to till
their own land. In short, they want to be exempted from agrarian reform program because
they claim to belong to a different class.
G.R. No. 79777: (Manaay vs Juico)
Nicolas Manaay questioned the validity of the agrarian reform laws (PD 27, EO 228, and 229)
on the ground that these laws already valuated their lands for the agrarian reform program
and that the specific amount must be determined by the Department of Agrarian Reform
(DAR). Manaay averred that this violated the principle in eminent domain which provides
that only courts can determine just compensation. This, for Manaay, also violated due
process for under the constitution, no property shall be taken for public use without just
compensation.
Manaay also questioned the provision which states that landowners may be paid for their
land in bonds and not necessarily in cash. Manaay averred that just compensation has
always been in the form of money and not in bonds.
G.R. No. 79777:
The petitioners are Nicolas Manaay and his wife who own a 9-hectare
riceland worked by four tenants and Augustin Hermano, Jr. who owns a 5-hectare
riceland worked by four tenants. They question the constitutionality of P.D. No. 27,
E.O. Nos. 228 & 229, and R.A. No. 6657 since their tenants were declared full owners
of the mentioned lands.
G.R. No. 79310

Landowners and sugar planters in the Victorias Mill District, Victorias, Negros
Occidental and Planters Committee Inc., with 1400 planter-members, submitted a
petition seeking to prohibit the implementation of Proc. No. 131 and E.O. No. 229.
Aug. 27, 1987 A motion for intervention was filed by the National Federation of
Sugarcane Planters, which claim 20 000 members). It was granted by the court.
Sept. 10, 1987 A motion for intervention was filed by Manuel Barcelona, et al.,
representing coconut and riceland owners. It was granted by the court.
G.R. No. 79744
Sept. 3 1986 The petitioner protested the erroneous inclusion of his small
landholding under Operation Land Transfer accusing the then Secretary of DAR of
violation of due process and the requirement for just compensation. Certificates of
Land Transfer were issued to the private respondents who then refused to pay lease
rentals. The petitioner is asking for the recall and cancellation of these certificates.
Dec. 24, 1986 Petitioner claims his petition was denied without hearing.
Feb. 17, 1987 A motion for reconsideration was filed which had not been acted upon
when E.O. Nos. 228 & 229 were issued which rendered his motion moot.
ISSUES Whether or Not the aforementioned EOs, PD, and RA were constitutional.
Held: The promulgation of PD 27 by President Marcos was valid in exercise of Police power
and eminent domain.
The power of President Aquino to promulgate Proc. 131 and EO 228 and 229 was authorized
under Sec. 6 of the Transitory Provisions of the 1987 Constitution. Therefore it is a valid
exercise of Police Power and Eminent Domain.
RA 6657 is likewise valid. The carrying out of the regulation under CARP becomes necessary
to deprive owners of whatever lands they may own in excess of the maximum area allowed,
there is definitely a taking under the power of eminent domain for which payment of just
compensation is imperative. The taking contemplated is not a mere limitation of the use of
the land. What is required is the surrender of the title and the physical
possession of said excess and all beneficial rights accruing to the owner in favour
of the farmer.
A statute may be sustained under the police power only if there is concurrence of the lawful
subject and the method.
Subject and purpose of the Agrarian Reform Law is valid, however what is to be determined
is the method employed to achieve it.
It is an exercise of the power of eminent domain because there is payment of just

compensation unlike in the exercise of police power wherein confiscation of
property is not compensable
A statute may be sustained under the police power only if there is a concurrence of the
lawful subject and the lawful method. As the subject and purpose of agrarian reform have
been laid down by the Constitution itself, we may say that the first requirement has been
satisfied. What remains to be examined is the validity of the method employed to achieve
the constitutional goal.
The petitioners have not shown that they belong to a different class and entitled to a
different treatment. The argument that not only landowners but also owners of other
properties must be made to share the burden of implementing land reform must be rejected.
There is a substantial distinction between these two classes of owners that is clearly visible
except to those who will not see.
It is declared that although money is the traditional mode of payment, other modes of
payment shall be permitted as compensation. The court accepts the theory that payment of
the just compensation is not always required to be made fully in money, they find further
that the proportion of cash payment to the other things of value constituting the total
payment, as determined on the basis of the areas of the lands expropriated, is not unduly
oppressive upon the landowner. The other modes, which are likewise available to the
landowner at his option, are also not unreasonable because payment is made in shares of
stock, LBP bonds, other properties or assets, tax credits, and other things of value
equivalent to the amount of just compensation.
(Court: We do not mind admitting that a certain degree of pragmatism has influenced our
decision on this issue. The Court is as acutely anxious as the rest of our people to see the
goal of agrarian reform achieved at last after the frustrations and deprivations of our
peasant masses during all these disappointing decades. We are aware that invalidation of
the said section will result in the nullification of the entire program, killing the farmer's hopes
even as they approach realization and resurrecting the spectre of discontent and dissent in
the restless countryside. That is not in our view the intention of the Constitution, and that is
not what we shall decree today.)
The CARP Law conditions the transfer of possession and ownership of the land to the
government on receipt by the landowner of the corresponding payment or the deposit by the
DAR of the compensation in cash or LBP bonds with an accessible bank. Until then, title also
remains with the landowner.
DISPOSITIVE
WHEREFORE, the Court holds as follows:
1. R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos. 228 and 229 are SUSTAINED
against all the constitutional objections raised in the herein petitions.
2. Title to all expropriated properties shall be transferred to the State only upon full payment
of compensation to their respective owners.
3. All rights previously acquired by the tenant- farmers under P.D. No. 27 are retained and
recognized.
4. Landowners who were unable to exercise their rights of retention under P.D. No. 27 shall
enjoy the retention rights granted by R.A. No. 6657 under the conditions therein prescribed.
5. Subject to the above-mentioned rulings all the petitions are DISMISSED, without
pronouncement as to costs.
NPC vs Chiong
Eminent domain, North Luzon Transmission Project

Court Commissioner: 500 NPC: 22.50
Due process; just compensation is not limited to easement
Facts: Petitioner is a government owned and controlled corporation, created and

existing pursuant to Republic Act No. 6395, [3] as amended, for the purpose of undertaking
the development of hydroelectric power, the production of electrical power from any source,
particularly by constructing, operating, and maintaining power plants, auxiliary plants,
dams, reservoirs, pipes, mains, transmission lines, power stations, and similar works to tap
the power generated from any river, creek, lake, spring, or waterfall in the country and
supplying such power to the inhabitants thereof. In order to carry out said purposes, NPC is
authorized to exercise the power of eminent domain.
NPC filed a complaint for eminent domain with the RTC of Iba, Zambales. It sought the
acquisition of an easement of right-of-way and certain portions of agricultural lands owned
by Igmedio and Liwayway Chiong and the Heirs of Agrifina[4] Angeles, as represented by
Francisco Mercurio, to be used in its Northwestern Luzon Transmission Line Project.
the Heirs of Agrifina Angeles did not dispute the purpose of NPC in instituting the
expropriation proceedings. However, they pointed out that NPC had already entered and
taken possession of a portion of their realty with an area of 4,000 square meters, more or
less (Lot A) and wanted to occupy another 4,000 square meters of the adjacent property (Lot
B). Respondents averred that the fair market value for both properties was P1,100.00 per
square meter or a total of P8,800,000.00 and prayed that the trial court direct NPC to pay
them said amount.
NPC filed an ex parte motion for the issuance of a writ of possession, which the trial court
granted.
The parties agreed that the controversy would be limited to determining the actual land area
taken by NPC and the just compensation to be paid by petitioner.
The trial court appointed as commissioners, Atty. Henry P. Alog, Atty. Regalado Castillo, and
Ms. Roselyn B. Regadio, Legal Researcher of the trial court, to determine the fair market
value of the land, as well as the total area taken by NPC from respondents.
Atty. Castillo and Ms. Ragadio submitted their report to the court finding that the property
classified as unirrigated riceland shall have a fair market value of P500.00 per square
meter[5] considering that the property is situated at Baytan, Babali, Lomboy, Sta. Cruz,
Zambales which is more than 900 meters from the town proper
Atty. Alog submitted his report recommending that NPC pay the Heirs of Agrifina Angeles
an easement fee of P20,957.88 and the Spouses Chiong be paid total easement fees
of P9,187.05.The affected properties of the Heirs of Agrifina Angeles were assessed by Atty.
Alog to have a fair market value of P22.50 per square meter, while those of the Spouses
Chiong were assigned a fair market value of P15.75 per square meter.[8]
Dissatisfied, NPC filed a special civil action for certiorari with the appellate court,
docketed as CA-G.R. SP No. 60716. NPC averred that the trial court committed grave abuse
of discretion amounting to excess or want of jurisdiction when it: (a) directed NPC to pay just
compensation for the land taken without first issuing an order of expropriation; (b) adopted
the compensation recommended by the two commissioners without a hearing; and (c)
directed petitioner to pay the full market value of the property instead of a mere easement
fee.
CA adismissed the case for lack of merit
In holding that NPC was not entitled to a writ of certiorari, the Court of Appeals found
that the trial court did not commit a grave abuse of discretion when it failed to issue an
expropriation order. The appellate court pointed out that as early as the pre-trial,
respondents did not question NPCs right to expropriate their properties. Hence, the only
matter to be addressed by the trial court was the amount of just compensation to be paid.
Second, NPC could not claim that it was denied due process because the trial court issued
the order without first conducting a hearing on the commissioners report. The court a
quo noted that formal-type hearings are not necessary in expropriation proceedings, as long
as the parties are afforded a fair and reasonable opportunity to be heard before the order to
pay compensation is issued.
The appellate court likewise found the assessed value of P500.00 per square meter to
be fair as opposed to the NPC-appointed commissioners valuation of P22.50 per square
meter. Finally, the CA held that as NPC failed to appeal the trial courts order, certiorari could
not be a substitute for a lost or lapsed right to appeal.
NPC moved for reconsideration, but this was denied by the appellate court in its
resolution of February 26, 2002.
ISSUE: : (1) whether petitioner NPC was deprived of due process; and (2) whether the
Court of Appeals erred in sustaining the Order of the RTC of Iba, Zambales, dated June 7,
2000, by dismissing NPCs petition for certiorari.
On the first issue, petitioner contends that the appellate court gravely erred in affirming
the trial courts order directing it to pay the respondent the compensation recommended by
the majority report of the commissioners. Petitioner points out that there were two reports
submitted by the commissioners, with conflicting findings as to the market values of the
expropriated properties. It insists that, given said situation, the trial court should have
conducted hearings on the two reports, as required by Rule 67, Sections 7 [12] and 8[13] of the
1997 Rules of Civil Procedure, before accepting the majority report.
HELD: The majority report was submitted on March 9, 2000. The trial court issued its
order adopting the majority report on June 7, 2000. Clearly, petitioner had ample time to
make its objections or ventilate its opposition to the majority report before the trial court. A
formal hearing or trial was not required for the petitioner to avail of its opportunity to object
and oppose the majority report. Petitioner could have filed a motion raising all possible
grounds for objecting to the findings and recommendations of the commissioners. It could
have moved the trial court to remand the report to the commissioners for additional facts.
Or it could have moved to expunge the majority report, for reasons petitioner could
muster. Petitioner, however, failed to seize the opportunity to register its opposition or
objections before the trial court. It is a bit too late in the day now to be asking for a hearing
on the pretext that it had not been afforded due process.
The elements of due process are well established, viz:
(1) There must be a court or tribunal clothed with judicial power to hear and
determine the matter before it;
(2) Jurisdiction must be lawfully acquired over the person of the defendant or
property which is the subject of the proceedings;
(3) The defendant must be given an opportunity to be heard; and
(4) Judgment must be rendered upon lawful hearing.[14]
What is repugnant to due process is the denial of the opportunity to be heard. [15] As
pointed out that the petitioner was afforded this opportunity is beyond question. Having
failed to make use of this opportunity, the petitioner cannot justifiably claim now that its
right to due process has been violated.
Rule 67, Section 8, of the 1997 Rules of Civil Procedure clearly shows that the trial court
has the discretion to act upon the commissioners report in any of the following ways: (1) it
may accept the same and render judgment therewith; or (2) for cause shown, it may: [a]
recommit the report to the commissioners for further report of facts; or [b] set aside the
report and appoint new commissioners; or [c] accept the report in part and reject it in part;
and it may make such order or render such judgment as shall secure to the plaintiff the
property essential to the exercise of his right of expropriation, and to the defendant just
compensation for the property so taken.[17]
From March 9, 2000 to June 7, 2000, petitioner did not object to the majority report. On
record, it did not, at the time, signify its opposition thereto, or specify that not all of the
evidence, pertinent and material thereto, had been considered by the commissioners or
presented to the court. Absent the objections raised by the petitioner, it became the duty of
the trial court to make a final order and judgment in which the proper award will be made
and thus end the controversy.
Moreover, after its receipt of the trial courts order dated June 7, 2000, which decided the
issue of compensation as delineated at the pre-trial, petitioner resorted to a special civil
action, rather than an appeal before the Court of Appeals. As aptly pointed out, petitioner
could not utilize certiorari as a substitute for its lost right of appeal.
Nevertheless, we shall now take up the matter of valuation and just compensation if
only to avoid any further delay in its resolution.
The fair market value of the 4,000 square meters occupied by the petitioner was fixed
by the trial court in its order of June 7, 2000 at P500.00 per square meter. The appellate
court affirmed the said valuation.
In contesting the valuation, petitioner argues now that the Court of Appeals gravely
erred in upholding the RTC order requiring it to pay the full market value of the expropriated
properties, notwithstanding the fact that the petitioner was only acquiring an easement of
right-of-way. The petitioner points out under Section 3-A [19] of RA No. 6395, where only an
easement of right-of-way shall be acquired, with the principal purpose for which the land is
actually devoted is unimpaired, the compensation should not exceed ten percent (10%) of
the market value of the property.
A perusal of its complaint shows that petitioner also stated that it would erect structures
for its transmission lines on portions of the expropriated property. In other words, the
expropriation was not to be limited for the purpose of easement of right-of-way. In fact, in
their Answer, the Heirs of Agrifina Angeles, alleged that petitioner had actually occupied an
area of 4,000 square meters wherein it constructed structures for its transmission lines and
was seeking to occupy another 4,000 square meters. [21] Petitioner failed to controvert this
material allegation. Justifiably, the market value of these 4,000 square meters allegedly
occupied by the petitioner has became the very crux of the present case.
In eminent domain or expropriation proceedings, the general rule is that the just
compensation to which the owner of condemned property is entitled to is the market value.
[22]
Market value is that sum of money which a person desirous but not compelled to buy,
and an owner willing but not compelled to sell, would agree on as a price to be given and
received therefor.[23] The aforementioned rule, however, is modified where only a part of a
certain property is expropriated. In such a case the owner is not restricted to compensation
for the portion actually taken. In addition to the market value of the portion taken, he is also
entitled to recover for the consequential damage, if any, to the remaining part of the
property. At the same time, from the total compensation must be deducted the value of the
consequential benefits.[24]
In fixing the valuation at P500.00 per square meter, the Court of Appeals noted that the
trial court had considered the reports of the commissioners and the proofs submitted by the
parties. This included the fair market value of P1,100.00 per square meter proffered by the
respondents.[25] This valuation by owners of the property may not be binding upon the
petitioner or the court, although it should at least set a ceiling price for the compensation to
be awarded.[26] The trial court found that the parcels of land sought to be expropriated are
agricultural land, with minimal improvements. It is the nature and character of the land at
the time of its taking that is the principal criterion to determine just compensation to the
landowner.[27] Hence, the trial court accepted not the owners valuation of P1,100 per square
meter but only P500 as recommended in the majority report of the commissioners.
As to the price of P22.50 per square meter recommended by the minority report of
Commissioner Atty. Alog, the Court of Appeals found it unconscionably inadequate. It was
rightly rejected by the trial court.
In finding that the trial court did not abuse its authority in evaluating the evidence and
the reports placed before it nor did it misapply the rules governing fair valuation, the Court
of Appeals found the majority reports valuation of P500 per square meter to be fair. Said
factual finding of the Court of Appeals, absent any showing that the valuation is exorbitant
or otherwise unjustified, is binding on the parties as well as this Court.
LBP vs BANAL
RTC: No hearing, used formula in EO 228 and RA 3844 (rice and corn, lease
hold)
CASE AT BAR: Coconut, no leasehold
Spouses Vicente and Leonidas Banal, respondents, are the registered owners of 19.3422
hectares of agricultural land situated in San Felipe, Basud, Camarines Norte covered by
Transfer Certificate of Title No. T-6296. A portion of the land consisting of 6.2330 hectares
(5.4730 of which is planted to coconut and 0.7600 planted to palay) was compulsorily
acquired by the Department of Agrarian Reform (DAR) pursuant to Republic Act (R.A.) No.
6657,[1] as amended, otherwise known as the Comprehensive Agrarian Reform Law of 1988.
In accordance with the formula prescribed in DAR Administrative Order No. 6, Series of
1992,[2] as amended by DAR Administrative Order No. 11, Series of 1994, [3] the Land Bank of
the Philippines[4] (Landbank), petitioner, made the following valuation of the property:
Acquired property Area in hectares Value
Coconut land 5.4730 P148,675.19
Riceland 0.7600 25,243.36
==========
P173,918.55
Respondents rejected the above valuation. Thus, pursuant to Section 16(d) of R.A. 6657, as
amended, a summary administrative proceeding was conducted before the Provincial
Agrarian Reform Adjudicator (PARAD) to determine the valuation of the land. Eventually, the
PARAD rendered its Decision affirming the Landbanks valuation.
Dissatisfied with the Decision of the PARAD, respondents filed with the Regional Trial
Court (RTC), Branch 40, Daet, Camarines Norte, designated as a Special Agrarian Court, a
petition for determination of just compensation. Petitioners therein prayed for a
compensation of P100,000.00 per hectare for both coconut land and riceland, or an
aggregate amount of P623,000.00.
During the pre-trial on September 23, 1998, the parties submitted to the RTC the
following admissions of facts: (1) the subject property is governed by the provisions of R.A.
6657, as amended; (2) it was distributed to the farmers-beneficiaries; and (3) the Landbank
deposited the provisional compensation based on the valuation made by the DAR. [5]
In its Decision dated February 5, 1999, the trial court computed the just compensation
for the coconut land at P657,137.00 and for the riceland at P46,000.00, or a total
of P703,137.00
In determining the valuation of the land, the trial court based the same on the facts
established in another case pending before it (Civil Case No. 6679, Luz Rodriguez vs. DAR, et
al.), using the following formula:
For the coconut land
1. Average Gross Production (AGP) x .70 x 9.70 (price per kilo of coconut) = Net
Income (NI)
2. NI / 6% = Price Per Hectare (PPH) (applying the capitalization formula

under Republic Act No. 3844[8])
For the riceland
1. 2.5 x AGP x Government Support Price (GSP) = Land Value (LV) or PPH (using the
formula under Executive Order No. 228[9])
2. AGP x 6% compounded annually for 26 years x GSP = Interest (pursuant to DAR

AO No. 13, Series of 1994)
Forthwith, the Landbank filed with the Court of Appeals a petition for review, docketed
as CA-G.R. SP No. 52163.
On March 20, 2000, the Appellate Court rendered a Decision [10] affirming in toto the
judgment of the trial court. The Landbanks motion for reconsideration was likewise denied.
[11]
Hence, this petition for review on certiorari

ISSUE: whether the Court of Appeals erred in sustaining the trial courts valuation of the
land.
Based on the Landbanks valuation of the land, the DAR makes an offer to the
landowner.[13] If the landowner accepts the offer, the Landbank shall pay him the purchase
price of the land after he executes and delivers a deed of transfer and surrenders the
certificate of title in favor of the government.[14] In case the landowner rejects the offer or
fails to reply thereto, the DAR adjudicator[15] conducts summary administrative proceedings
to determine the compensation for the land by requiring the landowner, the Landbank and
other interested parties to submit evidence as to the just compensation for the land.
[16]
These functions by the DAR are in accordance with its quasi-judicial powers under Section
50 of R.A. 6657, as amended, which provides:
SEC. 50. Quasi-Judicial Powers of the DAR. The DAR is hereby vested with primary
jurisdiction to determine and adjudicate agrarian reform matters and shall have exclusive
original jurisdiction over all matters involving the implementation of agrarian reform, except
those falling under the exclusive jurisdiction of the Department of Agriculture (DA) and the
Department of Environment and Natural Resources (DENR).
A party who disagrees with the decision of the DAR adjudicator may bring the matter to the
RTC designated as a Special Agrarian Court[17] for final determination of just
compensation. In determining just compensation, the RTC is required to consider several
factors enumerated in Section 17 of R.A. 6657, as amended, thus:
Sec. 17. Determination of Just Compensation. In determining just compensation, the cost of
acquisition of the land, the current value of like properties, its nature, actual use and
income, the sworn valuation by the owner, the tax declarations, and the assessment made
by government assessors shall 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-payment of taxes or loans secured from any government financing institution on the
said land, shall be considered as additional factors to determine its valuation.
These factors have been translated into a basic formula in DAR Administrative Order No.
6, Series of 1992, as amended by DAR Administrative Order No. 11, Series of 1994, issued
pursuant to the DARs rule-making power to carry out the object and purposes of R.A. 6657,
as amended.[21]
The formula stated in DAR Administrative Order No. 6, as amended, is as follows:
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)
LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration
The above formula shall be used if all the three factors are present, relevant and applicable.
A.1 When the CS factor is not present and CNI and MV are applicable, the formula shall be:
LV = (CNI x 0.9) + (MV x 0.1)
A.2 When the CNI factor is not present, and CS and MV are applicable, the formula shall be:
LV = (CS x 0.9) + (MV x 0.1)
A.3 When both the CS and CNI are not present and only MV is applicable, the formula shall
be:
LV = MV x 2
Here, the RTC failed to observe the basic rules of procedure and the
fundamental requirements in determining just compensation for the
property. Firstly, it dispensed with the hearing and merely ordered the parties to submit
their respective memoranda. Such action is grossly erroneous since the determination of just
compensation involves the examination of the following factors specified in Section 17 of
R.A. 6657, as amended:
1. the cost of the acquisition of the land;
2. the current value of like properties;
3. its nature, actual use and income;
4. the sworn valuation by the owner; the tax declarations;
5. the assessment made by government assessors;
6. the social and economic benefits contributed by the farmers and the farmworkers
and by the government to the property; and
7. the non-payment of taxes or loans secured from any government financing

institution on the said land, if any.
Obviously, these factors involve factual matters which can be established only during a
hearing wherein the contending parties present their respective evidence
Secondly, the RTC, in concluding that the valuation of respondents property
is P703,137.00, merely took judicial notice of the average production figures in
the Rodriguez case pending before it and applied the same to this case without
conducting a hearing and worse, without the knowledge or consent of the parties, thus:
x x x. In the case x x x of the coconut portion of the land 5.4730 hectares, defendants
determined the average gross production per year at 506.95 kilos only, but in the very
recent case of Luz Rodriguez vs. DAR, et al., filed and decided by this court in Civil
Case No. 6679 also for just compensation for coconut lands and Riceland situated at
Basud, Camarines Norte wherein also the lands in the above-entitled case are situated, the
value fixed therein was 1,061.52 kilos per annum per hectare for coconut land and
the price per kilo is P8.82, but in the instant case the price per kilo is P9.
As shown in the Memorandum of Landbank in this case, the area of the coconut land taken
under CARP is 5.4730 hectares. But as already noted, the average gross production a
year of 506.96 kilos per hectare fixed by Landbank is too low as compared to
the Rodriguez case which was 1,061 kilos when the coconut land in both cases are
in the same town of Basud, Camarines Norte, compelling this court then to adapt
1,061 kilos as the average gross production a year of the coconut land in this
case. We have to apply also the price of P9.70 per kilo as this is the value that Landbank
fixed for this case.
The net income of the coconut land is equal to 70% of the gross income. So, the net income
of the coconut land is 1,061 x .70 x 9.70 equals P7,204.19 per hectare. Applying the
capitalization formula of R.A. 3844 to the net income of P7,204.19 divided by 6%, the legal
rate of interest, equals P120,069.00 per hectare. Therefore, the just compensation for the
5.4730 hectares is P657,137.00.
The Riceland taken under Presidential Decree No. 27 as of October 21, 1972 has an area
of .7600 hectare. If in the Rodriguez case the Landbank fixed the average gross
production of 3000 kilos or 60 cavans of palay per year, then the .7600 hectare in this case
would be 46 cavans. The value of the riceland therefore in this case is 46 cavans x 2.5
x P400.00 equals P46,000.00.[22]
Well-settled is the rule that courts are not authorized to take judicial notice of the
contents of the records of other cases even when said cases have been tried or are pending
in the same court or before the same judge.[24] They may only do so in the absence of
objection and with the knowledge of the opposing party,[25]which are not obtaining here.
After the trial, and before judgment or on appeal, the proper court, on its own initiative or on
request of a party, may take judicial notice of any matter and allow the parties to be
heard thereon if such matter is decisive of a material issue in the case. (emphasis added)
The RTC failed to observe the above provisions.

Lastly, the RTC erred in applying the formula prescribed under Executive Order (EO) No.
228[26] and R.A. No. 3844,[27] as amended, in determining the valuation of the property; and
in granting compounded interest pursuant to DAR Administrative Order No. 13, Series of
1994.[28] It must be stressed that EO No. 228 covers private agricultural lands primarily
devoted to rice and corn, while R.A. 3844 governs agricultural leasehold
relation between the person who furnishes the landholding, either as owner, civil law
lessee, usufructuary, or legal possessor, and the person who personally cultivates the same.
[29]
Here, the land is planted to coconut and rice and does not involve agricultural
leasehold relation. What the trial court should have applied is the formula in DAR
Administrative Order No. 6, as amended by DAR Administrative Order No. 11 discussed
earlier.
As regards the award of compounded interest, suffice it to state that DAR Administrative
Order No. 13, Series of 1994 does not apply to the subject land but to those lands taken
under Presidential Decree No. 27[30] and Executive Order No. 228 whose owners have not
been compensated. In this case, the property is covered by R.A. 6657, as amended, and
respondents have been paid the provisional compensation thereof, as stipulated during the
pre-trial.
While the determination of just compensation involves the exercise of judicial discretion,
however, such discretion must be discharged within the bounds of the law. Here, the RTC
wantonly disregarded R.A. 6657, as amended, and its implementing rules and regulations.
(DAR Administrative Order No. 6, as amended by DAR Administrative Order No.11).
Thus, we deem it proper to remand this case to the RTC for trial on the merits wherein
the parties may present their respective evidence. In determining the valuation of the
subject property, the trial court shall consider the factors provided under Section 17 of R.A.
6657, as amended, mentioned earlier. The formula prescribed by the DAR in Administrative
Order No. 6, Series of 1992, as amended by DAR Administrative Order No. 11, Series of
1994, shall be used in the valuation of the land.
LBP vs RUFINO
Market Data Approach is not applicable. Should be the DARs formula
Facts: Respondents Jose Marie M. Rufino (Rufino), Nilo M. Resurreccion (Resureccion),

Arnel M. Atanacio (Atanacio), and Suzette G. Mateo (Suzette) are the registered owners in
equal share of a parcel of agricultural land situated in Barangay San Benon, Irosin, Sorsogon,
with an area of 239.7113 hectares covered by Transfer Certificate of Title (TCT) No. T-22934.
By respondents claim, in 1989, they voluntarily offered the aforesaid property to the
government for CARP coverage at P120,000 per hectare. Acting thereon, petitioner
Department of Agrarian Reform (DAR) issued a Notice of Land Valuation and Acquisition
dated October 21, 1996 declaring that out of the total area indicated in the title, 138.4018
hectares was subject to immediate acquisition at a valuation of P8,736,270.40 based on the
assessment of petitioner Land Bank of the Philippines (LBP).
Respondents having found the valuation unacceptable, the matter was referred by the
provincial agrarian reform officer of Sorsogon to the DAR Adjudication Board (DARAB) for the
conduct of summary administrative proceedings to determine just compensation.
Meanwhile, upon the DARs application, accompanied with LBPs certification of deposit of
payment, the Register of Deeds of Sorsogon partially cancelled TCT No. T-22934
corresponding to the 138.4018-hectare covered area (hereafter the property) and issued TCT
No. T-47571 in the name of the Republic of the Philippines (the Republic). The Republic
thereupon subdivided the property into 85 lots for distribution to qualified farmer-
beneficiaries under Republic Act No. 6657 (RA 6657) or the Comprehensive Agrarian Reform
Law of 1988.
respondents lodged with Branch 52 of the Sorsogon RTC (acting as a Special Agrarian Court)
a complaint for determination of just compensation against Ernesto Garilao, in his capacity
as then DAR Secretary, and LBP. Respondents contended that LBPs valuation was not the full
and fair equivalent of the property at the time of its taking, the same having been offered in
1989 at P120,000 per hectare.
LBP countered that the property was acquired by the DAR for CARP coverage in 1993 by
compulsory acquisition and not by respondents voluntary offer to sell; and that it
determined the valuation thereof in accordance with RA 6657 and pertinent DAR regulations
The DAR Secretary argued that LBPs valuation was properly based on DAR issuances.[8]
The trial court appointed the parties respective nominated commissioners to appraise the
property.
Commissioner Jesus S. Empleo, LBPs nominee, appraised the property based on, among
other things, the applicable DAR issuances, average gross production, and prevailing selling
prices of the crops planted thereon which included coconut, abaca, coffee, and rice. He
arrived at a valuation of P13,449,579.08.
Commissioner Amando Chua of Cuervo Appraisers, Inc., respondents nominee, used the
market data approach which relies primarily on sales and listings of comparable lots in the
neighborhood. Excluding the secondary crops planted thereon, he valued the property at
P29,925,725.
At the witness stand, Eugenio Mateo, Sr. (Mateo), attorney-in-fact of respondents Rufino,
Resurreccion, and Atanacio, declared that Commissioner Chua erroneously considered the
secondary crops as merely enhancing the demand for the property without them
significantly increasing its value; and that the coffee intercropping on the property which
yielded an estimated profit of P3,000,000, spread over a 12-year period, should be
considered in the determination of just compensation
the trial court found the market data approach to be more realistic and consistent with law
and jurisprudence on the full and fair equivalent of the property.
The Court of Appeals sustained the trial courts valuation of P29,926,000 as just
compensation.
LBP maintains that its valuation of the property at P13,449,579.08 was based on the factors
mentioned in RA 6657 and formula prescribed by the DAR; that its determination should be
given weight as it has the expertise to do the same; and that the taking of private property
for agrarian reform is not a traditional exercise of the power of eminent domain as it also
involves the exercise of police power, hence, part of the loss is not compensable.
ISSUE: Whether the appellate court correctly upheld the valuation by the trial court of the
property on the basis of the market data approach, in disregard of the formula prescribed by
DAR AO 6-92, as amended.
Held: In determining the just compensation due owners of lands taken for CARP coverage,
the RTC, acting as a Special Agrarian Court, should take into account the factors enumerated
in Section 17 of RA 6657, as amended, to wit:
Sec. 17. Determination of Just Compensation. In determining just

compensation, the cost of acquisition of the land, the current value of
like properties, its nature, actual use and income, the sworn valuation
by the owner, the tax declarations, and the assessment made by
government assessors shall 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-payment of
taxes or loans secured from any government financing institution on the
said land shall be considered as additional factors to determine its valuation.
(Emphasis supplied)
The DAR, being the government agency primarily charged with the
implementation of the CARP, issued Administrative Order No. 6, Series of
1992 (DAR AO 6-92), as amended by DAR Administrative Order No. 11, Series
of 1994 (DAR AO 11-94), translating the factors mentioned in Section 17 of RA
6657 into a basic formula, presented as follows:
LV = (CNI x 0.6) + ( CS x 0.3) + (MV x 0.1)
Where: LV = Land Value
MV = Market Value per Tax Declaration

The above formula shall be used if all the three factors are present, relevant,
and applicable.
A.1. When the CS factor is not present and CNI and MV are applicable, the
formula shall be:
LV = (CNI x 0.9) + (MV x 0.1)
A.2. When the CNI factor is not present, and CS and MV are applicable, the
formula shall be:
LV = (CS x 0.9) + (MV x 0.1)
A.3. When both the CS and CNI are not present and only MV is applicable, the
formula shall be:
LV = MV x 2
Petition is partially meritorious.While the determination of just compensation is essentially a

judicial function which is vested in the RTC acting as a Special Agrarian Court, the Court,
in LBP v. Banal,[20] LBP v. Celada,[21] and LBP v. Lim,[22] nonetheless disregarded the RTCs
determination thereof when, as in the present case, the judge did not fully consider the
factors specifically identified by law and implementing rules.
In LBP v. Banal,[23] the Court ruled that the factors laid down in Section 17 of RA 6657 and
the formula stated in DAR AO 6-92, as amended, must be adhered to by the RTC in fixing the
valuation of lands subjected to agrarian reform
And in LBP v. Celada,[24] the Court was emphatic that the RTC is not at liberty to disregard the
DAR valuation formula which filled in the details of Section 17 of RA 6657, it being
elementary that rules and regulations issued by administrative bodies to interpret the law
they are entrusted to enforce have the force of law.
In fixing the just compensation in the present case, the trial court, adopting the market data
approach on which Commissioner Chua relied, [25] merely put premium on the location of the
property and the crops planted thereon which are not among the factors enumerated in
Section 17 of RA 6657. And the trial court did not apply the formula provided in DAR AO 6-
92, as amended. This is a clear departure from the settled doctrine regarding the mandatory
nature of Section 17 of RA 6657 and the DAR issuances implementing it.
Not only did Commissioner Chua not consider Section 17 of RA 6657 and DAR AO 6-92, as
amended, in his appraisal of the property. His conclusion that the market data
approach conformed with statutory and regulatory requirements is bereft of basis.
Commissioner Empleo, however, instead used available data within the 12-month period
prior to his ocular inspection in October 1998 for the AGP,[29] and the average selling price
for the period January 1998 to December 1998 for the SP,[30] contrary to DAR AO 6-92, as
amended.
Furthermore, the Regional Consumer Price Index (RCPI) Adjustment Factor, which is used in
computing the market value of the property, is the ratio of the RCPI for the month when the
claimfolder was received by LBP, to the RCPI for the month of the registration of the most
recent Tax Declaration and Schedule of Unit Market Value[31] issued prior to receipt of
claimfolder by LBP. Consistent with the previous discussion, the applicable RCPIs should
therefore be dated 1997 or earlier.
Again, Commissioner Empleo instead used RCPI data for January 1999 in computing the RCPI
Adjustment Factor,[32] contrary to DAR AO 6-92, as amended.
Parenthetically, Commissioner Empleo testified[33] that his computations were based on

DAR Administrative Order No. 5, series of 1998.[34] This Administrative Order took effect
only on May 11, 1998, however, hence, the applicable valuation rules in this case remain to
be those prescribed by DAR AO 6-92, as amended by DAR AO 11-94.
But even if the 1998 valuation rules were applied, the data for the AGP would still pertain to
a period prior to October 1996, the revised reference date being the date of the field
investigation which precedes the Notice of Land Valuation and Acquisition; while the data for
the SP and the RCPIs would still pertain to 1997 or earlier, there being no substantial
revisions in their reference dates.
Finally, as reflected earlier, Commissioner Empleo did not consider in his computation the
secondary crops planted on the property (coffee, pili, cashew, etc.), contrary to DAR AO 6-
92, as amended, which provides that the [t]otal income shall be computed from the
combination of crops actually produced on the covered land whether seasonal or permanent.
[35]
IN FINE, the valuation asserted by petitioners does not lie.
HLI v PARC GR. No 171101 (Added a little facts so you have a better idea )
Facts: In 1988, RA 6657 or the CARP law was passed. It is a program aimed at redistributing
public and private agricultural lands to farmers and farmworkers who are landless. One of
the lands covered by this law is the Hacienda Luisita, a 6,443-hectare mixed agricultural-
industrial-residential expanse straddling several municipalities of Tarlac. Hacienda Luisita
was bought in 1958 from the Spanish owners by the Tarlac Development Corporation
(TADECO), which is owned and/or controlled by Jose Cojuanco Sr., Group. Back in 1980, the
Martial Law administration filed an expropriation suit against TADECO to surrender the
Hacienda to the then Ministry of Agrarian Reform (now DAR) so that the land can be
distributed to the farmers at cost. The RTC rendered judgment ordering TADECO to surrender
Hacienda Luisita to the MAR.
In 1988, under President Cory Aquinos administration, the OSG moved to dismiss the
governments case against TADECO. The CA dismissed it, but the dismissal was subject to
the condition that TADECO shall obtain the approval of FWB (farm worker beneficiaries) to
the SDP (Stock Distribution Plan) and to ensure its implementation.
Sec 31 of the CARP Law allows either land transfer or stock transfer as two
alternative modes in distributing land ownership to the FWBs. Since the stock distribution
scheme is the preferred option of TADECO, it organized a spin-off corporation, the Hacienda
Luisita Inc. (HLI), as vehicle to facilitate stock acquisition by the farmers.
After conducting a follow-up referendum and revision of terms of the Stock

Distribution Option Agreement (SDOA) proposed by TADECO, the Presidential Agrarian
Reform Council (PARC), led by then DAR Secretary Miriam Santiago, approved the SDP of
TADECO/HLI through Resolution 89-12-2 dated Nov 21, 1989.
From 1989 to 2005, the HLI claimed to have extended those benefits to the
farmworkers. Such claim was subsequently contested by two groups representing the
interests of the farmers the HLI Supervisory Group and the AMBALA. In 2003, each of them
wrote letter petitions before the DAR asking for the renegotiation of terms and/or revocation
of the SDOA. They claimed that they havent actually received those benefits in full, that HLI
violated the terms, and that their lives havent really improved contrary to the promise and
rationale of the SDOA.
The DAR created a Special Task Force to attend to the issues and to review the terms
of the SDOA and the Resolution 89-12-2. Adopting the report and the recommendations of
the Task Force, the DAR Sec recommended to the PARC (1) the revocation of Resolution 89-
12-2 and (2) the acquisition of Hacienda Luisita through compulsory acquisition scheme.
Consequently, the PARC revoked the SDP of TADECO/HLI and subjected those lands covered
by the SDP to the mandated land acquisition scheme under the CARP law. These acts of the
PARC was assailed by HLI via Rule 65.
On the other hand, FARM, an intervenor, asks for the invalidation of Sec. 31 of RA
6657, insofar as it affords the corporation, as a mode of CARP compliance, to resort to stock
transfer in lieu of outright agricultural land transfer. For FARM, this modality of distribution is
an anomaly to be annulled for being inconsistent with the basic concept of agrarian reform
ingrained in Sec. 4, Art. XIII of the Constitution.
ISSUE: (4) Is the date of the taking (for purposes of determining the just compensation
payable to HLI) November 21, 1989, when PARC approved HLIs SDP?
Ratio on just compensation:
YES, the date of taking is November 21, 1989, when PARC approved HLIs SDP.
[For the purpose of determining just compensation, the date of taking is November
21, 1989 (the date when PARC approved HLIs SDP) since this is the time that the FWBs were
considered to own and possess the agricultural lands in Hacienda Luisita. To be precise,
these lands became subject of the agrarian reform coverage through the stock distribution
scheme only upon the approval of the SDP, that is, on November 21, 1989. Such approval is
akin to a notice of coverage ordinarily issued under compulsory acquisition.
On the contention of the minority (Justice Sereno) that the date of the notice of
coverage [after PARCs revocation of the SDP], that is, January 2, 2006, is determinative of
the just compensation that HLI is entitled to receive, the Court majority noted that none of
the cases cited to justify this position involved the stock distribution scheme. Thus, said
cases do not squarely apply to the instant case. The foregoing notwithstanding, it bears
stressing that the DAR's land valuation is only preliminary and is not, by any means, final
and conclusive upon the landowner. The landowner can file an original action with the RTC
acting as a special agrarian court to determine just compensation. The court has the right to
review with finality the determination in the exercise of what is admittedly a judicial
function.]
More on the Separate opinion Serreno:
I have also proposed that the just compensation to TADECO/HLI be fixed at the current fair
market value, as defined by laws, regulations and jurisprudence, which is at the time of the
taking. This is the only logical conclusion from the ponencia of Justice Presbitero J. Velasco,
Jr. and the opinion of Justice Brion both of them, and I would require petitioner HLI, to
return to the FWBs the proceeds from the sale of the lands sold or transferred at the then
prevailing market rates. The Decision and those Opinions therefore fix the just compensation
at "fair market value," at the time when the transfer transaction took place, precisely for the
reason that they recognize that the purchase price is the just compensation. It is not fair to
require TADECO or petitioner HLI to accept less than fair market value if what is being
required from them is the payment to the qualified FWBs of the proceeds of the sale of those
lands earlier sold or disposed of at fair market value. There is an objection that to peg the
just compensation at fair market value would mean HLI lands would be prohibitively
expensive for the FWBs to acquire and thus they can never pay off the purchase price
therefor. But to rule otherwise is unjust to HLI and contrary to the statutory requirement of
payment to landowners of just compensation at fair market value. It is for DAR to facilitate
all kinds of economic arrangements whereby the farmers can ultimately pay off the value of
the land, including the direct transfer of the land to buyers.
I did not go the route proposed by Justice Brion that the just compensation be fixed as of 11
May 1989, and that TADECO or petitioner HLI not be awarded any interest on the amount
they should have been paid. There would be injustice in such a proposal, because not only is
this approach inconsistent with Justice Brions position that the market price paid by LIPCO
be given to the FWBs, there have already been many improvements introduced by TADECO
or petitioner HLI since that time, and to deny them compensation for the value either of
those industrial fruits (the improvements) or of the civil fruits (interest on the just
compensation) would be seriously unjust. Regardless of the history of the land,
improvements have been introduced by TADECO/HLI for which this Court must allow
compensation.
It is not right for this Court to distinguish between two classes of persons whose lands the
law has subjected to expropriation by virtue of either compulsory acquisition under CARL
or other lawful confiscatory power such as eminent domain and then to condemn CARL
original landowners to an inferior position by denying them compensation at fair market
value vis-a-vis others whose properties are subjected to compulsory acquisition, but not by
land reform. Let this be an acid test for the government whether it wants and is able to
abide by a standard of fairness applicable to all kinds of landowners.
INTEREST
LBP v Celada GR 164876 No interest since no delay in payment. Money has been
deposited.
Facts: Respondent Leonila P. Celada owns 22.3167 hectares of agricultural land in Calatrava,
Carmen, Bohol of which 14.1939 hectares was identified by the DAR as suitable for
compulsory acquisition under the Comprehensive Agrarian Reform Program (CARP). The
matter was then indorsed to petitioner Land Bank of the Philippines (LBP) for field
investigation and land valuation.
In due course, LBP valued respondents land at P2.1105517 per square meter for an
aggregate value of P299,569.61.2 The DAR offered the same amount to respondent as just
compensation, but it was rejected. Nonetheless, on August 27, 1999, LBP deposited the said
sum in cash and bonds in the name of respondent.3
The matter was referred to the DAR Adjudication Board (DARAB) for the determination of just
compensation.
While the DARAB case was pending, respondent Celada filed, a petition 4 for judicial
determination of just compensation before the RTC of Tagbilaran which was raffled to the
designated Special Agrarian Court (SAC). Respondent alleged that the current market value
of her land is at least P150,000.00 per hectare based on the following factors:
14.1. The land in question has been mortgaged to the defunct Rural Bank of San
Miguel (Bohol), Inc., for P1,220,000.00 on July 23, 1998 since it was appraised at
P15.00 per square meter;
14.2. Agricultural lands in said barangay are priced ranging from P140,000.00 to
P150,000.00 per hectare and current land transactions reveal said price range;
14.3. The land in question is titled or registered property, cultivated and fully
developed with rice5 and corn occupying the greater portion thereof;
14.4. The topography of the land, its soil condition, climate and productivity of
surrounding lots justify the just compensation requested or asked for;
14.5. Even the class and base unit market value for agricultural lands in Bohol is
about thirty (30) times higher than the price offered per hectare by DAR/LBP. 6
The DAR and the MARO filed an Answer 8 averring that the determination of just
compensation rests exclusively with the LBP.
Meanwhile, the DARAB Provincial Adjudicator (PARAD) issued an Order9 dated April 12, 2000
affirming the valuation made by LBP.
the SAC also rendered judgment fixing the compensation of the land of petitioner at P2.50
per square meter or a total of P354,847.50 and which shall earn legal interest of twelve
percent (12%) per annum from the time of its taking by the DAR.
Issue: Whether or not the SAC erred in fixing the just compensation and awarding legal
interest to Celada
Held: Yes, the SAC erred in setting aside LBPs valuation of respondent Celadas land on the
sole basis of the higher valuation given for neighboring properties
The SAC based its valuation solely on the observation that there was a "patent disparity"
between the price given to respondent and the other landowners. It did not apply the DAR
valuation formula since according to the SAC, it is Section 17 of RA No. 6657 that "should be
the principal basis of computation as it is the law governing the matter". 27 The SAC further
held that said Section 17 "cannot be superseded by any administrative order of a
government agency",28 thereby implying that the valuation formula under DAR
Administrative Order No. 5, Series of 1998 is invalid and of no effect.
As the government agency principally tasked to implement the agrarian reform program, it
is the DARs duty to issue rules and regulations to carry out the object of the law. DAR AO
No. 5, s. of 1998 precisely "filled in the details" of Section 17, RA No. 6657 by providing a
basic formula by which the factors mentioned therein may be taken into account. The SAC
was at no liberty to disregard the formula which was devised to implement the said
provision.
It is elementary that rules and regulations issued by administrative bodies to interpret the
law which they are entrusted to enforce, have the force of law, and are entitled to great
respect.32 Administrative issuances partake of the nature of a statute 33 and have in their
favor a presumption of legality.34 As such, courts cannot ignore administrative issuances
especially when, as in this case, its validity was not put in issue. Unless an administrative
order is declared invalid, courts have no option but to apply the same.
Thus, Section 17 of RA No. 6657 states:
SEC. 17. Determination of Just Compensation. In determining just compensation, the cost
of acquisition of the land, the current value of like properties, its nature, actual use and
by government assessors, shall 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
nonpayment of taxes or loans secured from any government financing institution on the said
land shall be considered as additional factors to determine its valuation.
As stated earlier, the above provision is implemented through DAR AO No. 5 which contains
the basic formulas for the valuation of lands.
Under the circumstances, we find the explanation and computation of petitioner LBP to be
sufficient and in accordance with applicable laws. Petitioners valuation must thus be upheld.
Finally, there is no basis for the SACs award of 12% interest per annum in favor of
respondent. Although in some expropriation cases, the Court allowed the imposition of said
interest, the same was in the nature of damages for delay in payment which in effect makes
the obligation on the part of the government one of forbearance. 37 In this case, there is no
delay that would justify the payment of interest since the just compensation due to
respondent has been promptly and validly deposited in her name in cash and LBP bonds.
Neither is there factual or legal justification for the award of attorneys fees and costs of
litigation in favor of respondent.
LBP v Soriano GR 180772 and 180776
Interest: Incremental interest up to full payment vs. LBP approved

payment.
Is actual payment approval of payment? NO. Actual payment is full

payment. Pay within a reasonable period.
Facts: Domingo and Mamerto Soriano (respondents) are the registered owners of several
parcels of rice land situated in Oas, Albay. Out of the 18.9163 hectares of land3 owned by
the respondents, 18.2820 hectares were placed under the Operations Land Transfer and the
CARP.
The LBP6 pegged the value of 18.0491 hectares of land at P482,363.957 (P133,751.65 as
land value plus P348,612.30 incremental interest). Not satisfied with the valuation,
respondents Soriano instituted a Complaint 9 for judicial determination of just compensation
with the Regional Trial Court of Legazpi City,10 sitting as a Special Agrarian Court (SAC).
Respondents alleged that they are entitled to an amount of not less than P4,500,000.00 as
just compensation.11
The SAC rendered a judgment, ordering LBP to pay the respondents P894,584.94
ACCORDINGLY, the just compensation of the 18.0491 hectares of irrigated riceland

is P133,751.79, plus increment of 6% per annum computed annually beginning October 21,
1972, until the value is fully paid, and of the 0.2329 hectare of rain fed riceland is P8,238.94
plus 12% interest per annum, beginning August 17, 1998, until the value is fully paid or a
total of P894,584.94 as of this date.
The SAC applied the formula prescribed under Executive Order No. 228 in determining the
valuation of the property, i.e., Land value = Average Gross Production x 2.5 x Government
Support Price.
Both parties disagreed with the trial courts valuation, prompting them to file their
respective appeals with the Court of Appeals. The appellate court, however, affirmed the
judgment of the trial court.
LBP filed the instant petition seeking to nullify the appellate courts decision and resolution,
particularly the amount awarded to respondents as just compensation.
Basic is the tenet that since respondents were deprived of their land, they are entitled to just
compensation. Under Executive Order No. 228, the formula used to compute the land value
is:
Land value = Average Gross Production (AGP) x 2.5

x Government Support Price (GSP)
With the passage of Republic Act (R.A.) No. 6657 or the CARL in 1988, new guidelines were
set for the determination of just compensation. In particular, Section 17 provides, thus:
Determination of Just Compensation. In determining just compensation, the cost of
acquisition of the land, the current value of like properties, its nature, actual use and
by government assessors shall 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-payment of taxes or loans secured from any government financing institution on the
said land shall be considered as additional factors to determine its valuation.
The new formula outlined in DAR Administrative Order No. 5, series of 1998 should be
applied in computing just compensation, thus:
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)

Where: LV = Land Value
MV = Market Value per Tax Declaration15
To write finis to this case, we uphold the amount derived from the old formula. However,
since the application of the new formula is a matter of law and thus, should be made
applicable, the parties are not precluded from asking for any additional amount as may be
warranted by the new formula.
On to the more pertinent issue. LBP assails the imposition of 6% interest rate on the 18.0491
hectares of lot valued at P133,751.65. It avers that the incremental interest due to the
respondents should be computed from the date of taking on 21 October 1972, not
up to full payment of just compensation but up to the time LBP approved the
payment of their just compensation claim and a corresponding deposit of the
compensation proceeds was made by the bank.
LBP relies on the provisions of DAR Administrative Order No. 13, series of 1994, which
substantially provides that "the grant of 6% yearly interest compounded annually shall be
reckoned from 21 October 1972 up to the time of actual payment but not later than
December 2006." LBP stresses that under said Administrative Order, time of actual payment
is defined as the date when LBP approves the payment of the land transfer claim and
deposits the compensation proceeds in the name of the landowner in cash and in bonds
Respondents counter that the award of interest until full payment of just compensation was
correctly adhered to by the lower courts in line with the Courts ruling in Land Bank of the
Philippines v. Imperial. According to respondents, the award of interest until full payment of
just compensation is to ensure prompt payment. Moreover, respondents claim that the date
LBP approves the payment of the land transfer claim and deposits the proceeds in the name
of the landowner is not tantamount to actual payment because on said date, the release of
the amount is conditioned on certain requirements. 18
ISSUE: What does until time of actual payment, in reference to the 6% interest mean? Does
it mean the date when LBP approves the payment of the land transfer claim and deposits
the compensation proceeds (LBPs contention) or up to full payment of just compensation
(Respondents contention)
Held: we cannot subscribe to the arguments of LBP.

Section 4, Article XIII of the 1987 Constitution, mandates that the redistribution of
agricultural lands shall be subject to the payment of just compensation. The deliberations of
the 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
successful agrarian reform program. Hence, the landowner's right to just compensation
should be balanced with agrarian reform.19
Administrative Order No. 13, as amended, was issued to compensate those who were
effectively deprived of their lands by expropriation. LBP relies on said Administrative Order
to justify its own computation of interest. A literal reading of this Administrative Order seems
to favor LBPs interpretation with respect to the period covered by the interest rate. We
quote the relevant portion of the Administrative Order:
The grant of six percent (6%) yearly interest compounded annually shall be reckoned as
follows:
3.1 Tenanted as of 21 October 1972 and covered under OLT
- From 21 October 1972 up to the time of actual payment but not later than December 2006
3.2 Tenanted after 21 October 1972 and covered under OLT
From the date when the land was actually tenanted (by virtue of Regional Order of
Placement issued prior to August 18, 1987) up to the time of actual payment but not later
than December 2006
Time of actual payment is the date when the Land Bank of the Philippines (LBP) approves
payment of the land transfer claim and deposits the compensation proceeds in the name of
the landowner (LO) in cash and in bonds. The release of payment can be claimed by the
landowner upon compliance with the documentary requirements for release of payment. 20
However, as embodied in its Prefatory Statement, the intent of the Administrative Order was
precisely to address a situation "where a number of landholdings remain unpaid in view of
the non-acceptance by the landowners of the compensation due to low valuation. Had the
landowner been paid from the time of taking his land and the money deposited in a bank,
the money would have earned the same interest rate compounded annually as authorized
under banking laws, rules and regulations." 21 The concept of just compensation embraces
not only the correct determination of the amount to be paid to the owners of the land, but
also payment within a reasonable time from its taking. Without prompt payment,
compensation cannot be considered "just" inasmuch as the property owner is made to suffer
the consequences of being immediately deprived of his land while being made to wait for a
decade or more before actually receiving the amount necessary to cope with his loss. 22 To
condition the payment upon LBPs approval and its release upon compliance with some
documentary requirements would render nugatory the very essence of "prompt payment."
Therefore, to expedite the payment of just compensation, it is logical to conclude that the
6% interest rate be imposed from the time of taking up to the time of full payment of just
compensation.
Apo Fruits v LBP GR 164195 Oct 2010
On October 12, 1995 AFC-HPI voluntarily offered to sell their lands 1 to the government under
Republic Act 6657 (CARL). Land Bank valued the properties at P165,484.47 per hectare, but
AFC-HPI rejected the offer. Consequently, on instruction of DAR, Land Bank deposited partial
payments in AFC-HPIs bank accounts for a total of P71,891,256.62.
Upon revaluation of the expropriated properties, Land Bank eventually made additional
deposits, placing the total amount paid at P411,769,168.32 an increase of nearly five times.
Both AFC-HPI withdrew the amounts. Still, they filed separate complaints for just
compensation with the DAR Adjudication Board (DARAB). But due to DARABs inaction, they
later filed complaints for determination of just compensation with the Regional Trial Court
(RTC) of Tagum City.
The RTC ruled in favor of AFC-HPI, fixing the just compensation for 1,338.6027 hectares of
land at P1,383,179,000.00, more than double the previous estimated value, and ordering
the payment of 12% interest per annum from the time of taking until the finality of the
decision plus attorneys fees.
The Third Division of this Court affirmed the RTC decision. But, on motion for reconsideration,
the Third Division deleted the award of interest and attorneys fees. Upon finality of this
resolution, entry of judgment was issued on May 16, 2008.
Undaunted, AFC-HPI filed a second motion for reconsideration with respect to the denial of
the award of legal interest and attorneys fees. The Third Division subsequently referred the
case to the En Banc. The Court En Banc accepted the referral but denied with finality AFC-
HPIs second motion for reconsideration. An entry of its finality was duly recorded.
Still AFC-HPI filed a third motion for reconsideration on the issue of legal interest. The En
Banc granted AFC-HPIs motion for reconsideration and restored the additional award of 12%
legal interest in their favor equivalent to P1.331 billion.
The Court held that although Land Banks deposits might have been sufficient for the
purpose of immediate taking of the properties, the deposits were insufficient to excuse Land
Bank from the payment of interest on the unpaid balance. It found Land Bank to have
grossly undervalued AFC-HPIs properties, thus resulting in a prolonged suit.
The Court voted 8-3-1 to issue the above resolution.
Issue: Whether or not respondent Land Bank has been guilty of delay and, therefore, should
be made to pay AFC-HPI P1.331 billion in interest;
In his dissenting opinion, Mr. Justice Abad argues that interest on just compensation is due
only where there is delay in payment. In the present case, the petitioners allegedly did not
suffer any delay in payment since the LBP made partial payments prior to the taking of their
lands.
This argument completely overlooks the definition of just compensation already established
in jurisprudence. Apart from the requirement that compensation for expropriated land must
be fair and reasonable, compensation, to be "just," must also be made without
delay.6 In simpler terms, for the governments payment to be considered just compensation,
the landowner must receive it in full without delay.
In the present case, it is undisputed that the government took the petitioners lands
on December 9, 1996; the petitioners only received full payment of the just compensation
due on May 9, 2008. This circumstance, by itself, already confirms the unconscionable delay
in the payment of just compensation.
Although there were partial payments at the time of the taking, this only amounted to a
trifling five percent (5%) of the actual value of the expropriated properties.
It should be considered that the properties the government took were fully operating and
earning plantations at the time of the taking. Thus, the landowners lost not only their
properties, but the fruits of these properties.
It should also be noted that for twelve long years, the amount of P971,409,831.68 was
withheld from the landowners by LBP.
Aside from the loss of income the landowners suffered because of the delay, LBP earned
from the sizeable sum it withheld for twelve long years. From this perspective, the
unaccounted-for LBP income is unjust enrichment in its favor and an inequitable loss to
the landowners. This situation was what the Court essentially addressed when it awarded
the petitioners 12% interest.
Mr. Justice Abad goes on to argue that the delay should not be attributed to the LBP as it
could not have foreseen that it would take twelve years for the case to be resolved but two
significant factors justify the attribution of the delay to the government.
The first is the DARs gross undervaluation of the petitioners properties the government
move that started the cycle of court actions.
The second factor to consider is government inaction. Records show that after the
petitioners received the LBPs initial valuation of their lands, they filed petitions with the
DARAB, the responsible agency of the DAR, for the proper determination of just
compensation. Instead of dismissing these petitions outright for lack of jurisdiction, the
DARAB sat on these cases for three years
The RTC interpreted the DARABs inaction as reluctance of the government to pay the
petitioners just compensation, a view this Court affirmed in its October 12, 2010 Resolution.

Philippine Constitution Article XIII, Section 4 Article III Section 9

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Urban Land Reform and Housing

EO 228 1987 Section 2-5

DECLARING FULL LAND OWNERSHIP TO QUALIFIED FARMER BENEFICIARIES COVERED BY

(c) Other modes of payment as may be prescribed or approved by the Presidential

SECTION 17. Determination of Just Compensation. In determining just compensation, the

(2) Shares of stock in government-owned or controlled corporations, LBP preferred shares,

(4) LBP bonds, which shall have the following features:

VESTING IN THE LAND BANK OF THE PHILIPPINES THE PRIMARY RESPONSIBILITY TO

DAR AO No. 5 1998

DAR AO 7 2011 Sec 85

Association of Small Land Owners vs Secretary of Agrarian Reform

G.R. No. 78742: (Association of Small Landowners vs Secretary)

G.R. No. 79310

It is an exercise of the power of eminent domain because there is payment of just

Eminent domain, North Luzon Transmission Project

Facts: Petitioner is a government owned and controlled corporation, created and

CA adismissed the case for lack of merit

The elements of due process are well established, viz:

(3) The defendant must be given an opportunity to be heard; and

(4) Judgment must be rendered upon lawful hearing.[14]

Acquired property Area in hectares Value

Coconut land 5.4730 P148,675.19

Riceland 0.7600 25,243.36

For the coconut land

2. NI / 6% = Price Per Hectare (PPH) (applying the capitalization formula

For the riceland

2. AGP x 6% compounded annually for 26 years x GSP = Interest (pursuant to DAR

Hence, this petition for review on certiorari

LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)

CNI = Capitalized Net Income

MV = Market Value per Tax Declaration

LV = (CNI x 0.9) + (MV x 0.1)

LV = (CS x 0.9) + (MV x 0.1)

1. the cost of the acquisition of the land;

2. the current value of like properties;

3. its nature, actual use and income;

4. the sworn valuation by the owner; the tax declarations;

5. the assessment made by government assessors;

7. the non-payment of taxes or loans secured from any government financing

The RTC failed to observe the above provisions.

Market Data Approach is not applicable. Should be the DARs formula

Facts: Respondents Jose Marie M. Rufino (Rufino), Nilo M. Resurreccion (Resureccion),

Sec. 17. Determination of Just Compensation. In determining just

LV = (CNI x 0.6) + ( CS x 0.3) + (MV x 0.1)

Where: LV = Land Value

CNI = Capitalized Net Income

MV = Market Value per Tax Declaration

LV = (CNI x 0.9) + (MV x 0.1)

LV = (CS x 0.9) + (MV x 0.1)

Petition is partially meritorious.While the determination of just compensation is essentially a

Parenthetically, Commissioner Empleo testified[33] that his computations were based on

IN FINE, the valuation asserted by petitioners does not lie.

After conducting a follow-up referendum and revision of terms of the Stock

Ratio on just compensation:

More on the Separate opinion Serreno:

Thus, Section 17 of RA No. 6657 states:

LBP v Soriano GR 180772 and 180776

Interest: Incremental interest up to full payment vs. LBP approved

Is actual payment approval of payment? NO. Actual payment is full

ACCORDINGLY, the just compensation of the 18.0491 hectares of irrigated riceland

Land value = Average Gross Production (AGP) x 2.5

LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)