TL;DR

In a win for landowners, the Supreme Court upheld that lower courts have the final say in determining the fair price for land acquired under agrarian reform. The Court reiterated that while guidelines from the Department of Agrarian Reform (DAR) are helpful, judges are not strictly bound by them and must consider all factors to ensure landowners receive just compensation. This case specifically clarifies that for land acquisitions initiated before July 2009, older laws and valuation methods apply, emphasizing fair market value at the time the land was taken by the government. The decision ensures a more equitable process, preventing purely administrative formulas from overriding judicial assessment of fair compensation.

Balancing Justice and Land Reform: Ensuring Fair Compensation for Expropriated Lands

The case of Land Bank of the Philippines vs. Heirs of Fernando Alsua revolves around the crucial concept of just compensation in agrarian reform. The heirs of Fernando Alsua owned agricultural lands in Albay, which were placed under the Comprehensive Agrarian Reform Program (CARP). Land Bank of the Philippines (LBP) valued the land based on administrative formulas, but the landowners contested this valuation, seeking a fairer price for their expropriated property. This legal battle highlights the tension between the government’s mandate to implement agrarian reform and the constitutional right of landowners to receive just compensation for their properties.

The legal framework for determining just compensation is rooted in Republic Act No. 6657 (RA 6657), the Comprehensive Agrarian Reform Law. Section 17 of RA 6657 outlines specific factors that must be considered in land valuation, including:

“(a) the acquisition cost of the land, (b) the current value of like properties, (c) the nature and actual use of the property, and the income therefrom, (d) the owner’s sworn valuation, (e) the tax declarations, (f) the assessment made by government assessors, (g) the social and economic benefits contributed by the farmers and the farmworkers, and by the government to the property, and (h) the nonpayment of taxes or loans secured from any government financing institution on the said land, if any, must be equally considered.”

Initially, the Regional Trial Court (RTC), acting as a Special Agrarian Court (SAC), leaned towards applying newer guidelines under Republic Act No. 9700 (RA 9700) and DAR Administrative Order No. 1, series of 2010, which were enacted after the land acquisition process began but while the case was pending. However, the Court of Appeals (CA) overturned this, emphasizing that since the claim folders were received by LBP before July 1, 2009, the older version of RA 6657, prior to RA 9700 amendments, should apply. The CA also pointed out that the RTC failed to demonstrate that it had properly considered all the factors listed in Section 17 of RA 6657 in its valuation.

The Supreme Court agreed with the Court of Appeals. Justice Kho, Jr., writing for the Second Division, clarified that while DAR administrative orders provide formulas for land valuation, these are merely guidelines. The determination of just compensation is ultimately a judicial function. The Court emphasized that SACs are not strictly bound by DAR formulas and can deviate from them if warranted by evidence, provided they clearly justify their reasons for doing so. The decision underscored the importance of considering the time of taking, which in this case was when the land titles were transferred to the Republic of the Philippines in 1996 and 2001. Valuation must reflect the fair market value of the land at those specific times.

The Supreme Court stated that the RTC’s reliance on RA 9700 and DAR A.O. No. 1, series of 2010 was misplaced because these regulations were not applicable to cases where claim folders were received by LBP before July 1, 2009. The Court reiterated that for cases like this, the determination of just compensation must adhere to Section 17 of RA 6657 as it stood before the amendments introduced by RA 9700. The Court found that LBP, while claiming to have used DAR A.O. No. 5, series of 1998, failed to convincingly show that it had duly considered all the factors in Section 17, particularly the economic and social benefits and the current value of comparable properties.

Ultimately, the Supreme Court upheld the CA’s decision to remand the case back to the RTC. This remand directs the RTC to re-evaluate the just compensation by meticulously considering all factors under Section 17 of RA 6657 (pre-RA 9700 amendment), using evidence relevant to the time of taking (1996 and 2001). The Court also clarified the applicable interest rates for any unpaid balance of just compensation, setting it at 12% per annum from the time of taking until June 30, 2013, and 6% per annum thereafter until full payment, in accordance with prevailing jurisprudence and Bangko Sentral ng Pilipinas circulars.

FAQs

This case reinforces the judiciary’s crucial role in ensuring fairness in agrarian reform. It serves as a reminder that just compensation is not merely a matter of applying administrative formulas but requires a comprehensive judicial assessment to protect landowners’ rights while upholding the goals of agrarian reform.

For inquiries regarding the application of this ruling to specific circumstances, please contact Atty. Gabriel Ablola through gaboogle.com or via email at connect@gaboogle.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: LAND BANK OF THE PHILIPPINES VS. HEIRS OF FERNANDO ALSUA, G.R. No. 219623, March 27, 2023