Dear Atty. Gab,

Musta Atty! My name is Ricardo Cruz, writing to you from ricardocruz_musta_atty@email.com. I inherited about 15 hectares of riceland in Nueva Ecija from my father several years ago. Back in the late 1980s, maybe around 1988 or 1989, the Department of Agrarian Reform (DAR) placed about 5 hectares under Operation Land Transfer (OLT) pursuant to P.D. No. 27. Emancipation Patents were eventually issued to the tenants working on that portion.

I remember my father receiving some documents and a small initial payment offer from Land Bank back then, which he felt was extremely low. He signed an acknowledgment, but always insisted it wasn’t the final ‘just compensation.’ He passed away before resolving it, and honestly, I didn’t pursue it much, thinking it was a done deal based on the old law. The amount paid was maybe around P10,000 per hectare back then, which seemed unfair even at that time.

Recently, DAR acquired another 2-hectare portion of my adjacent, non-riceland property under the newer R.A. 6657 for a different project. The valuation offered by Land Bank for this portion is significantly higher, almost P150,000 per hectare, based on current market values and productivity.

This got me thinking: since my father never truly accepted the full payment for the 5-hectare OLT portion and contested the low valuation, and the payment process was never really ‘completed’ at a fair price, shouldn’t the just compensation for that older portion be recalculated based on the standards of R.A. 6657, similar to the recent acquisition? Or am I stuck with the old P.D. 27 valuation even though full payment was never really settled? I’m confused about my rights regarding the valuation of the land taken decades ago. Any guidance would be greatly appreciated.

Salamat po,
Ricardo Cruz

Dear Ricardo,

Thank you for reaching out. I understand your confusion regarding the valuation of your land acquired under different agrarian reform laws and timelines. It’s a situation many landowners face, especially concerning properties processed under P.D. No. 27 where compensation issues lingered.

The core principle hinges on when the agrarian reform process, specifically the payment of just compensation, was actually completed. Even if land acquisition began under P.D. No. 27, if the just compensation was not fully paid before the Comprehensive Agrarian Reform Law (R.A. 6657) took effect on June 15, 1988, the valuation might need to follow the standards set by the newer law. Let’s delve into the legal framework governing this.

Untangling Valuation: When PD 27 Lands Meet RA 6657 Standards

The situation you described involves a crucial interplay between Presidential Decree No. 27 (Decreeing the Emancipation of Tenants) and Republic Act No. 6657 (Comprehensive Agrarian Reform Law of 1988 or CARL). While your 5-hectare riceland was initially placed under OLT pursuant to P.D. No. 27, the key factor determining the basis for just compensation is the completion of the land transfer process through full payment.

Philippine jurisprudence has established that the agrarian reform process under P.D. No. 27 is considered incomplete if just compensation has not been fully paid to the landowner. The mere issuance of Emancipation Patents or the initial placement of the land under OLT does not automatically finalize the compensation aspect based on P.D. No. 27 standards if payment remained unsettled when R.A. 6657 came into effect.

The Supreme Court has clarified this in several rulings, emphasizing that:

Seizure of landholdings or properties covered by P.D. No. 27 did not take place on 21 October 1972, but upon the payment of just compensation. Taking into account the passage in 1988 of R.A. 6657 pending the settlement of just compensation, this Court concluded that it is R.A. 6657 which is the applicable law, with P.D. No. 27 and E.O. 228 having only suppletory effect.

This means if the payment for your 5-hectare land was not fully settled before June 15, 1988, the determination of just compensation should adhere to the provisions of R.A. 6657. The fact that your father received only a partial amount and contested the valuation strengthens the argument that the process under P.D. No. 27 was not completed.

R.A. 6657 provides a more comprehensive mechanism for determining just compensation. Section 17 of the law outlines the factors to be considered:

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.

This provision mandates a consideration of various factors beyond the formula initially used under P.D. No. 27 (which was generally based on Average Gross Production). The Department of Agrarian Reform (DAR) subsequently issued administrative orders, like DAR Administrative Order No. 5, Series of 1998, providing specific formulas based on factors like Capitalized Net Income (CNI), Comparable Sales (CS), and Market Value per Tax Declaration (MV), derived from Section 17.

Furthermore, R.A. 6657 itself acknowledges the role of prior laws but positions them as supplementary:

Section 75. Suppletory Application of Existing Legislation. — The provisions of Republic Act No. 3844 as amended, Presidential Decree Nos. 27 and 266 as amended, Executive Order Nos. 228 and 229, both Series of 1987; and other laws not inconsistent with this Act shall have suppletory effect.

Therefore, while P.D. No. 27 initiated the process for your 5-hectare land, its valuation rules do not necessarily apply if the compensation was not finalized before R.A. 6657. The applicable law for determining the final just compensation amount shifts to R.A. 6657 because the transfer process remained incomplete due to the unsettled payment.

Your observation about the significant difference in valuation between the P.D. 27 land and the land recently acquired under R.A. 6657 highlights the potential financial impact of applying the correct legal standard. It suggests that a re-evaluation based on R.A. 6657 factors could result in a substantially higher compensation for the 5-hectare portion.

Practical Advice for Your Situation

• Gather All Documentation: Collect all documents related to the 5-hectare OLT acquisition, including the Notice of Coverage, any valuation offers from LBP/DAR, proofs of partial payment received by your father, any written objections he filed, and the Emancipation Patents issued.
• Verify Payment Status: Formally inquire with the Land Bank of the Philippines (LBP) and DAR regarding the official status of the just compensation payment for the 5-hectare OLT property. Request records showing the amounts offered, paid, and whether it was considered full settlement.
• Document Non-Acceptance: Compile any evidence showing your father’s non-acceptance of the initial valuation as full payment. This could include letters, affidavits, or records of administrative protests filed.
• Consult DAR/PARO: Discuss your situation with the Provincial Agrarian Reform Officer (PARO). Present your documents and argue that compensation should be recalculated under R.A. 6657 due to incomplete payment before its effectivity.
• Legal Action (SAC): If administrative remedies fail, you may need to file a case for the determination of just compensation with the Regional Trial Court designated as a Special Agrarian Court (SAC). The SAC has the authority to determine the correct just compensation based on applicable laws.
• Highlight Incomplete Payment: Your primary legal argument will be that the just compensation process was never completed under P.D. No. 27 prior to June 15, 1988, thus triggering the application of R.A. 6657 valuation standards.
• Use Comparative Valuation: While not determinative, you can use the recent R.A. 6657 valuation for your other property as supporting evidence of current land values in the area, relevant under Section 17.

Navigating agrarian reform compensation can be complex, especially when dealing with historical acquisitions. The key is establishing that the payment process under P.D. 27 was not completed before R.A. 6657 took effect. If proven, you have a strong legal basis to seek re-computation of just compensation based on the more comprehensive factors outlined in R.A. 6657.

Hope this helps!

Sincerely,
Atty. Gabriel Ablola

For more specific legal assistance related to your situation, please contact me through gaboogle.com or via email at connect@gaboogle.com.

Disclaimer: This correspondence is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please schedule a formal consultation.