Dear Atty. Gab,

Musta Atty! I hope this message finds you well. My name is Gregorio Panganiban, and I’m writing from Cabanatuan City, Nueva Ecija. I’m quite distressed about a long-standing issue concerning my late parents’ agricultural land, which was placed under Operation Land Transfer back in the late 1970s under Presidential Decree No. 27. The land consists of about 15 hectares of irrigated riceland, partly in Gen. Natividad and Aliaga.

While the land was distributed to farmer-beneficiaries decades ago, the process for determining and paying the just compensation to my parents (and now us, their heirs) seems to have dragged on indefinitely. Recently, we were informed by the Land Bank about a valuation, but it still seems based on the very old P.D. 27 formula, resulting in a value around P10,000 per hectare. This feels incredibly unfair given the current value of similar irrigated lands in our area, which easily fetch significantly more, maybe closer to P150,000 per hectare or even higher, especially considering its productivity.

We heard that a newer law, Republic Act No. 6657 (the Comprehensive Agrarian Reform Law), came into effect in 1988. Since the payment process was never completed before this law was passed, shouldn’t the valuation be based on R.A. 6657 standards, which consider current market values? We feel stuck with an outdated valuation from the 1970s for land effectively taken much later in terms of final compensation. Could you please enlighten us on which law should apply for determining the just compensation and what steps we can take to pursue a fairer valuation? We are losing hope and feel shortchanged by the system.

Thank you for your time and guidance.

Sincerely,
Gregorio Panganiban

Dear Gregorio,

Thank you for reaching out. I understand your frustration regarding the prolonged process and the seemingly low valuation offered for your family’s land taken under the agrarian reform program. It’s a situation many landowners have faced, especially when the administrative process spans different legal regimes.

The core issue here involves determining the correct legal basis for just compensation when the land acquisition process initiated under P.D. No. 27 remained incomplete upon the enactment of R.A. No. 6657 (CARL) in 1988. Jurisprudence clarifies that if the process, particularly the final determination and payment of just compensation, was not completed before R.A. 6657 took effect, then the provisions of R.A. 6657 should govern the valuation. This generally means that factors beyond the old P.D. 27 formula should be considered, potentially leading to a valuation more reflective of the land’s current worth at the time of taking or payment.

Understanding Just Compensation Across Agrarian Reform Laws

The principle of just compensation is enshrined in our Constitution, guaranteeing that when private property is taken for public use, the owner receives the full and fair equivalent of the property. In the context of agrarian reform, this means compensating landowners fairly for the land acquired by the government for distribution to farmer-beneficiaries. The challenge arises when the legal landscape changes during the protracted acquisition process.

Your situation involves land initially covered by P.D. No. 27, which, along with Executive Order No. 228, established a formula for valuation primarily based on Average Gross Production (AGP), a fixed multiplier (2.5), and the Government Support Price (GSP) for the produce (palay or corn) prevailing at the time the decree was issued (often pegged at P35 or P31 per cavan). This often resulted in lower valuations compared to the land’s actual market potential later on.

However, the Supreme Court has clarified the application of laws in situations like yours. When the determination and payment of just compensation were not concluded before June 15, 1988 (the effectivity date of R.A. 6657), the valuation process should be completed under the framework of the newer law. The principle is articulated as follows:

“Considering the passage of Republic Act No. 6657 (RA 6657) before the completion of this process, the just compensation should be determined and the process concluded under the said law. Indeed, RA 6657 is the applicable law, with PD 27 and EO 228 having only suppletory effect…”

This means R.A. 6657 becomes the primary law governing the valuation, while P.D. 27 and E.O. 228 only supplement it where applicable and not inconsistent. R.A. 6657 provides a more comprehensive set of factors for determining just compensation, moving beyond the rigid formula of P.D. 27. Section 17 of R.A. 6657 explicitly states:

“SECTION 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, 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 shall be considered additional factors to determine its valuation.”

Therefore, the valuation for your family’s land should ideally take into account these broader factors, including the current value of similar properties in the area, the land’s income potential, its actual use, and relevant tax declarations, rather than solely relying on the outdated P.D. 27 formula. The Department of Agrarian Reform (DAR) and the Land Bank of the Philippines (LBP) are mandated to consider these factors. If you disagree with their valuation, you have recourse through the judicial system by filing a case for the determination of just compensation before the Regional Trial Court designated as a Special Agrarian Court (SAC).

It’s also important to note that disputes like these can sometimes be resolved through settlement. Parties can enter into a compromise agreement regarding the just compensation amount. The Civil Code recognizes the validity of such agreements:

“Under Article 2028 of the Civil Code, a compromise is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced.”

Such an agreement, especially one intended to end a pending court case (a judicial compromise), becomes binding upon the parties once executed, but requires court approval to be fully executory and have the force of a judgment.

“…a judicial compromise, while immediately binding between the parties upon its execution, is not executory until it is approved by the court and reduced to a judgment.”

This means negotiation and potential settlement based on a revaluation considering R.A. 6657 factors or current DAR administrative orders could be a viable path to resolving the matter more expediently than prolonged litigation.

Feature	P.D. 27 / E.O. 228 (Primary Basis if process completed before R.A. 6657)	R.A. 6657 (Applicable if process incomplete by June 15, 1988)
Valuation Basis	Formula: Ave. Gross Production x 2.5 x Gov’t Support Price (at P.D. 27 enactment)	Multiple Factors (Sec. 17): Current land value, income, use, tax declarations, etc.
Flexibility	Rigid Formula	More flexible, considers various indicators of fair market value
Date Focus	Value often pegged to 1972 GSP levels	Considers values closer to the time of actual taking or payment, including current market conditions

Practical Advice for Your Situation

• Verify the ‘Taking’ Date Used: Confirm the official date of taking used by DAR/LBP for valuation purposes. While the land transfer might have started earlier, the relevant date for R.A. 6657 valuation might be considered later, potentially when valuation or payment was actively pursued post-1988.
• Gather Current Evidence: Collect documents supporting a higher valuation based on R.A. 6657, Sec. 17 factors. This includes recent deeds of sale for comparable properties, tax declarations showing current assessed values, certifications of land productivity/income, and appraisals if available.
• Formally Contest the Valuation: If you disagree with the LBP’s offer, formally reject it in writing and state your basis, preferably citing R.A. 6657.
• Request Revaluation: Ask the DAR/LBP to recompute the just compensation based on R.A. 6657 and relevant DAR Administrative Orders (AOs) concerning valuation, including potentially newer AOs that might apply.
• File with the Special Agrarian Court (SAC): If administrative remedies fail, your recourse is to file a petition for judicial determination of just compensation with the RTC designated as an SAC in your region.
• Consider Negotiation/Compromise: Explore the possibility of negotiating a settlement with LBP, perhaps based on a mutually agreeable revaluation. A compromise can save time and resources compared to litigation.
• Seek Agrarian Law Expertise: Engage a lawyer who specializes in agrarian reform cases. They can provide tailored advice, represent you in negotiations, and handle court proceedings if necessary.

Navigating the complexities of agrarian reform compensation requires persistence and proper legal grounding. Given that the process remained incomplete when R.A. 6657 came into force, you have strong grounds to argue for a valuation based on its more comprehensive and potentially more favorable provisions.

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.