*JUST COMPENSATION IN AGRARIAN REFORM

* 1987 CONSTITUTION Article XIII, Sec. 4 The State shall, by law, undertake an agrarian reform program founded on the right of farmers and regular farmworkers who are landless, to own directly or collectively the lands they till or, in the case of other farmworkers, to receive a just share of the fruits thereof. To this end, the State shall encourage and undertake the just distribution of all agricultural lands, subject to such priorities and reasonable retention limits as the Congress may prescribe, taking into account ecological, developmental, or equity considerations, and subject to the payment of just compensation. In determining retention limits, the State shall respect the right of small landowners. The State shall further provide incentives for voluntary land-sharing.

* RA 6657, THE CARP LAW

15 June 1988

Coverage: The Comprehensive Agrarian Reform Law of 1988 shall cover, regardless of tenurial arrangement and commodity produced, all public and private agricultural lands as provided in Proclamation No. 131 and Executive Order No. 229, including other lands of the public domain suitable for agriculture. (Sec. 4)

* RA 3844, AGRICULTURAL LAND REFORM CODE8 August 1963Abolished share tenancy relationship and provides for the expropriation of certain agricultural lands for resale to qualified beneficiariesCreated Land Bank of the Philippines to finance the acquisition by the Government of landed estates for division and resale to small landholders, as well as the purchase of the landholding by the agricultural lessee from the landowner

* PD 27, OPERATION LAND TRANSFER21 October 1972

Covers private agricultural lands primarily devoted to rice and corn

* EO 22817 July 1987Declared qualified farmer beneficiaries as full owners of the land as of 21 October 1972Provides for the valuation mechanism for lands acquired pursuant to PD 27 FORMULA UNDER EO 228

LV = (2.5 x AGP x P35/31) x AWhere: LV = Land Value AGP = Average Gross Production/hectare P35/31 = Government Support Price for one (1) cavan of palay/corn in 1972 A = Total area of the land

*

Proclamation No. 131

22 July 1987

Instituted the CARP

* EO 22922 July 1987

Provides the mechanism for the implementation of the CARP

*

Association of Small Landowners in the Philippines vs. Secretary of Agrarian Reform(G.R. No. 78742, En Banc, 14 July 1989)

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. x x x

*1987 CONSTITUTION Article XIII, Sec. 4The State shall, by law, undertake an agrarian reform program founded on the right of farmers and regular farmworkers who are landless, to own directly or collectively the lands they till or, in the case of other farmworkers, to receive a just share of the fruits thereof. To this end, the State shall encourage and undertake the just distribution of all agricultural lands, subject to such priorities and reasonable retention limits as the Congress may prescribe, taking into account ecological, developmental, or equity considerations, and subject to the payment of just compensation. In determining retention limits, the State shall respect the right of small landowners. The State shall further provide incentives for voluntary land-sharing.

* STAKEHOLDERS IN AGRARIAN REFORMFarmer-Beneficiaries

Landowners

Government

*JUST COMPENSATIONThe just and complete equivalent of the loss which the owner of the thing expropriated has to suffer by reason of the expropriation.The compensation given to the owner is just compensation if he receives for his property a sum equivalent to its market value.

City of Manila vs. Estrada, 25 Phil 208 (1913)

*MARKET VALUEIt is the price fixed by the buyer and the seller in the open market in the usual and ordinary course of legal trade and competition; the price and value of the article established or shown by sale, public or private, in the ordinary course of business; the fair value of property as between one who desires to purchase and one who desires to sell.

City of Manila vs. Estrada25 Phil 208 (1913)

*1987 ConstitutionArticle III, Sec. 9

Private property shall not be taken for public use without just compensation.

*1987 ConstitutionArticle XIII, Sec. 4

The State shall, by law, undertake an agrarian reform program founded on the right of farmers and regular farmworkers, who are landless, to own directly and indirectly the lands they till or, in the case of other farmworkers, to receive a just share of the fruits thereof. To this end, the State shall encourage and undertake the just distribution of all agricultural lands, subject to such priorities and reasonable retention limits as the Congress may prescribe, taking into account ecological, developmental, or equity considerations, and subject to the payment of just compensation. In determining retention limits, the State shall respect the rights of small landowners. The State shall further provide incentives for voluntary land-sharing.

*1987 Constitution

Article III Bill of Rights

It is a guarantee that there are certain areas of a persons life, liberty, and property which governmental power may not touch.

Article XIII Social Justice

The goal of social justice is closer regulation of the acquisition, ownership, use, and disposition of property in order to achieve a more equitable distribution of wealth and political power.Fr. Joaquin G. Bernas, S.J.The 1987 Philippine ConstitutionA Reviewer-Primer

*In trying to determine just compensation for purposes of agrarian reform, we must remember that we have to look at this in the context of the Article where it is. It is in the Article on Social Justice, and the thrust of this Article is precisely to make it easier for the disadvantaged to be able to obtain land. * - Fr. Joaquin G. Bernas, SJ*The 1987 Constitution of the Philippines, A Commentary, 2003 Ed., p. 1203

*When pursuant to an agrarian reform mandate that is intended to reduce inequalities, as social justice commands, land is taken for redistribution, is the action taken by the state pure eminent domain or is it not eminent domain mixed with the exercise of police power? But it is established jurisprudence that loss incurred due to the states exercise of police power is not compensable. It would seem therefore that compensation in expropriation for land reform should be approached differently than under the Bill of Rights when property is taken for traditional purposes. * - Fr. Joaquin G. Bernas, SJ*Ibid, p. 1205

*Association of Small Landowners in the Philippines vs. Secretary of Agrarian Reform (G.R. No. 78742, En Banc, 14 July 1989)

What we deal with here is a revolutionary kind of expropriation.

The expropriation before us affects all private agricultural lands whenever found and of whatever kind as long as they are in excess of the maximum retention limits allowed their owners. This kind of expropriation is intended for the benefit not only of a particular community or of a small segment of the population but of the entire Filipino nation, from all levels of our society, from the impoverished farmer to the land-glutted owner. x x x

-J. Isagani Cruz

* Sec. 17, RA 6657In 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."

* Sec. 49, RA 6657The PARC and the DAR shall have the power to issue rules and regulations, whether substantive or procedural, to carry out the objects and purposes of this Act. Said rules shall take effect ten (10) days after publication in two (2) national newspapers of general circulation.

*DAR AO No. 5, Series of 1998There shall be one basic formula for the valuation of lands covered by VOS or CA:LV= (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)

Where: LV = Land Value CNI = Capitalized Net IncomeCS = Comparable SalesMV = Market Value

*LandBank vs. Banal (G.R. No. 143276, 3rd Division, 20 July 2004)(I)n determining the valuation of the subject property, the trial court shall consider the factors provided under Section 17 of RA 6657, as amended x x x. 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 land.

- J. Sandoval-Guttierez

*LandBank vs. Celada (G.R. No. 164876, 1st Division, 23 January 2006)DAR AO No. 5, s. of 1998 precisely filled in the details of Section 17, RA 6657 by providing a basic formula by which the factors mentioned therein may be taken into account.

SAC was at no liberty to disregard the formula which was devised to implement the said provision.

- J. Ynares-Santiago

*LandBank vs. Lim and Cabochan (G.R. No. 171941, En Banc, 2 August 2007)In Land Bank of the Philippines v. Spouses Banal, this Court underscored the mandatory nature of Section 17 of RA 6657 and DAR AO 6-92, as amended by DAR AO 11-94.xxxAnd in LBP v. Celada, this Court set aside the valuation fixed by the RTC of Tagbilaran, which was based solely on the valuation of neighboring properties, because it did not apply the DAR valuation formula.xxx

*LandBank vs. Lim and Cabochan (G.R. No. 171941, En Banc, 2 August 2007)Consequently, as the amount of P2,232,868 adopted by the RTC in its December 21, 2001 Order was not based on any of the mandatory formulas prescribed in DAR AO 6-92, as amended by DAR AO 11-94, the Court of Appeals erred when it affirmed the valuation adopted by the RTC. - J. Carpio Morales

*Some Cases Reiterating the Doctrine in Banal, Celada and Lim that Adherence to the Formula Prescribed by the DAR is MandatoryLBP v. Wycoco (G. R. No. 140160, 14 January 2003) Sps. Zoleta, et al. v. Hon. Andres Reyes, et al. (G. R. No. 169054, 31 August 2003) De Castro, et al. v. LBP (G. R. No. 168026, 03 August 2005) Meneses v. DAR Secretary, et al. (G. R. No. 156304, 23 October 2006) LBP vs. Heirs of Eleuterio Cruz (G.R. No. 175175, September 29, 2008) Land Bank of the Philippines v. Dumlao (G.R. No. 167809, November 27, 2008)Allied Bank Corporation v. Land Bank of the Philippines (G.R. No. 175422, March 13, 2009)

*continuedLand Bank of the Philippines v. Heirs of Honorato De Leon (G.R. No. 164025, May 8, 2009) LBP v. Belista (G. R. No. 164631, 26 June 2009) LBP v. Kumassie Plantation Co., (G.R. No. 177404, December 4, 2009)LBP v. Alpasan, Jr. (G. R. No. 188221, 03 February 2010) LBP v. Escandor (G. R. No. 171685, 11 October 2010) LBP v. Barrido (G.R. No. 183688, August 18, 2010)

*Case where the Supreme Court departed from the doctrineAPO FRUITS CORPORATION and HIJO PLANTATION, INC., vs. COURT OF APPEALS (G.R. No. 164195, February 6, 2007)

*More Supreme Court cases since 2004 were decided in accordance with the doctrine espoused in Banal, Celada and Lim Cabochan

Only case decided by the Supreme Court En Banc involving the issue of how just compensation in land reform is to be computed is LBP vs. Lim and Cabochan

*DATE OF TAKING(Section 2, Rule 67 of the Rules of Court)

General Rule in Expropriation Proceedings:

Filing of the complaintDue notice to ownerDeposit of Compensation

*TAKING UNDER RA 6657 Secs. 16 (e) & 24, par. 2, RA 6657, as amended

Payment to LO

Deposit , in case of rejection

Issuance of title in the name of RP

*TAKING UNDER PD 27October 21, 1972

Locsin vs. Valenzuela, 194 SCRA 194;Assn of Small Landowners vs. Sec. of Agrarian Reform, G.R. Nos. 78742, 79310, 79744 & 79777, 14 July 1989;LBP vs. David C. Naval, et al., G.R. No. 122231, 27 November 1995;NPC vs. Chiong, G.R. No. 152436, 20 June 2003Gabatin vs. LBP, G.R. No. 148223, 25 November 2004

*

Formula upheld where taking is October 21, 1972 is the formula under PD 27/EO 228.

LV = (2.5 x AGP x P35/31) x A

*Variance in the Reckoning of Date of TakingUpon payment of just compensation judicially determined

OP, et al. vs. CA, G.R. No. 131216, 19 July 2001LBP vs. Estanislao, G.R. No. 166777, 10 July 2007

*

Date of issuance of EPs

LBP vs. Domingo, G.R. No. 168533, 4 February 2008;LBP vs. Dumlao, G.R. No. 167809, 27 November 2008;DAR vs. Tiongson, G.R. No. 171674, 4 August 2009;

*Effect of Change in Date of TakingFormula under RA 6657 is to be used, resulting in higher valuation. Rationale is because the agrarian reform process is not yet complete when RA 6657 took effect on 15 June 1988.

LV = (CNI x .60) + (CS x .30) + (MV x .10)

*Reason for Divergent PD 27 Rulings on the Date of TakingCourts have recognized that the determination of the value of the land as of October 21, 1972 will result in a low valuation and fixing the date of taking on a later date, and in accordance with RA 6657, will increase the valuation.

*Relevance of PD 27 Jurisprudence Today

RA 9700 (July 1, 2009), rendered the issue on date of taking for PD 27-acquired lands moot and academic.

Section 5 of RA 9700 - all previously-acquired lands subject to challenge should be finally resolved in accordance with Section 17 of RA 6657, as amended.

*DAR AO No. 1, series of 2010 - provides that the reckoning date of the AGP and SP inputs needed in the computation shall be June 30, 2009; provides the legal formula in the computation:

LV = (CNI x .60) + (CS x .30) + (MV x .10) OrLV = (CNI x .90) + (MV x .10)

*AMOUNT TO BE DEPOSITEDSection 16 (a), (b), (d), & (e) of RA 6657

(a) x x x Said notice shall contain the offer of the DAR to pay a corresponding value in accordance with the valuation set forth in Sections 17, 18, and other pertinent provisions hereof.

(b) Within thirty (30) days from the date of receipt of written notice by personal delivery or registered mail, the landowners, his administrator, or representative shall inform the DAR of his acceptance or rejection of the offer.

*continued

(c) If the landowner accepts the offer of the DAR, the LBP shall pay the landowner the purchase price of the land within thirty (30) days after he executes and delivers a deed of transfer x x x

(e) Upon receipt by the landowner of the corresponding payment or in case of rejection or no response from the landowner, upon the deposit with an accessible bank designated by the DAR of the compensation in cash or in LBP bonds in accordance with this Act, the DAR shall take immediate possession of the land and shall request the proper Register of Deeds to issue a Transfer Certificate of Title (TCT) in the name of the Republic of the Philippines. The DAR shall thereafter proceed with the redistribution of the land to qualified beneficiaries.

*

LBP v. Arieta Tan(G.R. No. 161834, August 23, 2010)

The amount of offer which the DAR gives to the landowner as compensation for his land, as mentioned in Section 16 (b) and (c), is based on the initial valuation by the LBP. This then is the amount which may be accepted or rejected by the landowner under the procedure established in Section 16. Perforce, such initial valuation by the LBP also becomes the basis of the deposit of provisional compensation pending final determination of just compensation, in accordance with sub-paragraph (e).

*AMOUNT THAT CAN BE WITHDRAWNLBP v. Josefina Lubrica, (G.R. No. 177190, February 23, 2011) Clearly, therefore, it is the initial valuation made by the DAR and LBP that is contained in the letter-offer to the landowner under Sec. 16(e), said valuation of which must be deposited and released to the landowner prior to taking possession of the property.

* Sec. 18, RA 6657The 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.

* Sec. 16, RA 6657Any party who disagrees with the decision may bring the matter to the court of proper jurisdiction for final determination of just compensation.

* Sec. 57, RA 6657The Special Agrarian Courts shall have original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners, and the prosecution of all criminal offenses under this Act. The Rules of Court shall apply to all proceedings before the Special Agrarian Courts, unless modified by this Act.

*DAR Adjudication Board (DARAB)

Section 16. Procedure for Acquisition of Private Lands. xxx(d) In case of rejection or failure to reply, the DAR shall conduct summary administrative proceedings to determine the compensation for the land requiring the landowner, the LBP and other interested parties to submit evidence as to the just compensation for the land, within fifteen (15) days from the receipt of the notice. xxx (RA 6657)

*Sec 50, RA 6657Quasi-Judicial Power 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).

*DARAB Rules of Procedures

1. 2009

2. 2003

3. 1994

*DARAB and SACs JurisdictionPhilippine Veterans Bank v. CA (G.R. No. 132767. January 18, 2000)No contradiction in the jurisdiction of DARAB and SAC

Proceedings before the DARAB is administrative while the proceedings before SAC is judicial

*LBP vs. Wycoco (G.R. No. 140160, 13 January 2004)

Direct resort to SAC is valid

SAC is not an appellate court of DARAB

Summary administrative proceedings before the DARAB is not necessary prior to filing before the SAC

*LBP vs. Belista (G.R. No. 164631, 26 June 2009)

Party need not appeal the Adjudicators decision to the DARAB before it can file a petition for determination of just compensation before the SAC.

*Land Bank of the Philippines v. Celada (G.R. No. 164876, 23 January 2006)

APO Fruits and HIJO Plantation, Inc., vs. CA (G.R. No. 164195, 6 February 2007)

Notwithstanding the pendency of a just compensation case before the DARAB, a party may file a petition before the SAC

*Time to File Original Action Before the SACPhilippine Veterans Bank v. CA (G.R. No. 132767, January 18, 2000)

LBP vs. Raymunda Martinez (G.R. No. 169008, July 31, 2008)Although the proceedings before the SAC is not appellate in nature the petition for the fixing of just compensation should be filed within 15 days period from receipt of the adverse DARAB decision.

* Sec. 60, RA 6657An appeal may be taken from the decision of the Special Agrarian Courts by filing a petition for review with the Court of Appeals within fifteen (15) days from receipt of notice of the decision; otherwise, the decision shall become final.

An appeal from the decision of the Court of Appeals, or from any order, ruling or decision of the DAR, as the case may be, shall be by a petition for review with the Supreme Court within a non-extendible period of fifteen (15) days from receipt of a copy of said decision.

*LBP vs. Arlene De LeonG.R. No. 143275, 20 March 2003

We ruled that the Rules of Court does not categorically prescribe ordinary appeal as the exclusive mode of appeal from decisions of Special Agrarian Courts. The reference by Section 61 to the Rules of Court in fact even supports the mode of a petition for review as the appropriate way to appeal decisions of the Special Agrarian Courts. x x x

WHEREFORE, the motion for reconsideration dated October 16, 2002 and the supplement to the motion for reconsideration dated November 11, 2002 are PARTIALLY GRANTED. While we clarify that the Decision of this Court dated September 10, 2002 stands, our ruling therein that a petition for review is the correct mode of appeal from decisions of Special Agrarian Courts shall apply only to cases appealed after the finality of this Resolution.

*ARF is solely answerable for just compensation to landownerSec. 63, RA 6657, as amended by RA 9700

xxx all just compensation payments to landowners, including execution of judgments therefor, shall only be sourced from the Agrarian Reform Fund;

*INTEREST ON JUST COMPENSATION

1. When there is no delay in payment.

2. When there is a delay in payment.

*WHEN THERE IS NO DELAY

Cash portion prevailing savings rate

Bond portion interest rate aligned with the 91-day TB rates (Section 18, RA 6657, as amended)

*WHEN THERE IS DELAY Art. 2209, Civil Code

CB Circular 416

Eastern Shipping vs. CA (G.R. No. 168453, 13 March 2009)

*APO-HIJO VS. LBP (G.R No. 164195, 12 April 2011)

Forbearance of money

12% interest

*PECULIAR CIRCUMSTANCES IN APO-HIJO VS. LBPMarket value upheld over value determined under DAR valuation guidelines

SC decided case on the merits when issue on appeal is procedural

2nd MR of APO elevated to the SC En Banc and given due course inspite of Entry of Judgment.

*

3rd MR of APO given due course without 2/3 vote of the Justices pursuant to SC Internal Rules of Procedure

Payment of just compensation classified as forbearance of money to justify 12% interest

*

THANK YOU!