In the case of Land Bank of the Philippines v. Teresita Panlilio Luciano, the Supreme Court addressed the proper valuation method for determining just compensation in land acquisitions under the Comprehensive Agrarian Reform Program (CARP). The Court clarified that when land is voluntarily offered for sale under Republic Act (RA) No. 6657, the valuation factors outlined in Section 17 of RA No. 6657 and the formula in Department of Agrarian Reform (DAR) Administrative Order (AO) No. 6, series of 1992, as amended, must be applied, not Presidential Decree (PD) No. 27. This decision ensures that landowners receive just compensation based on the current legal framework, promoting fairness and equity in agrarian reform.

Voluntary Offer vs. PD 27: Which Law Determines Just Compensation?

Teresita Panlilio Luciano voluntarily offered her agricultural lands to the government under CARP. Disagreeing with Land Bank’s valuation, she filed a petition with the Special Agrarian Court (SAC), arguing that DAR AO No. 6, series of 1992, was illegally issued. The RTC used PD No. 27 to determine just compensation, but the Court of Appeals (CA) vacated this decision and remanded the case. The central legal question was whether the RTC could suppletorily apply PD No. 27’s formula when the land was offered under RA No. 6657.

The Supreme Court reversed the CA’s decision, holding that RA No. 6657 and its implementing regulations should govern the determination of just compensation. The Court emphasized that Section 17 of RA No. 6657 provides specific factors for determining just compensation, including:

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 are 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. The Court pointed out that in Land Bank of the Philippines v. Banal, it had already ruled that the RTC must consider these factors when determining just compensation. This involves a factual inquiry that requires a hearing where parties can present evidence.

Building on this principle, the Court clarified that while PD No. 27 and Executive Order (EO) No. 228 have suppletory effect, they should not be the primary basis for determining just compensation under RA No. 6657. Section 75 of RA No. 6657 explicitly states this suppletory nature. The Court reasoned that applying PD No. 27 and EO No. 228 would be inequitable, especially considering the time elapsed since the land acquisition. It is imperative that just compensation be the full and fair equivalent of the property, determined in accordance with RA No. 6657.

The Court addressed Land Bank’s role in the valuation process. While Land Bank has the initial responsibility for determining land value, this is not conclusive. The RTC, acting as a Special Agrarian Court, makes the final determination, considering the factors in Section 17 of RA No. 6657 and applicable DAR regulations. Land Bank’s valuation must be substantiated during a hearing to be considered sufficient.

The Supreme Court recognized the advanced age of the respondent and the length of time since the land acquisition. To expedite the final disposition of the case, the Court commissioned the Court of Appeals to receive and evaluate the evidence of the parties. The CA’s mandate is to ascertain the just compensation due, applying Section 17 of RA No. 6657 and DAR AO No. 6, series of 1992, as amended.

In conclusion, the Supreme Court’s decision reinforces the principle that just compensation in land acquisitions under CARP must be determined based on the specific provisions of RA No. 6657 and its implementing regulations. This ensures a fair and equitable valuation process that considers various factors affecting the land’s value. The Court’s decision underscores the importance of adhering to the proper legal framework in agrarian reform cases.

FAQs

What was the key issue in this case?	The key issue was whether the RTC could use the formula under PD No. 27 to determine just compensation for land voluntarily offered under RA No. 6657.
What did the Supreme Court rule?	The Supreme Court ruled that RA No. 6657 and its implementing regulations, specifically Section 17 and DAR AO No. 6, should be used to determine just compensation.
What factors are considered under RA No. 6657?	Factors include the cost of acquisition, current value of like properties, nature, actual use and income, sworn valuation by the owner, tax declarations, and government assessments.
What is Land Bank’s role in determining just compensation?	Land Bank has the initial responsibility for determining land value, but this is not conclusive; the RTC makes the final determination.
Why did the Court remand the case to the Court of Appeals?	To expedite the final disposition, the Court commissioned the CA to receive and evaluate evidence from the parties to determine just compensation.
What is the suppletory effect of PD No. 27 and EO No. 228?	While they have suppletory effect, they should not be the primary basis for determining just compensation under RA No. 6657.
What is the significance of DAR AO No. 6?	DAR AO No. 6 provides a formula for calculating just compensation based on the factors outlined in Section 17 of RA No. 6657.
What is the meaning of just compensation?	Just compensation means the full and fair equivalent of the property taken from its owner by the expropriator; the equivalent being real, substantial, full and ample.

The Supreme Court’s decision in Land Bank of the Philippines v. Teresita Panlilio Luciano provides important guidance on the proper valuation method in land acquisitions under CARP. By clarifying that RA No. 6657 and its implementing regulations should govern the determination of just compensation, the Court ensures a fair and equitable process for landowners. This ruling is a significant step towards achieving the goals of agrarian reform while protecting the rights of property owners.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.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. Teresita Panlilio Luciano, G.R. No. 165428, November 25, 2009