G.R. No.
133706 May 7, 2002
FRANCISCO ESTOLAS, petitioner, vs. ADOLFO MABALOT, respondent.
"On November 11, 1973, a Certificate of Land Transfer (hereinafter referred to as CLT) was issued in
favor of respondent over a 5,000 square meter lot (hereinafter referred to as subject land) located in
Barangay Samon, Sta. Maria, Pangasinan. Sometime in May, 1978, needing money for medical
treatment, respondent passed on the subject land to the petitioner for the amount of P5,800.00 and
P200.00 worth of rice. According to respondent, there was only a verbal mortgage; while according to
petitioner, a sale had taken place. Acting on the transfer, the DAR officials in Sta. Maria, Pangasinan
authorized the survey and issuance of an Emancipation Patent, leading to the issuance of a Transfer
Certificate of Title No. 3736 on December 4, 1987, in favor of the petitioner.
"Sometime in May, 1988, respondent filed a Complaint against the petitioner before the Barangay
Lupon in Pangasinan for the purpose of redeeming the subject land. When no amicable settlement was
reached, the case was referred to the Department of Agrarian Reform’s (hereinafter referred to as DAR)
regional office at Pilar, Sta. Maria, Pangasinan.
"On July 8, 1988, Atty. Linda F. Peralta of the DAR’s District Office submitted her investigation report
finding that respondent merely gave the subject land to petitioner as guarantee for the payment of a
loan he had incurred from the latter; and recommending that the CLT remain in the name of respondent
and that the money loan be returned to petitioner.
"Meanwhile, in a letter, dated September 20, 1988, petitioner insisted that the subject land had been
sold to him by respondent and requested the DAR to cancel the CLT in respondent’s name. Another
investigation was conducted on the matter which led to the Order dated March 9, 1989, issued by DAR
Regional Director Antonio M. Nuesa. In the said Order, the DAR found the act of respondent in
surrendering the subject land in favor of petitioner as constituting abandonment thereof, and denied
respondent’s prayer for redemption of the subject land. Respondent’s request for reinvestigation was
denied in a Resolution, dated April 11, 1989.
"Thus, on May 3, 1989, respondent appealed the case to the DAR Central Office which, on August 28,
1990, issued an Order reversing the assailed Order of DAR Regional Director Antonio M. Nuesa and
ordering the petitioner to return the subject land to respondent. Petitioner’s Motion for
Reconsideration was denied on June 8, 1992. He filed an Appeal with the Office of the President which
was dismissed in a Decision dated August 29, 1994. Petitioner’s Motion for Reconsideration of the said
Decision was also denied in an Order dated November 28, 1994. Likewise, petitioner’s second Motion
for Reconsideration was denied in an Order dated July 5, 1995."4
The subject property was awarded to respondent by virtue of PD 27. On November 11, 1973,9 a CLT was
issued in his favor. PD 27 specifically provides that when private agricultural land -- whether classified as
landed estate or not – is primarily devoted to rice and corn under a system of sharecrop or lease
tenancy, the tenant farmers thereof shall be deemed owners of a portion constituting a family-size farm
of five (5) hectares if not irrigated, and three (3) hectares if irrigated.
PD 27 specifically provides that title to land acquired pursuant to its mandate or to that of the Land
Reform Program of the government shall not be transferable except to the grantee’s heirs by hereditary
succession, or back to the government by other legal means. The law is clear and leaves no room for
interpretation.
Upon the promulgation of PD 27, farmer-tenants were deemed owners of the land they were tilling.
Their emancipation gave them the rights to possess, cultivate and enjoy the landholding for themselves.
These rights were granted by the government to them as the tillers and to no other. Thus, to insure their
continuous possession and enjoyment of the property, they could not, under the law, effect any transfer
except back to the government or, by hereditary succession, to their successors.11
Furthermore, this Court has always ruled that agrarian laws must be interpreted liberally in favor of the
grantees in order to give full force and effect to the clear intent of such laws: "to achieve a dignified
existence for the small farmers"; and to make them "more independent, self-reliant and responsible
citizens, and a source of genuine strength in our democratic society."12
Neither are we convinced that an award under PD 27 may be transferred to another in case the grantee
abandons it. The law is explicit. Title acquired pursuant to PD 27 shall not be transferable except to the
grantee’s heirs by hereditary succession, or back to the government by other legal means.
For abandonment to exist, the following requisites must be proven: (a) a clear and absolute intention to
renounce a right or claim or to desert a right or property and (b) an external act by which that intention
is expressed or carried into effect. There must be an actual, not merely a projected, relinquishment;
otherwise, the right or claim is not vacated or waived and, thus, susceptible of being appropriated by
another.18 Administrative Order No. 2, issued on March 7, 1994, defines abandonment or neglect as a
"willful failure of the agrarian reform beneficiary, together with his farm household, to cultivate, till or
develop his land to produce any crop, or to use the land for any specific economic purpose continuously
for a period of two calendar years." In the present case, no such "willful failure" has been demonstrated.
Quite the contrary, respondent has continued to claim dominion over the land.
In the present case, there was no valid transfer in favor of the government. It was petitioner himself
who requested the DAR to cancel respondent’s CLT and to issue another one in his favor.21 Unlike in the
above-cited case, respondent’s land was not turned over to the government or to any entity authorized
by the government to reallocate the farmholdings of tenant-farmers who refuse to become beneficiaries
of PD 27. Petitioner cannot, by himself, take over a farmer-beneficiary’s landholding, allegedly on the
ground that it was abandoned. The proper procedure for reallocation must be followed to ensure that
there was indeed an abandonment, and that the subsequent beneficiary is a qualified farmer-tenant as
provided by law.
G.R. No. 175175 September 29, 2008
LAND BANK OF THE PHILIPPINES, Petitioner, vs. HEIRS OF ELEUTERIO CRUZ, Respondents.
Petitioner Land Bank of the Philippines (LBP) is a government banking institution designated under
Section 64 of Republic Act (R.A.) No. 6654 as the financial intermediary of the agrarian reform program
of the government.
Respondent Heirs of Eleuterio Cruz are Anicia Cruz-Papa, Resurreccion Cruz-Pagcaliwagan, Antonio D.
Cruz, Lourdes Cruz-Doma, Lorna Cruz-Felipe, Mamerto D. Cruz, Eduardo D. Cruz and Victoria Cruz-
Dumlao. Eleuterio Cruz is the registered owner of an unirrigated riceland situated in Lakambini, Tuao,
Cagayan per Transfer Certificate of Title No. T-368. Of the total 13.7320 hectares of respondents’
landholding, an area of 13.5550 hectares was placed by the government under the coverage of the
operation land transfer program under Presidential Decree (P.D.) No. 27.6
Petitioner pegged the value of the acquired landholding at P106,935.76 based on the guidelines set
forth under P.D. No. 277 and Executive Order (E.O.) No. 228.8 Respondents rejected petitioner’s
valuation and instituted an action for a summary proceeding for the preliminary determination of just
compensation before the PARAD. On 23 November 1999, the PARAD rendered a decision fixing the just
compensation in the amount of P80,000.00 per hectare.9 Petitioner sought reconsideration but was
unsuccessful.
Thus, on 28 January 2000, petitioner filed a petition for the determination of just compensation before
the RTC of Tuguegarao City.10 The petition was docketed as Agrarian Case No. 0058 and entitled Land
Bank of the Philippines v. Heirs of Eleuterio Cruz, represented by Lorna Cruz, et al.11
Petitioner’s evidence consisted of the testimonies of Benedicta Simon, head of the LBP Evaluation
Division of Land Owner’s Compensation Department, and Francisco de la Cruz, Chief, PARAD, Cagayan.
Simon testified that as the officer charged with reviewing claims under the agrarian reform program, she
computed the valuation of respondents’ landholdings based on the formula set forth in P.D. No. 27, E.O.
No. 228 and Administrative Order (A.O.) No. 13, series of 1994 and arrived at the value of P106,935.76.
As the PARAD Chief tasked to oversee the implementation of the agrarian reform program, De la Cruz
testified that the subject landholding was tenanted and covered by production agreements between the
owner and various tenants.12 Petitioner offered in evidence Exhibit "H" to prove that the subject
landholding had an average production of 25 and 40 cavans per hectare annually.
For their part, respondents presented Lorna Cruz Felipe, who testified that as one of the heirs of
Eleuterio Cruz, she knew that the subject landholding was planted with rice two or three times a year
and had a production capacity of 80 to 100 cavans per hectare. Felipe also claimed that the current
market value of the property was between P150,000.00 to P200,000.00 per hectare.13
The Court laid down in Paris v. Alfeche25 the applicability of P.D. No. 27 and E.O. No. 228 in relation to
R.A. No. 6657 in the matter of the payment of just compensation. There the Court explained that while
under P.D. No. 27 tenant farmers are already deemed owners of the land they till, they are still required
to pay the cost of the land before the title is transferred to them and that pending the payment of just
compensation, actual title to the tenanted land remains with the landowner.
It would certainly be inequitable to determine just compensation based on the guideline provided by PD
No. 27 and EO 228 considering the DAR’s failure to determine the just compensation for a considerable
length of time. That just compensation should be determined in accordance with RA 6657, and not PD
27 or EO 228, is especially imperative considering that just compensation should be the full and fair
equivalent of the property taken from its owner by the expropriator, the equivalent being real,
substantial, full and ample.28
he decisive backdrop of the instant case coincides with that in Paris, that is, the amount of just
compensation due to respondents had not yet been settled by the time R.A. No. 6657 became effective.
Following the aforementioned pronouncement in Paris, the fixing of just compensation should therefore
be based on the parameters set out in R.A. No. 6657, with P.D. No. 27 and E.O. No. 228 having only
suppletory effect.
Section 17 of R.A. No. 6657 states:
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 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.
The SAC, meanwhile, referred to DAR A.O. No. 6, series of 1992, as amended, as the controlling
guideline in fixing just compensation. Pertinently, to obtain the land value, the formula33 under said
regulation requires that the values for the Capitalized Net Income, Comparable Sales and Market Value
based on the tax declaration must be shown. Moreover, said formula has been superseded by DAR A.O.
No. 05, series of 1998, which also requires values for Capitalized Net Income, Comparable Sales and
Market Value, the same parameters laid down in the prior regulation.
G.R. No. 213863
LAND BANK OF THE PHILIPPINES, Petitioner, vs. EDGARDO L. SANTOS, represented by his
assignee, ROMEO L. SANTOS, Respondent.
Santos owned three (3) parcels of agricultural land devoted to corn situated in the Municipality of
Sagnay, Camarines Sur, covered by Tax Declaration (TD) Nos. 197-018-0579 (Land 1) and 97-010-076
(Land 2),7 and Transfer Certificate of Title (TCT) No. 57178 (Land 3; collectively, subject lands).
In 1984, the subject lands were placed under the government's Operation Land Transfer Program9
pursuant to Presidential Decree (PD) No. 27,10 and distributed to the farmer-beneficiaries who were
issued the corresponding Emancipation Patents.11 The Department of Agrarian Reform (DAR) fixed the
just compensation at P164,532.50 for Land 1, P39,841.93 for Land 2,12 and P66,2l4.03 for Land 3,13
using the formula provided under Executive Order No. (EO) 228,14 Series of 1987.
On May 25, 2000, the LBP received the claim folder covering the subject lands15 and allowed Santos to
collect the initial valuation for Land 3. It withheld the release of the valuation for Lands 1 and 2 until the
submission of the certificates of title thereto,16 since it was discovered that they were covered by
Decree Nos. N-8237817 and 622575,18 respectively.
Thus, on August 30, 2000 and December 17, 2003, respectively, Santos was issued Agrarian Reform (AR)
Bond No. 0079665 in the amount of P11,674.59 representing the initial valuation of Land 3 and AR Bond
No. 0079666 in the amount of P30,428.83 representing the six percent (6%) increment pursuant to PD
27 and EO 228, and paid cash in the total amount of P4,678.16.19
Finding the valuation unreasonable, Santos filed three (3) petitions20 for summary administrative
proceedings for the determination of just compensation of the subject lands before the Office of the
Provincial Adjudicator (PARAD) of Camarines Sur, docketed as DARAB Case Nos. V-RC-051-CS-00, V-RC-
074-CS-00, and V-RC-075-CS-00.
On March 27, 2001, the PARAD rendered separate decisions21 fixing the just compensation as follows:
(a) P510,034.2922 for Land 1; (b) P2,532,060.3123 for' Land 2; and (c) Pl,147,466.7324 for Land 3, using
the formula,25 LV = AGP x 2.5 x GSP. However, in arriving at such values, I the PARAD used the recent
government support price (GSP) for com of P300.00/cavan (P6.00/kilo) as certified by the National Food
Authority Provincial Manager of Camarines Sur, instead of the P31.00/cavan provided under Section 226
of EO 228. Hence, it no longer applied the six percent (6%) annual incremental interest granted under
DAR Administrative Order (DAR AO) No. 13,27 Series of 1994. In a letter28 dated September 5, 2001,
Santos unconditionally 'accepted and called for the immediate payment of the valuations for Lands 2
and 3.
The Court has repeatedly held that the seizure of landholdings or properties covered by PD 27 did not
take place on October 21, 1972, but upon the payment of just compensation.75 Thus, if the agrarian
reform process is still incomplete, as in this case where the just compensation due the landowner has
yet to be settled, just compensation should be determined and the process concluded under RA 6657.76
As summarized in LBP v. Sps. Banal,77 the procedure for the determination of just compensation under
RA 6657 commences with the LBP determining the initial valuation of the lands under the land reform
program.78 Using the LBP's valuation, the DAR makes an offer to the landowner.79 In case the
landowner rejects the offer, the DAR adjudicator conducts a summary administrative proceeding to
determine the compensation for the land by requiring the landowner, the LBP, and other interested
parties to submit evidence on the just compensation of the land. A party who disagrees with the
decision of the DAR adjudicator may bring the matter to the RTC, designated as a Special Agrarian Court
for final determination of just compensation.80
Note that in case of rejection, RA 6657 entitles the landowner to withdraw the initial valuation of the
landholding pending the determination of just compensation.81 In this case, however, the LBP, citing
DAR AO No. 2, Series of 2005, posited that the release of such amount is conditioned on the submission
of all the documentary requirements listed therein, and that the RTC's failure to require Santos to
comply therewith constitutes grave abuse of discretion.82
Contrary to the LBP's assertion in G.R. No. 213863, nowhere from the said administrative guideline can it
be inferred that the submission of the complete documents is a pre-condition for the release of the
initial valuation to a landowner. To hold otherwise would effectively protract payment of the amount
which RA 6657 guarantees to be immediately due the landowner even pending the determination of
just compensation. As elucidated in LBP v. CA:84
As an exercise of police power, the expropriation of private property under the CARP puts the
landowner, and not the government, in a situation where the odds are already stacked against his favor.
He has no recourse but to allow it. His only consolation is that he can negotiate for the amount of
compensation to be paid for the expropriated property. As expected, the landowner will exercise this
right to the hilt, but subject however to the limitation that he can only be entitled to a "just
compensation." Clearly therefore, by rejecting and disputing the valuation of the DAR, the landowner is
merely exercising his right to seek just compensation. If we are to x x x [withhold] the release of the
offered compensation despite depriving the landowner of the possession and use of his property, we are
in effect penalizing the latter for simply exercising a right afforded to him by law.
Obviously, this would render the right to seek a fair and just compensation illusory as it would
discourage owners of private lands from contesting the offered valuation of the DAR even if they find it
unacceptable, for fear of the hardships that could result from long delays in the resolution of their cases.
This is contrary to the rules of fair play because the concept of just compensation embraces not only the
correct determination of the amount to be paid to the owners of the land, but also the payment of the
land within a reasonable time from its taking. Without prompt payment, compensation cannot be
considered "just" for the property owner is made to suffer the consequence of being immediately
deprived of his land while being made to wait for a decade or more before actually receiving the amount
necessary to cope with his loss.85 (Emphasis supplied)
Thus, the leniency accorded by the RTC cannot be construed as a capricious exercise of power as it
merely expedited the procedure for payment which is inherently fairer under the circumstances
considering that: (a) Santos has been "deprived of his right to enjoy his properties as early as 1983, and
has not yet received any compensation therefor since then;"86 (b) the existence of the certificates of
title over Lands 1 and 2 which the LBP insists to be submitted had not been sufficiently established;87 (c)
the LBP had judicially admitted, that Santos is the owner of Lands 1 and 2 which were identified as
covered by tax declarations;88 and (d) compliance with the required documents may still be directed
before the full payment of the correct just compensation89 which, up to this time, has not yet been
finally determined. Moreover, as aptly pointed out by the CA, Santos' failure to produce the titles to
Lands 1 and 2 was not motivated by any obstinate refusal to abide by the requirements but due to
impediments beyond his control.90
Perforce, no reversible error or grave abuse of discretion can be imputed on the CA in sustaining the RTC
Orders dated July 9, 2009 and August 24, 2009 which allowed the withdrawal of the initial valuation
upon Santos' (a) submission of two (2) valid ID cards, two (2) latest ID pictures, I and his current CTC, and
(b) execution of a Deed of Assignment, Warranties and Undertaking in favor of the LBP.
Neither can the Court subscribe to the LBP's contention that the RTC was barred by res judicata from
conducting further proceedings to determine just compensation for Lands 2 and 3 since the final and
executory Decision in CA-G.R. CV No. 75010 merely called for a remand of the case for computation
purposes only.
With respect to the award of twelve percent (12%) interest on the unpaid just compensation for Land 3
subject of GR. No. 214021, the Court finds untenable the LBP's contention that the same was bereft of
factual and legal bases, grounded on its having promptly paid Santos the initial valuation therefor barely
two months after it approved the DAR's valuation on June 26, 2000.97
Notably, while the LBP released the initial valuation in the amount of P46,781.58 in favor of Santos in
the year 2000, the said amount is way below, or only four (4% )98 of the just compensation finally
adjudged by the RTC. To be considered as just, the compensation must be fair and equitable, and the
landowners must have received it without any delay.
It is doctrinal that the concept of just compensation contemplates of just and timely payment. It
embraces not only the correct determination of the amount to be paid to the landowner, but also the
payment of the land within a reasonable time from its taking, as otherwise, compensation cannot be
considered "just," for the owner is made to suffer the consequence of being immediately deprived of his
land while being made to wait for years before actually receiving the amount necessary to cope with his
loss.99
In LBP v. Orilla,100 the Court elucidated that "prompt payment" of just compensation is not satisfied by
the mere deposit with any accessible bank of the provisional compensation determined by it or by the
DAR, and its subsequent release to the landowner after compliance with the legal requirements set by
RA 6657, to wit:
Just compensation is defined as the full and fair equivalent of the property taken from its owner by the
expropriator. It has been repeatedly stressed by this Court that the true measure is not the taker's gain
but the owner's loss. The word 'just" is used to modify the meaning of the word "compensation" to
convey the idea that the equivalent to be given for the property to be taken shall be real, substantial,
full, and ample.
The concept of just compensation embraces not only the correct determination of the amount to be
paid to the owners of the land, but also payment within a reasonable time from its taking. Without
prompt payment, compensation cannot be considered "just" inasmuch as the property owner is made
to suffer the consequences of being immediately deprived of his land while being made to wait for a
decade or more before actually receiving the amount necessary to cope with his loss.
Put differently, while prompt payment of just compensation requires the immediate deposit and release
to the landowner of the provisional compensation as determined by the DAR, it does not end there.
Verily, it also encompasses the payment in full of the just compensation to the landholders as finally
determined by the courts. Thus, it cannot be said that there is already prompt payment of just
compensation when there is only a partial payment thereof, as in this case.101 (Emphasis supplied)
Thus, in expropriation cases, interest is imposed if there is delay in the payment of just compensation to
the landowner since the obligation is deemed to be an effective forbearance on the part of the State.
Such interest shall be pegged at the rate of twelve percent (12%) per annum on the unpaid balance of
the just compensation, reckoned from the time of taking,102 or the time when the landowner was
deprived of the use and benefit of his property103 such as when title is transferred to the Republic,104
or emancipation patents are issued by the government, until full payment.105 To clarify, unlike the six
percent (6%) annual incremental interest allowed under DAR AO No. 13, Series of 1994, DAR AO No. 2,
Series of 2004 and DAR AO No. 6, Series of 2008, this twelve percent (12%) annual interest is not
granted on the computed just compensation; rather, it is a penalty imposed for damages incurred by the
landowner due to the delay in its payment.106
Accordingly, the award of twelve percent (12%) annual interest on the unpaid balance of the just
compensation for Land 3 should be computed from the time of taking and not from January 1, 2010 as
ruled by the RTC and the CA, until full payment on October 12, 2011.107 However, copies of the
emancipation patents issued to the farmer-beneficiaries have not been attached to the records of the
case. Hence, the Court is constrained to remand the case to the RTC of Naga City for receipt of evidence
as to the date of the grant of the emancipation patents, which shall serve as the reckoning point for the
computation of the interests due Santos.
