G.R. No. 182472 , November 24, 2014.
LAND BANK OF THE PHILIPPINES, Petitioner, vs. JAIME K. IBARRA, ANTONIO K. IBARRA, JR., LUZ IBARRA VDA. DE JIMENEZ, LEANDRO K IBARRA, and CYNTHIA IBARRA-GUERRERO, Respondents.

FACTS

Respondents are the registered owners of a 6.2773-hectare agricultural land in Pampanga. Pursuant to the Land Reform Program, the Department of Agrarian Reform (DAR) acquired 6.0191 hectares of the property and placed it under the coverage of Presidential Decree (PD) No. 27. Respondents filed a Complaint for Determination of Just Compensation before the Regional Trial Court (RTC). The RTC, in its Amended Decision, ordered petitioner Land Bank of the Philippines to pay respondents the sum of Five Hundred Thirty-Nine Thousand One Hundred Sixty and 88/100 (P539,160.88) in cash and bond pursuant to Section 18 of Republic Act (RA) No. 6657, less the provisional payment, with interest, plus attorney’s fees and costs. Petitioner filed a Petition for Review with the Court of Appeals (CA), arguing that just compensation should be computed based on the value at the time of taking under PD No. 27 and Executive Order (EO) No. 228, not under RA No. 6657 . The CA affirmed the RTC but modified it by deleting the award of attorney’s fees and costs, and remanded the case to the RTC for final determination of just compensation in accordance with RA No. 6657 , holding that the agrarian reform process was still incomplete as just compensation had not been settled.

ISSUE

Whether just compensation for agricultural land acquired under PD No. 27 should be computed in accordance with PD No. 27 and EO No. 228, or under RA No. 6657 .

RULING

The Supreme Court ruled in favor of respondents and affirmed the CA Decision. Just compensation should be determined in accordance with RA No. 6657 , not PD No. 27 and EO No. 228. The seizure of landholdings under PD No. 27 takes effect only upon payment of just compensation. Since the agrarian reform process was still incomplete at the time RA No. 6657 took effect, as just compensation had not been settled, the provisions of RA No. 6657 govern, with PD No. 27 and EO No. 228 having only suppletory effect. This is based on Section 75 of RA No. 6657 and equitable considerations, as it would be inequitable to compute compensation based on 1972 values when payment is made much later. The CA correctly deleted the award of attorney’s fees, as no premium should be placed on the right to litigate, and costs, as petitioner, being a government instrumentality, is not liable for costs unless provided by law. The case was remanded to the RTC for final determination of just compensation using the formula under RA No. 6657 .