G.R. No. 182704 April 23, 2014
LAND BANK OF THE PHILIPPINES, Petitioner, vs. VICTORINO T. PERALTA, Respondent.

FACTS

Respondent Victorino T. Peralta is the registered owner of two parcels of agricultural land in Don Carlos, Bukidnon. A portion of 2.73 hectares was placed under the Operation Land Transfer (OLT) program under Presidential Decree (P.D.) No. 27 and distributed to tenant-beneficiaries. The Land Bank of the Philippines (LBP) valued the land at ₱17,240.00 based on a 1981 Landowner-Tenant Production Agreement (LTPA). Peralta filed a petition for judicial determination of just compensation with the Regional Trial Court (RTC), acting as a Special Agrarian Court (SAC), claiming the valuation was unconscionable and that the true market value was ₱200,000 per hectare. LBP argued that Peralta had agreed to the LTPA valuation, waived his claim for higher compensation, and that his action had prescribed. The SAC constituted a panel of commissioners. The LBP commissioner recommended the ₱17,240.00 valuation under P.D. No. 27, while the Municipal Assessor reported the prevailing fair market value was not less than ₱200,000 per hectare. The SAC chairman recommended ₱150,000 per hectare, totaling ₱409,500.00 as just compensation. The SAC rendered a decision adopting this amount and awarding attorney’s fees and litigation costs. The Court of Appeals affirmed the SAC decision but deleted the award of attorney’s fees and costs, ruling that since no just compensation had been paid to Peralta by the advent of Republic Act (R.A.) No. 6657 (Comprehensive Agrarian Reform Law), the completion of the process should be under R.A. No. 6657 .

ISSUE

1. Whether the Court of Appeals erred in affirming the SAC’s decision.
2. Whether R.A. No. 6657 has rendered inoperative the valuation formula under P.D. No. 27 and Executive Order No. 228.

RULING

The petition is partly meritorious. The Supreme Court modified the appealed decision. The Court held that for lands acquired under P.D. No. 27 but where just compensation was not settled prior to the effectivity of R.A. No. 6657 , the just compensation should be determined in accordance with the latter law. The Court found that the SAC correctly assumed jurisdiction over the petition for determination of just compensation. However, the SAC erred in not applying the factors enumerated in Section 17 of R.A. No. 6657 and its implementing rules in determining just compensation. The case was remanded to the SAC for the proper determination of just compensation in accordance with Section 17 of R.A. No. 6657 , as amended, and applicable administrative orders. The Court emphasized that the determination of just compensation involves the exercise of judicial discretion and must be based on all established rules and the evidence presented.