G.R. No. 175175 - Land Bank of the Philippines vs. Heirs of Cruz

Petitioner: Land Bank of the Philippines (LBP), a government banking institution designated under Section 64 of R.A. No. 6654 as the financial intermediary for the agrarian reform program.
Respondents: Heirs of Eleuterio Cruz (including 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), who are the registered owners of an unirrigated riceland in Lakambini, Tuao, Cagayan per Transfer Certificate of Title No. T-368.

The subject landholding has a total area of 13.7320 hectares, of which 13.5550 hectares were covered by the government’s operation land transfer program under Presidential Decree No. 27.
LBP initially valued the acquired landholding at P106,935.76 per hectare based on the guidelines set forth in P.D. No. 27 and Executive Order No. 228.

Respondents rejected LBP’s valuation and instituted a summary proceeding before the Cagayan Provincial Agrarian Reform Adjudicator (PARAD) to determine just compensation.
On November 23, 1999, PARAD rendered a decision fixing the just compensation at P80,000.00 per hectare.

LBP filed a petition for the determination of just compensation before the Regional Trial Court (RTC) of Tuguegarao City, docketed as Agrarian Case No. 0058.
On December 7, 2005, the RTC, sitting as a Special Agrarian Court (SAC), ruled:

The just compensation for the subject land was fixed at P80,000.00 per hectare.
The decision was based on the weight given to the PARAD’s determination and guidance from Section 17 of R.A. No. 6657.
Respondents’ claims for a valuation based on current market value and LBP’s valuation based on P.D. No. 27 were both rejected due to lack of evidentiary support.

Corrected the factual error regarding the land area, establishing that only 13.5550 hectares were covered under the agrarian program.
Affirmed the SAC’s ruling on just compensation at P80,000.00 per hectare.

LBP questioned the factual determination of both the land area and the just compensation amount.
LBP argued that the valuation formula under P.D. No. 27/EO No. 228—which computes land value based on production and the government support price from 1972—should be applied as the correct standard.
The petitioner insisted that just compensation must be determined based on the value at the time of the taking.

Benedicta Simon testified that the valuation was computed based on P.D. No. 27, EO No. 228, and A.O. No. 13, series of 1994.
Francisco de la Cruz, Chief of PARAD in Cagayan, testified regarding the tenancy status and production agreements affecting the valuation.

Lorna Cruz-Felipe testified that the land was capable of producing 80 to 100 cavans per hectare and indicated a current market value ranging from P150,000.00 to P200,000.00 per hectare.

The SAC’s decision, which fixed the compensation at P80,000.00 per hectare, was grounded on the probative value of the PARAD decision and factors enumerated in R.A. No. 6657.
After the denial of further reconsideration by the CA, LBP elevated the matter by filing a petition for review on certiorari.
LBP’s petition argued for the application of the PD/EO valuation formula, reflecting a time-specific valuation at the moment of expropriation (October 21, 1972).

Whether the just compensation for lands acquired under P.D. No. 27 should be determined based on the formula prescribed in Executive Order No. 228 (i.e., using the average gross production and the 1972 government support price) or based on the parameters of R.A. No. 6657.

Whether the valuation of P80,000.00 per hectare, as fixed by PARAD and subsequently adopted by the SAC and CA, had a sufficient evidentiary basis, despite conflicting testimonies regarding production capacity and current market value.

Whether the application of the guidelines under P.D. No. 27/EO No. 228 remains valid after the enactment and implementation of R.A. No. 6657, or if these should now apply only suppletorily.

Whether the factual findings regarding the total covered land area and the computed just compensation were conclusive and binding, notwithstanding the petitioner's contention of errors and lack of evidentiary support.