G.R. Nos.

181912 & 183347, November 29, 2016

RAMON M. ALFONSOv. LAND BANK

FACTS:
After the effectivity of RA 6657, the DAR sought to acquire the subject lands.
The owner prior to petitioner rejected the valuation of DAR, resulting to land
valuation cases subsequently being filed before the DAR Provincial Adjudication
Board. Subsequently, the Land Bank filed a motion seeking reconsideration of the
DAR PAB’s valuations. Both petitioner and respondent filed separate actions for the
judicial determination of just compensation of the subject properties. The RTC, sitting
as Special Agrarian Court, found the valuations of both the LBP and the Provincial
Adjudicator to be unrealistically low.

During the proceedings, the RTC adopted Commissioner Chua’s valuation

which utilized the Market Data Approach and the Capitalized Income Approach, due
to their “different actual land use”. He opined that “the average of the two indicators
reasonably represented the just compensation (FMV) of the land with productive
coconut trees”.

LBP argued before the CA that there is nothing in Section 17 of RA 6657

which provides that capitalized income of a property can be used as a basis in
determining just compensation. Thus, when the RTC used that capitalized income of
the properties as a basis for valuation, “it actually modified the valuation factors set
forth by RA 6657”. The CA reversed the findings off the RTC.

ISSUE:
Whether or not courts are obliged to apply the DAR formula in cases where
they are asked to determine just compensation for property covered by RA 6657.

RULING:
Yes. The factors listed under Section 17 of RA 6657 and its resulting formulas
provide a uniform framework or structure for the computation of just compensation
which ensures that the amounts to be paid to affected landowners are not arbitrary,
absurd or even contradictory to the objectives of agrarian reform.

Until and unless declared invalid in a proper case, the DAR formulas partake
of the nature of statutes, which under the 2009 amendment became law itself, and
thus have in their favor the presumption of legality, such that courts shall consider,
and not disregard, these formulas in the determination of just compensation for
properties covered by the CARP. When faced with situations which do not warrant
the formula's strict application, courts may, in the exercise of their judicial discretion,
relax the formula's application to fit the factual situations before them, subject only to
the condition that they clearly explain in their Decision their reasons (as borne by the
evidence on record) for the deviation undertaken. It is thus entirely allowable for a
court to allow a landowner’s claim for an amount higher than what would otherwise
have been offered (based on application of the formula) for as long as there is
evidence on record sufficient to support the award.