MURAO, JOSE PEPITO III

I. Article III Section 9, Just Compensation:

Land Bank of the Philippines v. Gallego (G.R. No. 173226)

Facts:
Herein respondents Manuel Gallego Jr, Joseph Gallego, and Christopher Gallego are co-owners of several
parcels of agricultural land in Nueva Ejica amounting to 142.3263 hectares. In 1972, the Department of
Agrarian Reform (DAR) placed a portion of their land under the coverage of PD 27 or Emancipation of
Tenants from the Bondage of Soil, Transferring to them Ownership of the land they Till and Providing
Instruments and Mechanism Therefor. PD 27 basically gave the government authority to seize private
agricultural property in exchange for just compensation. However, the DAR and Gallegos failed to agree on
the amount of compensation, thus, the respondents filed a petition before the RTC of Cabanatuan City on
1998. The DAR and Land Bank of the Philippines were originally labeled as respondents for a case to
compute just compensation under PD 27, which depended on the correct Average Gross Production of the
land.
On 2003, the RTC adopted Gallegos’ formula based on an Average Gross Production of 121.6 cavans per
hectare. LBP appealed the trial courts’ decision arguing that it erred in applying values that had no basis in
law and instead, the court should of adopt the Average Gross Production established by DAR Circular No.
26 and the mandated Government Support Price of 35 pesos per cavan of palay under EO 228. The CA
issued a resolution ordering release of 2,000,000 pesos in favor of respondents Gallegos as partial
execution of the trial court’s decision as Manuel Gallego needed money for a medical operation.
CA then recommended two alternative solutions for computing the just compensation. Using the CA’s
proposed formulas, compensation would amount to either upwards of 95 Million pesos or slightly more
than 50.4 Million pesos. Both formulas reference the DAR Administrative Order No.05-98. The DAR
Administrative Order provides for several alternate formulas based on the presence of 4 factors that alter
the computation, hence the distinct values arrived by the parties. The LBP’s forwarded computation
amounted to only 24.6 Million pesos while the respondent Gallegos formula resulted to 95.3 Million. The
CA favored the second alternative formula because of the following factors:
(a) Data for computing one factor that the DAR and LBP formula relied on a different year and a
different barangay
(b) LBP and DAR formula included only 108 hectares of respondents land although the parties had
agried on 122.8464 hectares
(c) LBP and DAR formula does not take into account improvements to the land by respondents.
(d) Amount proposed by LBP ran contrary to the 2009 decision of the CA that just compensation
should not be lower than 30.7 Million pesos.
Issue:
W/N the Court of Appeals erred choosing the alternative formula?
NO. Although the Supreme Court arrived at an amount of 50,432,063.89 pesos, the Court favored the
second alternative formula. Particularly, the LBP’s computation was done away with as it factored in data
from different locations and calendar years. Also, the Supreme Court shall take into consideration that for
more than four decades, respondents have yet to receive full and fair compensation for the property taken
from them therefore, they should be awarded payment for delay. Thus, respondent Gallegos are also
awarded 12% interest per annum fro mthe time of taking in 1972 until full payment.

Held: CA decision is AFFIRMED WITH MODIFICATIONS.