Dizon, Mary Rose E.

LAND BANK OF THE PHILIPPINES (LBP) vs. SORIANO

DOCTRINE: The Court determined that the new formula by the DAR is bereft of adequate data,
upholding the amount derived from the old formula. However, the Court said that since the
application of the new formula is a matter of law and thus, should be made applicable, the parties
are not precluded from asking for any additional amount as may be warranted by the new
formula. The courts, in the exercise of their functions, have the final say on the amount of just
compensation.
FACTS: A Petition for Review on Certiorari filed by LBP seeking to annul the Decision and
Resolution of the Court of Appeals (CA) in two cases herein where the main controversy is the
determination of just compensation for lands covered by the Comprehensive Agrarian Reform
Program (CARP).
Respondents Domingo and Mamerto Soriano are registered owners of parcels of rice lands in
Oas, Albay. 18.28 hectares out of 18.92 hectares of said lands were placed under Operations Land
Transfer and CARP as per PD No. 27 and RA No. 6657 [Comprehensive Agrarian Reform Law
(CARL)]. The LBP computed the total value of the lands as Php 490,602.89. Respondents were
not satisfied with the valuation and thus a Complaint was lodged with the RTC for the
determination of just compensation, alleging that they are entitled to an amount not less than Php
4.5M as just compensation.
The RTC ordered LBP to pay respondents Php 849,584.94, as computed under the formula
prescribed by EO No. 228 in determining the valuation of the property, i.e. Land Value = Ave.
Gross Production x 2.5 x Govt Support Price. Both parties disagreed with the decision and both
appeal with the CA. CA affirmed the judgment of the RTC.
ISSUE: Should the formula under EO No. 228 apply in this case?
HELD + RATIO: Yes. With the passage of RA No. 6657 or the CARL in 1998, new guidelines
were set for the determination of the just compensation. Two divergent formulae arose which
made the Court decide that if just compensation is not settled prior to the passage of the RA No.
6657, it should be computed in accordance with the said law, although the property was acquired
under PD No. 27. However, the Court determined that the proper valuation by the DAR is
bereft of adequate data, upholding the amount derived from the old formula even though the
lands were acquired under PD No. 27 and the complaint for just compensation was only set up on
November 23, 2000 or long after RA No. 6657 in 1988 and the factors enumerated in RA No.
6657 were already considered in a basic formula by the DAR pursuant to its rule-making power
under RA No. 6657, i.e. Land Value = (Capitalized Net Income x 0.6) + (Comparable Sales x 0.3)
+ (Market Value per Tax Declaration x 0.1). However, the Court said that since the application of
the new formula is a matter of law and thus, should be made applicable, the parties are not
precluded from asking for any additional amount as may be warranted by the new formula.
The DARs decision is only preliminary and is not final and conclusive. The courts, in the
exercise of their functions, have the final say on the amount of just compensation. Hence, the
computation by the RTC is sustained. Petition is DENIED.