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Home Preface CARL (R.A. 6657, as amended) and Related Laws History and Evolution of Major Agrarian Reform Laws Issuances Philippine Constitution Laws, Statutes and Presidential Issuances Supreme Court Decisions and Issuances o Case Digests o Decisions Issuances Court of Appeals Decisions Implementing Rules and Regulations

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Preface

CARL (R.A. 6657, as amended) and Related Laws

History and Evolution of Major Agrarian Reform Laws

Issuances

Philippine Constitution

Laws, Statutes and Presidential Issuances

Supreme Court Decisions and Issuances

o Case Digests o Decisions

Issuances

Court of Appeals Decisions

Implementing Rules and Regulations

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    FUNDAMENTAL  DISTINCTIONS AMONG TENANCY, TENANT EMANCIPATION DECREE AND CARP

   

LEASEHOLD TENANCY TENANT EMANCIPATION DECREE COMPREHENSIVE AGRARIAN REFORM PROGRAM

I — LEGAL BASIS:

1.       Republic Act No. 3844 — Agricultural Land Reform Code (August 8, 1963)

2.   Republic Act No. 6389 — Code of Agrarian Reform (September 10, 1971)

3.   Presidential Decree No. 1425 — Amending Presidential Decree No. 1040 by Strengthening the Prohibition against Agricultural Share Tenancy and Providing Penalties for Violation thereof. (June 10, 1978)

4.       Section 12, Republic Act No. 6657 — Comprehensive Agrarian Reform Law of 1988.

 II — JURISPRUDENCE ON CONSTITUTIO-NALITY

 1.       Security of Tenure — Primero vs. CAR, 101 Phil. 675 (1957); Pineda vs. de

1.   Presidential Decree No. 27 – Tenants' Emancipation Decree (October 21, 1972)

2. Letter of Instructions No. 474-PLACING UNDER OLT TENANTED RICE/CORN LANDS SEVEN HECTARES OR LESS IN AREAS UNDER CERTAIN CONDITIONS (OCTOBER 21, 1976)

1.   Presidential Decree No. 27 was assumed to be constitutional and upheld as part and parcel of the law of the land in De Chavez vs. Zobel, 155 SCRA 26; Gonzales vs. Estrella, 91 SCRA 294 (1979) andAssociation of Small Landowners in the Philippines Inc. vs. Secretary of Agrarian

1.  Presidential Proclamation No. 131-Instituting a Comprehensive Agrarian Reform Program (July 22, 1987)

2.  Republic Act No. 6657 – An Act instituting a Comprehensive Agrarian Reform Program to Promote Social Justice and Industrialization, providing the Mechanism for its Implementation and other purposes. (June 15, 1988)

1. The power of President Aquino to promulgate Proc. No. 131 and E.O. Nos. 228and 229 was authorized under Section 6 of the Transitory Provision of the1987 Constitution.

All assaults against the validity of RA 6657 were set aside. (Association of Small Landowners in the Philippines, Inc. vs. Secretary of Agrarian Reform, 175 SCRA 342 (1989)

COVERAGE OF CARL 1988

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Guzman, 21 SCRA 1450 (1967).

 III – COVERAGE OR SCOPE

       Agricultural Leasehold shall apply to all tenanted agricultural lands, including but not limited to the following —

A.       Retained areas under R.A. 6657 andP.D. 27;

B.    Tenanted Agricultural Lands not yet acquired for distribution under CARP pursuant to RA 6657;

C.      All tenanted areas under Section 10 ofRA 6657 which may be covered by this Order. (Administrative Order No. 4, Series of 1989)

IV — AREA OF COVERAGE

It shall be unlawful for the tenant, whenever the area of his holding is five hectares or more, or is of sufficient size to make him and the members of his immediate farm household fully occupied in its cultivation, to CONTRACT TO WORK at the same time on TWO OR MORE SEPARATE HOLDINGS belonging todifferent landholders under any system of tenancy WITHOUT THE KNOWLEDGE AND CONSENT of the landholder with whom he first entered into tenancy relationship. (Par. 1, Sec. 24, Republic Act No. 1199)

V — EXEMPTION OR EXCLUSION FROM COVERAGE

Absence  of any of the six (6) Essential Elements of Tenancy Relationship.

Reform, 175 SCRA 342 (1989)

2.  Letter of Instructions No. 474; Constitutionality was upheld inZurbano vs. Estrella, 137 SCRA 333 (1989)

The REQUISITES FOR COVERAGEunder OPERATION LAND TRANSFER (OLT) program are the following:

1. The land must be DEVOTED toRICE or CORN crops; and

2.    There must be a system ofSHARE CROP or LEASE TENANCY obtaining therein.

If either of these requisites isABSENT, the land is NOT COVERED under OLT. Hence, a landownerNEED NOT APPLY FOR RETENTION, where his ownership over the entire landholding is INTACT andUNDISTURBED. (Eudosia Daez and/or Her Heirs represented by Edriano D. Daez vs. the Hon. CA, et al., 325 SCRA 857).

RULES ON COVERAGE OF LANDS UNDER PD 27.

Rule 1

Landed estates  or landholdings larger than 24 hectares (LOI 46 (December 7, 1972) -  covered by OLT  and there is no retention to the landowner.

Rule 2

Landholding of 24 hectares or less (but above 7 hectares

Scope — All PUBLIC and PRIVATE Agricultural Lands regardless oftenurial arrangement and commodity produced, including lands of the public domain suitable for agriculture. (1st par., Sec. 4, RA 6657)

Specific lands covered by CARP.

a.     All alienable and disposable lands of the public domaindevoted to or suitable for agriculture

b.       All lands of the public domain in excess of the specific limits  as determined by Congress in the preceding paragraph;

c.  All other lands owned by the Government  devoted to or suitable for agriculture; and

d.        All private lands devoted to or suitable for agricultureregardless of the agricultural products raised or that can be raised thereon.

PRIORITIES — The DAR, in coordination with the PARC, shall plan and program the acquisition anddistribution of all agricultural lands through a period of ten (10) years from the effectivity of this Act. Land shall be acquired and distributed as follows:

Phase One:

1.    Rice and corn land under PD 27;2.        Idle and abandoned lands

3.   Private lands voluntarily offeredby the owners for agrarian reform;

4.      Foreclosed land by governmentfinancial institutions;

5.  Land acquired by

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Essential Elements of Tenancy Relationship:

1.  The parties are the landholder and thetenant;

2.       The subject is agricultural land;

3.       There is consent;

4.   The purpose is agricultural production;

5.       There is personal cultivation;

6.   There is sharing of harvest or payment of rentals. (Caballes vs. DAR, 168 SCRA 247; Qua vs. Court of Appeals, 198 SCRA 247.)

VI — RETENTION

In Leasehold Tenancy, the Landowner or agricultural lessor RETAIN OWNERSHIPof the subject landholding.

The landowner EXERCISES the ATTRIBUTES OF OWNERSHIP. Under Art. 428 of the New Civil Code, the OWNER has the RIGHT TO DISPOSE OF a thing without other limitation than those imposed by law. As an incident of ownership. Therefore, there is nothing to prevent a landowner from DONATING his NAKED TITLE TO THE LAND. However, the new owner MUST RESPECT THE RIGHT OF THE TENANT.

The agricultural leasehold relation under this Code shall not be extinguished by MERE EXPIRATION OF THE TERM OR PERIOD in a leasehold contract nor by theSALE, ALIENATION OR TRANSFER of the legal possession of the landholding. In case the agricultural lessor SELLS, ALIENATES, OR

(LOI 46 (ibid) and LOI 227(November 16, 1974) covered by OLT but landowner is entitled to retention  except if LOI 474 (October 21, 1976) applies.

Rule 3

Landholding of seven (7) hectares or less is EXEMPTED from OLT except if LOI 474 is applicable under the following circumstances:

Landowner owns  other agricultural  land of  more than seven hectares in aggregate area, or he ownsCOMMERCIAL, INDUSTRIAL, RESIDENTIAL or URBAN LAND where he derives an adequate income, DAR Memo, Circular No. 11, s. 1978 (April 21, 1978) Adequate income is at least FIVE THOUSAND (P5000.00) PESOS per annum. (Gross Income).

 Lands not covered by Presidential Decree No. 27.

1.  Private agricultural lands which are NOT PRIMARILY DEVOTED TO RICE OR CORN, or

2.    There is NO SYSTEM OF SHARE CROP OR LEASE TENANCY obtaining in the landholding. (Daez vs. CA, ibid)

* The REQUISITES for the exercise

the PresidentialCommission on GoodGovernment; and

6.  All other lands owned by the Government devoted to or suitable for agriculture.

These shall be acquired anddistributed immediately upon effectivity of the Act, with the implementation to be completedwithin a period of not more than four (4) years. (Sec. 7, par. 2, RA 6657)

Phase Two:

1.   All disposable and alienable public agricultural lands;

2.     All arable public agricultural lands under agro-forest, pasture and agricultural leases already cultivated and planted for crops in accordance with Sec. 6, Art. XIII of the Constitution;

3.  All public agricultural lands which are open for new development and resettlement; and

4.   All private agricultural lands in excess of fifty (50) hectares

These shall be distributed immediately upon the effectivity of the Act, with the implementation to be completed within a period of not more than four (4) years.

Phase Three:All private AGRICULTURAL LANDS commencing with LARGE landholdings and proceeding to MEDIUM and SMALLlandholdings under

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TRANSFERS the legal possession of the landholding, the PURCHASER OR TRANSFEREE thereof shall be subrogated to the rights and substituted to the obligations of the agricultural lessor. (see. 10, RA 3844)

VII — BENEFICIARIES

The beneficiaries under Republic Act No. 1199, Republic Act No. 3844 as amended by Republic Act No. 6389areSHARE-TENANT OR AGRICULTURAL LESSEES (TENANTS). Thus:

“In the INTERPRETATION AND ENFORCEMENT of this Act and other laws as well as of the stipulations between the landholder and the tenant the COURTS AND ADMINISTRATIVE OFFICIALS SHALL RESOLVE ALL GRAVE DOUBTS IN FAVOR OF THE TENANT. (Sec. 56, Republic Act No. 1199)

VIII — AWARD CEILING

The share-tenant/ agricultural lessee who is already cultivating a landholding with an area of FIVE (5) HECTARES or more or ofsufficient size to make him and member of his immediate farm household fullyoccupied in its cultivation is prohibited toCONTRACT TO WORK at the same time to two or more separate holdings belonging to different landholders WITHOUT THE KNOWLEDGE AND CONSENT OF THE LANDOWNER/AGRICULTURAL LESSOR (Par. 1, Sec. 24, Republic Act No. 1199)

IX — PAYMENT FOR THE COST OF THE LAND

by the landowner of his RIGHT OF RETENTION are the following:

1.      The land must be DEVOTED TO RICE OR CORN CROPS;

2.      There must be a system ofshare-crop or lease tenancyobtaining there.

3.    The size of the landholding MUST NOT EXCEED TWENTY FOUR (24) hectares provided that at least seven (7) hectares thereof are covered lands and more than seven (7) hectares of it consist of “other agricultural lands.” Daez vs. CA, Ibid)

Right of Retention by Landowners under Presidential Decree No. 27. Supplemental Guideline A.O. No. 04, Series of 1991).

The policy statements are as follows:

a.          Landowners covered by PD 27are entitled to retain SEVENhectares, except those whose entire tenanted rice and corn lands are subject to acquisition and distribution under OLT.

AN OWNER MAY NOT RETAIN UNDER THE FOLLOWING CASES:

a)   If he, as of October 21, 1972, owned more than 24 hectares of tenanted rice or corn lands; or

b)       By virtue of LOI 474, if he, as of 21 October 1972, owns less than 24

the following schedules:

a)      Landholdings ABOVE 24 hectares up to 50 hectares to begin on the fourth year from effectivity of this Act and to be completed within three years; and,

b)   Landholdings from the RETENTION LIMIT up to 24 hectares, to begin on the sixth year from effectivity of this Act and to be completed within four years.

LANDS NOT COVERED BY CARP

1.  Those which are not suitable for agriculture or those which are classified as mineral, forest, residential, commercial or industrial lands. (Sec. 3. (c), RA 6657);

2. Those which have been classified and approved as NON-AGRICULTURAL prior to June 15, 1988. (DOJ Opinion No. 44, S. 1990)

3.  Those which are EXEMPT pursuant to Sec. 10, RA 6657.

4. Those which are devoted to poultry,swine or livestock-raising as of June 15, 1988 pursuant to the Supreme Court ruling on Luz Farms vs. The Hon. Secretary of Agrarian Reform (192 SCRA 51);

5. Fishponds and prawn farms exempted pursuant to R.A. No. 7881, and its implementingAdministrative Order No. 3, Series of 1995;

6. Those which are retained by thelandowners;

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In the exercise of RIGHT OF PRE-EMPTION by the agricultural lessee-tenant, he must EITHER TENDER PAYMENT OF, OR PRESENT A CERTIFICATE FROM THE LBPthat it shall make payment under Section 80 of Republic Act No. 3844 (10% CASH and 90% in six percent, tax free, redeemable bonds issued by the LBP.)  If the landowner refuses to accept TENDER orPRESENTMENT, the agricultural lessee mayCONSIGN it in COURT, (Sec. 11, Republic Act No. 3844 as amended by Republic Act No. 6389.

The REDEMPTION PRICE shall be the REASONABLE PRICE OF THE LAND at the time of sale. (Sec. 12, Republic Act No. 3844as amended by Republic Act No. 6389)

X — TRANSFERABILITY OF

LANDHOLDING

1.    Sale, Alienation or Transfer of the legal possession of the landholding

2. Extinguishment of Agricultural Leasehold Relations  (Sec. 8, RA 3844)

A. ABANDONMENT of the landholding without the knowledge of the agricultural lessor. (Teodoro vs. Macaraeg, 27 SCRA 7 (1969) To constitute abandonment there must be an absolute relinquishment of the premises of the tenant.  This "overt act" must be coupled with his intention to do so "which is carried

hectares of tenanted rice but additionally owns the following =

         Other agricultural land of more than seven hectares, whether tenanted or not, whether cultivated or not, and regardless of the income derived therefrom; or

         Land used forcommercial, industrial, residential or other  urban purposes, from which he derives adequate incometo support himself and his family.

b.    Landowners who filed their application for retentionBEFORE 27 August 1985, the deadline set by Administrative Order No. 1, Series of 1985,may retain not more than seven hectares of their landholding covered by PD 27regardless of whether or not they complied with LOI Nos. 41,45, and 52.

Landowners who filed their application AFTER 27 August 1985 but complied with the requirement of LOI No. 41, 45and 52 shall likewise beentitled to such a seven-hectare retention area.

However, landowners who filed their application for retention AFTER the 27 August 1985 deadline and DID NOT COMPLY with the requirements of LOI Nos. 41, 45, and 52 shall

7.  Those lands or portions thereof under the coverage of EO 407 but found to be no longer suitable for agriculture and therefore could not be given appropriate valuation by the LBP as determined by DAR/LBP; and

8. Those lands declared byPresidential Proclamations for certain uses other than agricultural.

Rules and Procedures Governing the Exercise of Retention Rights byLandowners and Award to Childrenunder Sec. 6 of RA 6657 (A.O. No. 11, Series of 1990; and A.O. No. 2, S. 2003)

A.  Landowners whose landholdings are covered by CARP may retainan area of FIVE (5) hectares.

In addition, each of his children, (legitimate, illegitimate or adopted, may be AWARDEDthree (3) hectares as PREFERRED BENEFICIARY provided -

1.       That the child was at least 15 years of age on June 15, 1988 (RA 6657 effectivity); and

2.   The child was actually tilling the land or directly managing the farmland from June 15, 1988 to the filing of the application for retention and/or at the time of acquisition of the land under CARP.

Retention of husband and wife:

1. For marriages covered by the New Civil Code, the spouse who owns only CONJUGAL PROPERTIES may retain a total of five (5) hectares

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into effect." (Philippine Labor and Social Legislation, Martin, 70 Ed. Pp. 405-406).  Abandonment to validly terminate tenancy  relationship is characterized by:

(a)     an INTENT to ABANDON, and

(b)   an OVERT ACT to carry out such intention

There must be, therefore, NO ANIMUS REVERTENDI on the part of the tenant.(Labor, Agrarian and Social Legislation, Montemayor, 2nd Ed., 1968, pp. 54-55)

B. VOLUNTARY SURRENDER of the landholding by the agricultural lessee, written notice of which shall be served three months in advance (Nisnisan, et al., vs. CA, 294 SCRA 173 (1998).

As a mode of extinguishing tenancy relationship it connotes a decision in the part of the tenant to return the possession of the landholding and relinquish his right as tenant thereon uninfluenced by any compelling factor, coming particularly from the landholder. For surrender to be valid, there must be (a) an intention to abandon, and (b) an external act or an omission to act, by which such intention is carried out into effect. When a tenant voluntarily yields the land, he terminates the tenancy relationship by his unilateral act. (Anacleto Inson vs. Planas de Asis, et al., CA GR No. Sp-01769, October 11, 1974)

NOTE: SUBLEASING by the agricultural lessee is also a ground for the

only be entitled to a maximum of five (5) hectares as retention area.

c.     A landowner WHO HAS DIEDmust have manifested during his lifetime his intention to exercise his right of retention prior to 23 AUGUST 1990 (The finality of the Supreme Court decision in the case "Association of Small Landowners of the Philippines, Inc. et al. vs. Honorable Secretary of Agrarian Reform) toallow his heirs to now exercise such right under these Guidelines. Said heirs must show proof of the original landowner's intention.

The heirs may also exercise the original landowner's right of retention if they can prove that the decedent HAD NO KNOWLEDGE of OLT coverage over the subject property.

The BENEFICIARIES ofPresidential Decree No. 27 are TENANT-FARMERS, thus:

“This shall apply to TENANT-FARMERS of PRIVATE AGRICULTURAL LANDS PRIMARILY DEVOTED TO RICE OR CORN under a SYSTEM OF SHARE-CROP or LEASE-TENANCY, whether classified as landed estate or not. (Par. 5,Presidential Decree No. 27)

“The tenant-farmers, whether in land classified as

unless there is an agreement for the JUDICIAL SEPARATION OF PROPERTIES. However, if either or both of them are landowners in their respective rights (capital and/or paraphernal), they may retain not more than five (5) hectares each from their respective landholdings. In no case, however, shall the total retention of such a couple exceed 10 hectares, and

2.    For marriages covered by the New Family Code (August 3, 1988), a husband owning capital property and/or a wife owning paraphernal property may retain not more than five (5) hectares each provided they execute a JUDICIAL SPERATION OF PROPERTIES prior to entering the marriage. In the absence of such an agreement all properties (capital, paraphernal and conjugal) shall be considered held in absolute community.

QUALIFIED BENEFICIARIES. — The lands covered by the CARP shall be distributed as much as possible tolandless residents of the same barangay, or in the absence thereof, landless residents of the same municipality in the following order of priority:

a) agricultural lessees and share tenants;

b)  regular farmworkers;

c)   seasonal farmworkers;

d)  other farmworkers;

e) actual tillers or occupants of public lands;

f) collectives or cooperatives of the above

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extinguishments of Agricultural Leasehold Relations. (Par. 2, Sec. 27, Republic Act No. 3844)

XI — EVIDENCE OF RIGHT/TITLE OVER THE LANDHOLDING.

AGRICULTURAL LEASE-HOLD CONTRACT IN GENERAL. —

— The agricultural lessor and theagricultural lessee shall be FREE to ENTERinto any kind of TERMS, CONDITIONS orSTIPULATIONS in a LEASEHOLD CONTRACT as long as they are not contrary to LAW, MORALS OR PUBLIC POLICY. (Sec. 15, Republic Act No. 3844).

Except in case of mistake, violence,intimidation, undue influence, or fraud, an AGRICULTURAL CONTRACT reduced in writing and registered as hereinafter provided SHALL BE CONCLUSIVE BETWEEN THE CONTRACTING PARTIES, if not DENOUNCED OR IMPUGNED WITHIN THIRTY DAYS AFTER REGISTRATION. (Sec. 17, Republic Act No. 3844)

XII — MODES OF TRANSFER OF THE LAND TO THE TENANT OR BENEFICIARY

The landowner-agricultural lessor can FREELY AND VOLUNTARILY TRANSFER the landholding to the agricultural lessor by way of:

1.     Sale

2.     Donation

3.    Succession — the agricultural lessee as DEVISEE to the testator’s free

landed estate or not shall beDEEMED OWNER of a portion constituting a family-size farm of FIVE (5) hectares if not irrigated and THREE (3) HECTARES IF IRRIGATED. (Par. 6, Presidential Decree No. 27)

The tenant shall pay for THE COST OF THE LAND, includinginterest of six (6) percent per annum in FIFTEEN (15) YEARS of fifteen (15) equal annual amortizations.

NOTE: The period is extended to twenty (20) years equal annual amortizations under Sec. 6, E.O. 228of July 17, 1987 by Pres. Corazon C. Aquino.

The TITLE to the landowned by the tenant shall not be transferable except BY HEREDITARY SUCCESSION or TO THE GOVERNMENT in accordance with this Decree,the Code of Agrarian Reform and other existing laws and regulations.

NOTE: Sec. 6, EO 228 provides,"Ownership of lands acquired by the farmer-beneficiary may be transferred after full payment of amortizations."

The EMANCIPATION PATENT awarded to the TENANT-BENEFICIARY CREATES a VESTED RIGHT OF ABSOLUTE OWNERSHIP in the landholding

beneficiaries; and

g)  others directly working on the land.

(Par. 1, Sec. 22, RA 6657)

The children of landowners who arequalified under Sec. 6 of this Act shall be given preference in the distribution of the land of their parents; And, further, that actual tenant-tillers in the landholding shall be ejected or removed therefrom. (Par. 2, Sec. 22, RA 6657)

“Distribution Limit — No qualified beneficiary may own more than three (3) hectares of agricultural land.” (Sec. 23, RA 6657)

 “Award Ceiling for Beneficiaries. — Beneficiaries shall be awarded an area NOT EXCEEDING THREE (3) HECTARES which may cover a CONTIGUOUS tract of land or SEVERAL PARCELS of land cumulated up to the prescribed award limits.” (Sec. 25, RA 6657).

Payment by Beneficiaries. — Lands awarded pursuant to this Act shall be paid for the beneficiaries to the LBP in thirty (30) annual amortizations at six percent (6%)  per annum.  The payments for the first three (3) years after the award may be at reduced amounts as established by the PARC: Provided, That the first five (5) annual payments may not be more than five percent (5%) of the value of the annual gross production as established by the DAR.  Should the scheduled annual payments after the fifth year exceed ten percent (10%) of the annual gross production and the failure to produce accordingly is not due to the beneficiary’s fault, the LBP may reduce the interest rate or reduce the principal obligation to make

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portion in the will.

However, the limitation imposed by law on his right to acquire must be observed, i.e. Legal prohibition on the acquisition of property.

By operation of law, the agricultural-lessee can acquire ownership of the subject landholding by the exercise of the following rights.

1.       Right of Pre-emption; and

2.       Right of Redemption

XIII — CONSIDERATION FOR THE USE OF VALUE OF THE LAND.

Consideration for the Lease of Agricultural lands:

1.    Not more than 25 per centum of the average normal harvest  during the three agricultural years immediately preceding the date the leasehold was established.

2.       Deductible items:

a. Seedlings

b. Cost of Harvesting

c. Cost of Threshing

d. Cost of Loading

e. Cost of Hauling

f. Cost of Processing

3.     If the land is cultivated for a period of less than three years, the initial consideration is based on the average normal harvest during the preceding years when the land was actually cultivated or on the harvest of the first year if newly

– "a right which has become fixed and establishedand is no longer open to doubt or controversy." (Pagtalunan vs. Tamayo, 183 SCRA 252)

The Mode of Transfer of Lands  to Tenant-Beneficiaries underPresidential Decree No. 27 are the following:

1.          OPERATION LAND TRANSFER (OLT) under PD 27 and EO 228; and

        Operation Land Transfer is the ORDERLY and SYSTEMATIC TRANSFER of land from the landowner to the tenant-farmer under Presidential Decree No. 27.

2.          DIRECT PAYMENT SCHEME(DPS). — The landowner and the tenant-beneficiary can AGREE on the DIRECT SALE terms and conditions which are not onerous to the tenant-beneficiary.

The value of the land shall be equivalent to two and one half (2-1/2) times the AVERAGE HARVEST OF THREE NORMALCROP YEARS IMMEDIATELY PRECEDING THE PROMULGATION OF THIS DECREE.

the repayment affordable.

The LBP shall have a lien by way of mortgage on the land awarded to the beneficiary; and this mortgage may be foreclosed by the LBP for non-payment of an aggregate of three (3) annual amortizations.  The LBP shall advise the DAR of such proceedings and the latter shall subsequently award the forfeited landholding to other qualified beneficiaries.  A beneficiary whose land, as provided herein, has been foreclosed shall thereafter be permanently disqualified from becoming a beneficiary under this Act. (Sec. 26, RA 6657)

Transferability of Awarded Lands. - lands acquired by beneficiaries under this Act may not be sold, transferred or conveyed except through hereditary succession, or to the government, or to the LBP, or to other qualified beneficiaries for a period of ten (10) years; Provided, however, That the children or the spouse of the transferor shall have a right to repurchase the land from the government or LBP within the period of two (2) years.  Due notice of the availability of the land shall be given by the LBP to he Barangay Agrarian Reform Committee (BARC) of the barangay where the land is situated.  The Provincial Agrarian Reform Coordinating Committee (PARCCOM), as herein provided, shall, in turn, be given due notice thereof by the BARC.

If the land has not yet been fully paid by the beneficiary, the rights to the land may be transferred or conveyed, with prior approval of the DAR, to any heir of the beneficiary or to any other beneficiary who, as a condition for such transfer or conveyance, shall cultivate the land himself.  Failing compliance herewith, the

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cultivated, and the harvest is normal.

4.      After the lapse of the first three normal harvests, the final consideration shall be based on the average normal harvest during these three preceding agricultural years.

5.       In the absence of any agreement as to the rental, the maximum allowed shall be applied.

6.     If Capital Improvement is introduced not by the lessee to increase productivity, the rentals shall be increased proportionally to the consequent increase in production due to the improvement.

7.    In case of Disagreement the Court shall determine the reasonable increase in rental.

8.  Capital improvement refers to any permanent and tangible improvement on the land that will result in increased productivity. If done with the consent of the lessee, then the lease rental shall be increased proportionately.

land shall be transferred to the LBP which shall give due notice of the availability of the land in the manner specified in the immediately preceding paragraph.

In the event of such transfer to the LBP, the latter shall compensate the beneficiary in one lump sum for the amounts the latter has already paid, together with the value of improvements he has made on the land. (Sec. 27, RA 6657)

The TITLES awarded to farmer-beneficiaries under the CARP are the following:

1. Free Patent for Public, Alienable and Disposable Lands;

2. CERTIFICATE OF LAND OWNERSHIP AWARD (CLOA) for Resettlement Sites:

3.  STEWARDSHIP CONTRACT for Lands covered by INTEGRATED SOCIAL FORESTRY PROGRAM (ISFP); and

4.          CLOA for Private Agricultural Lands.

The MODES OF ACQUIRING LANDSfor distribution under CARP:

a.  COMPULSORY ACQUISITION (CA) (Sec. 16, RA 6657)

b.  VOLUNTARY OFFER TO SELL (VOS) (Sec. 19, RA 6657)

c. VOLUNTARY LAND TRANSFER/DIRECT PAYMENT SCHEME (VLT/DPS) (Sec. 20, RA 6657).

Factors/Criteria considered in determining just compensation:

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1.      Cost of Acquisition of the land;

2.      Current Value of like properties;

3.      Nature of the land;

4.      Actual use;

5.      Income;

6.      Sworn valuation by the landowner;

7.      Tax Declaration;

8.  Assessment made by government assessors;

9. The social and economic benefits contributed by the farmers, and

10.    Non-payment of taxes or loans secured from any government financing institution on the land.

Basic Formula for the valuation of lands covered by VOS and CA —

LV = (CNI x 0.6) + (CS x 0.3) +

(MV x 0.1)

 where:

LV = Land Value

CNI = Capitalized Net Income

CS = Comparable Sales

MV = Market Value per Tax Declaration

The above formula shall be used if all three factors are present, relevant and applicable.

 A.1. When the CS factor ispresent andCNI and MV are applicable, the formula shall be:

 LV = (CNI x 0.9) + (MV x 0.1)

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A.2. When the CNI factor ispresent and CS and MV are applicable,the formula shall be:

LV = (CS x 0.9) + (MV x 0.1)

A.3. When both CS and CNI are not present and only MV is applicable, theformula shall be:

LV = (MV x 2)

 

 

 

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Preface

CARL (R.A. 6657, as amended) and Related Laws

History and Evolution of Major Agrarian Reform Laws

Issuances

Philippine Constitution

Laws, Statutes and Presidential Issuances

Supreme Court Decisions and Issuances

o Case Digestso Decisions

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Issuances

Court of Appeals Decisions

Implementing Rules and Regulations

Issuances from Other Government Agencies

Handbooks and Publications

Articles and Journals

Forms and Templates

Lecture Materials

Login

JUST COMPENSATION IN AGRARIAN REFORM

 

1987 ConstitutionArticle XIII, Sec. 4

"The State shall, by law, undertake an agrarian reform program founded on the right of farmers and regular farmworkers who are landless, to own directly or collectively the lands they till or, in the case of other farmworkers, to receive a just share of the fruits thereof. To this end, the State shall encourage and undertake the just distribution of all agricultural lands, subject to such priorities and reasonable retention limits as the Congress may prescribe, taking into account ecological, developmental, or equity considerations, and subject to the payment of just compensation. In determining retention limits, the State shall respect the right of small landowners. The State shall further provide incentives for voluntary land-sharing."

RA 6657, The CARP Law

15 June 1988

Coverage:

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"The Comprehensive Agrarian Reform Law of 1988 shall cover, regardless of tenurial arrangement and commodity produced, all public and private agricultural lands as provided in Proclamation No. 131 and Executive Order No. 229, including other lands of the public domain suitable for agriculture." (Sec. 4)

RA 3844, Agricultural LandReform Code

8 August 1963

Abolished share tenancy relationship and provided for the expropriation of certain agricultural lands for resale to qualified beneficiaries

Created Land Bank of the Philippines to finance the acquisition by the Government of landed estates for division and resale to small landholders, as well as the purchase of the landholding by the agricultural lessee from the landowner

PD 27, Operation Land Transfer

21 October 1972

Covers private agricultural lands primarily devoted to rice and corn

EO 228

17 July 1987

Declared qualified farmer beneficiaries as full owners of the land as of 21 October 1972

Provides for the valuation mechanism for lands acquired pursuant to PD 27

FORMULA UNDER EO 228

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         LV = (2.5 x AGP x P35/31) x A

Where:LV = Land ValueAGP = Average Gross Production/hectareP35/31 = Government Support Price for one (1) cavan of palay/corn in 1972A = Total area of the land

Proclamation No. 131

22 July 1987

Instituted the CARP

EO 229

22 July 1987

Provides the mechanism for the implementation of the CARP

Association of Small Landowners in the Philippines vs. Secretary of Agrarian Reform (G.R. No. 78742, En Banc, 14 July 1989)

"WHEREFORE, the Court holds as follows:

1.      R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos. 228 and 229 are SUSTAINED against all the constitutional objections raised in the herein petitions.

xxx                    xxx                    xxx"

1987 ConstitutionArticle XIII, Sec. 4

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"The State shall, by law, undertake an agrarian reform program founded on the right of farmers and regular farmworkers who are landless, to own directly or collectively the lands they till or, in the case of other farmworkers, to receive a just share of the fruits thereof. To this end, the State shall encourage and undertake the just distribution of all agricultural lands, subject to such priorities and reasonable retention limits as the Congress may prescribe, taking into account ecological, developmental, or equity considerations, and subject to the payment of just compensation. In determining retention limits, the State shall respect the right of small landowners. The State shall further provide incentives for voluntary land-sharing."

Stakeholders in Agrarian Reform

 Farmer-Beneficiaries

Landowners

Government

Just CompensationThe just and complete equivalent of the loss which the owner of the thing expropriated has to suffer by reason of the expropriation.

The compensation given to the owner is just compensation if he receives for his property a sum equivalent to its market value.

City of Manila vs. Estrada25 Phil 208 (1913)

Market ValueIt is the price fixed by the buyer and the seller in the open market in the usual and ordinary course of legal trade and competition; the price and value of the article established or shown by sale, public or private, in the ordinary course of business; the fair value of property as between one who desires to purchase and one who desires to sell.

City of Manila vs. Estrada25 Phil 208 (1913)

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1987 ConstitutionArticle III, Sec. 9

"Private property shall not be taken for public use without just compensation."

1987 ConstitutionArticle XIII, Sec. 4

"The State shall, by law, undertake an agrarian reform program founded on the right of farmers and regular farmworkers, who are landless, to own directly and indirectly the lands they till or, in the case of other farmworkers, to receive a just share of the fruits thereof. To this end, the State shall encourage and undertake the just distribution of all agricultural lands, subject to such priorities and reasonable retention limits as the Congress may prescribe, taking into account ecological, developmental, or equity considerations, and subject to the payment of just compensation. In determining retention limits, the State shall respect the rights of small landowners. The State shall further provide incentives for voluntary land-sharing.

1987 ConstitutionArticle III – Bill of Rights

It is a guarantee that there are certain areas of a person's life, liberty, and property which governmental power may not touch.

Article XIII – Social JusticeThe goal of social justice is closer regulation of the acquisition, ownership, use, and disposition of property in order to achieve a more equitable distribution of wealth and political power.

Fr. Joaquin G. Bernas, S.J.The 1987 Philippine Constitution

A Reviewer-Primer

"In trying to determine just compensation for purposes of agrarian reform, we must remember that we have to look at this in the context of the Article where it is. It is in the Article on Social Justice, and the thrust of this Article is precisely to make it easier for the disadvantaged to be able to obtain land." 

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- Fr. Joaquin G. Bernas, SJ

"When pursuant to an agrarian reform mandate that is intended to reduce inequalities, as social justice commands, land is taken for redistribution, is the action taken by the state pure eminent domain or is it not eminent domain mixed with the exercise of police power? But it is established jurisprudence that loss incurred due to the state's exercise of police power is not compensable. It would seem therefore that compensation in expropriation for land reform should be approached differently than under the Bill of Rights when property is taken for traditional purposes." 

- Fr. Joaquin G. Bernas, SJ

Association of Small Landowners in the Philippines vs. Secretary of Agrarian Reform(G.R. No. 78742, En Banc, 14 July 1989)

"What we deal with here is a revolutionary kind of expropriation.The expropriation before us affects all private agricultural lands whenever found and of whatever kind  as long as they are in excess of the maximum retention limits allowed their owners. This kind of expropriation is intended for the benefit not only of a particular community or of a small segment of the population but of the entire Filipino nation, from all levels of our society, from the impoverished farmer to the land-glutted owner. . ."

- J. Isagani Cruz

Sec. 17, RA 6657"In determining just compensation, the cost of acquisition of the land, the value of the standing crop, the current value of like properties, its nature, actual use and income, the sworn valuation by the owner, the tax declarations, the assessment made by government assessors, and seventy percent (70%) of the zonal valuation of the Bureau of Internal Revenue (BIR), translated into a basic formula by the DAR shall be considered, subject to the final decision of the proper court. The social and economic benefits contributed by the farmers and the farmworkers and by the Government to the property as well as the nonpayment of taxes or loans secured from any government financing institution on the said land shall be considered as additional factors to determine its valuation."

Sec. 49, RA 6657

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"The PARC and the DAR shall have the power to issue rules and regulations, whether substantive or procedural, to carry out the objects and purposes of this Act. Said rules shall take effect ten (10) days after publication in two (2) national newspapers of general circulation."

DAR AO No. 5, Series of 1998

"There shall be one basic formula for the valuation of lands covered by VOS or CA:

LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)

 

Where:

 

LV = Land Value

CNI = Capitalized Net Income

CS = Comparable Sales

MV = Market Value"

LandBank vs. Banal(G.R. No. 143276, 3rd Division, 20 July 2004)

"(I)n determining the valuation of the subject property, the trial court shall consider the factors provided under Section 17 of RA 6657, as amended. . . . The formula prescribed by the DAR in Administrative Order No. 6, Series of 1992, as amended by DAR Administrative Order No. 11, Series of 1994, shall be used in the valuation of land."

- J. Sandoval-Gutierez

LandBank vs. Celada(G.R. No. 164876, 1st Division, 23 January 2006)

"DAR AO No. 5, s. of 1998 precisely "filled in the details" of Section 17, RA 6657 by providing a basic formula by which the factors mentioned therein may be taken into account."

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"SAC was at no liberty to disregard the formula which was devised to implement the said provision."

- J. Ynares-Santiago

LandBank vs. Lim and Cabochan(G.R. No. 171941, En Banc, 2 August 2007)

"In Land Bank of the Philippines v. Spouses Banal, this Court underscored the mandatory nature of Section 17 of RA 6657 and DAR AO 6-92, as amended by DAR AO 11-94.

xxx                    xxx                    xxx""And in LBP v. Celada, this Court set aside the valuation fixed by the RTC of Tagbilaran, which was based solely on the valuation of neighboring properties, because it did not apply the DAR valuation formula.

xxx                    xxx                    xxx""Consequently, as the amount of P2,232,868 adopted by the RTC in its December 21, 2001 Order was not based on any of the mandatory formulas prescribed in DAR AO 6-92, as amended by DAR AO 11-94, the Court of Appeals erred when it affirmed the valuation adopted by the RTC."

- J. Carpio Morales

Some Cases Reiterating the Doctrine in Banal, Celada and Lim that Adherence to the Formula Prescribed by the DAR is Mandatory

LBP v. Wycoco, (G.R. No. 140160, 13 January 2004)

Sps. Zoleta, et al. v. Hon. Andres Reyes, et al., (G.R. No. 169054, 31 August 2003)

De Castro, et al. v. LBP, (G.R. No. 168026, 03 August 2005)

Meneses v. DAR Secretary, et al., (G. R. No. 156304, 23 October 2006)

LBP vs. Heirs of Eleuterio Cruz, (G.R. No. 175175, September 29, 2008)

Land Bank of the Philippines v. Dumlao, (G.R. No. 167809, November 27, 2008)

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Allied Bank Corporation v. Land Bank of the Philippines, (G.R. No. 175422, March 13, 2009)

Land Bank of the Philippines v. Heirs of Honorato De Leon, (G.R. No. 164025, May 8, 2009)

LBP v. Belista, (G.R. No. 164631, 26 June 2009)

LBP v. Kumassie Plantation Co., (G.R. No. 177404, December 4, 2009)

LBP v. Alpasan, Jr., (G.R. No. 188221, 03 February 2010)

LBP v. Escandor, (G. R. No. 171685, 11 October 2010)

LBP v. Barrido, (G.R. No. 183688, August 18, 2010)

Case where the Supreme Court departed from the doctrine

APO Fruits Corporation and HIJO Plantation, Inc. vs. Court of Appeals, (G.R. No. 164195, February 6, 2007)

More Supreme Court cases since 2004 were decided in accordance with the doctrine espoused in Banal, Celada and Lim Cabochan

Only case decided by the Supreme Court En Bancinvolving the issue of how just compensation in land reform is to be computed is LBP vs. Lim and Cabochan

Date of Taking(Section 2, Rule 67 of the Rules of Court)

General Rule in Expropriation Proceedings:

-     Filing of the complaint

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-     Due notice to owner-     Deposit of Compensation

Taking Under RA 6657(Secs. 16 (e) & 24, par. 2, RA 6657, as amended)

Payment to LO

Deposit, in case of rejection

Issuance of title in the name of RP

Taking Under PD 27

October 21, 1972

-     Locsin vs. Valenzuela, 194 SCRA 194;-    Ass'n. of Small Landowners vs. Sec. of Agrarian Reform, G.R. Nos. 78742, 79310, 79744 & 79777, 14 July 1989;-     LBP vs. David C. Naval, et al., G.R. No. 122231, 27 November 1995;-     NPC vs. Chiong, G.R. No. 152436, 20 June 2003;-     Gabatin vs. LBP, G.R. No. 148223, 25 November 2004.

Formula upheld where taking is October 21, 1972 is the formula under PD 27/EO 228.

LV = (2.5 x AGP x P35/31) x A

Variance in the Reckoning of Date of Taking

Upon payment of just compensation judicially determined

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-     OP, et al. vs. CA, G.R. No. 131216, 19 July 2001-     LBP vs. Estanislao, G.R. No. 166777, 10 July 2007

Date of issuance of EPs

-     LBP vs. Domingo, G.R. No. 168533, 4 February 2008;-     LBP vs. Dumlao, G.R. No. 167809, 27 November 2008;-     DAR vs. Tiongson, G.R. No. 171674, 4 August 2009.

Effect of Change in Date of TakingFormula under RA 6657 is to be used, resulting in higher valuation. Rationale is because the agrarian reform process is not yet complete when RA 6657 took effect on 15 June 1988.

LV = (CNI x .60) + (CS x .30) + (MV x .10)

Reason for Divergent PD 27 Rulings on the Date of Taking

Courts have recognized that the determination of the value of the land as of October 21, 1972 will result in a low valuation and fixing the date of taking on a later date, and in accordance with RA 6657, will increase the valuation.

Relevance of PD 27 Jurisprudence Today

RA 9700 (July 1, 2009) — rendered the issue on date of taking for PD 27-acquired lands moot and academic.

Section 5 of RA 9700 — all previously-acquired lands subject to challenge should be finally resolved in accordance with Section 17 of RA 6657, as amended.

DAR AO No. 1, series of 2010 — provides that the reckoning date of the AGP and SP inputs needed in the computation shall be June 30, 2009; provides the legal formula in the computation:

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LV = (CNI x .60) + (CS x .30) + (MV x .10)orLV = (CNI x .90) + (MV x .10)

Amount to be DepositedSection 16 (a), (b), (d), & (e) of RA 6657

"(a)    . . . Said notice shall contain the offer of the DAR to pay a corresponding value in accordance with the valuation set forth in Sections 17, 18, and other pertinent provisions hereof.

(b)     Within thirty (30) days from the date of receipt of written notice by personal delivery or registered mail, the landowners, his administrator, or representative shall inform the DAR of his acceptance or rejection of the offer."

(c)     If the landowner accepts the offer of the DAR, the LBP shall pay the landowner the purchase price of the land within thirty (30) days after he executes and delivers a deed of transfer. . .

(e)     "Upon receipt by the landowner of the corresponding payment or in case of rejection or no response from the landowner, upon the deposit with an accessible bankdesignated by the DAR of the compensation in cash or in LBP bonds in accordance with this Act, the DAR shall take immediate possession of the land and shall request the proper Register of Deeds to issue a Transfer Certificate of Title (TCT) in the name of the Republic of the Philippines.The DAR shall thereafter proceed with the redistribution of the land to qualified beneficiaries."

LBP v. Arieta Tan(G.R. No. 161834, August 23, 2010)

"The amount of 'offer' which the DAR gives to the landowner as compensation for his land, as mentioned in Section 16 (b) and (c), is based on the initial valuation by the LBP. This then is the amount which may be accepted or rejected by the landowner under the procedure established in Section 16. Perforce,  such initial valuation by the LBP also becomes the basis of the deposit of provisional compensation pending final determination of just compensation, in accordance with sub-paragraph (e)."

Amount that can be Withdrawn

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LBP v. Josefina Lubrica,(G.R. No. 177190, February 23, 2011)

"Clearly, therefore, it is the initial valuation made by the DAR and LBP that is contained in the letter-offer to the landowner under Sec. 16 (e), said valuation of which must be deposited and released to the landowner prior to taking possession of the property."

Sec. 18, RA 6657"The LBP shall compensate the landowner in such amounts as may be agreed upon by the landowner and the DAR and the LBP, in accordance with the criteria provided for in Sections 16 and 17, and other pertinent provisions hereof, or as may be finally determined by the court, as the just compensation for the land."

Sec. 16, RA 6657"Any party who disagrees with the decision may bring the matter to the court of proper jurisdiction for final determination of just compensation."

Sec. 57, RA 6657"The Special Agrarian Courts shall have original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners, and the prosecution of all criminal offenses under this Act. The Rules of Court shall apply to all proceedings before the Special Agrarian Courts, unless modified by this Act."

DAR Adjudication Board (DARAB)

"Section 16.  Procedure for Acquisition of Private Lands. —

xxx                    xxx                    xxx

(d)     In case of rejection or failure to reply, the DAR shall conduct summary administrative proceedings to determine the compensation for the land requiring the landowner, the LBP and other interested parties to submit evidence as to the just compensation for the land, within fifteen (15) days from the receipt of the notice. . . ." (RA 6657)

Sec. 50, RA 6657

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Quasi-Judicial Power of the DAR. — The DAR is hereby vested with primary jurisdiction to determine and adjudicate agrarian reform matters and shall have exclusive original jurisdiction over all matters involving the implementation of agrarian reform, except those falling under the exclusive jurisdiction of the Department of Agriculture (DA) and the Department of Environment and Natural Resources (DENR)

 

DARAB Rules of Procedures1.   2009

2.   2003

3.   1994

DARAB and SAC's JurisdictionPhilippine Veterans Bank v. CA(G.R. No. 132767. January 18, 2000)

No contradiction in the jurisdiction of DARAB and SAC.

Proceedings before the DARAB is administrative while the proceedings before SAC is judicial.

LBP vs. Wycoco(G.R. No. 140160, 13 January 2004)

Direct resort to SAC is valid

SAC is not an appellate court of DARAB

Summary administrative proceedings before the DARAB is not necessary prior to filing before the SAC

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LBP vs. Belista(G.R. No. 164631, 26 June 2009)

Party need not appeal the Adjudicator's decision to the DARAB before it can file a petition for determination of just compensation before the SAC.

Land Bank of the Philippines v. Celada(G.R. No. 164876, 23 January 2006)

Apo Fruits and Hijo Plantation, Inc. vs. CA(G.R. No. 164195, 6 February 2007)

Notwithstanding the pendency of a just compensation case before the DARAB, a party may file a petition before the SAC.

Time to File Original Action Before the SAC

Philippine Veterans Bank v. CA, (G.R. No. 132767, January 18, 2000)

LBP vs. Raymunda Martinez, (G.R. No. 169008, July 31, 2008)

Although the proceedings before the SAC is not appellate in nature the petition for the fixing of just compensation should be filed within 15 days period from receipt of the adverse DARAB decision.

Sec. 60, RA 6657"An appeal may be taken from the decision of the Special Agrarian Courts by filing a petition for review with the Court of Appeals within fifteen (15) days from receipt of notice of the decision ; otherwise, the decision shall become final.

An appeal from the decision of the Court of Appeals, or from any order, ruling or decision of the DAR, as the case may be, shall beby a petition for review with the Supreme Court within a non-extendible period of fifteen (15) days from receipt of a copy of said decision."

LBP vs. Arlene de Leon(G.R. No. 143275, 20 March 2003)

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"We ruled that the Rules of Court does not categorically prescribe ordinary appeal as the exclusive mode of appeal from decisions of Special Agrarian Courts. The reference by Section 61 to the Rules of Court in fact even supports the mode of a petition for review as the appropriate way to appeal decisions of the Special Agrarian Courts. . .

"WHEREFORE, the motion for reconsideration dated October 16, 2002 and the supplement to the motion for reconsideration dated November 11, 2002 are PARTIALLY GRANTED. While we clarify that the Decision of this Court dated September 10, 2002 stands, our ruling therein that a petition for review is the correct mode of appeal from decisions of Special Agrarian Courts shall apply only to cases appealed after the finality of this Resolution."

ARF is solely answerable for just compensation to landowner

Sec. 63, RA 6657, as amended by RA 9700

•           ". . . all just compensation payments to landowners, including execution of judgments therefor, shall only be sourced from the Agrarian Reform Fund;"

Interest on Just Compensation1.     When there is no delay in payment.

2.     When there is a delay in payment.

When there is no delayCash portion — prevailing savings rate

Bond portion — interest rate aligned with the 91-day TB rates(Section 18, RA 6657, as amended)

When there is delay

Art. 2209, Civil Code

CB Circular 416

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Eastern Shipping vs. CA, (G.R. No. 168453, 13 March 2009)

Apo-Hijo vs. LBP(G.R. No. 164195, 12 April 2011)

Forbearance of money

12% interest

Peculiar Circumstances in Apo-Hijo vs. LBP

Market value upheld over value determined under DAR valuation guidelines.

SC decided case on the merits when issue on appeal is procedural.

2nd MR of APO elevated to the SC En Banc and given due course inspite of Entry of Judgment.

3rd MR of APO given due course without 2/3 vote of the Justices pursuant to SC Internal Rules of Procedure.

Payment of just compensation classified as forbearance of money to justify 12% interest.

 

HELP CENTERHow to Use the ERC Legal Information Archive

CONTACT INFORMATION

Page 31: Learning Materials

Department of Agrarian ReformElliptical Road, DilimanQuezon City, Philippines

Tel. No.: (632) 928-7031 to 39

Copyright InformationAll material contained in this site is copyrighted by the Department of Agrarian Reform unless otherwise specified. For the purposes of this demo, information are

intended to show a representative example of a live site. All images and materials are the copyright of their respective owners.