Agrarian Reform cases; Eminent domain

Eminent domain refers to the inherent power of the State to take private property for public use. This power has two basic limitations: 

(1) the taking must be for public use; and 
(2) just compensation must be given to the owner of the property taken.[1] 
Notably, in agrarian reform cases, the taking of private property for distribution to landless farmers is considered to be one for public use.[2] Anent just compensation, the same is defined as the full and fair equivalent of the property expropriated. The term "just" qualifies the word "compensation" because the return deserved by the owner of the property must be real, substantial, full and ample.[3]

In the case of Land Bank of the Philippines v. Yatco Agricultural Enterprises,[4] Land Bank of the Philippines v. Peralta,[5] and Department of Agrarian Reform v. Spouses Diosdado Sta. Romana and Resurreccion O. Ramos,[6] the Supreme Court had made declarations as to the determination of just compensation.

In Yatco, the Supreme Court stated that the determination of just compensation is a judicial function and the RTC, acting as SAC, has the original and exclusive power to determine just compensation. It was also emphasized therein that in the exercise of its function, the RTC must be guided by the valuation factors under Section 17 of RA 6657, translated into a basic formula embodied in DAR A.O. No. 5. The factors under RA 6657 and the formula under DAR A.O. No. 5 serve as guarantees that the compensation arrived at would not be absurd, baseless, arbitrary or contradictory to the objectives of the agrarian reform laws. However, the Supreme Court clarified that the RTC may relax the application of the DAR formula, if warranted by the circumstances of the case and provided the RTC explains its deviation from the factors or formula above-mentioned.

In Peralta, the High Court confirmed the mandatory character of the guidelines under Section 17 of RA 6657 and restated that the valuation factors under RA 6657 had been translated by the DAR into a basic formula as outlined in DAR A.O. No. 5.

In Sta. Romana, it was held that the RTC is not strictly bound by the formula created by the DAR, if the situations before it do not warrant its application. The RTC cannot be arbitrarily restricted by the formula outlined by the DAR. While the DAR provides a formula, "it could not have been its intention to shackle the courts into applying the formula in every instance."[7]

Summarizing the pronouncements in the above-cited cases, the rule is that the RTC must consider the guidelines set forth in Section 17 of RA 6657 and as translated into a formula embodied in DAR A.O. No. 5. However, it may deviate from these factors/formula if the circumstances warrant or, as stated in Sta. Romana, "if the situations before it do not warrant its application." In such a case, the RTC, as held in Yatco, must clearly explain the reason for deviating from the aforesaid factors or formula.

[1] Apo Fruits Corporation v. Land Bank of the Philippines, 647 Phil. 251, 269 (2010).
[2]  Id. at 270-271.
[3] National Power Corporation v. Zabala, G.R. No. 173520, January 30, 2013.
[4] G.R. No. 172551, January 15, 2014.
[5] G.R. No. 182704, April 23, 2014.
[6] G.R. No. 183290, July 9, 2014.
[7] Id., citing Land Bank of the Philippines v. Heirs of Maximo and Gloria Puyat, 689 Phil. 505 (2012).

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