386. Gabatin vs.

Land Bank of the Philippines 444 SCRA 176

FACTS: Petitioners Fernando, Alberto, and Jose, all surnamed Gabatin, were registered owners of three
parcels of rice land situated in Sariaya, Quezon, under separate certificates of title. In 1989, the properties,
pursuant to the Land Reform Program of the Government as defined under Presidential Decree (P.D.) No.
27 and Executive Order (E.O.) No. 228, were placed by the Department of Agrarian Reform (DAR) under
its Operation Land Transfer (OLT). The properties were distributed to deserving farmer beneficiaries
through the issuance of emancipation patents.
The formula prescribed under P.D. No. 27 and E.O. No. 228 for computing the Land Value (LV) of rice
lands is 2.5 x Average Gross Production (AGP) x Government Support Price (GSP). Otherwise stated, the
formula is as follows:
LV = 2.5 x AGP x GSP

The AGP for the lots covered under TCTs No. T-107863 and No. T-107864 was at 94.64 cavans per
hectare while that of TCT No. T-107865 was at 118.47. The DAR and respondent Land Bank of the
Philippines (Land Bank), fixed the GSP at P35 which was the price of each cavan of palay in 1972, when
the lots were deemed taken for distribution. Hence, respondents valuation of the properties:
Acquired Property Area in hectares Land Value

TCT No. T-107864 1.4272 P 11,818.47

TCT No. T-107865 1.4330 14,854.66

TCT No. T-107863 .3965 3,283.41

TOTAL P 29,956.54

Petitioners rejected the valuation.

On 16 April 1996, petitioners filed a case for the determination of just compensation of their lands
with the Regional Trial Court (RTC) of Lucena City, naming the DAR and Land Bank as respondents. The
case was raffled to Branch 56, the designated Special Agrarian Court. Petitioners prayed that the just
compensation be fixed in accordance with the formula in P.D. No. 27, with 6% compounded annual
interest to be paid based on the price of palay at the time of payment and not at the time of taking. The
SAC, in its order, fixed the GSP of palay at the current price of P400 as basis for the computation of the
payment, and not the GSP at the time of taking, thus:
TCT T-107863 P 37,524.76

TCT T-107864 P 135,070.20

TCT T-107865 P 169,767.50

TOTAL P 342,362.46
 Respondent Land Bank filed a motion for reconsideration dated 04 June 1998 which was denied by
the trial court in its Order dated 23 July 1998. Of the two respondents in the trial court, only Land Bank
appealed to the Court of Appeals under Rule 41 of the Rules of Court. On 10 July 2000, petitioners filed a
motion to remand the records to the SAC and to dismiss the appeal on the grounds that the decision of
the SAC became final and executory, and that the appeal raised issues involving purely questions of law.
They maintained that the appeal of respondent, not being an indispensable party, did not stop the running
of the period to appeal, thereby making the decision final. They also claimed that the appeal should be
dismissed because the proper venue is the Supreme Court via a petition for review under Rule 45, and
not the Court of Appeals.
On 15 September 2000, the Court of Appeals rendered a decision denying the motion to dismiss and
reversing the decision of the SAC. It ruled it has jurisdiction over the appeal reasoning that its jurisdiction
over appeals from RTCs cannot simply be disregarded on the submission that the issues presented before
it are purely legal in nature. As to the personality of Land Bank to file the said appeal, the Court of Appeals
made a finding that respondent was a necessary party; hence, it had a personality to appeal the SAC
decision. It also fixed the GSP at the time of taking of the land in 1972, instead of the GSP at the time of
payment. Thus:
Based on the foregoing, the appropriate land valuation formula for the appellees property should be two
and a half (2) multiplied by the average gross production multiplied by the price of palay (P35.00), (P.D.
No. 27). In addition, the said amount shall accumulate compounded interest at 6% per annum, pursuant
to A.O. No. 13, (1994) (supra) computed from the time of taking, i.e., when P.D. No. 27 came into effect
in October, 1972, until the full amount is paid.

ISSUE: Whether just compensation in kind (palay) at the time of the taking of the properties shall be
appraised at the price of the commodity at the time of the taking or at the time it was ordered paid by
the SAC?
HELD: In the instant case, the said taking of the properties was deemed effected on 21 October 1972,
when the petitioners were deprived of ownership over their lands in favor of qualified beneficiaries,
pursuant to E.O. No. 228 and by virtue of P.D. No. 27. The GSP for one cavan of palay at that time was at
P35. Prescinding from the foregoing discussion, the GSP should be fixed at said rate, which was the GSP
at the time of the taking of the subject properties.
Petitioners are not rendered disadvantaged by the computation inasmuch as they are entitled to
receive the increment of six percent (6%) yearly interest compounded annually pursuant to DAR
Administrative Order No. 13, Series of 1994. As amply explained by this Court.
The purpose of AO No. 13 is to compensate the landowners for unearned interests. Had they been paid in
1972 when the GSP for rice and corn was valued at P35.00 and P31.00, respectively, and such amounts
were deposited in a bank, they would have earned a compounded interest of 6% per annum. Thus, if the
PARAD used the 1972 GSP, then the product of (2.5 x AGP x P35.00 or P31.00) could be multiplied by
(1.06) to determine the value of the land plus the additional 6% compounded interest it would have
earned from 1972.

Petitioners reliance on Land Bank v. CA where Land Bank was ordered to pay the just compensation
based on the GSP at the time the PARAD rendered the decision, and not at the time of the taking, is not
well taken. In that case, PARAD, in its decision, used the GSP at the time of payment in determining the
land value. When the decision became final and executory, Land Bank, however, refused to pay the
landowner arguing that the PARADs valuation was null and void for want of jurisdiction. We ruled therein
that the PARAD has the authority to determine the initial valuation of lands involving agrarian reform.
Thus, the decision of the PARAD was binding on Land Bank. Land Bank was estopped from questioning
the land valuation made by PARAD because it participated in the valuation proceedings and did not appeal
the said decision. Hence, Land Bank was compelled to pay the land value based on the GSP at the time of
payment.
The factual milieu of the case relied upon by petitioners is different from the case at bar. In the case
on hand, respondent insisted from the very start that the land valuation be based on the GSP at the time
of the taking - 1972. It stood firm on that ground. When SAC ordered Land Bank to pay petitioners the
land value based on the GSP at the time of payment, respondent vehemently disagreed and questioned
the valuation before the Court of Appeals. PETITION DENIED.

412. City of Manila v Chinese Community 40 PHIL 349 (1919)

FACTS: The City of Manila wants to expropriate a land owned by the Chinese community as cemetery
for the purpose of extending Rizal Avenue for public use. The respondents contend that the land already
acquires a quasi-public character and many dead bodies are already buried there. They stress that there
is no necessity of taking the land for public purpose since such is under Torrens title and the
expropriation will disturb the resting place of the dead. The plaintiff contends that under the Charter of
City of Manila, they may condemn private lands for public purpose, such being an exclusive function of
the legislature and the only function of the court is to assess the value of the land expropriated.

ISSUE: Whether or not the court can inquire into the necessity of expropriation.

HELD: The court ruled that the power of judicial review on expropriation is not limited to the inquiry of
the existence of law that grants a municipal corporation to expropriate private lands for public purpose.
The court has the responsibility to (1) ensure that a law or authority exists for the exercise of the right of
eminent domain, and (2) that the right or authority is being exercised in accordance with the law. There
are two conditions imposed upon the authority conceded to the City of Manila: (1) the land must be
private; and, (2) the purpose must be public. The taking of land in the exercise of power of eminent
domain of the state is not a judicial question but the court is bound to interfere to prevent an abuse of
the discretion delegated by the legislature. The very foundation of the right to exercise eminent domain
is a genuine necessity, and that necessity must be of a public character. The ascertainment of the
necessity must precede or accompany, and not follow, the taking of the land. The court ruled that the
cemetery is a public property and it found no great necessity to allow the expropriation of the land by
the City of Manila thus thereby affirmed the decision of the lower court.

438. Del Rosario v De los Santos GR No. L-20589-90 (March 21, 1968)
This petition for the review of a decision of the Court of Agrarian Relations represents still another
attempt to assail the validity of Section 14 of the Agricultural Tenancy Act of 1955, 1 which empowers a
tenant "to change the tenancy contract from one of share tenancy to the leasehold tenancy and vice
versa and from one crop-sharing arrangement to another of the share tenancy." Such attempts in the
past on the part of landowners were singularly unsuccessful, its validity having been consistently upheld.
A similar fate is in store for the effort of petitioner-landowner in this case. The decision of the Court of
Agrarian Relations must be upheld.

Two petitions were filed by now-respondents Victorino de los Santos and Tomas de los Santos
before respondent Court of Agrarian Relations on April 28, 1961, manifesting their desire, as tenants of
herein petitioner-landowner, Ernesto del Rosario, to take advantage of Section 14 and to adopt the
leasehold system provided, thus changing their previous status as tenants. In the answer submitted on
May 5, 1961, the validity of the above legal provision was challenged. It was not until October 26, 1962,
that a decision was rendered by the Court of Agrarian Relations, rejecting the claim of
unconstitutionality of the above section as without merit and declaring the relationship between
respondent tenants and petitioner-landowner to be one of leasehold tenancy effective as of the
agricultural year 1961-1962 in a joint decision on the two petitions filed before it. From the aforesaid
joint decision, this petition for review was filed. As in the case of the proceedings before the Court of
Agrarian Relations, a single opinion suffices to dispose of the matter and to reaffirm once again the
constitutionality of Section 14 of the Agricultural Tenancy Act.

1. Tenancy legislation is a manifestation of the deep and earnest concern to solve an age-old
problem that has afflicted Philippine society, with its roots going back to the nineteenth century. The
framers of the Constitution mindful of the then growing feeling of dissatisfaction with the ability of the
government to cope with the poverty and misery of the vast majority of our people inserted the
protection to labor 2 and social justice 3 provisions of the Constitution. Thus they left no doubt about
the validity of remedial legislation intended to minimize, if not to do away entirely with, the oppressive
condition that usually was associated with agricultural labor. In no sphere of governmental activity then
could there be less receptivity to claims on the part of those adversely affected that thereby their
property rights were not given the respect the Constitution affords. More specifically as far as the social
justice principle is concerned, there is the translation into reality of its significance as popularized by the
late President Magsaysay: He who has less in life should have more in law.

In the second year of his term, the Agricultural Tenancy Act of 1955 was passed. The particular
provision, once again assailed in this litigation, as previously mentioned, vested in the tenants "the right
to change the tenancy contract from one of share tenancy to leasehold tenancy and vice versa and from
one-crop-sharing arrangement to another of the share tenancy." 4 Its validity was first sustained in De
Ramas v. Court of Agrarian Relations. 5

This Court, through Justice Labrador, spoke of the objective of the law thus: "The purpose of this
Act, according to Section 2 thereof, is 'to establish agricultural tenancy relations between landholders
and tenants upon the principle of social justice; to afford adequate protection to the rights of both
tenants and landlords, to insure an equitable division of the produce and income derived from the land;
to provide tenant-farmers with incentives to greater and more efficient agricultural production; to
bolster their economic position and to encourage their participation in the development of peaceful,
vigorous and democratic rural communities.'"

Its justification in the light of our history was stressed in this wise: "The history of land tenancy,
especially in Central Luzon, is a dark spot in the social life and history of the people. It was among the
tenants of Central Luzon that the late Pedro Abad Santos, acting as a saviour of the tenant class, which
for generations has been relegated to a life of bondage, without hope of salvation or improvement,
enunciated a form of socialism as a remedy for the pitiful condition of the tenants of Central Luzon. It
was in Central Luzon also that the tenants forming the PKM organization of tenants and, during the war,
the Hukbalahap, rose in arms against the constituted authority as their only salvation from permanent
thraldom. According to statistics, whereas at the beginning of the century we had only 19% of the
people belonging to the tenant class, after 60 years of prevailing, the percentage has reached 39%. It is
the desire to improve the condition of the peasant class that must have impelled the Legislature to
adopt the provisions as a whole of the Agricultural Tenancy Act, and particularly Section 14 [thereof]."

The opinion in the De Ramas decision, after setting forth that the legal question posed was
whether there was an unconstitutional impairment of the obligation of an existing contract, explained
why the answer must be in the negative. Thus: "Obligations of contracts must yield to a proper exercise
of the police power when such power is exercised, as in this case, to preserve the security of the State
and the means adopted are reasonably adapted to the accomplishment of that end and are not arbitrary
or oppressive." The De Ramas decision was subsequently followed in several cases. 6

Then in Ilusorio v. Court of Agrarian Relations, 7 in sustaining once again the validity of the above
Section 14, this Court, in an opinion by the then Justice, now Chief Justice, Concepcion, declared: "We
find no cogent reason to depart from the view we have so far adhered to, which is in consonance with
our consistent jurisprudence on the police power of the State." As distinguished from the De Ramas
holding, the objection to the validity of Section 14 in this case was premised not only on the alleged
impairment of an existing obligation but likewise on the transgression to the freedom of contract
concept which is embraced in the liberty safeguarded by the due process clause. Its validity then as a
police power measure is now beyond question. 8

It thus appears indisputable that reinforced by the protection to labor and social justice provisions
of the Constitution, the attribute of police power justifies the enactment of statutory provisions of this
character. That public interest would be served by governmental measures intended to aid the
economically under-privileged is apparent to all. Nor is the means relied upon to attain such a valid
objective unreasonable or oppressive. Considering that in the adjustment or reconciliation of the
conflicting claims to property and state authority, it suffices that there be a rational basis for the
legislative act, it is easily understandable why, from the enactment of the Constitution with its avowed
concern for those who have less in life, the constitutionality of such legislation has been repeatedly
upheld.
 Thus prior to the Agricultural Tenancy Act of 1955, there were previous statutes which likewise
passed the test of validity in earlier decisions. The first decision of importance is Tapang v. Court of
Industrial Relations. 9 In that case, the argument that the then Tenancy Law 10 was unconstitutional
because it impaired the obligation of contracts was considered by the court to be without any force as
outside of the fact that the contract entered into between the petitioner and the husband of the
respondent during his lifetime and the respondent herself after his death was without a fixed period,
the work being accomplished from year to year, the Constitution ordains the promotion of social justice
and the protection to labor, specially to working women. Then came Ongsiako v. Gamboa, 11 which
sustained the retroactive effect of an amendatory act 12 to then tenancy statute as against the
contention that there was a violation of the non-impairment clause. This constitutional provision is no
bar, according to this Court, for legislation affecting existing conditions enacted by the State in the
proper exercise of the police power.

The unanimous opinion of this Court in the recently decided Genuino v. Court of Agrarian
Relations, 13 with its unqualified approval of the power of Congress to abolish share tenancy, as
reflected in the latest legislation on the subject, 14 as against the contention that with the limitation on
the freedom of contract there is a deprivation of property without due process of law, evinces
unmistakably the firmness with which it adheres to the view that the police power is of sufficient
amplitude and scope to free from the taint of constitutional infirmity legislation intended to ameliorate
the sad plight of Filipino tenants and agricultural workers. Thereby, this Court has manifested its fidelity
to the constitutional intent so obvious from a cursory glance at the applicable provisions of the
Constitution. That will explain why every challenge hurled against the validity of this particular provision
was, from the outset, doomed to futility.

2. In addition, another issue which according to the petition for review is "now squarely raised
before this [Court] is whether or not the use of a tractor of a land-owner in addition to his carabao and
farm implements is a ground for a disqualification of said land-owner to undertake the personal
cultivation of his own land and the ejectment of his tenants" pursuant to the Agricultural Tenancy Act?
15 That point would have been deserving of further inquiry were it not for the express finding of the
Court of Agrarian Relations that respondent, now Petitioner before this Court, "does not have the bona
fide intention to cultivate the landholding in question personally." 16 That is a finding of fact supported
by substantial evidence, and as such, binding upon this Court. It cannot therefore be disturbed on
appeal. 17 The latest formulation of the above principle as set forth in Lapina v. Court of Agrarian
Relations, 18 in an opinion by Justice Dizon, is to the effect that its finding of fact must be accepted
"unless it is shown to be unfounded or arbitrarily arrived at, or that the [Court] had failed to consider
important evidence to the contrary." There is no occasion therefore to consider further the issue of
whether or not the ejectmennt of now respondents-tenants would lie.

WHEREFORE, the decision of the Court of Agrarian Relations now under review is affirmed. With
costs against petitioner.