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LBP vs. Livioco

The Supreme Court ruled that the compensation for the respondent's expropriated property was not determined correctly under the law for the following reasons: 1) The lower courts incorrectly valued the property as residential land rather than agricultural land, which was its actual use and character at the time of taking. 2) The potential future use of the land should not be the principal criterion for determining just compensation. 3) The valuation did not properly consider the factors required under Section 17 of RA 6657, such as the cost of acquisition, nature, actual use and income, and value of like properties. 4) LBP did not sufficiently substantiate its initial valuation during the court hearing. The case

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46 views

LBP vs. Livioco

The Supreme Court ruled that the compensation for the respondent's expropriated property was not determined correctly under the law for the following reasons: 1) The lower courts incorrectly valued the property as residential land rather than agricultural land, which was its actual use and character at the time of taking. 2) The potential future use of the land should not be the principal criterion for determining just compensation. 3) The valuation did not properly consider the factors required under Section 17 of RA 6657, such as the cost of acquisition, nature, actual use and income, and value of like properties. 4) LBP did not sufficiently substantiate its initial valuation during the court hearing. The case

Uploaded by

Alexandrei Gucor
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Land Bank of the Philippines vs.

Enrique Livioco
G.R No. 170685, September 22, 2010
Ponente: Del Castillo,J.

FACTS:
Respondent was the owner of the subject property(Sugarland) and sometime between
1987 & 1988, he offered his sugarland to DAR for acquisition under the CARP for a total of
P9,189,870.00. The voluntary offer to sell form he submitted to the DAR indicated that his
property were adjacent to residential subdivisions and to an international paper mill.
DAR referred respondent’s offer to the LBP for evaluation which set the price at
P827,943.48 which was promptly informed of the valuation and that the claim of proceeds has
been kept in trust until the respondent provides for the necessary requirements. However,
respondent failed to act upon the said notice. LBP then issued a certification to the Register of
Deeds of Pampanga that it has embarked the said amount as compensation for respondent’s
property.
Two years after, respondent requested for reevaluation on the ground that its value had
already appreciated from the time it was offered for sale however such was denied on the ground
that there was already a perfected sale. DAR proceeded to take possession while respondent filed
separate complaints to recover his property however CA sustained the validity of Certificates of
Land Ownership Award (CLOAs). He then filed a petition for reconveyance before the DAR
regional office which was gain dismissed by the CA.
CA ruled that the property was acquired through Compulsory Acquisition. Valuation of
the subject property was then lowered which eventually led to the respondent’s decision to file a
petition for judicial determination of just compensation against DAR and contended that the fact
that the area became a residential lot should be considered in the valuation. LBP objected to the
respondent’s theory that his property should be valued as a residential lot because the same was
acquired for agricultural purposes.
RTC ruled in favor of respondent’s contended price(P700) per square meter. CA affirmed
RTC’s decision. LBP assails the decision of the RTC and asserts that it is not the State’s policy
to purchase residential land. Since the property was acquired under the CARP, it had to be
valued as an agricultural land.

ISSUE:
Whether the compensation of the respondent’s property was determined in accordance with law.
RULING:
NO. For purposes of just compensation, the fair market value of an expropriated property
is determined by its character and its price at the time of taking. There are three important
concepts in this definition – the character of the property, its price, and the time of actual
taking.
The trial and appellate courts valued respondent’s property as a residential land worth
₱700.00 per square meter. They considered the use for the property as having changed from
agricultural in 1988 to residential by 2002 (allegedly due to the eruption of Mt. Pinatubo). Both
courts erred in treating the land as residential and accepting the change in the character of the
property, without any proof that authorized land conversion had taken place.

In expropriation cases (including cases involving lands for agrarian reform), the
property’s character refers to its actual use at the time of taking, not its potential uses. The
potential use of a property should not be the principal criterion for determining just
compensation for this will be contrary to the well-settled doctrine that the fair market
value of an expropriated property is determined by its character and its price at the time of
taking, not its potential uses. If at all, the potential use of the property or its "adaptability for
conversion in the future is a factor, not the ultimate in determining just compensation."

It would also be contrary to the social policy of agrarian reform, which is to free the
tillers of the land from the bondage of the soil without delivering them to the new oppression of
exorbitant land valuations. Note that in lands acquired under RA 6657, it is the farmer-
beneficiaries who will ultimately pay the valuations paid to the former land owners (LBP merely
advances the payment). The trial and appellate courts also erred in disregarding Section 17 of RA
6657 in their determination of just compensation. Section 17 of RA 6657 provides:

Sec. 17. Determination of Just Compensation. — In determining just compensation, the


cost of acquisition of the land, the current value of the like properties, its nature,
actual use and income, the sworn valuation by the owner, the tax declarations, and
the assessments made by government assessors shall be considered. The social and
economic benefits contributed by the farmers and the farmworkers and by the Government
to the property as well as the non-payment of taxes or loans secured from any government
financing institution on the said land shall be considered as additional factors to determine
its valuation.

Going over the factors in Section 17, it is clear that almost all were not properly considered
and some positively ignored. For instance: (a) The "cost of acquisition" was not even inquired
into. It would not have been difficult to require respondent to present evidence of the property’s
price when he acquired the same. (b) As to the "nature" of the property, it has already been
explained that the lower courts erroneously treated it as residential rather than agricultural. (c)
Also, no heed was given to the "current value of like properties." Since respondent’s property
is agricultural in nature, "like properties" in this case would be agricultural lands, preferably also
sugarcane lands, within the municipality or adjacent municipalities. But the chief appraiser of the
Rural Bank of Mabalacat testified that he considered the value of adjacent residential properties,
not "like properties" as required under the law. Comparing respondent’s agricultural property to
residential properties is not what the law envisioned. (d) The factor of "actual use and income
of the property" was also ignored; what was instead considered was the property’s potential
use.

AS TO LBP’s evaluation

LAND BANK’s valuation of lands covered by CARL is considered only as an initial


determination, which is not conclusive, as it is the RTC, sitting as a SAC, that should make the
final determination of just compensation, taking into consideration the factors enumerated in
Section 17 of RA 6657 and the applicable DAR regulations. Land Bank’s valuation had to be
substantiated during the hearing before it could be considered sufficient in accordance with
Section 17 of RA 6657 and DAR AO No.

In the case at bar, we find that LBP did not sufficiently substantiate its valuation. LBP
merely submitted its computation to the court without any evidence on record, whether
documentary or testimonial, that would support the correctness of the values or data used in such
computation.

LBP presented two of its officials, but their testimonies were hardly of any use. The first
witness only testified that she prepared the documents, computed the value, and had the same
approved by her superior. The other testified that LBP follows Section 17 of RA 6657 and the
relevant administrative orders in arriving at its valuations.

SC remanded the case to RTC.

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