LBP vs Livioco

LAND BANK OF THE PHILIPPINES, Petitioner,
vs.
ENRIQUE LIVIOCO, Respondent.

G.R. No. 170685               September 22, 2010

(Supreme Court, First Division)

Facts:

This is a Petition for Review under Rule 45, assailing the August 30, 2005 Decision of the Court of Appeals (CA), as well as its December 5, 2005 Resolution in CA-GR SP No. 83138.

Petitioner, Land Bank of the Philippines (LBP) is the government financial institution established to aid in the implementation of the Comprehensive Agrarian Reform Program (CARP) as well as to act as financial intermediary of the Agrarian Reform Fund.

Respondent Enrique Livioco (Livioco) was the owner of 30.6329 hectares of sugarland[ located in Dapdap, Mabalacat, Pampanga which was offered to the Department of Agrarian Reform (DAR) for acquisition under the CARP at P30.00 per square meter, for a total of P9,189,870.00.  The voluntary-offer-to-sell (VOS) form he submitted to the DAR indicated that his property is adjacent to residential subdivisions and to an international paper mill.

The DAR referred Livioco’s offer to the LBP for valuation which set the price at P3.21 per square meter or a total of P827,943.48 for 26 hectares. Livioco was then promptly informed of the valuation but did not act upon the notice given to him by both government agencies.  LBP then issued a certification to the Register of Deeds of Pampanga that it has earmarked the amount of P827,943.48 as compensation for Livioco’s 26 hectares.

However, it was only two years later that Livioco requested for a re-evaluation of the compensation on the ground that its value had already appreciated from the time it was first offered for sale. The request was denied by Regional Director Antonio Nuesa on the ground that there was already a perfected sale. The DAR proceeded to take possession of Livioco’s property. The DAR awarded Certificates of Land Ownership Award (CLOAs) covering Livioco’s property to 26 qualified farmer-beneficiaries.

Livioco filed separate complaints to cancel the CLOAs and to recover his property but the same proved futile. Unable to recover his property, but unwilling to accept what he believes was an outrageously low valuation of his property, Livioco finally filed a petition for judicial determination of just compensation against DAR, LBP, and the CLOA holders before Regional Trial Court (RTC) of Angeles City. He maintained that the area where his property is located has become predominantly residential hence he should be paid his property’s value as such. To prove that his property is now residential, Livioco presented a Certification from the Office of the Municipal Planning and Development Coordinator of the Municipality of Mabalacat that, as per zoning ordinance, Livioco’s land is located in an area where the dominant land use is residential.

Livioco then presented evidences to prove the value of his property and prayed that just compensation be computed atP700.00/square meter. The RTC rendered judgment in favor of the respondent, and against the DAR and the LBP with a determination that the just compensation be at Php700.00 per square meter.

LBP sought reconsideration arguing that the court should have considered the factors appearing in Section 17. Petitioner turned to the CA to no avail. Hence, this petition.

Issue:

·         Whether or not the compensation for respondent’s property was determined in accordance with law?

Held:

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 lower courts erred in ruling that the character or use of the property has changed from agricultural to residential, because there is no allegation or proof that the property was approved for conversion to other uses by DAR. It is the DAR that is mandated by law to evaluate and to approve land use conversions so as to prevent fraudulent evasions from agrarian reform coverage. Even reclassification and plans for expropriation by local government units (LGUs) will not ipso facto convert an agricultural property to residential, industrial or commercial.

Thus, in the absence of any DAR approval for the conversion of respondent’s property or an actual expropriation by an LGU, it cannot be said that the character or use of said property changed from agricultural to residential. Respondent’s property remains agricultural and should be valued as such. Hence, the CA and the trial court had no legal basis for considering the subject property’s value as residential.

The petition was denied by the Supreme Court, insofar as it seeks to have the LBP’s valuation of the subject property sustained. The assailed Decision of the CA and its Resolution are reversed and set aside for lack of factual and legal basis.

The case was remanded back to the RTC for reception of evidence on the issue of just compensation and to determine the just compensation in accordance with the guidelines set by the SC.