LBP vs Montinola-Escarilla

LAND BANK OF THE PHILIPPINES, Petitioner,
vs.
MONTINOLA-ESCARILLA and CO., INC., Respondent.

G.R. No. 178046               June 13, 2012

(Supreme Court, Third Division)

Facts:

This is a Petition for Review on Certiorari assailing the August 18, 2006 Decision and May 18, 2007 Resolution of the Court of Appeals (CA) in     CA-G.R. SP No. 75133, which set aside the October 8, 2002 Decision of the Regional Trial Court of Bayugan, Agusan del Sur, Branch 7 (RTC) and rendered a new judgment fixing the just compensation due to respondent at P4,615,194.00 and deleting the award of attorney's fees.

Respondent, Montinola-Escarilla and Co., Inc., (MECO) is the owner of a parcel of agricultural land covered by OCT No. T-70 with an area of 159.0881 hectares was acquired by the government under RA 6657. LBP initially valued the subject land at P 823,204.08 but MECO rejected the valuation. Pending summary administrative proceedings for determination of just compensation before the RARAD, MECO filed a complaint for determination of just compensation before the RTC which appointed 4 Board of Commissioners (BOC) to evaluate and appraise the just compensation for the subject property covering 4.4825 hectares of rainfed rice land and 154.6056 hectares of idle land. Then the RARAD rendered a decision fixing the just compensation at P 823,204.08. The BOC was not able to come up with a unified valuation of the subject property.

The just compensation of the property was fixed by the RTC at P 7,927,660.60 plus attorney's fee, they gave credence to the report submitted by Asian, though it did not follow its valuation, and instead fixed a lower value but nevertheless higher than those recommended by the BOC.

The CA in its ruling said that LBP did not consider all the factors in determining just compensation, and adopted the BOC's report and deleted the award of attorney's fee for being improper.

Hence, this petition.

Issue:

Whether or not in determining the proper just compensation for the subject (expropriated) property considered the factors set forth under Section 17 of R.A. No. 6657.

Held:

No, for determining just compensation, the fair market value of an expropriated property is determined by its character and price at the time of taking. The potential use of the expropriated property is only considered in cases where there is a great improvement in the general vicinity of the expropriated property, but should never control the determination of just compensation. it was erroneous to reclassify the acquired property into cornland and cocoland “based on plaintiff’s (MECO) evidence” considering that the improvements were introduced by the farmer-beneficiaries.

The Supreme Court set aside the assailed Decision and Resolution rendered by the CA.