Case Digest: Land Bank of the Philippines vs Heirs of Eleuterio Cruz, 567 SCRA 31 ,G.R. No. 175175, September 29, 2008

Land Bank of the Philippines vs. Heirs of Eleuterio Cruz
567 SCRA 31 ,
G.R. No. 175175
September 29, 2008

Facts:
​Respondent Heirs of Eleuterio Cruz are Anicia Cruz-Papa, Resurreccion Cruz-Pagcaliwagan, Antonio D. Cruz, Lourdes Cruz-Doma, Lorna Cruz-Felipe, Mamerto D. Cruz, Eduardo D. Cruz and Victoria Cruz-Dumlao. Eleuterio Cruz is the registered owner of an unirrigated riceland situated in Lakambini, Tuao, Cagayan of which 13.5550 hectares was placed by the government under the coverage of the operation land transfer program under Presidential Decree (P.D.) No. 27.Petitioner pegged the value of the acquired landholding at P106,935.76 based on the guidelines set forth under P.D. No. 277 and Executive Order (E.O.) No. 228.
Respondents rejected petitioner’s valuation and instituted an action for a summary proceeding for the preliminary determination of just compensation before the PARAD.
A perusal of the PARAD's Decision dated 23 November 1999, which mandated payment of just compensation in the amount of P80,000.00 per hectare, reveals that the PARAD did not adhere to the formula prescribed in any of the aforementioned regulations issued by the DAR or was at least silent on the applicability of the aforementioned DAR regulations to the question of just compensation. The PARAD decision also did not refer to any evidence in support of its finding.
The SAC, meanwhile, referred to DAR A.O. No. 6, series of 1992, as amended, as the controlling guideline in fixing just compensation. Pertinently, to obtain the land value, the formula under said regulation requires that the values for the Capitalized Net Income, Comparable Sales and Market Value based on the tax declaration must be shown. Moreover, said formula has been superseded by DAR A.O. No. 05, series of 1998, which also requires values for Capitalized Net Income,Comparable Sales and Market Value, the same parameters laid down in the prior regulation.
Stating that no evidence was presented by respondents on the aforementioned parameters, the SAC ruled that it was constrained to adopt the finding of the PARAD, which fixed the value of the land at P80,000.00 per hectare. On appeal, the CA adopted the same finding.

Issue:
Whether or not CA erred in adopting SAC ruling that it was constrained to adopt the finding of the PARAD which did not adhere to the formula prescribed in regulations issued by the DAR

​Held:
YES. The Court held in Celada that the formula outlined in DAR A.O. No. 5, series of 1998 should be applied in computing just compensation.
In Land Bank of the Philippines v. Sps. Banal, because the trial court therein based its valuation upon a different formula and did not conduct any hearing for the reception of evidence, the Court ordered a remand of the case to the SAC for trial on the merits.
Hence, the Court ordered that Agrarian Case No. 0058 is REMANDED to the Regional Trial Court, Branch 1, Tuguegarao ​City, Cagayan, which is directed to determine with dispatch the just compensation due respondents strictly in accordance with DAR A.O. No. 5, series of 1998.