G.R. No. 187307 - Land Bank of the Philippines vs. Del Moral, Inc.

Case Summary (G.R. No. 187307)

Key Dates and Procedural Milestones

P.D. No. 27 effectivity: October 21, 1972.
E.O. No. 228 issuance: July 17, 1987.
LBP approval/notification of monetary claim and deposit: 1992 (deposit of P342,917.81).
RTC Decision (Agrarian Case No. U-1505): October 16, 2006.
CA Decision (DAR appeal, CA-G.R. SP No. 98373): October 30, 2007.
CA Decision (LBP appeal, CA-G.R. SP No. 98033): May 9, 2008.
Denial of DAR petition to the Supreme Court (G.R. No. 181183): June 4, 2008; Entry of Judgment: October 28, 2008.
Supreme Court Decision in the present petition: October 14, 2020 (decision date to be used under the 1987 Constitution).

Applicable Law and Guiding Authorities

Primary statutory and administrative frameworks cited: P.D. No. 27; Executive Order No. 228; Republic Act No. 6657 (Comprehensive Agrarian Reform Law or CARL) and its Section 17 (criteria for determining just compensation); Republic Act No. 9700 (amendment to RA 6657, 2009) and implementing DAR Administrative Order No. 02-09; DAR Administrative Order No. 5 (Series of 1998) and other DAR valuation formulas and guidelines. Controlling jurisprudence relied upon includes Land Bank of the Philippines v. Natividad; Office of the President v. Court of Appeals; Lubrica v. Land Bank of the Philippines; Land Bank v. Spouses Chu; Land Bank v. Kho; and related Supreme Court precedents on the timing and basis for computation of just compensation.

Factual Background

Del Moral, Inc., as registered owner, originally held tobacco farmlands; the bulk (102.9766 hectares) became covered by P.D. No. 27. Under E.O. No. 228, DAR initially computed just compensation at P342,917.81 (approx. P3,329.30 per hectare). Del Moral challenged that valuation as grossly inadequate and filed a petition (April 26, 2002) in the RTC for proper determination of just compensation. LBP had, in 1992, informed Del Moral of approval of its monetary claim and had assigned the DAR valuation, but Del Moral contested adequacy and sought judicial determination.

RTC and Appellate Findings

The RTC (acting as a Special Agrarian Court) on October 16, 2006 computed just compensation by reference to recent fair market value using the DAR A.O. No. 5 (1998) formula and fixed just compensation at P216,104,385.00. The RTC also awarded P90 million as temperate damages and P10 million as nominal damages, with legal interest of 6% per annum from finality until full payment. The DAR and LBP filed motions for reconsideration which were denied. The CA, in the DAR appeal (CA-G.R. SP No. 98373), affirmed the RTC’s computation but reduced temperate damages to P10 million and nominal damages to P1 million, applying RA No. 6657 as governing law because the agrarian reform process remained incomplete when RA 6657 took effect. The CA in the LBP appeal (CA-G.R. SP No. 98033) reached a similar result and relied on the doctrine that long delay in payment mandates valuation at market value prevailing at time of payment, citing Lubrica and related cases.

Issues Presented to the Supreme Court

Whether LBP is bound by the final and executory judgment against DAR regarding computation of just compensation and the awards for temperate and nominal damages.
Whether the just compensation awarded to Del Moral was properly computed.
Whether the awards for temperate and nominal damages and the imposition of legal interest are proper.

Res Judicata and Law of the Case Analysis

The Court applied the requisites of res judicata: (1) a final judgment or order; (2) jurisdiction of the rendering court over subject matter and parties; (3) judgment on the merits; and (4) identity of parties, subject matter, and causes of action (or substantial identity of parties). The Court observed that the RTC decision (Oct. 16, 2006) affirmed by the CA in the DAR’s appeal (Oct. 30, 2007) became final upon this Court’s denial of the DAR petition (June 4, 2008, with entry of judgment on Oct. 28, 2008). The CA decisions in both appeals involved the same subject matter and substantially the same parties (DAR and LBP representing the government interest) and issues. Consequently, the Court held that res judicata and the law of the case doctrine bar relitigation of the same claims and issues, rendering the present petition dismissible insofar as it seeks to overturn those determinations.

Applicable Valuation Law and Temporal Basis for Just Compensation

The Court reaffirmed the principle established in controlling precedents (e.g., Lubrica, Natividad) that where payment of just compensation is not effected within a reasonable time and the agrarian reform process remains incomplete, just compensation should be computed on the basis of the market value prevailing at the time of payment as judicially determined, rather than at the time of the taking (1972 in this matter). The Court held that RA No. 6657 governs the determination of just compensation when the agrarian reform process remained incomplete at the time of RA 6657’s enactment, and that RA No. 9700’s amendments do not apply to claims like Del Moral’s that were already approved by LBP long before the transitory cutoff (July 1, 2009). Thus Section 17 of RA No. 6657 (pre-amendment) and the DAR-prescribed valuation factors remained the proper framework.

Judicial Discretion vs. Administrative Formulas

While Section 17 and DAR formulas provide the valuation factors and administrative guidance, the Court emphasized that valuation and determination of just compensation are judicial functions. Courts are not mechanically bound by administrative formulas if a particular case warrants deviation; any deviation must be justified with reasoned explanation grounded in the evidence. The Court found that the RTC appropriately exercised judicial discretion in relying on the appraisal evidence presented by Del Moral’s expert (appraisal report and testimony of Manrico Alhama), which considered multiple relevant factors (area, technical descriptions, actual and potential uses, proximity to infrastructure and urban center, ocular inspection, and municipal land use maps). The RTC properly rejected DAR/LBP reliance on the E.O. No. 228 formula (an agricultural production-based computation) as unduly narrow because it measured production rather than full land value.

Evidentiary Foundation for the Award

The Court accepted the RTC’s crediting of Del Moral’s appraisal report dated March 21, 2005 and expert testimony as adequate evidentiary basis for the present fai

Case Syllabus (G.R. No. 187307)

Case Caption and Decision Reference

Supreme Court of the Philippines, Second Division; G.R. No. 187307; Decision dated October 14, 2020 (888 Phil. 44).
Petition for review of the Court of Appeals Decision dated May 9, 2008 and Resolution dated March 26, 2009 in CA-G.R. SP No. 98033.
Petitioners: Land Bank of the Philippines (LBP); Respondent: Del Moral, Inc.
Ponente: Justice Hernando (Acting Chairperson in place of Senior Associate Justice Estela M. Perlas-Bernabe per raffle dated April 9, 2013).

Antecedent Facts — Property and Coverage

Del Moral, Inc. is a domestic family corporation and registered owner of several parcels of land in various municipalities of Pangasinan totaling 125.2717 hectares.
The parcels were originally tobacco farmlands.
A total of 102.9766 hectares (alternatively referenced in portions of the record as 102.9793 hectares) of Del Moral’s property were placed under the coverage of the agrarian reform program pursuant to Presidential Decree No. 27 (P.D. No. 27), which was approved October 21, 1972.

Relevant Statutes, Executive Order and Administrative Rules

Presidential Decree No. 27 (Decreeing the Emancipation of Tenants, approved October 21, 1972) — original statutory basis for coverage of rice and corn lands.
Executive Order No. 228 (approved July 17, 1987) — declared full land ownership to qualified farmer-beneficiaries covered by P.D. No. 27; determined value of remaining unvalued rice and corn lands subject to P.D. No. 27; provided manner of payment by beneficiaries and mode of compensation to the landowner.
Republic Act No. 6657 (Comprehensive Agrarian Reform Law) — enacted June 15, 1988; Section 17 sets factors for determination of just compensation.
Republic Act No. 9700 (An Act Strengthening CARP), approved August 7, 2009 — amended Section 7 of R.A. No. 6657 and contained transitional provisions relevant to valuation and coverage.
DAR Administrative Order No. 5 (Series of 1998) and DAR A.O. No. 02-09 (implementing rules of R.A. No. 9700) — administrative valuation guidelines and transitory provisions referenced in jurisprudence.
Civil Code, Article 2224 — source authority for temperate damages.

Procedural History — Administrative Valuation and LBP Action

Pursuant to Section 2 of E.O. No. 228, the Department of Agrarian Reform (DAR) computed just compensation payable to Del Moral at P342,917.81 in total, a figure that equated to approximately P3,329.30 per hectare.
In 1992, Land Bank of the Philippines (LBP) informed Del Moral of approval of its monetary claim pertaining to the 102.9766 hectares and assigned the original total valuation of P342,917.81 as just compensation.
Del Moral contended the valuation was grossly inadequate and filed a petition on April 26, 2002 before the Regional Trial Court (RTC) of Urdaneta City, Pangasinan, Branch 45, sitting as a Special Agrarian Court (SAC), for proper determination of just compensation (Agrarian Case No. U-1505).

RTC Decision (Agrarian Case No. U-1505)

RTC rendered Decision on October 16, 2006:
- Computed just compensation based on recent fair market value at the time of judicial determination rather than on values prevailing at the time of the taking in 1972.
- Applied formula in DAR A.O. No. 5 (Series of 1998).
- Fixed just compensation at P216,104,385.00 (equating to P2,098,522.57 per hectare as later described by LBP).
- Awarded Del Moral temperate damages in the amount of P90,000,000.00 and nominal damages in the amount of P10,000,000.00.
- Imposed legal interest on monetary awards at 6% per annum from finality of judgment until full payment.
RTC denied motions for reconsideration filed by the DAR and LBP (Order dated February 5, 2007).

Appeals to the Court of Appeals — DAR Appeal (CA-G.R. SP No. 98373)

DAR appealed to the Court of Appeals; CA rendered Decision on October 30, 2007 in CA-G.R. SP No. 98373:
- Affirmed RTC’s computation of just compensation but reduced awards for temperate and nominal damages to P10,000,000.00 and P1,000,000.00, respectively.
- Reasoned R.A. No. 6657 should be applied to compute just compensation because its passage predated the completion of Del Moral’s agrarian reform process; P.D. No. 27 and E.O. No. 228 have only suppletory application.
- Cited jurisprudence including Land Bank v. Natividad and Lubrica v. Land Bank of the Philippines to support computation based on market value prevailing at time of payment when payment is delayed for a long period.
DAR filed Petition for Review on Certiorari to the Supreme Court (G.R. No. 181183); petition denied on June 4, 2008 for procedural defects (failure to state material date of filing its motion for reconsideration and failure to submit required verification, certificate of non-forum shopping and affidavit of service). Entry of Judgment issued October 28, 2008; the DAR appeal decision became final and executory.

Appeals to the Court of Appeals — LBP Appeal (CA-G.R. SP No. 98033)

LBP filed separate appeal docketed as CA-G.R. SP No. 98033; CA promulgated Decision on May 9, 2008:
- Denied LBP’s appeal and affirmed RTC’s computation for just compensation; reduced damages to conform to CA’s earlier ruling in CA-G.R. SP No. 98373.
- Noted LBP’s issues were practically identical to those raised by DAR in CA-G.R. SP No. 98373 and declined to depart from that ruling.
- Applied doctrine from Land Bank v. Natividad and Office of the President v. Court of Appeals that, where payment of just compensation is not effected immediately after taking, just compensation should be computed based on market value prevailing at time of payment.
- Observed agrarian reform process remained incomplete, with judicial determination of just compensation occurring after 35 years from taking; deemed deposits made by LBP in 1992 (P342,917.81) as not constituting payment within a reasonable time.
LBP’s motion for reconsideration was denied by CA in Resolution dated March 26, 2009:
- Reasoning included that computation had been definitively resolved in CA-G.R. SP No. 98373; extreme delay made computation based on 1972 values unjust and inequitable; cited Lubrica v. Land Bank regarding valuation at time of payment after long delay.

Writ of Execution; LBP’s Motion for TRO/Preliminary Injunction

After the Supreme Court denial of DAR’s petition became final (Entry of Judgment October 28, 2008), Del Moral filed a motion for execution on March 12, 2009.
LBP opposed execution, asserting it was not made a party to DAR’s appeal and therefore could not be bound by that finality; noted its separate appeal (CA-G.R. SP No. 98033) was still pending at the time.
RTC granted motion for execution on April 24, 2009:
- RTC reasoned LBP is custodian of the Agrarian Reform Fund (ARF) and complements DAR’s duties; both DAR and LBP governed by same facts, laws and jurisprudence.
- Cited Tropical Homes, Inc. v. Judge Fortun for the principle that reversal on appeal binds only parties to the appealed case unless rights and liabilities are interwoven; concluded the obligations of DAR and LBP are joint and several (solidary) and a judgment against one necessarily affects the other.
LBP filed urgent verified motion/application with the Supreme Court on May 26, 2009 seeking issuance of TRO/preliminary injunction to restrain enforcement of the writ of execution, arguing the RT