Title
Land Bank of the Philippines vs. Del Moral, Inc.
Case
G.R. No. 187307
Decision Date
Oct 14, 2020
Del Moral contested agrarian reform valuation of its 102.9766-hectare land, claiming P342,917.81 inadequate. Courts ruled just compensation based on current fair market value, awarding P216M, modifying damages, and affirming legal interest.
land bank
del moral inc
supreme court

Case Summary (G.R. No. L-34915)

Factual Background

Del Moral, Inc. owned several parcels in Pangasinan aggregating 125.2717 hectares, originally cultivated to tobacco, of which 102.9766 hectares were placed under the coverage of P.D. No. 27. Pursuant to E.O. No. 228, the Department of Agrarian Reform computed just compensation at P342,917.81, equivalent to roughly P3,329.30 per hectare. In 1992, Land Bank of the Philippines informed Del Moral of the approval of its monetary claim and adopted the DAR valuation. Dissatisfied with the amount, Del Moral filed a petition on April 26, 2002 before the RTC for the proper judicial determination of just compensation.

Trial Court Proceedings

The RTC, acting as a Special Agrarian Court, rendered a decision on October 16, 2006 that computed just compensation based on the recent fair market value of the property rather than on values prevailing at the time of the taking. Applying the formula reflected in DAR A.O. No. 5 (Series of 1998) as interpreted by the court, the RTC fixed just compensation at P216,104,385.00, awarded P90,000,000 as temperate damages and P10,000,000 as nominal damages, and imposed legal interest at six percent per annum from finality until full payment. The RTC denied motions for reconsideration.

Court of Appeals Proceedings

Both the DAR and the LBP separately appealed to the Court of Appeals. In CA-G.R. SP No. 98373, the CA on October 30, 2007 affirmed the RTC’s computation of just compensation but reduced the awards for temperate and nominal damages to P10,000,000 and P1,000,000 respectively, reasoning that R.A. No. 6657 governed valuation because its passage preceded the completion of Del Moral’s agrarian reform process. The DAR’s subsequent petition for review to this Court was denied on June 4, 2008 for procedural deficiencies, and the entry of judgment issued on October 28, 2008. In CA-G.R. SP No. 98033, the CA on May 9, 2008 denied the LBP’s appeal, applying the Court’s jurisprudence in Land Bank of the Philippines v. Natividad and Office of the President v. Court of Appeals to hold that where payment of just compensation was not effected for a considerable length of time, just compensation must be computed at market value prevailing at the time of payment; the CA reduced damages consistent with its prior disposition and denied reconsideration by Resolution dated March 26, 2009.

Post-judgment Execution and Interim Relief Efforts

Following finality of the DAR-related proceedings, Del Moral, Inc. filed a motion for execution on March 12, 2009. The RTC granted execution on April 24, 2009, reasoning that LBP, as custodian of the Agrarian Reform Fund and co-implementer with the DAR, was bound by the same legal consequences and that the obligations between DAR and LBP were joint and several. Land Bank of the Philippines opposed enforcement and filed an urgent verified motion for a temporary restraining order and preliminary injunction with this Court on May 26, 2009 seeking to restrain enforcement of the writ of execution.

Issues Presented

The Supreme Court identified the dispositive issues as: (1) whether Land Bank of the Philippines was bound by the final and executory judgment against the DAR regarding computation of just compensation and awards for damages; (2) whether the just compensation awarded to Del Moral, Inc. was properly computed; and (3) whether the awards for temperate and nominal damages and the legal interest imposed were proper.

Parties’ Contentions

The LBP argued that the enactment of R.A. No. 9700 rendered the valuation formula issue moot because Section 7 was amended to require resolution of previously acquired lands pursuant to Section 17 of R.A. No. 6657, as amended; it maintained that the courts below disregarded the valuation factors mandated by law and applicable DAR rules, and that the award of compensation should have considered acquisition cost, sworn valuation, mortgage value, taxes, and social and economic benefits contributed by farmers. The LBP further contended that it acted without bad faith, had made deposits totaling P342,917.81 in 1992, and that damages could not be paid from the Agrarian Reform Fund. Del Moral, Inc. countered that the judgment had attained finality under the doctrine of the law of the case and res judicata, that the RTC’s valuation rested on uncontroverted expert evidence of present market value, and that LBP had not presented contrary valuation evidence.

Supreme Court’s Ruling (Disposition)

The Supreme Court denied the petition and affirmed the Court of Appeals’ Decision dated May 9, 2008 and Resolution dated March 26, 2009 in CA-G.R. SP No. 98033 with modification: the nominal damages award of P1,000,000 was deleted. The Court upheld the award of P10,000,000 as temperate damages and affirmed legal interest at six percent per annum from finality of the Court’s decision until full payment.

Legal Basis and Reasoning

The Court first applied the doctrine of res judicata and law of the case. It observed that the RTC decision had become final and executory by virtue of the CA decision in CA-G.R. SP No. 98373 and this Court’s denial on procedural grounds of the DAR’s petition in G.R. No. 181183, and that the element of substantial identity of parties and subject matter existed between the DAR and the LBP such that the prior final judgment operated as a bar to relitigation under Section 47, Rule 39 of the Rules of Court. On the valuation question, the Court applied its precedents in Lubrica v. Land Bank of the Philippines, Land Bank of the Philippines v. Natividad, and related cases to reiterate that where the agrarian reform process remained incomplete and payment of just compensation was unduly delayed, just compensation should be computed on the basis of market value prevailing at the time of payment judicially determined rather than on values prevailing at the time of taking. The Court held that R.A. No. 9700 and its implementing rules did not apply to Del Moral’s claim for valuation because the claim had been approved by LBP in 1992, well before the transitory cut-off of July 1, 2009 specified in DAR A.O. No. 02-09; consequently Section 17 of R.A. No. 6657 prior to its amendment governed the valuation. The Court emphasized that determination of just compensation is a judicial function vested in the courts and that although courts should ordinarily consider the factors and DAR formulas derived from Section 17, they retained judicial discretion to depart from administrative formulas when circumstances warranted, provided the departure was explained and justified on the record. The Court found that the RTC pro

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