LAND BANK OF THE PHILIPPINES, petitioner, vs. COURT OF APPEALS, PEDRO L.

YAP, HEIRS OF EMILIANO F. SANTIAGO, AGRICULTURAL MANAGEMENT &

DEVELOPMENT CORP., respondents.

1995-10-06 | G.R. No. 118712

DECISION

FRANCISCO, R., J.:

It has been declared that the duty of the court to protect the weak and the underprivileged should not be
carried out to such an extent as deny justice to the landowner whenever truth and justice happen to be
on his side. 1 As eloquently stated by Justice Isagani Cruz:

". . . social justice - or any justice for that matter - is for the deserving, whether he be a millionaire
in his mansion or a pauper in his hovel. It is true that, in case of reasonable doubt, we are called
upon to tilt the balance in favor of the poor, to whom the Constitution fittingly extends its sympathy
and compassion. But never is it justified to prefer the poor simply because they are poor, or to
reject the rich simply because they are rich, for justice must always be served, for poor and rich
alike, according to the mandate of the law." 2

In this agrarian dispute, it is once more imperative that the aforestated principles be applied in its
resolution.

Separate petitions for review were filed by petitioners Department of Agrarian Reform (DAR) (G.R. No.
118745) and Land Bank of the Philippines (G.R. No. 118712) following the adverse ruling by the Court of
Appeals in CA-G.R. SP No. 33465. However, upon motion filed by private respondents, the petitions
were ordered consolidated. 3

Petitioners assail the decision of the Court of Appeals promulgated on October 20, 1994, which granted
private respondents' Petition for Certiorari and Mandamus and ruled as follows:

"WHEREFORE, premises considered, the Petition for Certiorari and Mandamus is hereby
GRANTED:

A) DAR Administrative order No. 9, Series of 1990 is declared null and void insofar as it provides
for the opening of trust accounts in lieu of deposits in cash or bonds;

B) Respondent Landbank is ordered to immediately deposit - not merely 'earmark', 'reserve' or

'deposit in trust' - with an accessible bank designated by respondent DAR in the names of the
following petitioners the following amounts in cash and in government financial instruments - within
the parameters of Sec. 18 (1) of RA 6657:

P1,455, 207.31 Pedro L. Yap

P135, 482.12 Heirs of Emiliano Santiago
P15,914,127.77 AMADCOR;

C) The DAR-designated bank is ordered to allow the petitioners to withdraw the above-deposited
amounts without prejudice to the final determination of just compensation by the proper authorities;
and
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 D) Respondent DAR is ordered to 1) immediately conduct summary administrative proceedings to
determine the just compensation for the lands of the petitioners giving the petitioners 15 days from
notice within which to submit evidence and to 2) decide the cases within 30 days after they are
submitted for decision." 4

Likewise, petitioners seek the reversal of the Resolution dated January 18, 1995, 5 denying their motion
for reconsideration.

Private respondents are landowners whose landholdings were acquired by the DAR and subjected to
transfer schemes to qualified beneficiaries under the Comprehensive Agrarian Reform Law (CARL,
Republic Act No. 6657).

Aggrieved by the alleged lapses of the DAR and the Landbank with respect to the valuation and payment
of compensation for their land pursuant to the provisions of RA 6657, private respondents filed with this
Court a Petition for Certiorari and Mandamus with prayer for preliminary mandatory injunction. Private
respondents questioned the validity of DAR Administrative Order No. 6, Series of 1992 6 and DAR
Administrative Order No. 9, Series of 1990, 7 and sought to compel the DAR to expedite the pending
summary administrative proceedings to finally determine the just compensation of their properties, and
the Landbank to deposit in cash and bonds the amounts respectively "earmarked", "reserved" and
"deposited in trust accounts" for private respondents, and to allow them to withdraw the same.

Through a Resolution of the Second Division dated February 9, 1994, this Court referred the petition to
respondent Court of Appeals for proper determination and disposition.

As found by respondent court, the following are undisputed:

"Petitioner Pedro Yap alleges that '(o)n 4 September 1992 the transfer certificates of title (TCTs) of
petitioner Yap were totally cancelled by the Registrar of Deeds of Leyte and were transferred in
the names of farmer beneficiaries collectively, based on the request of the DAR together with a
certification of the Landbank that the sum of P735,337.77 and P719,869.54 have been earmarked
for Landowner Pedro L. Yap for the parcels of lands covered by TCT Nos. 6282 and 6283
respectively, and is issued in lieu thereof TC-563 and TC-562, respectively, in the names of listed
beneficiaries (ANNEXES 'C' & D') without notice to petitioner Yap and without complying with the
requirement of Section 16 (e) of RA 6657 to deposit the compensation in cash and Landbank
bonds in an accessible bank.' (Rollo, p. 6).

"The above allegations are not disputed by any of the respondents.

"Petitioner Heirs of Emiliano Santiago allege that the heirs of Emiliano F. Santiago are the owners of a
parcel of land located at Laur, NUEVA ECIJA with an area of 18.5615 hectares covered by TCT No.
NT-60359 of the registry of Deeds of Nueva Ecija, registered in the name of the late Emiliano F.
Santiago; that in November and December 1990, without notice to the petitioners, the Landbank required
and the beneficiaries executed Actual tillers Deed of Undertaking (ANNEX 'B') to pay rentals to the
LandBank for the use of their farmlots equivalent to at least 25% of the net harvest; that on 24 October
1991 the DAR Regional Director issued an order directing the Landbank to pay the landowner directly or
through the establishment of a trust fund in the amount of P135,482.12; that on 24 February 1992, the
Landbank reserved in trust P135,482.12 in the name of Emiliano F. Santiago. (ANNEX 'E'; Rollo, p. 7);
that the beneficiaries stopped paying rentals to the landowners after they signed the Actual Tiller's Deed
of Undertaking committing themselves to pay rentals to the LandBank (Rollo, p.133).

"The above allegations are not disputed by the respondents except that respondent Landbank claims 1)
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that it was respondent DAR, not Landbank which required the execution of Actual Tillers Deed of
Undertaking (ATDU, for brevity); and 2) that respondent Landbank, although armed with the ATDU, did
not collect any amount as rental from the substituting beneficiaries (Rollo, p. 99).

"Petitioner Agricultural Management and Development Corporation (AMADCOR, for brevity) alleges -
with respect to its properties located in San Francisco, Quezon - that the properties of AMADCOR in San
Francisco, Quezon consist of a parcel of land covered by TCT No. 34314 with an area of 209.9215
hectares and another parcel covered by TCT No. 10832 with an area of 163.6189 hectares: that a
summary administrative proceeding to determine compensation of the property covered by TCT No.
34314 was conducted by the DARAB in Quezon City without notice to the landowner; that a decision
was rendered on 24 November 1992 (ANNEX 'F') fixing compensation for the parcel of land covered by
TCT No. 34314 with an area of 209.9215 hectares at P2,768,326.34 and ordering the Landbank to pay
or establish a trust account for said amount in the name of AMADCOR; and that the trust account in the
amount of P2,768,326.34 fixed in the decision was established by adding P1,986,489.73 to the first trust
account established on 19 December 1991 (ANNEX 'G'). With respect to petitioner AMADCOR's
property in Tabaco, Albay, it is alleged that the property of AMADCOR in Tabaco, Albay is covered by
TCT No. T-2466 of the Register of Deeds of Albay with an area of 1,629.4578 hectares'; that
emancipation patents were issued covering an area of 701.8999 hectares which were registered on 15
February 1988 but no action was taken thereafter by the DAR to fix the compensation for said land; that
on 21 April 1993, a trust account in the name of AMADCOR was established in the amount of
P12,247,217.83', three notices of acquisition having been previously rejected by AMADCOR. (Rollo, pp.
8-9)

"The above allegations are not disputed by the respondents except that respondent Landbank claims
that petitioner failed to participate in the DARAB proceedings (land valuation case) despite due notice to
it (Rollo, p.100)." 8

Private respondents argued that Administrative Order No. 9. Series of 1990 was issued without
jurisdiction and with grave abuse of discretion because it permits the opening of trust accounts by the
Landbank, in lieu of depositing in cash or bonds in an accessible bank designated by the DAR, the
compensation for the land before it is taken and the titles are cancelled as provided under Section 16(e)
of RA 6657. 9 Private respondents also assail the fact that the DAR and the Landbank merely
"earmarked", "deposited in trust" or "reserved" the compensation in their names as landowners despite
the clear mandate that before taking possession of the property, the compensation must be deposited in
cash or in bonds. 10

Petitioner DAR, however, maintained that Administrative Order No. 9 is a valid exercise of its
rule-making power pursuant to Section 49 of RA 6657. 11 Moreover, the DAR maintained that the
issuance of the "Certificate of Deposit" by the Landbank was a substantial compliance with Section 16(e)
of RA 6657 and the ruling in the case of Association of Small Landowners in the Philippines, Inc., et al.
vs. Hon. Secretary of Agrarian Reform, G.R. No. 78742, July 14, 1989 (175 SCRA 343) 12

For its part, petitioner Landbank declared that the issuance of the Certificates of Deposits was in
consonance with Circular Nos. 29, 29-A and 54 of the Land Registration Authority where the words
"reserved/deposited" were also used. 13

On October 20, 1994, the respondent court rendered the assailed decision in favor of private
respondents. 14 Petitioners filed a motion for reconsideration but respondent court denied the same. 15

Hence, the instant petitions.

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On March 20,1995, private respondents filed a motion to dismiss the petition in G.R. No. 118745 alleging
that the appeal has no merit and is merely intended to delay the finality of the appealed decision. 16 The
Court, however, denied the motion and instead required the respondents to file their comments. 17

Petitioners submit that respondent court erred in (1) declaring as null and void DAR Administrative Order
No. 9, Series of 1990, insofar as it provides for the opening of trust accounts in lieu of deposit in cash or
in bonds, and (2) in holding that private respondents are entitled as a matter of right to the immediate
and provisional release of the amounts deposited in trust pending the final resolution of the cases it has
filed for just compensation.

Anent the first assignment of error, petitioners maintain that the word "deposit" as used in Section 16(e)
of RA 6657 referred merely to the act of depositing and in no way excluded the opening of a trust
account as a form of deposit. Thus, in opting for the opening of a trust account as the acceptable form of
deposit through Administrative Circular No. 9, petitioner DAR did not commit any grave abuse of
discretion since it merely exercised its power to promulgate rules and regulations in implementing the
declared policies of RA 6657.

The contention is untenable. Section .16(e) of RA 6657 provides as follows:

"Sec. 16. Procedure for Acquisition of Private Lands - . . .

(e) Upon receipt by the landowner of the corresponding payment or, in case of rejection or
no response from the landowner, upon the deposit with an accessible bank designated by
the DAR of the compensation in cash or in LBP bonds in accordance with this Act, the DAR
shall take immediate possession of the land and shall request the proper Register of Deeds
to issue a Transfer Certificate of Title (TCT) in the name of the Republic of the Philippines . .
."

It is very explicit therefrom that the deposit must be made only in "cash" or in "LBP bonds". Nowhere
does it appear nor can it be inferred that the deposit can be made in any other form. If it were the
intention to include a "trust account" among the valid modes of deposit, that should have been made
express, or at least, qualifying words ought to have appeared from which it can be fairly deduced that a
"trust account" is allowed. In sum, there is no ambiguity in Section 16(e) of RA 6657 to warrant an
expanded construction of the term "deposit".

The conclusive effect of administrative construction is not absolute. Action of an administrative agency
may be disturbed or set aside by the judicial department if there is an error of law, a grave abuse of
power or lack of jurisdiction or grave abuse of discretion clearly conflicting with either the letter or the
spirit of a legislative enactment. 18 In this regard, it must be stressed that the function of promulgating
rules and regulations may be legitimately exercised only for the purpose of carrying the provisions of the
law into effect. The power of administrative agencies is thus confined to implementing the law or putting
it into effect. Corollary to this is that administrative regulations cannot extend the law and amend a
legislative enactment, 19 for settled is the rule that administrative regulations must be in harmony with
the provisions of the law. And in case there is a discrepancy between the basic law and an implementing
rule or regulation, it is the former that prevails. 20

In the present suit, the DAR clearly overstepped the limits of its power to enact rules and regulations
when it issued Administrative Circular No. 9. There is no basis in allowing the opening of a trust account
in behalf of the landowner as compensation for his property because, as heretofore discussed, Section
16(e) of RA 6657 is very specific that the deposit must be made only in "cash" or in "LBP bonds". In the
same vein, petitioners cannot invoke LRA Circular Nos. 29, 29-A and 54 because these implementing
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regulations cannot outweigh the clear provision of the law. Respondent court therefore did not commit
any error in striking down Administrative Circular No. 9 for being null and void.

Proceeding to the crucial issue of whether or not private respondents are entitled to withdraw the
amounts deposited in trust in their behalf pending the final resolution of the cases involving the final
valuation of their properties, petitioners assert the negative.

The contention is premised on the alleged distinction between the deposit of compensation under
Section 16(e) of RA 6657 and payment of final compensation as provided under Section 18 21 of the
same law. According to petitioners, the right of the landowner to withdraw the amount deposited in his
behalf pertains only to the final valuation as agreed upon by the landowner, the DAR and the LBP or that
adjudged by the court. It has no reference to amount deposited in the trust account pursuant to Section
16(e) in case of rejection by the landowner because the latter amount is only provisional and intended
merely to secure possession of the property pending final valuation. To further bolster the contention
petitioners cite the following pronouncements in the case of "Association of Small Landowners in the Phil.
Inc. vs. Secretary of Agrarian Reform". 22

"The last major challenge to CARP is that the landowner is divested of his property even before actual
payment to him in full of just compensation, in contravention of a well-accepted principle of eminent
domain.

xxx xxx xxx

"The CARP Law, for its part conditions the transfer of possession and ownership of the land to the
government on receipt by the landowner of the corresponding payment or the deposit by the DAR
of the compensation in cash or LBP bonds with an accessible bank. Until then, title also remains
with the landowner. No outright change of ownership is contemplated either.

xxx xxx xxx

"Hence the argument that the assailed measures violate due process by arbitrarily transferring title
before the land is fully paid for must also be rejected."

Notably, however, the aforecited case was used by respondent court in discarding petitioners' assertion
as it found that:

". . . despite the 'revolutionary' character of the expropriation envisioned under RA 6657 which led
the Supreme Court, in the case of Association of Small Landowners in the Phil. Inc. vs. Secretary
of Agrarian Reform (175 SCRA 343), to conclude that 'payments of the just compensation is not
always required to be made fully in money' - even as the Supreme Court admits in the same case
'that the traditional medium for the payment of just compensation is money and no other' - the
Supreme Court in said case did not abandon the 'recognized rule . . . that title to the property
expropriated shall pass from the owner to the expropriator only upon full payment of the just
compensation." 23

We agree with the observations of respondent court. The ruling in the "Association" case merely
recognized the extraordinary nature of the expropriation to be undertaken under RA 6657 thereby
allowing a deviation from the traditional mode of payment of compensation and recognized payment
other than in cash. It did not, however, dispense with the settled rule that there must be full payment of
just compensation before the title to the expropriated property is transferred.

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The attempt to make a distinction between the deposit of compensation under Section 16(e) of RA 6657
and determination of just compensation under Section 18 is unacceptable. To withhold the right of the
landowners to appropriate the amounts already deposited in their behalf as compensation for their
properties simply because they rejected the DAR's valuation, and notwithstanding that they have already
been deprived of the possession and use of such properties, is an oppressive exercise of eminent
domain. The irresistible expropriation of private respondents' properties was painful enough for them. But
petitioner DAR rubbed it in all the more by withholding that which rightfully belongs to private
respondents in exchange for the taking, under an authority (the "Association" case) that is, however,
misplaced. This is misery twice bestowed on private respondents, which the Court must rectify.

Hence, we find it unnecessary to distinguish between provisional compensation under Section 16(e) and
final compensation under Section 18 for purposes of exercising the landowners' right to appropriate the
same. The immediate effect in both situations is the same, the landowner is deprived of the use and
possession of his property for which he should be fairly and immediately compensated. Fittingly, we
reiterate the cardinal rule that:

". . . within the context of the State's inherent power of eminent domain, just compensation means
not only the correct determination of the amount to be paid to the owner of the land but also the
payment of the land within a reasonable time from its taking. Without prompt payment,
compensation cannot be considered 'just' for the property owner is made to suffer the
consequence of being immediately deprived of his land while being made to wait for a decade or
more before actually receiving the amount necessary to cope with his loss." 24

The promulgation of the "Association" decision endeavored to remove all legal obstacles in the
implementation of the Comprehensive Agrarian Reform Program and clear the way for the true freedom
of the farmer. 25 But despite this, cases involving its implementation continue to multiply and clog the
courts' dockets. Nevertheless, we are still optimistic that the goal of totally emancipating the farmers from
their bondage will be attained in due time. It must be stressed, however, that in the pursuit of this
objective, vigilance over the rights of the landowners is equally important because social justice cannot
be invoked to trample on the rights of property owners, who under our Constitution and laws are also
entitled to protection. 26

WHEREFORE, the foregoing premises considered, the petition is hereby DENIED for lack of merit and
the appealed decision is AFFIRMED in toto.

SO ORDERED.

Regalado, Puno and Mendoza, JJ., concur.

Narvasa, C.J., is on leave.

Footnotes

1. Gelos v. Court of Appeals, 208 SCRA 608. 615 (1992), quoting Justice Alicia Sempio-Diy.
2. Ibid, p. 616.
3. Rollo, p. 7.
4. Rollo, pp. 122-123.
5. Rollo, p. 149.
6. which provides formulas for valuation of land expropriated under RA 6657.
7. which provide for the opening of trust accounts in the Land Bank instead of depositing in accessible
bank, in cash and bonds, the compensation for land expropriated by the DAR.
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8. Rollo, pp. 109-111.
9. Sec. 16. Procedure for Acquisition of Private Lands. - For the purposes of acquisition of private lands,
the following shall be followed:

xxx xxx xxx

(e) Upon receipt by the landowner of the corresponding payment or, in case rejection or no
response from the landowner, upon the deposit with an accessible bank designated by the DAR of
the compensation in cash in LBP bonds in accordance with this Act, the DAR shall take immediate
possession of the land and shall request the proper Register of Deeds to issue a Transfer
Certificate of Titles (TCT) in the name of the Republic of the Philippines. The DAR shall thereafter
proceed with the redistribution of the land to the qualified beneficiaries.

10. Rollo, p.111.

11. Sec. 49. Rules and Regulations. - The PARC and the DAR shall have the power to issue rules and
regulations, whether substantive or procedural, to carry out the objects and purposes of this Act . . . Said
rules shall take effect ten (10) days after the publication in two (2) national newspapers of general
circulation.
12. Rollo, pp. 111-112.
13. Rollo, p. 112.
14. Rollo, p. 107.
15. Rollo, p. 149.
16. Rollo, p.63.
17. Rollo. p. 67.
18. Peralta vs. Civil Service Commission 212 SCRA 425, 432 (1992).
19. Toledo vs. Civil Service Commission 202 SCRA 507, 54 (1991) citing Teoxon v. Members of the
Board of Administrators, Philippine Veterans Administration, 33 SCRA 585, 589 (1970), citing Santos vs.
Estenzo, 109 Phil. 419 (1960); Animos vs. Phil. Veterans Affairs Office, 174 SCRA 214, 223-224.
20. Shell Philippines, Inc. vs. Central Bank of the Philippines, 162 SCRA 628 (1988).
21. Section 18. Valuation and Mode of Compensation. - The LBP shall compensate the landowner in
such amount as may be agreed upon by the landowner and the DAR and LBP in accordance with the
criteria provided for in Sections 16 and 17 and other pertinent provisions hereof, or as may be finally
determined by the court as the compensation for the land.
22. 175 SCRA 343.
23. Decision, Court of Appeals, p. 14.
24. Municipality of Makati vs. Court of Appeals, 190 SCRA 207, 213 (1990) citing Cosculluela vs. The
Hon. Court of Appeals, 164 SCRA 393 400 (1988); Provincial Government of Sorsogon vs. Vda. de
Villaroya, 153 SCRA 291, 302 (1987).
25. 175 SCRA 343, 392.
26. Mata vs. Court of Appeals, 207 SCRA 748, 753 (1992).

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