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[G.R. No. 127198.

May 16, 2005]

LAND BANK OF THE PHILIPPINES, petitioner, vs. HON. ELI G. C. NATIVIDAD,


Presiding Judge of the Regional Trial Court, Branch 48, San Fernando,
Pampanga, and JOSE R. CAGUIAT represented by Attorneys-in-fact JOSE
T. BARTOLOME and VICTORIO MANGALINDAN, respondents.

DECISION

TINGA, J.:

This is a Petition for Review dated December 6, 1996 assailing the Decision of the Regional
[1] [2]

Trial Court dated July 5, 1996 which ordered the Department of Agrarian Reform (DAR) and
[3]

petitioner Land Bank of the Philippines (Land Bank) to pay private respondents the amount of P30.00
per square meter as just compensation for the States acquisition of private respondents properties
under the land reform program.

The facts follow.

On May 14, 1993, private respondents filed a petition before the trial court for the determination of
just compensation for their agricultural lands situated in Arayat, Pampanga, which were acquired by
the government pursuant to Presidential Decree No. 27 (PD 27). The petition named as respondents
the DAR and Land Bank. With leave of court, the petition was amended to implead as co-respondents
the registered tenants of the land.

After trial, the court rendered the assailed Decision the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of petitioners and against


respondents, ordering respondents, particularly, respondents Department of
Agrarian Reform and the Land Bank of the Philippines, to pay these lands
owned by petitioners and which are the subject of acquisition by the State
under its land reform program, the amount of THIRTY PESOS (P30.00) per
square meter, as the just compensation due for payment for same lands of
petitioners located at San Vicente (or Camba), Arayat, Pampanga.

Respondent Department of Agrarian Reform is also ordered to pay petitioners


the amount of FIFTY THOUSAND PESOS (P50,000.00) as Attorneys Fee, and to
pay the cost of suit.

SO ORDERED. [4]

DAR and Land Bank filed separate motions for reconsideration which were denied by the trial
court in its Order dated July 30, 1996 for being pro forma as the same did not contain a notice of
[5]
hearing. Thus, the prescriptive period for filing an appeal was not tolled. Land Bank consequently
failed to file a timely appeal and the assailed Decision became final and executory.

Land Bank then filed a Petition for Relief from Order Dated 30 July 1996, citing excusable
[6]

negligence as its ground for relief. Attached to the petition for relief were two affidavits of merit
claiming that the failure to include in the motion for reconsideration a notice of hearing was due to
accident and/or mistake. The affidavit of Land Banks counsel of record notably states that he simply
[7]

scanned and signed the Motion for Reconsideration for Agrarian Case No. 2005, Regional Trial Court
of Pampanga, Branch 48, not knowing, or unmindful that it had no notice of hearing due to his heavy
[8]

workload.

The trial court, in its Order of November 18, 1996, denied the petition for relief because Land
[9]

Bank lost a remedy in law due to its own negligence.

In the instant petition for review, Land Bank argues that the failure of its counsel to include a
notice of hearing due to pressure of work constitutes excusable negligence and does not make the
motion for reconsideration pro forma considering its allegedly meritorious defenses. Hence, the denial
of its petition for relief from judgment was erroneous.

According to Land Bank, private respondents should have sought the reconsideration of the
DARs valuation of their properties. Private respondents thus failed to exhaust administrative remedies
when they filed a petition for the determination of just compensation directly with the trial court. Land
Bank also insists that the trial court erred in declaring that PD 27 and Executive Order No. 228 (EO
228) are mere guidelines in the determination of just compensation, and in relying on private
respondents evidence of the valuation of the properties at the time of possession in 1993 and not on
Land Banks evidence of the value thereof as of the time of acquisition in 1972.

Private respondents filed a Comment dated February 22, 1997, averring that Land Banks failure
[10]

to include a notice of hearing in its motion for reconsideration due merely to counsels heavy
workload, which resulted in the motion being declared pro forma, does not constitute excusable
negligence, especially in light of the admission of Land Banks counsel that he has been a lawyer
since 1973 and has mastered the intricate art and technique of pleading.

Land Bank filed a Reply dated March 12, 1997 insisting that equity considerations demand that
[11]

it be heard on substantive issues raised in its motion for reconsideration.

The Court gave due course to the petition and required the parties to submit their respective
memoranda. Both parties complied.
[12] [13]

The petition is unmeritorious.

At issue is whether counsels failure to include a notice of hearing constitutes excusable


negligence entitling Land Bank to a relief from judgment.

Section 1, Rule 38 of the 1997 Rules of Civil Procedure provides:


Sec. 1. Petition for relief from judgment, order, or other proceedings.When a
judgment or final order is entered, or any other proceeding is thereafter taken
against a party in any court through fraud, accident, mistake, or excusable
negligence, he may file a petition in such court and in the same case praying
that the judgment, order or proceeding be set aside.

As can clearly be gleaned from the foregoing provision, the remedy of relief from judgment can
only be resorted to on grounds of fraud, accident, mistake or excusable negligence. Negligence to be
excusable must be one which ordinary diligence and prudence could not have guarded against. [14]

Measured against this standard, the reason profferred by Land Banks counsel, i.e., that his heavy
workload prevented him from ensuring that the motion for reconsideration included a notice of
hearing, was by no means excusable.

Indeed, counsels admission that he simply scanned and signed the Motion for Reconsideration
for Agrarian Case No. 2005, Regional Trial Court of Pampanga, Branch 48, not knowing, or unmindful
that it had no notice of hearing speaks volumes of his arrant negligence, and cannot in any manner
be deemed to constitute excusable negligence.

The failure to attach a notice of hearing would have been less odious if committed by a greenhorn
but not by a lawyer who claims to have mastered the intricate art and technique of pleading. [15]

Indeed, a motion that does not contain the requisite notice of hearing is nothing but a mere scrap
of paper. The clerk of court does not even have the duty to accept it, much less to bring it to the
attention of the presiding judge. The trial court therefore correctly considered the motion for
[16]

reconsideration pro forma. Thus, it cannot be faulted for denying Land Banks motion for
reconsideration and petition for relief from judgment.

It should be emphasized at this point that procedural rules are designed to facilitate the
adjudication of cases. Courts and litigants alike are enjoined to abide strictly by the rules. While in
certain instances, we allow a relaxation in the application of the rules, we never intend to forge a
weapon for erring litigants to violate the rules with impunity. The liberal interpretation and application
of rules apply only in proper cases of demonstrable merit and under justifiable causes and
circumstances. While it is true that litigation is not a game of technicalities, it is equally true that every
case must be prosecuted in accordance with the prescribed procedure to ensure an orderly and
speedy administration of justice. Party litigants and their counsel are well advised to abide by, rather
than flaunt, procedural rules for these rules illumine the path of the law and rationalize the pursuit of
justice.
[17]

Aside from ruling on this procedural issue, the Court shall also resolve the other issues presented
by Land Bank, specifically as regards private respondents alleged failure to exhaust administrative
remedies and the question of just compensation.

Land Bank avers that private respondents should have sought the reconsideration of the DARs
valuation instead of filing a petition to fix just compensation with the trial court.
The records reveal that Land Banks contention is not entirely true. In fact, private respondents did
write a letter to the DAR Secretary objecting to the land valuation summary submitted by the
[18]

Municipal Agrarian Reform Office and requesting a conference for the purpose of fixing just
compensation. The letter, however, was left unanswered prompting private respondents to file a
petition directly with the trial court.

At any rate, in Philippine Veterans Bank v. Court of Appeals, we declared that there is nothing
[19]

contradictory between the DARs primary jurisdiction to determine and adjudicate agrarian reform
matters and exclusive original jurisdiction over all matters involving the implementation of agrarian
reform, which includes the determination of questions of just compensation, and the original and
exclusive jurisdiction of regional trial courts over all petitions for the determination of just
compensation. The first refers to administrative proceedings, while the second refers to judicial
proceedings.

In accordance with settled principles of administrative law, primary jurisdiction is vested in the
DAR to determine in a preliminary manner the just compensation for the lands taken under the
agrarian reform program, but such determination is subject to challenge before the courts. The
resolution of just compensation cases for the taking of lands under agrarian reform is, after all,
essentially a judicial function.
[20]

Thus, the trial did not err in taking cognizance of the case as the determination of just
compensation is a function addressed to the courts of justice.

Land Banks contention that the property was acquired for purposes of agrarian reform on October
21, 1972, the time of the effectivity of PD 27, ergo just compensation should be based on the value of
the property as of that time and not at the time of possession in 1993, is likewise erroneous. In Office
of the President, Malacaang, Manila v. Court of Appeals, we ruled that the seizure of the landholding
[21]

did not take place on the date of effectivity of PD 27 but would take effect on the payment of just
compensation.

Under the factual circumstances of this case, the agrarian reform process is still incomplete as
the just compensation to be paid private respondents has yet to be settled. Considering the passage
of Republic Act No. 6657 (RA 6657) before the completion of this process, the just compensation
[22]

should be determined and the process concluded under the said law. Indeed, RA 6657 is the
applicable law, with PD 27 and EO 228 having only suppletory effect, conformably with our ruling
in Paris v. Alfeche.[23]

Section 17 of RA 6657 which is particularly relevant, providing as it does the guideposts for the
determination of just compensation, reads as follows:

Sec. 17. Determination of Just Compensation.In determining just


compensation, the cost of acquisition of the land, the current value of like
properties, its nature, actual use and income, the sworn valuation by the
owner, the tax declarations, and the assessment made by government
assessors shall be considered. The social and economic benefits contributed by
the farmers and the farm-workers and by the Government to the property as
well as the non-payment of taxes or loans secured from any government
financing institution on the said land shall be considered as additional factors
to determine its valuation.

It would certainly be inequitable to determine just compensation based on the guideline provided
by PD 27 and EO 228 considering the DARs failure to determine the just compensation for a
considerable length of time. That just compensation should be determined in accordance with RA
6657, and not PD 27 or EO 228, is especially imperative considering that just compensation should
be the full and fair equivalent of the property taken from its owner by the expropriator, the equivalent
being real, substantial, full and ample. [24]

In this case, the trial court arrived at the just compensation due private respondents for their
property, taking into account its nature as irrigated land, location along the highway, market value,
assessors value and the volume and value of its produce. This Court is convinced that the trial court
correctly determined the amount of just compensation due private respondents in accordance with,
and guided by, RA 6657 and existing jurisprudence.

WHEREFORE, the petition is DENIED. Costs against petitioner.

SO ORDERED.

JOSEFINA S. LUBRICA, in her G.R. No. 170220


capacity as Assignee of FEDERICO
C. SUNTAY, NENITA SUNTAY
TAEDO and EMILIO A.M.
SUNTAY III,
Petitioners, Present:
Panganiban, C.J. (Chairperson),
- versus - Ynares-Santiago,
Austria-Martinez,
Callejo, Sr., and
Chico-Nazario, JJ.
LAND BANK OF THE PHILIPPINES,
Respondent. Promulgated:

November 20, 2006


x ---------------------------------------------------------------------------------------- x

DECISION

YNARES-SANTIAGO, J.:

This Petition for Review on Certiorari under Rule 45 of the Rules of Court assails the October 27, 2005 Amended
Decision[1] of the Court of Appeals in CA-G.R. SP No. 77530, which vacated its May 26, 2004 Decision affirming (a) the
Order of the Regional Trial Court of San Jose, Occidental Mindoro, Branch 46, acting as Special Agrarian Court, in
Agrarian Case Nos. R-1339 and R-1340, dated March 31, 2003 directing respondent Land Bank of the Philippines (LBP)
to deposit the provisional compensation as determined by the Provincial Agrarian Reform Adjudicator (PARAD); (b) the
May 26, 2003 Resolution denying LBPs motion for reconsideration; and (c) the May 27, 2003 Order requiring Teresita V.
Tengco, LBPs Land Compensation Department Manager, to comply with the March 31, 2003 Order.
The facts of the case are as follows:

Petitioner Josefina S. Lubrica is the assignee [2] of Federico C. Suntay over certain parcels of agricultural land located at
Sta. Lucia, Sablayan, Occidental Mindoro, with an area of 3,682.0285 hectares covered by Transfer Certificate of Title
(TCT) No. T-31 (T-1326)[3] of the Registry of Deeds of Occidental Mindoro. In 1972, a portion of the said property with
an area of 311.7682 hectares, was placed under the land reform program pursuant to Presidential Decree No. 27 (1972)
[4]
and Executive Order No. 228 (1987). [5] The land was thereafter subdivided and distributed to farmer beneficiaries. The
Department of Agrarian Reform (DAR) and the LBP fixed the value of the land at P5,056,833.54 which amount was
deposited in cash and bonds in favor of Lubrica.

On the other hand, petitioners Nenita Suntay-Taedo and Emilio A.M. Suntay III inherited from Federico Suntay a parcel
of agricultural land located at Balansay, Mamburao, Occidental Mindoro covered by TCT No. T-128 [6] of the Register of
Deeds of Occidental Mindoro, consisting of two lots, namely, Lot 1 with an area of 45.0760 hectares and Lot 2 containing
an area of 165.1571 hectares or a total of 210.2331 hectares. Lot 2 was placed under the coverage of P.D. No. 27 but only
128.7161 hectares was considered by LBP and valued the same at P1,512,575.05.
Petitioners rejected the valuation of their properties, hence the Office of the Provincial Agrarian Reform Adjudicator
(PARAD) conducted summary administrative proceedings for determination of just compensation. On January 29, 2003,
the PARAD fixed the preliminary just compensation at P51,800,286.43 for the 311.7682 hectares (TCT No. T-31) and
P21,608,215.28 for the 128.7161 hectares (TCT No. T-128).[7]

Not satisfied with the valuation, LBP filed on February 17, 2003, two separate petitions [8] for judicial determination of just
compensation before the Regional Trial Court of San Jose, Occidental Mindoro, acting as a Special Agrarian Court,
docketed as Agrarian Case No. R-1339 for TCT No. T-31 and Agrarian Case No. R-1340 for TCT No. T-128, and raffled
to Branch 46 thereof.

Petitioners filed separate Motions to Deposit the Preliminary Valuation Under Section 16(e) of Republic Act (R.A.) No.
6657 (1988)[9] and Ad Cautelam Answer praying among others that LBP deposit the preliminary compensation determined
by the PARAD.

On March 31, 2003, the trial court issued an Order[10] granting petitioners motion, the dispositive portion of which reads:

WHEREFORE, Ms. Teresita V. Tengco, of the Land Compensation Department I (LCD I), Land Bank of
the Philippines, is hereby ordered pursuant to Section 16 (e) of RA 6657 in relation to Section 2,
Administrative Order No. 8, Series of 1991, to deposit the provisional compensation as determined by the
PARAD in cash and bonds, as follows:

1. In Agrarian Case No. R-1339, the amount of P 51,800,286.43, minus the amount received by the
Landowner;
2. In Agrarian Case No. R-1340, the amount of P 21,608,215.28, less the amount of P 1,512,575.16, the
amount already deposited.

Such deposit must be made with the Land Bank of the Philippines, Manila within five (5) days from
receipt of a copy of this order and to notify this court of her compliance within such period.

Let this order be served by the Sheriff of this Court at the expense of the movants.

SO ORDERED.[11]

LBPs motion for reconsideration was denied in a Resolution [12] dated May 26, 2003. The following day, May 27,
2003, the trial court issued an Order [13] directing Ms. Teresita V. Tengco, LBPs Land Compensation Department Manager,
to deposit the amounts.
Thus, on June 17, 2003, LBP filed with the Court of Appeals a Petition for Certiorari and Prohibition under Rule 65 of the
Rules of Court with application for the issuance of a Temporary Restraining Order and Writ of Preliminary Injunction
docketed as CA-G.R. SP No. 77530.[14]

On June 27, 2003, the appellate court issued a 60-day temporary restraining order [15] and on October 6, 2003, a writ of
preliminary injunction.[16]

On May 26, 2004, the Court of Appeals rendered a Decision [17] in favor of the petitioners, the dispositive portion of which
reads:

WHEREFORE, premises considered, there being no grave abuse of discretion, the instant Petition for
Certiorari and Prohibition is DENIED. Accordingly, the Order dated March 31, 2003, Resolution
dated May 26, 2003, and Order dated May 27, 2003 are hereby AFFIRMED. The preliminary injunction
We previously issued is hereby LIFTED and DISSOLVED.

SO ORDERED.[18]

The Court of Appeals held that the trial court correctly ordered LBP to deposit the amounts provisionally determined by
the PARAD as there is no law which prohibits LBP to make a deposit pending the fixing of the final amount of just
compensation. It also noted that there is no reason for LBP to further delay the deposit considering that the DAR already
took possession of the properties and distributed the same to farmer-beneficiaries as early as 1972.

LBP moved for reconsideration which was granted. On October 27, 2005, the appellate court rendered the assailed
Amended Decision,[19] the dispositive portion of which reads:

Wherefore, in view of the prescription of a different formula in the case of Gabatin which We hold as
cogent and compelling justification necessitating Us to effect the reversal of Our judgment herein sought
to be reconsidered, the instant Motion for Reconsideration is GRANTED, and Our May 26, 2004
Decision is hereby VACATED and ABANDONED with the end in view of giving way to and acting in
harmony and in congruence with the tenor of the ruling in the case of Gabatin. Accordingly, the assailed
rulings of the Special Agrarian Court is (sic) commanded to compute and fix the just compensation for the
expropriated agricultural lands strictly in accordance with the mode of computation prescribed (sic) Our
May 26, 2004 judgment in the case of Gabatin.

SO ORDERED.[20]

In the Amended Decision, the Court of Appeals held that the immediate deposit of the preliminary value of the
expropriated properties is improper because it was erroneously computed. Citing Gabatin v. Land Bank of the Philippines,
[21]
it held that the formula to compute the just compensation should be: Land Value = 2.5 x Average Gross Production x
Government Support Price. Specifically, it held that the value of the government support price for the corresponding
agricultural produce (rice and corn) should be computed at the time of the legal taking of the subject agricultural land, that
is, on October 21, 1972 when landowners were effectively deprived of ownership over their properties by virtue of P.D.
No. 27. According to the Court of Appeals, the PARAD incorrectly used the amounts of P500 and P300 which are the
prevailing government support price for palay and corn, respectively, at the time of payment, instead of P35 and P31, the
prevailing government support price at the time of the taking in 1972.

Hence, this petition raising the following issues:

A. THE COURT A QUO HAS DECIDED THE CASE IN A WAY NOT IN ACCORD WITH THE
LATEST DECISION OF THE SUPREME COURT IN THE CASE OF LAND BANK OF
THE PHILIPPINES VS. HON. ELI G.C. NATIVIDAD, ET AL., G.R. NO. 127198, PROM. MAY 16,
2005; and[22]

B. THE COURT A QUO HAS, WITH GRAVE GRAVE ABUSE OF DISCRETION, SO FAR
DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS,
DECIDING ISSUES THAT HAVE NOT BEEN RAISED, AS TO CALL FOR AN EXERCISE OF THE
POWER OF SUPERVISION.[23]

Petitioners insist that the determination of just compensation should be based on the value of the expropriated properties
at the time of payment. Respondent LBP, on the other hand, claims that the value of the realties should be computed as
of October 21, 1972 when P.D. No. 27 took effect.
The petition is impressed with merit.

In the case of Land Bank of the Philippines v. Natividad,[24] the Court ruled thus:

Land Banks contention that the property was acquired for purposes of agrarian reform on October
21, 1972, the time of the effectivity of PD 27, ergo just compensation should be based on the value of the
property as of that time and not at the time of possession in 1993, is likewise erroneous. In Office of the
President, Malacaang, Manila v. Court of Appeals, we ruled that the seizure of the landholding did not
take place on the date of effectivity of PD 27 but would take effect on the payment of just compensation.

The Natividad case reiterated the Courts ruling in Office of the President v. Court of Appeals [25] that the
expropriation of the landholding did not take place on the effectivity of P.D. No. 27 on October 21, 1972 but seizure
would take effect on the payment of just compensation judicially determined.

Likewise, in the recent case of Heirs of Francisco R. Tantoco, Sr. v. Court of Appeals,[26] we held that
expropriation of landholdings covered by R.A. No. 6657 take place, not on the effectivity of the Act on June 15, 1988, but
on the payment of just compensation.

In the instant case, petitioners were deprived of their properties in 1972 but have yet to receive the just
compensation therefor. The parcels of land were already subdivided and distributed to the farmer-beneficiaries thereby
immediately depriving petitioners of their use. Under the circumstances, it would be highly inequitable on the part of the
petitioners to compute the just compensation using the values at the time of the taking in 1972, and not at the time of the
payment, considering that the government and the farmer-beneficiaries have already benefited from the land although
ownership thereof have not yet been transferred in their names. Petitioners were deprived of their properties without
payment of just compensation which, under the law, is a prerequisite before the property can be taken away from its
owners.[27] The transfer of possession and ownership of the land to the government are conditioned upon the receipt by the
landowner of the corresponding payment or deposit by the DAR of the compensation with an accessible bank. Until then,
title remains with the landowner.[28]

Our ruling in Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform [29] is
instructive, thus:

It is true that P.D. No. 27 expressly ordered the emancipation of tenant-farmer as October 21,
1972 and declared that he shall be deemed the owner of a portion of land consisting of a family-sized
farm except that no title to the land owned by him was to be actually issued to him unless and until he had
become a full-fledged member of a duly recognized farmers cooperative. It was understood, however, that
full payment of the just compensation also had to be made first, conformably to the constitutional
requirement.

When E.O. No. 228, categorically stated in its Section 1 that:

All qualified farmer-beneficiaries are now deemed full owners as of October 21, 1972 of
the land they acquired by virtue of Presidential Decree No. 27 (Emphasis supplied.)

it was obviously referring to lands already validly acquired under the said decree, after proof of full-
fledged membership in the farmers cooperatives and full payment of just compensation. x x x

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.

We also note that the expropriation proceedings in the instant case was initiated under P.D. No. 27 but the agrarian
reform process is still incomplete considering that the just compensation to be paid to petitioners has yet to be
settled. Considering the passage of R.A. No. 6657 before the completion of this process, the just compensation should be
determined and the process concluded under the said law. Indeed, R.A. No. 6657 is the applicable law, with P.D. No. 27
and E.O. No. 228 having only suppletory effect.[30]

In Land Bank of the Philippines v. Court of Appeals,[31] we held that:

RA 6657 includes PD 27 lands among the properties which the DAR shall acquire and distribute
to the landless. And to facilitate the acquisition and distribution thereof, Secs. 16, 17 and 18 of the Act
should be adhered to.

Section 18 of R.A. No. 6657 mandates that the LBP shall compensate the landowner in such amount as may be
agreed upon by the landowner and the DAR and the LBP or as may be finally determined by the court as the just
compensation for the land. In determining just compensation, the cost of the acquisition of the land, the current value of
like properties, its nature, actual use and income, the sworn valuation by the owner, the tax declarations, and the
assessment made by government assessors shall be considered. The social and economic benefits contributed by the
farmers and the farmworkers and by the government to the property as well as the nonpayment of taxes or loans secured
from any government financing institution on the said land shall be considered as additional factors to determine its
valuation.[32]

Corollarily, we held in Land Bank of the Philippines v. Celada[33] that the above provision was converted into a
formula by the DAR through Administrative Order No. 05, S. 1998, to wit:

Land Value (LV) = (Capitalized Net Income x 0.6) + (Comparable Sales x 0.3) + (Market Value per Tax
Declaration x 0.1)

Petitioners were deprived of their properties way back in 1972, yet to date, they have not yet received just
compensation. Thus, it would certainly be inequitable to determine just compensation based on the guideline provided by
P.D. No. 227 and E.O. No. 228 considering the failure to determine just compensation for a considerable length of
time.That just compensation should be determined in accordance with R.A. No. 6657 and not P.D. No. 227 or E.O. No.
228, is important considering that just compensation should be the full and fair equivalent of the property taken from its
owner by the expropriator, the equivalent being real, substantial, full and ample. [34]

WHEREFORE, premises considered, the petition is GRANTED. The assailed Amended Decision dated October 27,
2005 of the Court of Appeals in CA-G.R. SP No. 77530 is REVERSED and SET ASIDE. The Decision dated May 26,
2004 of the Court of Appeals affirming (a) the March 31, 2003 Order of the Special Agrarian Court ordering the
respondent Land Bank of the Philippines to deposit the just compensation provisionally determined by the PARAD; (b)
the May 26, 2003 Resolution denying respondents Motion for Reconsideration; and (c) the May 27, 2003 Order directing
Teresita V. Tengco, respondents Land Compensation Department Manager to comply with the March 31, 2003 Order,
is REINSTATED. The Regional Trial Court of San Jose, Occidental Mindoro, Branch 46, acting as Special Agrarian
Court is ORDERED to proceed with dispatch in the trial of Agrarian Case Nos. R-1339 and R-1340, and to compute the
final valuation of the subject properties based on the aforementioned formula.

SO ORDERED.

G.R. No. 118712 October 6, 1995

LAND BANK OF THE PHILIPPINES, petitioner,


vs.
COURT OF APPEALS, PEDRO L. YAP, HEIRS OF EMILIANO F. SANTIAGO, AGRICULTURAL MANAGEMENT
& DEVELOPMENT CORP., respondents.
G.R. No. 118745 October 6, 1995

DEPARTMENT OF AGRARIAN REFORM, represented by the Secretary of Agrarian Reform, petitioner,


vs.
COURT OF APPEALS, PEDRO L. YAP, HEIRS OF EMILIANO F. SANTIAGO, AGRICULTURAL MANAGEMENT
& DEVELOPMENT CORP., ET AL., respondents.

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:

P 1,455,207.31 Pedro L. Yap

P 135,482.12 Heirs of Emiliano Santiago

P 15,914,127.77 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
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 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) 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 the
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. 14Petitioners filed a motion for reconsideration but respondent court denied the same. 15

Hence, the instant petitions.

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

xxx xxx xxx

(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. . . . (emphasis supplied)

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 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(Emphasis supplied)

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.

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 (Emphasis supplied)

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.

G.R. No. 118712 October 6, 1995

LAND BANK OF THE PHILIPPINES, petitioner,


vs.
COURT OF APPEALS, PEDRO L. YAP, HEIRS OF EMILIANO F. SANTIAGO, AGRICULTURAL MANAGEMENT
& DEVELOPMENT CORP., respondents.

G.R. No. 118745 October 6, 1995

DEPARTMENT OF AGRARIAN REFORM, represented by the Secretary of Agrarian Reform, petitioner,


vs.
COURT OF APPEALS, PEDRO L. YAP, HEIRS OF EMILIANO F. SANTIAGO, AGRICULTURAL MANAGEMENT
& DEVELOPMENT CORP., ET AL., respondents.

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:

P 1,455,207.31 Pedro L. Yap

P 135,482.12 Heirs of Emiliano Santiago

P 15,914,127.77 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

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 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) 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 the
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. 14Petitioners filed a motion for reconsideration but respondent court denied the same. 15

Hence, the instant petitions.

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


xxx xxx xxx

(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. . . . (emphasis supplied)

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 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(Emphasis supplied)

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.

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 (Emphasis supplied)
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.

G.R. No. 192890, June 17, 2013

LAND BANK OF THE PHILIPPINES, Petitioner, v. VIRGINIA PALMARES, LERMA P. AVELINO, MELILIA P.
VILLA, NINIAN P. CATEQUISTA, LUIS PALMARES, JR., SALVE P. VALENZUELA, GEORGE P. PALMARES, AND
DENCEL P. PALMARES HEREIN REPRESENTED BY THEIR ATTORNEY-IN-FACT, LERMA P.
AVELINO, Respondents.

RESOLUTION

PERLAS-BERNABE, J.:

This petition for review on certiorari1 assails the August 28, 2007 Decision2 and June 29, 2010 Resolution3 of the Court
of Appeals (CA) in CA-G.R. CEB SP No. 01846, which affirmed with modification the March 27, 2006 Decision 4 of the
Regional Trial Court (RTC) of Iloilo City, Branch 34, ordering petitioner Land Bank of the Philippines (LBP) to pay
respondents Virginia Palmares, Lerma P. Avelino, Melilia P. Villa, Ninian P. Catequista, Luis Palmares, Jr., Salve P.
Valenzuela, George P. Palmares, and Dencel P. Palmares (respondents) the total sum of P669,962.53 as just
compensation for their land plus twelve percent (12%) interest per annum from June 1995 until full payment.

The Factual Antecedents

Respondents inherited a 19.98-hectare agricultural land located in Barangay Tagubang, Passi City, Iloilo, registered
under Transfer Certificate of Title (TCT) No. T-11311. In 1995, they voluntarily offered the land for sale to the
government pursuant to Republic Act No. 6657 (RA 6657), the Comprehensive Agrarian Law of 1988. Accordingly, the
Department of Agrarian Reform (DAR) acquired 19.1071 hectares of the entire area, 5 which was valued by LBP at
P440,355.92. Respondents, however, rejected said amount. Consequently, the Department of Agrarian Reform
Adjudication Board (DARAB) conducted summary proceedings to determine just compensation for the land, but it
resolved to adopt LBP's valuation. Hence, the same amount was deposited to respondents' credit as provisional
compensation for the land.

On August 17, 2001, respondents filed a petition6 for judicial determination of just compensation docketed as Civil
Case No. 01-26876 before the RTC of Iloilo City. During the pendency of said petition, the trial court directed 7 LBP to
recompute the value of the land. In compliance therewith, LBP filed a Manifestation8 dated November 4, 2002 stating
the recomputed value of the land from P440,355.92 to P503,148.97. Despite the increase, respondents still rejected
the offer.

The RTC Ruling

On March 27, 2006, the RTC rendered the assailed Decision fixing the just compensation of the land at P669,962.53,
thus:cralavvonlinelawlibrary

WHEREFORE, based on the foregoing premises, judgment is hereby rendered fixing the just compensation of the total
area of the land actually taken in the amount of P669,962.53 and ordering the LBP to pay the plaintiffs Virginia
Palmares, et al. the total sum of P669,962.53 as just compensation for the 19.1071 hectares taken by the
government pursuant to R.A. 6657 plus 12% interest per annum from June, 1995 until full payment.
Under Section 19 of R.A. 6657, plaintiffs are also entitled to an additional five percent (5%) cash payment by way of
incentive for voluntarily offering the subject lot for sale.

SO ORDERED.9

The trial court arrived at its own computation by getting the average of (1) the price per hectare as computed by LBP
in accordance with DAR guidelines;10 and (2) the market value of the land per hectare as shown in the 1997 tax
declaration, viz:
cralavvonlinelawlibrary

LBP price per ha. + Market value Average x Area Value


Corn land [P17,773.91 + = P 28,766.95 x = P432,177.40
P39,760.00]/2 15.0234 has.
Rice land [44,304.44 + = 62,047.22 x 3.6337 = 225,460.98
79,790.00]/2 has.
Bamboo 27,387.00 27,387.00 x 0.4500 = 12,324.15
land has.
Total Land Value P669,962.5311
LBP appealed to the CA arguing that the computation made by the RTC failed to consider the factors in determining
just compensation enumerated under Section 17 of RA 6657, which reads: cralavvonline lawlibrary

SEC. 17. Determination of Just Compensation. In determining just compensation, the cost of acquisition of the
land, the current value of like properties, its nature, actual use and income, the sworn valuation by the owner, the tax
declarations, and the assessment made by government assessors shall be considered. The social and economic
benefits contributed by the farmers and the farmworkers and by the Government to the property as well as the non-
payment of taxes or loans secured from any government financing institution on the said land shall be considered as
additional factors to determine its valuation.

The CA Ruling

On August 28, 2007, the appellate court affirmed the just compensation fixed by the RTC as having been arrived at in
consonance with Section 17 of RA 6657 and pertinent DAR Administrative Orders. It emphasized that the
determination of just compensation in eminent domain proceedings is essentially a judicial function and, in the
exercise thereof, courts should be given ample discretion and should not be delimited by mathematical formulas.

The CA modified the award of twelve percent (12%) interest to apply only to the remaining balance of the just
compensation in the amount of P229,606.61, considering that LBP had already previously deposited in the name of
respondents the amount of P440,355.92 corresponding to its valuation. Thus: cralavvonline lawlibrary

WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. The impugned Decision dated 27 March
2006 and Order dated 12 May 2006 are AFFIRMED with the MODIFICATION that petitioner is ordered to pay
respondents the remaining balance of Php229,606.61 with legal interest thereon at 12% per annum computed from
the taking of the property in June, 1995 until the amount shall have been fully paid.

SO ORDERED.12 nadcralavvonlinelawlibrary

In its motion for reconsideration13 of the foregoing Decision, LBP insisted on its valuation of the subject land, which
already factored in the market value per tax declaration in 1995 when the land was offered, in accordance with the
formula14 prescribed under DAR Administrative Order (AO) No. 6, Series of 1992, as amended by AO No. 11, Series of
1994. The RTC, however, factored in the market value in the 1997 Tax Declaration of the subject land to arrive at its
own valuation. Thus, LBP protested what it called the "double take up" of the market value per tax declaration. 15

During the pendency of the said motion, LBP urgently moved 16 for the consolidation of the instant case with CA-G.R.
CEB SP No. 01845 entitled Republic of the Philippines, represented by the Department of Agrarian Reform v. Virginia
Palmares, et al. It appeared that the DAR had filed a separate appeal of the March 27, 2006 Decision of the RTC
before a different division of the CA, which rendered a Decision on September 28, 2007, exactly a month after the
promulgation of the assailed Decision in the instant case, reversing the RTC and ordering the remand of the case for
determination of just compensation with the assistance of at least three (3) commissioners. LBP, however, failed to
append a copy of the September 28, 2007 Decision in CA-G.R. SP No. 01845 both in its Urgent Manifestation with
Motion to Consolidate before the appellate court, and in the instant petition before us.

LBP's motion for reconsideration of the August 28, 2007 Decision 17 of the CA and its Urgent Manifestation with Motion
to Consolidate were both denied in the June 29, 2010 Resolution, 18for lack of merit.

Hence, LBP is now before us via the instant petition for review on certiorari alleging that

1. THE COURT OF APPEALS COMMITTED A SERIOUS ERROR OF LAW IN AFFIRMING WITH MODIFICATION THE
DECISION DATED MARCH 27, 2006 AND ORDER DATED MAY 12, 2006 OF THE SPECIAL AGRARIAN COURT (SAC), THE
COMPENSATION FIXED BY THE SAC NOT BEING IN ACCORDANCE WITH THE LEGALLY PRESCRIBED VALUATION
FACTORS UNDER SECTION 17 OF R.A. 6657 AS TRANSLATED INTO A BASIC FORMULA IN DAR ADMINISTRATIVE
ORDER NO. 05, SERIES OF 1998 AND AS RULED BY THE SUPREME COURT IN THE CASES OF SPS. BANAL, G.R. NO.
143276 (JULY 20, 2004); CELADA, G.R. NO. 164876 (JANUARY 23, 2006); AND LUZ LIM, G.R. NO. 171941 (AUGUST
2, 2007).

2. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING PETITIONER LBP LIABLE FOR INTEREST OF 12% PER
ANNUM.

3. THE COURT OF APPEALS EIGHTEENTH DIVISION ERRED IN NOT CONSOLIDATING THE CASE WITH CA-G.R. CEB SP
NO. 01845 AND REMANDING THE CASE TO THE COURT A QUO CONSIDERING THE SEPTEMBER 28, 2007 DECISION
OF THE SPECIAL TWENTIETH DIVISION OF THE COURT OF APPEALS IN CA-G.R. CEB-SP NO. 01845 TO REMAND THE
CASE ON THE PETITION FILED BY THE DAR.19

The Court's Ruling

There is merit in the instant petition.

The principal basis of the computation for just compensation is Section 17 of RA 6657, 20 which enumerates the
following factors to guide the special agrarian courts in the determination thereof: (1) the acquisition cost of the land;
(2) the current value of the properties; (3) its nature, actual use, and income; (4) the sworn valuation by the owner;
(5) the tax declarations; (6) the assessment made by government assessors; (7) the social and economic benefits
contributed by the farmers and the farmworkers, and by the government to the property; and (8) the non-payment of
taxes or loans secured from any government financing institution on the said land, if any.21 Pursuant to its rule-
making power under Section 4922 of the same law, the DAR translated these factors into a basic formula. 23

In the instant case, the trial court found to be "unrealistically low" the total valuation by LBP and the DAR in the
amount of P440,355.92, which was computed on the basis of DAR AO No. 6, Series of 1992, as amended by DAR AO
No. 11, Series of 1994. It then merely proceeded to add said valuation to the market value of the subject land as
appearing in the 1997 Tax Declaration, and used the average of such values to fix the just compensation at
P669,962.53.

In Land Bank of the Philippines v. Barrido,24 where the RTC adopted a different formula, as in this case, by considering
the average between the findings of the DAR using the formula laid down in Executive Order No. 228 25 and the market
value of the property as stated in the tax declaration, we declared it to be an obvious departure from the mandate of
the law and the DAR administrative order. We emphasized therein that, while the determination of just compensation
is essentially a judicial function vested in the RTC acting as a special agrarian court, the judge cannot abuse his
discretion by not taking into full consideration the factors specifically identified by law and implementing rules.

We agree with LBP in the instant case that the "double take up" of the market value per tax declaration as a valuation
factor completely destroys the rationale of the formula laid down by the DAR. Thus, argues LBP: cralavvonlinelawlibrary

x x x Market value accounts for only 10% under the basic formula of LV = (CNI x 0.60) + (CS x .30) + (MV x .10).
The 10% remains constant even under the variation formulae of LV = (CNI x .90) + (MV x .10) and LV = (CS x .90) +
(MV x .10). It is only when the data constituting CS (Comparable sales) and CNI (capitalized net income) are absent
that MV is given greater weight in determining just compensation. This is not obtaining in this case.

x x x Greater weight is accorded CNI, 60% in the basic formula and 90% in the other variation thereof, and this is not
without a valid reason. The valuation formula is heavily production based (net income) because that is the true value
of what landowners lose when their lands are expropriated and what the farmers-beneficiaries gain when the lands
are distributed to them. A more fundamental reason for the valuation formula of DAR is the fidelity to the principle of
affordability, i.e. what the farmers-beneficiaries can reasonably afford to pay based on what the land can produce. It
must be emphasized that agricultural lands are not residential lands, and farmers-beneficiaries are not given those
lands so they can live there but so that they can till them. And since they generally live on hand to mouth existence,
their source of repaying the just compensation is sourced from their income derived from the cultivation of the land.
Thus, the double take up of market value as a valuation factor goes against the grain of affordability as the basic
principle in the government-supervised valuation formula for agrarian reform. 26
Considering, therefore, that the RTC based its valuation on a different formula and without taking into full
consideration the factors set forth in Section 17 of RA 6657, we order the consolidation of the instant case (CA-G.R.
CEB SP No. 01846) with CA-G.R. CEB SP No. 01845, where the appeal of the DAR from the March 27, 2006 Decision
of the RTC was granted and said case was remanded to the trial court for determination of just compensation with the
assistance of commissioners. We have held that consolidation of cases is proper when there is a real need to forestall,
as in this case, the possibility of conflicting decisions being rendered in the cases. 27

WHEREFORE, the petition is GRANTED. The August 28, 2007 Decision and June 29, 2010 Resolution of the Court of
Appeals in CA-G.R. SP No. 01846 are hereby REVERSED and SET ASIDE. The case is CONSOLIDATED with CA-
G.R. CEB SP No. 01845 and REMANDED to the Regional Trial Court of Iloilo City, Branch 34, which is directed to
determine with dispatch, and with the assistance of at least three (3) commissioners, the just compensation due the
respondents in accordance with Section 17 of Republic Act No. 6657 and the applicable DAR Administrative Orders.

SO ORDERED.

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