[G.R. No. 118712. October 6, 1995.

LAND BANK OF THE PHILIPPINES, Petitioner, v. 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, v. COURT OF APPEALS, PEDRO L. YAP, HEIRS OF
EMILIANO F. SANTIAGO, AGRICULTURAL MANAGEMENT &
DEVELOPMENT CORP., ET AL., Respondents.

Gonzales, Aquino & Associates for petitioner Land Bank of the Philippines.

Fernando A. Santiago for Private Respondents.

The Solicitor General for Respondents.

SYLLABUS

1. LABOR AND SOCIAL LEGISLATION; COMPREHENSIVE AGRARIAN

REFORM LAW; LAND ACQUISITION; SECTION 16(e) THEREOF
CONSTRUED. — Section 16(c) 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."cralaw virtua1aw library

2. ID.; ID.; ID.; RULE IN CASE THERE IS A DISCREPANCY BETWEEN

THE BASIC LAW AND AN IMPLEMENTING RULE OR REGULATION;
APPLICATION IN CASE AT BAR. — 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. 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, 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. 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.

3. ID.; ID.; ID.; FAIR AND IMMEDIATE COMPENSATION MANDATED. —

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 of purposes of exercising the landowner’s 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."

DECISION

FRANCISCO, 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:chanroblesvirtuallawlibrary

". . . 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:chanroblesvirtual|awlibrary

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

hereby GRANTED:chanrob1es virtual 1aw library

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:chanroblesvirtuallawlibrary

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

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."
4chanrobles.com : virtual lawlibrary

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:jgc:chanrobles.com.ph

"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) 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).chanroblesvirtuallawlibrary

"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.
10chanroblesvirtual|awlibrary

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. v. 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.chanroblesvirtuallawlibrary

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.chanrobles.com : virtual lawlibrary

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

follows:jgc:chanrobles.com.ph

"SECTION 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 . . ." (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.chanroblesvirtuallawlibrary
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. v.
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.

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.chanroblesvirtual|awlibrary

x x x

"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."cralaw
virtua1aw library
Notably, however, the aforecited case was used by respondent court in discarding
petitioners’ assertion as it found that:jgc:chanrobles.com.ph

". . . 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. v. 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)chanrobles.com : virtual lawlibrary

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:jgc:chanrobles.com.ph

". . . 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.chanroblesvirtuallawlibrary

SO ORDERED.

Regalado, Puno and Mendoza, JJ., concur.

Narvasa, C.J., is on leave.