2/15/2017 G.R.No.

118712

TodayisWednesday,February15,2017

RepublicofthePhilippines
SUPREMECOURT
Manila

SECONDDIVISION

G.R.No.118712October6,1995

LANDBANKOFTHEPHILIPPINES,petitioner,
vs.
COURTOFAPPEALS,PEDROL.YAP,HEIRSOFEMILIANOF.SANTIAGO,AGRICULTURALMANAGEMENT
&DEVELOPMENTCORP.,respondents.

G.R.No.118745October6,1995

DEPARTMENTOFAGRARIANREFORM,representedbytheSecretaryofAgrarianReform,petitioner,
vs.
COURTOFAPPEALS,PEDROL.YAP,HEIRSOFEMILIANOF.SANTIAGO,AGRICULTURALMANAGEMENT
&DEVELOPMENTCORP.,ETAL.,respondents.

FRANCISCO,R.,J.:

Ithasbeendeclaredthatthedutyofthecourttoprotecttheweakandtheunderprivilegedshouldnotbecarriedout
to such an extent as deny justice to the landowner whenever truth and justice happen to be on his side. 1 As
eloquentlystatedbyJusticeIsaganiCruz:

...socialjusticeoranyjusticeforthatmatterisforthedeserving,whetherhebeamillionairein
hismansionorapauperinhishovel.Itistruethat,incaseofreasonabledoubt,wearecalleduponto
tilt the balance in favor of the poor, to whom the Constitution fittingly extends its sympathy and
compassion.Butneverisitjustifiedtopreferthepoorsimplybecausetheyarepoor,ortorejecttherich
simplybecausetheyarerich,forjusticemustalwaysbeserved,forpoorandrichalike,accordingto
themandateofthelaw.2

Inthisagrariandispute,itisoncemoreimperativethattheaforestatedprinciplesbeappliedinitsresolution.

SeparatepetitionsforreviewwerefiledbypetitionersDepartmentofAgrarianReform(DAR)(G.R.No.118745)and
LandBankofthePhilippines(G.R.No.118712)followingtheadverserulingbytheCourtofAppealsinCAG.R.SP
No.33465.However,uponmotionfiledbyprivaterespondents,thepetitionswereorderedconsolidated.3

Petitioners assail the decision of the Court of Appeals promulgated on October 20, 1994, which granted private
respondents'PetitionforCertiorariandMandamusandruledasfollows:

WHEREFORE,premisesconsidered,thePetitionforCertiorariandMandamusisherebyGRANTED:

a)DARAdministrativeOrderNo.9,Seriesof1990isdeclarednullandvoidinsofarasit
providesfortheopeningoftrustaccountsinlieuofdepositsincashorbonds

b) Respondent Landbank is ordered to immediately deposit not merely "earmark",

"reserve"or"depositintrust"withanaccessiblebankdesignatedbyrespondentDAR
inthenamesofthefollowingpetitionersthefollowingamountsincashandingovernment
financialinstrumentswithintheparametersofSec.18(1)ofRA6657:

P1,455,207.31PedroL.Yap

P135,482.12HeirsofEmilianoSantiago

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P15,914,127.77AMADCOR

c) The DARdesignated bank is ordered to allow the petitioners to withdraw the above
depositedamountswithoutprejudicetothefinaldeterminationofjustcompensationbythe
properauthoritiesand

d) Respondent DAR is ordered to 1) immediately conduct summary administrative

proceedingstodeterminethejustcompensationforthelandsofthepetitionersgivingthe
petitioners15daysfromnoticewithinwhichtosubmitevidenceandto2)decidethecases
within30daysaftertheyaresubmittedfordecision.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
schemestoqualifiedbeneficiariesundertheComprehensiveAgrarianReformLaw(CARL,RepublicActNo.6657).

AggrievedbytheallegedlapsesoftheDARandtheLandbankwithrespecttothevaluationandpaymentof
compensationfortheirlandpursuanttotheprovisionsofRA6657,privaterespondentsfiledwiththisCourta
Petition for CertiorariandMandamuswith prayer for preliminary mandatory injunction. Private respondents
questionedthevalidityofDARAdministrativeOrderNo.6,Seriesof19926andDARAdministrativeOrderNo.
9,Seriesof1990,7andsoughttocompeltheDARtoexpeditethependingsummaryadministrativeproceedingsto
finally determine the just compensation of their properties, and the Landbank to deposit in cash and bonds the
amountsrespectively"earmarked","reserved"and"depositedintrustaccounts"forprivaterespondents,andtoallow
themtowithdrawthesame.

ThroughaResolutionoftheSecondDivisiondatedFebruary9,1994,thisCourtreferredthepetitiontorespondent
CourtofAppealsforproperdeterminationanddisposition.

Asfoundbyrespondentcourt,thefollowingareundisputed:

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
namesoffarmerbeneficiariescollectively,basedontherequestoftheDARtogetherwithacertification
oftheLandbankthatthesumofP735,337.77andP719,869.54havebeenearmarkedforLandowner
PedroL.YapfortheparcelsoflandscoveredbyTCTNos.6282and6283,respectively,andissuedin
lieu thereof TC563 and TC562, respectively, in the names of listed beneficiaries (ANNEXES "C" &
"D")withoutnoticetopetitionerYapandwithoutcomplyingwiththerequirementofSection16(e)ofRA
6657todepositthecompensationincashandLandbankbondsinanaccessiblebank.(Rollo,p.6).

Theaboveallegationsarenotdisputedbyanyoftherespondents.

PetitionerHeirsofEmilianoSantiagoallegethattheheirsofEmilianoF.Santiagoaretheownersofa
parcel of land located at Laur, NUEVA ECIJA with an area of 18.5615 hectares covered by TCT No.
NT60359 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
requiredandthebeneficiariesexecutedActualtillersDeedofUndertaking(ANNEX"B")topayrentals
totheLandBankfortheuseoftheirfarmlotsequivalenttoatleast25%ofthenetharvestthaton24
October1991theDARRegionalDirectorissuedanorderdirectingtheLandbanktopaythelandowner
directlyorthroughtheestablishmentofatrustfundintheamountofP135,482.12,thaton24February
1992,theLandbankreservedintrustP135,482.12inthenameofEmilianoF.Santiago.(ANNEX"E"
Rollo,
p. 7) that the beneficiaries stopped paying rentals to the landowners after they signed the Actual
Tiller'sDeedofUndertakingcommittingthemselvestopayrentalstotheLandBank(Rollo,p.133).

TheaboveallegationsarenotdisputedbytherespondentsexceptthatrespondentLandbankclaims1)
that it was respondent DAR, not Landbank which required the execution of Actual Tillers Deed of
Undertaking(ATDU,forbrevity)and2)thatrespondentLandbank,althougharmedwiththeATDU,did
notcollectanyamountasrentalfromthesubstitutingbeneficiaries(Rollo,p.99).

PetitionerAgriculturalManagementandDevelopmentCorporation(AMADCOR,forbrevity)alleges
withrespecttoitspropertieslocatedinSanFrancisco,QuezonthatthepropertiesofAMADCORin
SanFrancisco,QuezonconsistofaparceloflandcoveredbyTCTNo.34314withanareaof209.9215
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.
34314wasconductedbytheDARABinQuezonCitywithoutnoticetothelandownerthatadecision
was rendered on 24 November 1992 (ANNEX "F") fixing the compensation for the parcel of land
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covered by TCT No. 34314 with an area of 209.9215 hectares at P2,768,326.34 and ordering the
LandbanktopayorestablishatrustaccountforsaidamountinthenameofAMADCORandthatthe
trust account in the amount of P2,768,326.34 fixed in the decision was established by adding
P1,986,489.73tothefirsttrustaccountestablishedon19December1991(ANNEX"G").Withrespect
to petitioner AMADCOR's property in Tabaco, Albay, it is alleged that the property of AMADCOR in
Tabaco, Albay is covered by TCT No. T2466 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
whichwereregisteredon15February1988butnoactionwastakenthereafterbytheDARtofixthe
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
rejectedbyAMADCOR.(Rollo,pp.89)

The above allegations are not disputed by the respondents except that respondent Landbank claims
thatpetitionerfailedtoparticipateintheDARABproceedings(landvaluationcase)despiteduenotice
toit(Rollo,p.100).8

PrivaterespondentsarguedthatAdministrativeOrderNo.9,Seriesof1990wasissuedwithoutjurisdictionandwith
graveabuseofdiscretionbecauseitpermitstheopeningoftrustaccountsbytheLandbank,inlieuofdepositingin
cashorbondsinanaccessiblebankdesignatedbytheDAR,thecompensationforthelandbeforeitistakenand
thetitlesarecancelledasprovidedunderSection16(e)ofRA6657.9Privaterespondentsalsoassailthefactthatthe
DAR and the Landbank merely "earmarked", "deposited in trust" or "reserved" the compensation in their names as
landownersdespitetheclearmandatethatbeforetakingpossessionoftheproperty,thecompensationmustbedepositedin
cashorinbonds.10

Petitioner DAR, however, maintained that Administrative Order No. 9 is a valid exercise of its rulemaking power
pursuanttoSection49ofRA6657.11Moreover,theDARmaintainedthattheissuanceofthe"CertificateofDeposit"by
theLandbankwasasubstantialcompliancewithSection16(e)ofRA6657andtherulinginthecaseofAssociationofSmall
LandownersinthePhilippines,Inc.,etal.vs.Hon.SecretaryofAgrarianReform,G.R.No.78742,July14,1989(175SCRA
343).12

Foritspart,petitionerLandbankdeclaredthattheissuanceoftheCertificatesofDepositswasinconsonancewith
CircularNos.29,29Aand54oftheLandRegistrationAuthoritywherethewords"reserved/deposited"werealso
used.13

On October 20, 1994, the respondent court rendered the assailed decision in favor of private respondents. 14
Petitionersfiledamotionforreconsiderationbutrespondentcourtdeniedthesame.15

Hence,theinstantpetitions.

OnMarch20,1995,privaterespondentsfiledamotiontodismissthepetitioninG.R.No.118745allegingthatthe
appeal has no merit and is merely intended to delay the finality of the appealed decision.16 The Court, however,
deniedthemotionandinsteadrequiredtherespondentstofiletheircomments.17

Petitioners submit that respondent court erred in (1) declaring as null and void DAR Administrative Order No. 9,
Seriesof1990,insofarasitprovidesfortheopeningoftrustaccountsinlieuofdepositincashorinbonds,and(2)
inholdingthatprivaterespondentsareentitledasamatterofrighttotheimmediateandprovisionalreleaseofthe
amountsdepositedintrustpendingthefinalresolutionofthecasesithasfiledforjustcompensation.

Anentthefirstassignmentoferror,petitionersmaintainthattheword"deposit"asusedinSection16(e)ofRA6657
referredmerelytotheactofdepositingandinnowayexcludedtheopeningofatrustaccountasaformofdeposit.
Thus,inoptingfortheopeningofatrustaccountastheacceptableformofdepositthroughAdministrativeCircular
No. 9, petitioner DAR did not commit any grave abuse of discretion since it merely exercised its power to
promulgaterulesandregulationsinimplementingthedeclaredpoliciesofRA6657.

Thecontentionisuntenable.Section16(e)ofRA6657providesasfollows:

Sec.16.ProcedureforAcquisitionofPrivateLands

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(e)Uponreceiptbythelandownerofthecorrespondingpaymentor,incaseofrejectionornoresponse
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
possessionofthelandandshallrequesttheproperRegisterofDeedstoissueaTransferCertificateof
Title(TCT)inthenameoftheRepublicofthePhilippines....(emphasissupplied)

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Itisveryexplicittherefromthatthedepositmustbemadeonlyin"cash"orin"LBPbonds".Nowheredoesitappear
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
ambiguityinSection16(e)ofRA6657towarrantanexpandedconstructionoftheterm"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
jurisdictionorgraveabuseofdiscretionclearlyconflictingwitheithertheletterorthespiritofalegislativeenactment.
18Inthisregard,itmustbestressedthatthefunctionofpromulgatingrulesandregulationsmaybelegitimatelyexercised
onlyforthepurposeofcarryingtheprovisionsofthelawintoeffect.Thepowerofadministrativeagenciesisthusconfinedto
implementingthelaworputtingitintoeffect.Corollarytothisisthatadministrativeregulationscannotextend
thelawandamendalegislativeenactment,19forsettledistherulethatadministrativeregulationsmustbeinharmonywith
theprovisionsofthelaw.Andincasethereisadiscrepancybetweenthebasiclawandanimplementingruleorregulation,it
istheformerthatprevails.20

Inthepresentsuit,theDARclearlyoversteppedthelimitsofitspowertoenactrulesandregulationswhenitissued
AdministrativeCircularNo.9.Thereisnobasisinallowingtheopeningofatrustaccountinbehalfofthelandowner
ascompensationforhispropertybecause,asheretoforediscussed,Section16(e)ofRA6657isveryspecificthat
thedepositmustbemadeonlyin"cash"orin"LBPbonds".Inthesamevein,petitionerscannotinvokeLRACircular
Nos. 29, 29A and 54 because these implementing regulations cannot outweigh the clear provision of the law.
RespondentcourtthereforedidnotcommitanyerrorinstrikingdownAdministrativeCircularNo.9forbeingnulland
void.

Proceedingtothecrucialissueofwhetherornotprivaterespondentsareentitledtowithdrawtheamountsdeposited
in trust in their behalf pending the final resolution of the cases involving the final valuation of their properties,
petitionersassertthenegative.

ThecontentionispremisedontheallegeddistinctionbetweenthedepositofcompensationunderSection16(e)of
RA6657andpaymentoffinalcompensationasprovidedunderSection1821ofthesamelaw.Accordingtopetitioners,
therightofthelandownertowithdrawtheamountdepositedinhisbehalfpertainsonlytothefinalvaluationasagreedupon
bythelandowner,theDARandtheLBPorthatadjudgedbythecourt.Ithasnoreferencetoamountdepositedinthetrust
accountpursuanttoSection16(e)incaseofrejectionbythelandownerbecausethelatteramountisonlyprovisionaland
intendedmerelytosecurepossessionofthepropertypendingfinalvaluation.Tofurtherbolsterthecontentionpetitionerscite
the following pronouncements in the case of "Association of Small Landowners in the Phil. Inc. vs. Secretary of Agrarian
Reform".22

ThelastmajorchallengetoCARPisthatthelandownerisdivestedofhispropertyevenbeforeactual
payment to him in full of just compensation, in contravention of a wellaccepted principle of eminent
domain.

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The CARP Law, for its part conditions the transfer of possession and ownership of the land to the
governmentonreceiptbythelandownerofthecorrespondingpaymentorthedepositbytheDARof
thecompensationincashorLBPbondswithanaccessiblebank.Untilthen,titlealsoremainswiththe
landowner.Nooutrightchangeofownershipiscontemplatedeither.

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Hence the argument that the assailed measures violate due process by arbitrarily transferring title
beforethelandisfullypaidformustalsoberejected.

Notably,however,theaforecitedcasewasusedbyrespondentcourtindiscardingpetitioners'assertionasitfound
that:

...despitethe"revolutionary"characteroftheexpropriationenvisionedunderRA6657whichledthe
Supreme Court, in the case of Association of Small Landowners in the Phil. Inc. vs. Secretary of
AgrarianReform(175SCRA343),toconcludethat"paymentsofthejustcompensationisnotalways
requiredtobemadefullyinmoney"evenastheSupremeCourtadmitsinthesamecase"thatthe
traditionalmediumforthepaymentofjustcompensationismoneyandnoother"theSupremeCourt
insaidcasedidnotabandonthe"recognizedrule...thattitletothepropertyexpropriatedshallpass
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
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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
expropriatedpropertyistransferred.

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
appropriatetheamountsalreadydepositedintheirbehalfascompensationfortheirpropertiessimplybecausethey
rejectedtheDAR'svaluation,andnotwithstandingthattheyhavealreadybeendeprivedofthepossessionanduse
of such properties, is an oppressive exercise of eminent domain. The irresistible expropriation of private
respondents'propertieswaspainfulenoughforthem.ButpetitionerDARrubbeditinallthemorebywithholdingthat
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
immediateeffectinbothsituationsisthesame,thelandownerisdeprivedoftheuseandpossessionofhisproperty
forwhichheshouldbefairlyandimmediatelycompensated.Fittingly,wereiteratethecardinalrulethat:

...withinthecontextoftheState'sinherentpowerofeminentdomain,justcompensationmeansnot
onlythecorrectdeterminationoftheamounttobepaidtotheownerofthelandbutalsothepaymentof
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
amountnecessarytocopewithhisloss.24(Emphasissupplied)

Thepromulgationofthe"Association"decisionendeavoredtoremovealllegalobstaclesintheimplementationof
theComprehensiveAgrarianReformProgramandclearthewayforthetruefreedomofthefarmer.25 But despite
this,casesinvolvingitsimplementationcontinuetomultiplyandclogthecourts'dockets.Nevertheless,wearestilloptimistic
thatthegoaloftotallyemancipatingthefarmersfromtheirbondagewillbeattainedinduetime.Itmustbestressed,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,theforegoingpremisesconsidered,thepetitionisherebyDENIEDforlackofmeritandtheappealed
decisionisAFFIRMEDintoto.

SOORDERED.

Regalado,PunoandMendoza,JJ.,concur.

Narvasa,C.J.,isonleave.

Footnotes

1Gelosv.CourtofAppeals,208SCRA608.615(1992),quotingJusticeAliciaSempioDiy.

2Ibid,p.616.

3Rollo,p.7.

4Rollo,pp.122123.

5Rollo,p.149.

6whichprovidesformulasforthevaluationoflandexpropriatedunderRA6657.

7whichprovidesfortheopeningoftrustaccountsintheLandBankinsteadofdepositinginan
accessiblebank,incashandbonds,thecompensationforlandexpropriatedbytheDAR.

8Rollo,pp.109111.

9Sec.16.ProcedureforAcquisitionofPrivateLands.Forpurposesofacquisitionofprivate
lands,thefollowingshallbefollowed:

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(e)Uponreceiptbythelandownerofthecorrespondingpaymentor,incaseofrejectionorno
responsefromthelandowner,uponthedepositwithanaccessiblebankdesignatedbytheDAR
ofthecompensationincashorinLBPbondsinaccordancewiththisAct,theDARshalltake
immediatepossessionofthelandandshallrequesttheproperRegisterofDeedstoissuea
TransferCertificateofTitle(TCT)inthenameoftheRepublicofthePhilippines.TheDARshall
thereafterproceedwiththeredistributionofthelandtothequalifiedbeneficiaries.

10Rollo,p.111.

11Sec.49.RulesandRegulations.ThePARCandtheDARshallhavethepowertoissue
rulesandregulations,whethersubstantiveorprocedural,tocarryouttheobjectsandpurposes
ofthisAct.Saidrulesshalltakeeffectten(l0)daysafterthepublicationintwo(2)national
newspapersofgeneralcirculation.

12Rollo,pp.111112.

13Rollo,p.112.

14Rollo,p.107.

15Rollo,p.149.

16Rollo,p.63.

17Rollo,p.67.

18Peraltavs.CivilServiceCommission212SCRA425,432(1992).

19Toledovs.CivilServiceCommission202SCRA507,54(1991)citingTeoxonv.Membersof
theBoardofAdministrators,PhilippineVeteransAdministration,33SCRA585,589(1970),citing
Santosvs.Estenzo,109Phil.419(1960)Animosvs.Phil.VeteransAffairsOffice,174SCRA
214,223224(1989).

20ShellPhilippines,Inc.vs.CentralBankofthePhilippines,162SCRA628(1988).

21Sec.18.ValuationandModeofCompensation.TheLBPshallcompensatethelandowner
insuchamountasmaybeagreeduponbythelandownerandtheDARandLBPinaccordance
withthecriteriaprovidedforinSections16and17andotherpertinentprovisionshereof,oras
maybefinallydeterminedbythecourtasthejustcompensationfortheland.

22175SCRA343.

23Decision,CourtofAppeals,p.14.

24MunicipalityofMakativs.CourtofAppeals,190SCRA207,213(1990)citingCosculluelavs.
TheHon.CourtofAppeals,164SCRA393,400(1988)ProvincialGovernmentofSorsogonvs.
Vda.deVillaroya,153SCRA291,302(1987).

25175SCRA343,392.

26Matavs.CourtofAppeals,207SCRA748,753(1992).

TheLawphilProjectArellanoLawFoundation

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