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

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:

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

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 19926 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.

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.

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

Anent the first assignment of error, petitioners maintain that the word "deposit"
as used in Section 16(e) of RA 6657 referred mcerely 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 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

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 1821 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.

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.

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:

. . . 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.

Regalado, Puno and Mendoza, JJ., concur.

Narvasa, C.J., is on leave.