[G.R. No. 127198.
May 16, 2005] Respondent Department of Agrarian Reform is also
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[1] dated December
6, 1996 assailing the Decision[2] of the Regional Trial
Court[3] dated July 5, 1996 which ordered the
Department of Agrarian Reform (DAR) and 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.
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[5] dated July 30, 1996 for being pro forma as
the same did not contain a notice of 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,[6] citing excusable
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.[7] The affidavit of Land
Banks counsel of record notably states 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[8] due to his heavy
workload.
The trial court, in its Order[9] of November 18,
1996, denied the petition for relief because Land
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[10] dated
February 22, 1997, averring that Land Banks failure
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[11] dated March 12,
1997 insisting that equity considerations demand that
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.[12] Both parties complied.[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.[16] The trial court therefore
correctly considered the motion for
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[18] to the DAR Secretary objecting to the
land valuation summary submitted by the 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,[19] we declared that there is nothing
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,[21] 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.
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)[22] before the
completion of this process, the just compensation
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.
G.R. No. 170220
JOSEFINA S. LUBRICA, in her
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,
LAND BANK OF THE PHILIPPINES,
Respondent. Promulgated:
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
payment. Respondent LBP, on the other hand, claims
that the value of the realties should be computed as
of October 21, 1972when 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.
of
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
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.
in
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
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.
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.
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 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.
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.14 Petitioners 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
— case there is a discrepancy between the basic law
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
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 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. 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.
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.

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