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SECOND DIVISION[G.R. No. 118712. October 6, 1995.]

LAND BANK OF THE PHILIPPINES, petitioner, vs. COURT OF APPEALS, PEDRO L. YAP, HEIRS OFEMILIANO 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, AGRICULTURALMANAGEMENT & 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.

D E C I S I O N

FRANCISCO, J p:

It has been declared that the duty of the court to protect the weak and the underprivileged should not becarried 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 amillionaire in his mansion or a pauper in his hovel. It is true that, in case of reasonabledoubt, we are called upon to tilt the balance in favor of the poor, to whom the Constitutionfittingly extends its sympathy and compassion. But never is it justified to prefer the poorsimply because they are poor, or to reject the rich simply because they are rich, for justicemust 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 wereordered consolidated. 3

Petitioners assail the decision of the Court of Appeals promulgated on October 20, 1994, which grantedprivate respondents' Petition for Certiorari and Mandamus and ruled as follows:

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

a) DAR Administrative order No. 9, Series of 1990 is declared null and void insofaras it provides for the opening of trust accounts in lieu of deposits in cash orbonds;

b) Respondent Landbank is ordered to immediately deposit not merely 'earmark','reserve' or 'deposit in trust' with an accessible bank designated by respondentDAR in the names of the following petitioners the following amounts in cash andin government financial instruments within the parameters of Sec. 18 (1) of RA6657:

P1,455,207.31 Pedro L. YapP135,482.12 Heirs of Emiliano SantiagoP15,914,127.77 AMADCOR;

c) The DAR-designated bank is ordered to allow the petitioners to withdraw theabove-deposited amounts without prejudice to the final determination of justcompensation by the proper authorities; and

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d) Respondent DAR is ordered to 1) immediately conduct summary administrativeproceedings to determine the just compensation for the lands of the petitionersgiving the petitioners 15 days from notice within which to submit evidence and to2) 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 forreconsideration.

Private respondents are landowners whose landholdings were acquired by the DAR and subjected totransfer 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 ofcompensation for their land pursuant to the provisions of RA 6657, private respondents filed with this Court aPetition for Certiorari and Mandamus with prayer for preliminary mandatory injunction. Private respondentsquestioned the validity of DAR Administrative Order No. 6, Series of 1992 6 and DAR Administrative OrderNo. 9, Series of 1990, 7 and sought to compel the DAR to expedite the pending summary administrativeproceedings to finally determine the just compensation of their properties, and the Landbank to deposit incash and bonds the amounts respectively "earmarked", "reserved" and "deposited in trust accounts" forprivate 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 andwere transferred in the names of farmer beneficiaries collectively, based on the request ofthe DAR together with a certification of the Landbank that the sum of P735,337.77 andP719,869.54 have been earmarked for Landowner Pedro L. Yap for the parcels of landscovered by TCT Nos. 6282 and 6283 respectively, and is issued in lieu thereof TC-563and TC-562, respectively, in the names of listed beneficiaries (ANNEXES 'C' & D') withoutnotice to petitioner Yap and without complying with the requirement of Section 16 (e) ofRA 6657 to deposit the compensation in cash and Landbank bonds in an accessiblebank.' (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 theowners of a parcel of land located at Laur, NUEVA ECIJA with an area of 18.5615hectares 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 December1990, without notice to the petitioners, the Landbank required and the beneficiariesexecuted Actual tillers Deed of Undertaking (ANNEX 'B') to pay rentals to the Landbankfor the use of their farmlots equivalent to at least 25% of the net harvest; that on 24October 1991 the DAR Regional Director issued an order directing the Landbank to paythe landowner directly or through the establishment of a trust fund in the amount ofP135,482.12; that on 24 February 1992, the Landbank reserved in trust P135,482.12 inthe name of Emiliano F. Santiago. (ANNEX 'E'; Rollo, p. 7); that the beneficiaries stoppedpaying rentals to the landowners after they signed the Actual Tiller's Deed of Undertakingcommitting themselves to pay rentals to the Landbank (Rollo, p. 133).

"The above allegations are not disputed by the respondents except that respondentLandbank claims 1) that it was respondent DAR, not Landbank which required theexecution of Actual Tillers Deed of Undertaking (ATDU, for brevity); and 2) thatrespondent Landbank, although armed with the ATDU, did not collect any amount asrental from the substituting beneficiaries (Rollo, p. 99).

"Petitioner Agricultural Management and Development Corporation (AMADCOR, forbrevity) alleges with respect to its properties located in San Francisco, Quezon thatthe properties of AMADCOR in San Francisco, Quezon consist of a parcel of land covered

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by TCT No. 34314 with an area of 209.9215 hectares and another parcel covered by TCTNo. 10832 with an area of 163.6189 hectares: that a summary administrative proceedingto determine compensation of the property covered by TCT No. 34314 was conducted bythe DARAB in Quezon City without notice to the landowner; that a decision was renderedon 24 November 1992 (ANNEX 'F') fixing compensation for the parcel of land covered byTCT No. 34314 with an area of 209.9215 hectares at P2,768,326.34 and ordering theLandbank 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 wasestablished by adding P1,986,489.73 to the first trust account established on 19December 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 TCTNo. T-2466 of the Register of Deeds of Albay with an area of 1,629.4578 hectares'; thatemancipation patents were issued covering an area of 701.8999 hectares which wereregistered on 15 February 1988 but no action was taken thereafter by the DAR to fix thecompensation 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 acquisitionhaving been previously rejected by AMADCOR. (Rollo, pp. 8-9)

"The above allegations are not disputed by the respondents except that respondentLandbank claims that petitioner failed to participate in the DARAB proceedings (landvaluation case) despite due notice to it (Rollo, p. 100)." 8

Private respondents argued that Administrative Order No. 9. Series of 1990 was issued without jurisdictionand with grave abuse of discretion because it permits the opening of trust accounts by the Landbank, in lieuof depositing in cash or bonds in an accessible bank designated by the DAR, the compensation for the landbefore it is taken and the titles are cancelled as provided under Section 16(e) of RA 6657. 9 Privaterespondents 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 takingpossession 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-makingpower 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 andthe 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 allegingthat the appeal has no merit and is merely intended to delay the finality of the appealed decision. 16 TheCourt, 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 OrderNo. 9, Series of 1990, insofar as it provides for the opening of trust accounts in lieu of deposit in cash or inbonds, and (2) in holding that private respondents are entitled as a matter of right to the immediate andprovisional 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) ofRA 6657 referred merely to the act of depositing and in no way excluded the opening of a trust account as aform 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 merelyexercised 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:

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"SECTION 16. Procedure for Acquisition of Private Lands. . . .

(e) Upon receipt by the landowner of the corresponding payment or, in case ofrejection or no response from the landowner, upon the deposit with an accessiblebank designated by the DAR of the compensation in cash or in LBP bonds inaccordance 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 ofTitle (TCT) in the name of the Republic of the Philippines . . ." (Emphasissupplied)

It is very explicit therefrom that the deposit must be made only in "cash" or in "LBP bonds". Nowhere does itappear nor can it be inferred that the deposit can be made in any other form. If it were the intention toinclude a "trust account" among the valid modes of deposit, that should have been made express, or atleast, qualifying words ought to have appeared from which it can be fairly deduced that a "trust account" isallowed. In sum, there is no ambiguity in Section 16(e) of RA 6657 to warrant an expanded construction ofthe term "deposit".

The conclusive effect of administrative construction is not absolute. Action of an administrative agency maybe disturbed or set aside by the judicial department if there is an error of law, a grave abuse of power or lackof jurisdiction or grave abuse of discretion clearly conflicting with either the letter or the spirit of a legislativeenactment. 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 ofadministrative agencies is thus confined to implementing the law or putting it into effect. Corollary to this isthat administrative regulations cannot extend the law and amend a legislative enactment, 19 for settled isthe rule that administrative regulations must be in harmony with the provisions of the law. And in case thereis 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 itissued Administrative Circular No. 9. There is no basis in allowing the opening of a trust account in behalf ofthe landowner as compensation for his property because, as heretofore discussed, Section 16(e) of RA6657 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 regulationscannot outweigh the clear provision of the law. Respondent court therefore did not commit any error instriking 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 amountsdeposited in trust in their behalf pending the final resolution of the cases involving the final valuation of theirproperties, petitioners assert the negative.

The contention is premised on the alleged distinction between the deposit of compensation under Section16(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 pertainsonly to the final valuation as agreed upon by the landowner, the DAR and the LBP or that adjudged by thecourt. It has no reference to amount deposited in the trust account pursuant to Section 16(e) in case ofrejection by the landowner because the latter amount is only provisional and intended merely to securepossession of the property pending final valuation. To further bolster the contention petitioners cite thefollowing 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 evenbefore 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 theland to the government on receipt by the landowner of the corresponding payment or thedeposit 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 iscontemplated either.

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xxx xxx xxx

"Hence the argument that the assailed measures violate due process by arbitrarilytransferring 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 itfound that:

". . . despite the 'revolutionary' character of the expropriation envisioned under RA 6657which 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 theSupreme 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 notabandon the 'recognized rule . . . that title to the property expropriated shall pass from theowner to the expropriator only upon full payment of the just compensation." 23 (Emphasissupplied)

We agree with the observations of respondent court. The ruling in the "Association" case merely recognizedthe 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 didnot, however, dispense with the settled rule that there must be full payment of just compensation before thetitle to the expropriated property is transferred.

The attempt to make a distinction between the deposit of compensation under Section 16(e) of RA 6657 anddetermination of just compensation under Section 18 is unacceptable. To withhold the right of thelandowners to appropriate the amounts already deposited in their behalf as compensation for theirproperties simply because they rejected the DAR's valuation, and notwithstanding that they have alreadybeen 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 petitionerDAR rubbed it in all the more by withholding that which rightfully belongs to private respondents in exchangefor the taking, under an authority (the "Association" case) that is, however, misplaced. This is misery twicebestowed 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 thesame. The immediate effect in both situations is the same, the landowner is deprived of the use andpossession of his property for which he should be fairly and immediately compensated. Fittingly, we reiteratethe cardinal rule that:

". . . within the context of the State's inherent power of eminent domain, just compensationmeans not only the correct determination of the amount to be paid to the owner of the landbut also the payment of the land within a reasonable time from its taking. Without promptpayment, compensation cannot be considered 'just' for the property owner is made tosuffer the consequence of being immediately deprived of his land while being made towait for a decade or more before actually receiving the amount necessary to cope with hisloss." 24 (Emphasis supplied)

The promulgation of the "Association" decision endeavored to remove all legal obstacles in theimplementation of the Comprehensive Agrarian Reform Program and clear the way for the true freedom ofthe 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 theirbondage 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 totrample 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 theappealed decision is AFFIRMED in toto.

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SO ORDERED.

Regalado, Puno and Mendoza, JJ ., concur.Narvasa, C .J ., is on leave.

Footnotes

1. Gelos v. Court of Appeals, 208 SCRA 608. 615 (1992), quoting Justice Alicia Sempio-Diy.2. Ibid, p. 616.3. Rollo, p. 7. cdtai4. Rollo, pp. 122-123.5. Rollo, p. 149.6. which provides formulas for valuation of land expropriated under RA 6657.7. which provide for the opening of trust accounts in the Land Bank instead of depositing in accessible bank, in

cash and bonds, the compensation for land expropriated by the DAR.8. Rollo, pp. 109-111. cdt9. Sec. 16. Procedure for Acquisition of Private Lands. For the purposes of acquisition of private lands, the

following shall be followed:

xxx xxx xxx

(e) Upon receipt by the landowner of the corresponding payment or, in caserejection or no response from the landowner, upon the deposit with an accessiblebank designated by the DAR of the compensation in cash in LBP bonds inaccordance with this Act, the DAR shall take immediate possession of the landand shall request the proper Register of Deeds to issue a Transfer Certificate ofTitles (TCT) in the name of the Republic of the Philippines. The DAR shallthereafter proceed with the redistribution of the land to the qualified beneficiaries.

10. Rollo, p. 111.11. Sec. 49. Rules and Regulations. The PARC and the DAR shall have the power to issue rules and

regulations, whether substantive or procedural, to carry out the objects and purposes of this Act . . . Said rulesshall take effect ten (10) days after the publication in two (2) national newspapers of general circulation.

12. Rollo, pp. 111-112.13. Rollo, p. 112. cdasia14. Rollo, p. 107.15. Rollo, p. 149.16. Rollo, p. 63.17. Rollo. p. 67.

18. Peralta vs. Civil Service Commission 212 SCRA 425, 432 (1992).19. Toledo vs. Civil Service Commission 202 SCRA 507, 54 (1991) citing Teoxon v. Members of the Board ofAdministrators, Philippine Veterans Administration, 33 SCRA 585, 589 (1970), citing Santos vs. Estenzo, 109Phil. 419 (1960); Animos vs. Phil. Veterans Affairs Office, 174 SCRA 214, 223-224.

20. Shell Philippines, Inc. vs. Central Bank of the Philippines, 162 SCRA 628 (1988). cdtai21. Section 18. Valuation and Mode of Compensation. The LBP shall compensate the landowner in such amount

as may be agreed upon by the landowner and the DAR and LBP in accordance with the criteria provided for inSections 16 and 17 and other pertinent provisions hereof, or as may be finally determined by the court as thecompensation for the land.

22. 175 SCRA 343.23. Decision, Court of Appeals, p. 14. cdt24. Municipality of Makati vs. Court of Appeals, 190 SCRA 207, 213 (1990) citing Cosculluela vs. The Hon. Court of

Appeals, 164 SCRA 393 400 (1988); Provincial Government of Sorsogon vs. Vda. de Villaroya, 153 SCRA 291,302 (1987).

25. 175 SCRA 343, 392.26. Mata vs. Court of Appeals, 207 SCRA 748, 753 (1992).