G.R. No.

118712 | October 6, 1995 |

LAND BANK OF THE PHILIPPINES vs. C O U R T O F A P P E A L S ,
PEDRO L. YAP, HEIRS OF EMILIANO F.
S A N T I A G O , AGRICULTURAL MANAGEMENT & DEVELOPMENT
CORP.,
FACTS:
The nature of the case is the consolidation of two separate petitions
for review filed by Department of Agrarian Reform and Land Bank of
t h e P h i l i p p i n e s , a s s a i l i n g t h e C o u r t o f Appeals decision, which granted private
respondents' petition for Certiorari and Mandamus.
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, herein respondents filed with the SC
a Petition for Certiorari and Mandamus with prayer for preliminary mandatory
injunction. They questioned the validity of DAR Administrative Order No. 6, Series of
1992 and DAR Administrative Order No. 9, Series of 1990, 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. T h e S C r e f e r r e d t h e
petition to CA for proper determination and disposition.
The CA found the following facts undisputed:
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. 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.
Petitioner DAR maintained that Administrative Order No. 9 is a valid exercise of its rulemaking power pursuant to Section 49 of RA 6657. Moreover, DAR maintained that the
issuance of the "Certificate of Deposit" by the Landbank was a substantial compliance
with Section 16(e) of RA 6657. 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.
ISSUES:
1. Whether or not DAR Admin Order No. 9 (1990) is null and void insofar as it
provides for the opening of trust accounts in lieu of deposit in cash or in bonds.
2. Whether or not the private respondents are entitled as a matter of right to
the i m m e d i a t e a n d p r o v i s i o n a l r e l e a s e o f t h e a m o u n t s d e p o s i t e d i n
t r u s t p e n d i n g t h e f i n a l resolution of the cases it has filed for just compensation.
RULING:
1. YES. Section 16(e) of RA 6657 provides as follows:

"SECTION 16.

Procedure for Acquisition of Private Lands. . . .

(e) Upon receipt by the landowner of the corresponding payment or, in case
of rejection or no response from the landowner, upon the deposit with an
accessible bank designated by the DAR of the compensation in
cash or in LBP bonds in accordance with this Act, the DAR shall take
immediate possession of the land and shall request the proper Register of
Deeds to issue a Transfer Certificate of Title (TCT) in the name of the
Republic of the Philippines . . ." (Emphasis supplied)

It is very explicit therefrom that the deposit must be made only in "cash" or in "LBP
bonds". Nowhere does it appear nor can it be inferred that the deposit can be made in any
other form. If it were the intention to include a "trust account" among the valid modes of
deposit, that should have been made express, or at least, qualifying words ought to have
appeared from which it can be fairly deduced that a "trust account" is allowed. In sum,
there is no ambiguity in Section 16(e) of RA 6657 to warrant an expanded construction of
the term "deposit".
The conclusive effect of administrative construction is not absolute. Action of an
administrative agency may be disturbed or set aside by the judicial department if there is
an error of law, a grave abuse of power or lack of jurisdiction or grave abuse of discretion
clearly conflicting with either the letter or the spirit of a legislative enactment.
In this regard, it must be stressed that the function of promulgating rules and
regulations may be legitimately exercised only for the purpose of carrying the provisions
of the law into effect. The power of administrative agencies is thus confined to
implementing the law or putting it into effect. Corollary to this is that administrative
regulations cannot extend the law and amend a legislative enactment, for settled is the
rule that administrative regulations must be in harmony with the provisions of the law.
And in case there is a discrepancy between the basic law and an implementing rule or
regulation, it is the former that prevails.
In the present suit, the DAR clearly overstepped the limits of its power to enact
rules and regulations when it issued Administrative Circular No. 9. There is no basis in
allowing the opening of a trust account in behalf of the landowner as compensation for
his property because, as heretofore discussed, Section 16(e) of RA 6657 is very specific
that the deposit must be made only in "cash" or in "LBP bonds". In the same vein,
petitioners cannot invoke LRA Circular Nos. 29, 29-A and 54 because these implementing
regulations cannot outweigh the clear provision of the law. Respondent court therefore
did not commit any error in striking down Administrative Circular No. 9 for being null
and void.
2. YES. The attempt to make a distinction between the deposit of compensation under
Section 16(e) of RA 6657 and determination of just compensation under Section 18 is
unacceptable. To withhold the right of the landowners to appropriate the amounts
already deposited in their behalf as compensation for their properties simply because
they rejected the DAR's valuation, and notwithstanding that they have already been
deprived of the possession and use of such properties, is an oppressive exercise of
eminent domain. The irresistible expropriation of private respondents' properties was
painful enough for them. But petitioner DAR rubbed it in all the more by withholding
that which rightfully belongs to private respondents in exchange for the taking, under
an authority (the "Association" case) that is, however, misplaced. This is misery twice
bestowed on private respondents, which the Court must rectify.
Hence, we find it unnecessary to distinguish between provisional compensation
under Section 16(e) and final compensation under Section 18 for purposes of
exercising the landowners' right to appropriate the same. The immediate effect in
both situations is the same, the landowner is deprived of the use and possession of his
property for which he should be fairly and immediately compensated.

Prepared by:
MARRY-JUNE SA. VILLARAZA