FIFTH DIVISION
[CA-G.R. SP No. 28906. March 22, 1993.]
LILIA Y. GONZALES, as co-administratrix of the Estate of Matias Yusay, petitioner, vs. LAND OF THE PHILIPPINES, and ERNESTO SIGRE, respondent.
D E C I S I O N
JAVELLANA, J p:
This is a petition for prohibition and mandamus for the nullification of Memorandum Circular No. 6, Series of 1978, of the Department of Agrarian Reform (DAR), with a temporary restraining order enjoining respondent Land Bank of the Philippines (LBP) from receiving leasehold rentals of private respondent Ernesto Sigre, and the latter from paying said rentals to LBP, during the pendency of this petition, and, after notice, the temporary restraining order be converted into a preliminary injunction with bond.
On 18 September 1992, without necessarily giving due course to the petition, we required respondents to comment thereon, and temporarily restrained LBP from collecting from Sigre, and the latter from paying to the former, the rentals due from the land under tenancy for a period of twenty (20) days. 1
Private respondent Sigre filed his comment on 10 October 1992, 2 while that of respondent LBP was filed on 3 November 1992. 3
The undisputed facts are:
Sigre is a tenant of petitioner in an irrigated rice land identified as Lot 6032 of Pototan Cadastre, with an area of 12,839.89 square meters, situated in Barangay Naga, Pototan, Iloilo, and covered by TCT No. 395808 in the name of Matias Yusay for more than forty (40) years, first under the tenancy system and later under the leasehold system, religiously paying the Estate of Matias Yusay a lease rental of sixteen (16) cavans per crop or thirty-two (32) cavans for two (2) crops every agricultural year.
In the first crop of the 1991-1992 crop year, Sigre failed and refused to pay the sixteen (16) cavans lease rental to the Estate of Yusay because, according to him, he paid the said rental to the LBP which has been accepting said rental on the basis of DAR Memorandum Circular No. 6, Series of 1978, the full text of which reads:
"DEPARTMENT MEMORANDUM CIRCULAR
No. 6
Series of 1978
"TO : All Regional Directors, District Officers, Team Leaders and Field Personnel
"SUBJECT : Guidelines in the payment of lease rental/partial payment by farmer — beneficiaries under the land transfer program pursuant to Presidential Decree No. 27
"Our attention has been invited on situations which has affected adversely the orderly and systematic implementation of Operation Land Transfer (OLT), among which are the following:
"1. Continued payment of lease rentals directly to landowners by tenant-farmers may result to situations wherein payments made may even exceed the actual value of the land. This is particularly probable in cases where continuous payments made are based on previous sharing arrangements, despite its being declared as contrary to law or public policy. It is anticipated that a considerable number of tenant-farmers shall have paid for the total value of the land within the next two or three harvest seasons.
"2. There is difficulty in recording lease rental payments made by tenant-farmers to landowners more specifically in cases where landowners concerned refuse to issue acknowledgment/official receipts for payments made.
"3. Payments made by tenant-farmers to landowners after the establishment of Farmer Amortization Schedule (FAS) through the National Computer Center were found to be ineffectively captured or accounted for. This situation occurs due to the continued collection of lease rental payments by some landowners from tenant-farmers, although the value of the land has already been established and in some instances partially paid for by the Land Bank of the Philippines (LBP).
"4. The prolonged disagreement between parties concerned on the total payments made by the tenant-farmers has delayed program implementations.
"Considering that lease rental payments in rice/corn lands covered by OLT are to be credited as partial payments of the land transferred to the tenant-farmers, the following guidelines and procedures are hereby prescribed for guidance in the implementation of the land transfer program:
"A. Where the value of the land has already been established.
"The value of the land is established on the date the Secretary or his authorized representative has finally approved the average gross production data established by the BCLP or upon the signing of the LTPA by landowners and tenant-farmers concerned heretofore authorized.
"Payment of lease rentals to landowners covered by OLT shall terminate on the date the value of the land is established. Thereafter, the tenant-farmers, shall pay their lease rentals/amortization to the LBP or its authorized agents: Provided that in case where the value of the land is established during the month the crop is to be harvested, the cut-off period shall take effect on the next harvest season. With respect to cases where lease rentals paid may exceed the value of the land, the tenant-farmers may no longer be bound to pay such rentals, but it shall be his duty to notify the landowner and the DAR Team Leader concerned of such fact who shall ascertain immediately the veracity of the information and thereafter resolve the matter as expeditiously as possible. If the landowner still insist after positive ascertainment that the tenant-farmer is to pay rentals to him, the amount equivalent to the rental insisted to be paid shall be deposited by the tenant-farmer with the LBP or its authorized agent in his name and for his account to be withdrawn only upon proper written authorization of the DAR District Officer based on the result of ascertainment or investigation.
"B. Where the value of the land has not yet been established or under process or under protest.
"In case where the value of the land has not yet been established or under process or under protest, tenant-farmers concerned shall continue paying their lease rentals to the landowners until such time that the value of the land is established provided that such rental payments be properly receipted by landowners. In case the landowner concerned refuse to issue such receipt, the tenant-farmers may deposit such rental payments to the LBP or its authorized agents or to a bonded warehouse in the name of the landowner. The tenant-farmer shall properly notify the landowner of such deposit copy furnished the DAR Field Team.
"In case the tenant-farmer has estimated that his subsequent rental payment may already exceed the value of the land by considering the total rentals paid by him and/or the mortgage indebtedness as a lien or encumbrance of the land, it is his duty to immediately inform the landowner concerned in writing that the rentals paid by him including mortgage indebtedness will already exceed the estimated value of the land and thereafter, he will no longer continue to pay lease rentals. In the event that the landowner will not agree and insist in the payment of rentals, it shall be the duty of the tenant-farmer to bring the matter to the DAR District Office for summary verification and investigation and the District Officer shall resolve the problem as expeditiously as possible but not to exceed ten (10) days from the receipt of the complaint. Resolution of this problem may be appealed within five (5) days from receipt thereof to the Regional Director concerned for final resolution within ten (10) days from receipt of the appeal. A copy of the appeal should be furnished the District Officer concerned. However, any rental due for payment during the pendency of the question shall in the meantime be deposited by the tenant-farmer to the Land Bank of the Philippines or to any of its authorized agents, or any bonded warehouse in his name and for his account to be withdrawn only upon proper written authorization of the DAR Regional Director based on his final resolution. In the absence of an appeal, proper authorization shall be made by the DAR District Officer.
"For strict compliance.
"February 28, 1978, Diliman, Quezon City.
"(SGD.) CONRADO F. ESTRELLA
Secretary"
(pp. 52-56, Rollo)
Upon inquiry, petitioner learned that, without notice to her, DAR had fixed the three-year harvest before October, 1972 at 119.33 cavans per hectare and, on 3 April 1991, again, without notice to her, the DAR fixed the just compensation of the land at P13,406.67.
Petitioner contends that respondent LBP is acting without or in excess of jurisdiction in implementing DAR Memorandum Circular No. 6, Series of 1978, by accepting the leasehold rentals of respondent Sigre because said Circular is null and void, for the following reasons:
1. It amends PD 27 which it is supposed to implement because its mandate that payment of lease rental to the landowner for lands covered by operation land transfer shall terminate on the date the value of the land is established and, thereafter, the tenant-farmer shall pay the lease rental amortization to the LBP, are nowhere to be found in PD 27.
2. Assuming that Memorandum Circular No. 6 conforms with PD 27, Sigre cannot still be deemed owner of the land because no just compensation had been paid to petitioner as mandated by jurisprudence.
3. Memorandum Circular No. 6 runs counter to PD 816.
4. PD 27 is unconstitutional insofar as its provision fixing just compensation is concerned.
5. Assuming that PD 27, in fixing just compensation, is constitutional, its provision on compensation has been repealed by RA 6657.
6. Memorandum Circular No. 6 was not published in the Official Gazette.
I
Petitioner contends that Memorandum Circular No. 6 actually amends or expands PD 27 amounting to unauthorized legislation on the part of DAR because its provision that the obligation of the tenant-farmer to pay to the landowner the lease rentals for land covered by operation land transfer shall terminate on the date the value of the land is established and the tenant-farmer shall pay said rentals to the LBP thereafter, is not found or sanctioned under PD 27.
Respondent LBP has not disputed this argument. It only makes a general statement that the questioned circular was issued on the authority of PD 27, embraces a subject within the scope and purview of PD 27, and is reasonable. It does not, however, explain or elucidate how the circular is embraced within PD 27 and why it is reasonable. It has not specifically and successfully refuted petitioner's argument that the objectionable provision in the Memorandum Circular is not contained in or authorized by PD 27.
Indeed, nowhere in PD 27 can the objectionable provision of the circular be justified. As held in Teoxon versus Member of the Board of Administrators: 4
"1. The recognition of the power of administrative officials to promulgate rules in the implementation of the statute, necessarily limited to what is provided for in the legislative enactment, may be found in the early case of United States v. Barrias decided in 1908. Then came, in a 1914 decision, United States v. Tupasi Molina, a delineation of the scope of such competence. Thus: "Of course the regulations adopted under legislative authority by a particular department must be in harmony with the provisions of the law, and for the sole purpose of carrying into effect its general provisions. By such regulations, of course, the law itself can not be extended. So long, however, as the regulations relate solely to carrying into effect the provisions of the law, they are valid." In 1936, in People v. Santos, this Court expressed its disapproval of an administrative order that would amount to an excess of the regulatory power vested in an administrative official. We reaffirmed such a doctrine in a 1951 decision, where we again made clear that where an administrative order betrays inconsistency or repugnancy to the provisions of the Act, "the mandate of the Act must prevail and must be followed." Justice Barrera, speaking for the Court in Victorias Milling Company, Inc. v. Social Security Commission, citing Parker as well as Davis did tersely sum up the matter thus: "A rule is binding on the courts so long as the procedure fixed for its promulgation is followed and its scope is within the statutory granted by the legislature, even if the courts are not in agreement with the policy stated therein or its innate wisdom . . .. On the other hand, administrative interpretation of the law is at best merely advisory, for it is the courts that finally determine what the law means."
It cannot be otherwise as the Constitution limits the authority of the President, in whom all executive power resides, to take care that the laws be faithfully executed. No lesser administrative executive office or agency then can, contrary to the express language of the Constitution, assert for itself a more extensive prerogative. Necessarily, it is bound to observe the constitutional mandate. There must be strict compliance with the legislative enactment. Its terms must be followed. The statute requires adherence to, not departure from, its provisions. No deviation is allowable. In the terse language of the present Chief Justice, an administrative agency "cannot amend an act of Congress." Respondents can be sustained, therefore only if it could be shown that the rules and regulations promulgated by them were in accordance with what the Veterans' Bill of Rights provides." (pp. 588-590, 33 SCRA)
II
Petitioner next contends that even if Memorandum Circular No. 6 is relevant and germane to PD 27, it would still not vest ownership in Sigre over the land of petitioner tenanted by him (Sigre) until petitioner shall have first been compensated for his land, pursuant to the pronouncements in Association of Small Landowners of the Philippines, Inc. versus Secretary of Agrarian Reform, 175 SCRA 343 (1989) and Vinzons-Magana versus Estrella, 201 SCRA 536 (1991).
This argument is off-tangent. The questioned circular does not pretend to vest title over the land in the tenant-farmer before the landowner has been compensated for it. The main purpose of the circular is to make certain that the lease rental payments of the tenant-farmer are applied to his amortizations on the purchase price of the land. Before the memorandum circular, there was no way of knowing how much had already been paid by the tenant-farmer on account of the purchase price because of the refusal or failure of the landowners to issue receipts for the payments made to them. The circular was meant to remedy the situation where the tenant-farmer's lease rentals to the landowners were not credited in his favor against the determined purchase price of the land, thus making him a perpetual obligor for said purchase price. The circular does not make the tenant-farmer the owner of the land before he completes payment of the purchase price.
III
Petitioner's contention that the questioned memorandum circular runs counter to PD 816, promulgated on 21 December 1975, is not contested by respondents. Indeed, while the memorandum circular directs the tenant-farmer to pay the lease rental to the LBP, PD 816, mandates that it be paid to the landowner and the failure of the tenant-farmer to do so for a period of two years would result, upon hearing and final judgment, in the forfeiture of his Certificate of Land Transfer, if one has already been issued to him, or in the loss of his right to be issued a Certificate of Land Transfer, if one has not yet been issued to him. In either case, he loses his farmholding. There is, therefore, an irreconcileable conflict between PD 816, a statute, and Memorandum Circular No. 6. Necessarily, the latter must yield to the former.
IV
Petitioner asserts that the provision in PD No. 27 which sets forth the formula for determining the cost of the land to be transferred to the tenant-farmer is unconstitutional as it encroaches on the judicial prerogative under the Constitution to determine just compensation in the expropriation of land. Hence, Memorandum Circular No. 6 which has fixed the compensation to be paid for the subject land is invalid. Said provision reads:
"For the purpose of determining the cost of the land to be transferred to the tenant-farmer pursuant to this Decree, the value of the land shall be the equivalent to two and one-half (2½) times the average harvest of three normal crop years immediately preceding the promulgation of this Decree."
We agree with petitioner. In the case of Export Processing Zone Authority versus Dulay, 149 SCRA 305 (1987), PD Nos. 76, 464, 794, and 1533, making the fair and current market value declared by the owner of the property sought to be expropriated or such market value as determined by the assessor, whichever is lower, the basis of just compensation, were declared unconstitutional and void because:
"The method of ascertaining just compensation under the aforecited decrees constitutes impermissible encroachment on judicial prerogatives. It tends to render this Court inutile in a matter which under the Constitution is reserved to it for final determination.
"Thus, although in an expropriation proceeding the court technically would still have the power to determine the just compensation for the property, following the applicable decrees, its task would be relegated to simply stating the lower value of the property as declared either by the owner or the assessor. As a necessary consequence, it would be useless for the court to appoint commissioners under Rule 67 of the Rules of Court. Moreover, the need to satisfy the due process clause in the taking of private property is seemingly fulfilled since it cannot be said that a judicial proceeding was not had before the actual taking. However, the strict application of the decrees during the proceedings would be nothing short of a mere formality or charade as the court has only to choose between the valuation of the owner and that of the assessor, and its choice is always limited to the lower of the two. The court cannot exercise its discretion or independence in determining what is just or fair. Even a grade school pupil could substitute for the judge insofar as the determination of the constitutional just compensation is concerned." (at pp. 311-312)
Likewise, in Manotok versus National Housing Authority, 89 SCRA (89 (1987), PD Nos. 1669 and 1670, which pegged the just compensation at the market value determined by the City Assessor, were declared unconstitutional for the reason that:
"The market value stated by the city assessor alone cannot substitute for the court's judgment in expropriation proceedings. It is violative of the due process and the eminent domain provisions of the Constitution to deny to a property owner the opportunity to prove that the valuation made by a local assessor is wrong or prejudiced. The statements made in tax documents by the assessor may serve as one of the factors to be considered but they cannot exclude or prevail over a court determination made after expert commissioners have examined the property and all pertinent circumstances are taken into account and after the parties have had the opportunity to fully plead their case before a competent and unbiased tribunal. To enjoin this Court by decree from looking into alleged violations of the due process, equal protection, and eminent domain clauses of the Constitution is impermissible encroachment on its independence and prerogatives." (at p. 109)
Like PD Nos. 1669 and 1670, the questioned provision of PD No. 27, does not even give the courts the choice of the lower of two prices afforded by PD Nos. 76, 464, 794 and 1533. The courts are limited to the mathematical formula stated in the decree and is precluded from declaring a higher valuation than that arrived at in the application of the formula even if it should find that the just compensation therefor is very much higher after taking into account "all the capabilities of the property and all the uses to which it may be applied or for which it is adapted. . . . All the facts as to the condition of the property and its surroundings, its improvements and capabilities." 5 Such a limitation on a judicial prerogative violates the Constitution.
Respondents counter that the constitutionality of PD No. 27 can no longer be questioned as its constitutionality has been sustained against all the constitutional objections raised against it in the case of Association of Small Landowners in the Philippines, Inc., et al., versus Hon. Secretary of Agrarian Reform, supra.
This is not so. What was discussed and resolved in that case was the compensation provided in Republic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform Program. 6 It did not touch at all on the compensation provided in PD No. 27.
V
Petitioner next contends that, assuming arguendo that PD No. 27, in fixing the just compensation of the land in question, is constitutional, nevertheless, its mode of determining compensation can no longer be enforced as it has been repealed by RA 6657, the CARP law.
Respondents maintain otherwise, pointing to Section 75 of RA 6657 which specifically states that, "The provisions of Republic Act No. 3844 as amended, Presidential Decree Nos. 27 and 266 as amended, Executive Order Nos. 228 and 229, both Series of 1987; and other laws not inconsistent with this Act shall have suppletory effect."
Again, we must disagree with respondents. The provision of PD No. 27 on compensation is inconsistent with that of RA 6657. PD No. 27 declares that "the value of the land shall be equivalent to two and one-half (2½) times the average harvest of three normal crop years immediately preceding the promulgation of (the) Decree." RA 6657, on the other hand, provides that, "In determining just compensation, the cost of acquisition of the land, the current value of like properties, the sworn valuation by the owner, the tax declarations and assessments, 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 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." Clearly, the formula in PD No. 27 for determining compensation can find no application after RA 6657.
VI
Lastly, the validity of DAR Memorandum Circular No. 6 is assailed for lack of publication, pursuant to the doctrine in Tanada versus Tuvera, 146 SCRA 446 (1986).
We do not find it necessary to resolve this issue in view of our findings above that DAR Memorandum Circular No. 6 goes beyond the limits of PD No. 27 it seeks to implement and is tantamount to administrative legislation. It is, therefore, invalid regardless of whether or not it had been published.
We cannot understand respondents' resort to PD 27 and DAR Memorandum Circular No. 6. When respondent LBP sought to enforce said PD and circular to the landholding of petitioner in 1991, RA 6657, the CARP law, was already in force, having been passed in June, 1988, and its constitutionality had been upheld by the Supreme Court in July 1989. The law lays down the procedure for the acquisition of private lands (Sec. 16), the determination of just compensation (Sec. 17), and the mode of payment to the landowner (Sec. 18). It would seem, therefore, that respondents are still enforcing a law which, to all intents and purposes, no longer finds application, at least insofar as the acquisition of farm-lands and their compensation are concerned. If respondents had only followed the CARP law, instead of insisting on outmoded legislation, this case would never have arisen.
WHEREFORE, the petition is given due course and Memorandum Circular No. 6, Series of 1978 of the Department of Agrarian Reform is hereby declared null and void and respondents are hereby enjoined from enforcing it against petitioner herein. Respondent LBP is directed to return to petitioner the lease rentals paid by respondent Sigre to it, and respondent Sigre is directed to pay to petitioner the rentals that have accrued since his last payment to LBP, as well as the current rentals due on the land. No pronouncement as to costs.
SO ORDERED.
Gonzaga-Reyes and Ynares-Santiago, JJ., concur.
Footnotes
1. Rollo, p. 29.
2. Ibid., pp. 38-44.
3. Ibid., pp. 50-78.
4. 33 SCRA 585 (1979).
5. Garcia versus Court of Appeals, 102 SCRA 597, 608.
6. At. pp. 380-388, 175 SCRA.