Gonzales vs. Land Bank of the Philippines

A deed of assignment of rights under a land transfer claim does not override the Land Bank’s administrative regulation requiring that bonds be issued in the name of the landowner-assignor, who must thereafter endorse them to the assignee; the assignee acquires no greater right than the assignor and takes the right subject to existing restrictions burdening it.

Ramos Plantation Company, Inc. owned 251.4300 hectares of agricultural land in Malang, North Cotabato, covered by Transfer Certificate of Title No. T-28750. The property was placed under the government’s Operation Land Transfer program pursuant to Presidential Decree No. 27, giving rise to a claim for compensation with the Land Bank of the Philippines. On August 8, 1981, the corporation, through its president Antonio Vic Zulueta, executed a Deed of Assignment transferring its rights under Land Transfer Claim No. 82-757 to petitioner Ramon A. Gonzales in the amount of P400,000.00, to be paid in Land Bank bonds.

• The Assignment: On August 8, 1981, Ramos Plantation Company, Inc., through its president Antonio Vic Zulueta, executed a Deed of Assignment assigning its rights under Land Transfer Claim No. 82-757 to petitioner Ramon A. Gonzales for P400,000.00, to be paid in Land Bank bonds.

• Request for Direct Issuance: The corporation’s president wrote to the Land Bank requesting that the bonds be issued in petitioner’s name, attaching the Deed of Assignment and a board resolution.

• Land Bank’s Response: On June 30, 1982, the Land Bank’s manager of the Land Transfer Operation Department informed Ramos Plantation, Inc. that Land Transfer Claim No. 82-757 had been approved in the aggregate amount of P565,717.50, but that payment was subject to submission and accomplishment of the bank’s requirements. The corporation failed to comply with nine requirements; at the time of the stipulation, six remained unfulfilled.

• Stipulations of Facts: The parties submitted a Stipulation of Facts (July 29, 1985) and a Supplemental Stipulation of Facts (September 10, 1985). These admitted the execution of the Deed of Assignment, the request, the Land Bank’s approval, and the list of outstanding requirements. However, the stipulations omitted the Land Bank’s policy of issuing bonds only in the landowner’s name and the multi-stage nature of the release process.

• Trial Court’s Directive: The trial court ordered the Land Bank to issue P400,000.00 in bonds in petitioner’s name and directed Ramos Plantation Company, Inc. to comply with the six remaining requirements. No appeal was taken by Ramos Plantation Company, Inc. from this directive.

• Lack of Appellate Jurisdiction: Petitioner argued that the Court of Appeals acted without jurisdiction in resolving the appeal because the trial court rendered judgment solely on the basis of stipulations of fact, which, in his view, meant the appeal raised only questions of law that should have been brought directly to the Supreme Court.

• Validity and Effect of the Deed of Assignment: Petitioner maintained that under Article 1311 of the Civil Code, he stepped into the shoes of the assignor and acquired all its rights, and that the Court of Appeals erred in finding the Deed of Assignment ineffective to authorize the Land Bank to issue bonds directly in his name.

• No Cause of Action / No Privity: The Land Bank argued that the complaint stated no cause of action because there was no privity of contract between petitioner and the bank; the bank dealt only with the landowner whose land was subjected to Operation Land Transfer.

• Appeal Properly Taken: The Solicitor General, representing the Land Bank, countered that the stipulation of facts was merely partial and omitted material facts, such as the bank’s policy on issuance and the different stages of release. Hence, the appeal involved mixed questions of law and fact and was properly lodged with the Court of Appeals.

• Administrative Regulation Controls: The Land Bank relied on its Resolution No. 75-68, which prescribed that bonds be issued to the landowner-assignor, who then endorses them to the assignee, consistent with the bank’s policy to deal directly with landowners to save time and effort in verifying claimants’ identities.

• Appellate Jurisdiction: Whether the Court of Appeals had jurisdiction to entertain the Land Bank’s appeal, or whether the appeal raised only questions of law that should have been brought directly to the Supreme Court.

• Effect of Administrative Regulation on Assignment: Whether the Land Bank can be compelled to issue Land Bank bonds directly in the name of the assignee by virtue of a Deed of Assignment, notwithstanding the bank’s administrative regulation requiring issuance in the landowner’s name first.

• Appellate Jurisdiction: The Court of Appeals properly exercised jurisdiction. A stipulation of facts does not automatically mean that the parties agreed on all the facts; stipulations may be total or partial. Here, the stipulation was merely partial—it omitted the Land Bank’s policy of issuing bonds directly and only in the landowner’s name, as well as the fact that the release of payments involves different stages with distinct requirements. Because vital factual matters were left out, the appeal to the Court of Appeals involved not only pure questions of law but mixed questions of law and fact, making the remedy of appeal proper.

• Effect of Administrative Regulation on Assignment: The assignment was valid, but the assignee’s right was subject to the Land Bank’s administrative regulations. While petitioner did step into the shoes of the assignor under Article 1311 of the Civil Code, the assigned right was burdened by the restrictions set forth in Land Bank Resolution No. 75-68. That resolution, promulgated pursuant to Section 76 of Republic Act No. 3844 as amended by Presidential Decree No. 251, required that Land Bank bonds be made payable to the assignor-landowner, who must then endorse them to the assignee. An assignee cannot acquire a greater right than that pertaining to the assignor, and the assignment could not erase liens or restrictions burdening the assigned right. Administrative regulations enacted by administrative bodies to interpret the law they enforce have the force of law and enjoy a presumption of legality. Therefore, Ramos Plantation Company, Inc. must first comply with the outstanding requirements, and only after the bonds are released in its name may it endorse them to petitioner.

• Assignee Acquires No Greater Right Than Assignor — The assignee of a right takes it subject to all the defenses, liens, and restrictions that burdened the right in the hands of the assignor. An assignment cannot operate to erase existing restrictions or confer upon the assignee rights broader than those held by the assignor. Here, the assigned land transfer claim was subject to Land Bank Resolution No. 75-68, which petitioner was bound to respect.

• Force and Effect of Administrative Regulations — Administrative regulations and policies enacted by administrative bodies pursuant to their rule-making power to interpret the law they are entrusted to enforce have the force of law and are entitled to great respect. They carry a presumption of legality. The Court applied this doctrine to uphold Land Bank Resolution No. 75-68, which prescribed the procedure for recognizing assignments.

• Partial Stipulation of Facts and Appellate Jurisdiction — A judgment rendered on the basis of a stipulation of facts does not automatically limit an appeal to questions of law. Where the stipulation is only partial and omits material facts necessary to a complete resolution of the controversy, the appeal involves mixed questions of law and fact, and the Court of Appeals has jurisdiction to review the same.

• “The act of assignment could not operate to erase liens or restrictions burdening the right assigned. The assignee cannot, after all, acquire a greater right than that pertaining to the assignor.” — This passage encapsulates the core ratio of the case regarding the effect of assignment subject to existing regulations.

• “It is an elementary rule in administrative law that administrative regulations and policies enacted by administrative bodies to interpret the law which they are entrusted to enforce have the force of law and entitled to great respect. They have in their favor a presumption of legality.” — This passage states the doctrine that justified the binding effect of the Land Bank’s resolution on the assignee.

• PNB v. General Acceptance and Finance Corporation, et al., G.R. No. 30751, May 24, 1988, 161 SCRA 449 — Cited for the settled principle that an assignee cannot acquire a greater right than that pertaining to the assignor; an assignment does not erase liens or restrictions burdening the right assigned.

• Español v. Chairman, PVA, 137 SCRA 315 (1986) — Cited in support of the rule that administrative regulations have the force of law and enjoy a presumption of legality.

• Article 1311, Civil Code — Provides that contracts take effect between the parties, their assigns, and heirs. Petitioner invoked this provision to argue that he acquired the assignor’s rights directly. The Court recognized the applicability of the provision but clarified that the assignee’s rights remained subject to existing restrictions.

• Section 76, Republic Act No. 3844, as amended by Presidential Decree No. 251 — Authorized the Land Bank’s Board of Directors to prescribe rules and regulations for the issuance, reissuance, servicing, placement, and redemption of bonds. This provision served as the statutory basis for Land Bank Resolution No. 75-68.

• Land Bank Resolution No. 75-68 (February 25, 1975) — The specific administrative regulation governing the recognition of assignments of land transfer claims. Paragraph 4 thereof required that bonds be made payable to the assignor-landowner, who must then endorse them to the assignee, for record purposes.

Gutierrez, Jr., Feliciano, Bidin, and Cortes, JJ., concurred.