December 13, 1996

DAR OPINION NO. 122-96

PARO Linda Lim-Siriban

DAR Provincial Office

Sta. Isabel, Dipolog City

Dear PARO Lim-Siriban:

This refers to your unsigned letter of 18 July 1996 regarding the request of the ARBs in the Molina Estate situated at Labakid, Sindangan, Zamboanga del Norte for clarification on some issues; to wit:

1.         Whether or not the Trust Account established/earmarked by the Land Bank of the Philippines in favor of the landowner/s whose land was covered by OLT, is considered as actual payment?

2.         Is the establishment of the Trust Fund a valid justification for the farmer-beneficiaries to stop payment of lease rentals?

Your letter states that the farmer-beneficiaries of the Molina Estate are holders of registered Emancipation Patents, and that your Legal Division had advised the farmer-beneficiaries to continue paying lease rentals, unless 'the landowner is actually paid by the Land Bank. This same query was raised by the ARBs through Sr. Carmencita Alcalde of the Franciscan Missionaries of Mary, in her letter of 29 July 1996.

Anent your first query, please be informed that pursuant to the Decision in the cases of Land Bank of the Philippines (LBP) versus Court of Appeals (CA), Pedro L. Yap, et al., (G.R. No. 118712) and Department of Agrarian Reform (DAR) versus CA, Pedro L. Yap, et al., (G.R. No. 118745), the Supreme Court stated that there is no basis in allowing the opening of a trust account in behalf of the landowner as compensation for his property because Section 16 (e) of RA 6657 is very specific that the deposit must be made only in "cash" or in "LBP bonds". In line with this ruling, the Secretary has issued DAR Administrative Order No. 2 dated August 6, 1996 wherein it is provided that "All trust accounts issued pursuant to Administrative Order No. 1, S. 1993 covering landholdings not yet transferred in the name of the Republic of the Philippines as of July 5, 1996 shall immediately be converted to deposit accounts in the name of the landowners concerned." The compensation deposit in the name of the LO in cash and in bonds may be withdrawn by the landowner in full, subject however to the submission of all documentary requirements. The opening therefore of a trust account is not considered actual payment. However, if emancipation patents were already issued to the farmer-beneficiaries, the trust account shall be considered a deposit account as of the date of the opening of the trust account.

Anent your second query, inasmuch as the EPs were already registered and distributed, the only obligation of the FPs is to pay religiously the land amortizations to the LBP. He does not have to pay lease rentals anymore.

Please be guided accordingly.

Very truly yours,

(SGD.) LORENZO R. REYES

OIC-Undersecretary
LAFMA

Copy furnished:

OSEC

Doc. Nos. 9600585/96070627

Sr. Carmencita Alcalde, FMM

Franciscan Missionaries of Mary

Josefina, Zamboanga del Norte

The Chief, Legal Assistance Division

Provincial Agrarian Reform Office

Sta. Isabel, Dipolog City