February 9, 1998
DAR OPINION NO. 20-98
Mr. Rogelio B. Rondan
Provincial Agrarian Reform Officer
Balogo, Sorsogon
Sorsogon
Dear PARO Rondan:
This has reference to your letter seeking opinion on whether landowners are still entitled to share in the produce of the land after the Department of Agrarian Reform has deposited/opened a trust account in their names.
You state that the subject landholding is a 78.1183 hectare agricultural land, situated at Barangay Sipaya and Catanusan, Juban, Sorsogon, embraced under TCT No. T-11526 and registered in the name of Salvador Encinas, Jr.; than on February 22, 1994, Certificates of Land Ownership Award (CLOAs) were issued to farmer-beneficiaries recognizing them as owners thereof; and that despite the fact that the DAR has deposited/opened a trust account in the name of Salvador Encinas, Jr., Judge Honesto A. Villamor of the Regional Trial Court, Branch 52 of Sorsogon, Sorsogon rendered a decision dated December 1, 1995 ordering said farmer-beneficiaries to pay the sum of P200,000.00 representing the lawful share of the plaintiff/landowner in the net produce covering the period from 1990 to 1994.
Anent your query, please be informed that the transitory provisions of DAR Administrative Order No. 02, Series of 1996 (copy attached) expressly provides that: "all previously established Trust Deposits which served as the basis for the transfer of the landowner's title to the Republic of the Philippines shall likewise be converted to deposits in cash and in bonds. The Bureau of Land Acquisition and Distribution shall coordinate with the LBP for this purpose". The aforecited implementing rules and regulations clearly provide that payment shall only be made: in the form of "cash or LBP bonds", a mode of payment recognized under Section 16 (e) of R.A. No. 6657 and not by means of "trust deposits". This is in line with the Supreme Court Resolution dated 05 July 1996 in the cases of Land Bank of the Philippines (LBP) vs. Court of Appeals (CA), Pedro L. Yap., et al., (G.R. No. 118712) and Department of Agrarian Reform (DAR) vs. Pedro L. Yap, et al., (G.R. No. 118745).
Since the establishment of "trust account" in the name of Salvador Encinas, Jr. did not produce the effect of payment to extinguish their obligations, the farmer-beneficiaries are still duty bound to pay their lease rentals from 1990 until such time that a "cash or LBP bonds", the only mode of payment recognized under Section 16 of R.A. No. 6657, has been made in the name of the said landowner. This is so because prior to the conversion of trust deposits into cash or LBP bonds, there could be no payment to speak of. When the trust account in the name of Salvador Encinas, Jr., was opened, the same produced no legal effect per se for this mode of payment is not the one contemplated under the law as ruled by the Supreme Court.
Please be guided accordingly.
Very truly yours,
(SGD.) ARTEMIO A. ADASA, JR.
Undersecretary for Legal Affairs, and Policy and Planning