AGRA LAW BATCH 2 Case No. 2 LBP v.

CA
FACTS:
Private Respondent Pedro Yap alleges that his transfer certificates of title (TCTs) were totally cancelled by the
Registrar of Deeds of Leyte and were transferred in the names of farmer beneficiaries collectively, based on
the request of the DAR together with a certification of the Landbank that the sum of money have been
earmarked for Landowner Pedro L. Yap, private respondent.
A new set of TCT were issued in the names of listed beneficiaries without notice to respondent Yap and
without full payment of just compensation in compliance with the requirement of Section 16 (e) of RA 6657 to
deposit the compensation in cash and Landbank bonds in an accessible bank.
In their complaint, respondent claimed that DAR AO No. 9 series of 1990 is null and void because DAR and
LBP 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.
In their comment, LBP and DAR that the word "deposit" as used in Section 16(e) of RA 6657 referred merely
to the act of depositing and in no way excluded the opening of a trust account as a form of deposit.
RTC referred the case to CA to which the latter ruled in favor of respondent Yap. Hence, this petition.

ISSUE:
1. Whether or not “TRUST ACCOUNT” in lieu of deposit in cash and in bonds under Sec 16(e) of RA
6657 is valid?
2. Whether or not private respondents are entitled to withdraw the amounts deposited in trust in their
behalf pending the final resolution of the cases involving the final valuation of their properties?
RULING:
1. NO. Section 16(e) of RA 6657 provides as follows:
Sec. 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. . . . 

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".

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". 

2. YES. It is a settled rule that there must be full payment of just compensation before the title to the
expropriated property is transferred. 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.