LANDBANK vs, COURT OF APPEALS

GR NO. 118712 July 5, 1996

Facts: Private respondents are landowners whose landholdings are acquired by DAR. They are aggrieved
by the compensation valuation made by the DAR and LBP which led them to file a petition for certiorari
and mandamus with preliminary mandatory injunction. They sought to compel the DAR to finally
determine the just compensation and the LBP to deposit in cash and bonds the amount respectively
deposited in trust accounts for private respondents and to allow then to withdraw the same.

Private respondents argued that  AO No. 9, Series of 1990 was issued without jurisdiction and with grave
abuse of discretion because it permits the opening of trust accounts by the Landbank, in lieu of
depositing in cash or bonds in an accessible bank designated by the DAR, the compensation for the land
before it is taken and the titles are cancelled as provided under Section 16(e) of RA 6657. Private
respondents also assail the fact that the DAR and the Landbank 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. 

Petitioner DAR, however, maintained that AO No. 9 is a valid exercise of its rule-making power pursuant
to Section 49 of RA 6657. Moreover, the DAR maintained that the issuance of the "Certificate of
Deposit" by the Landbank was a substantial compliance with Section 16(e) of RA 6657.

Issue: Whether the term “deposit” in Section 16(e) of RA 6657 excluded the opening of a trust account
as a form of deposit.

Ruling: Yes. It is explicit from Section 16(e) of RA 6657 that the deposit must be in the form of cash or
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".

The action of an administrative agency is not absolute and may be disturbed by the judicial department
if there is an error of law. It must be stressed that the function of promulgating rules and regulations
may be legitimately exercised only for the purpose of carrying the provisions of the law into effect. The
power of administrative agencies is thus confined to implementing the law or putting it into effect.
Administrative regulations must be in harmony with the provisions of the law. And in case there is a
discrepancy between the basic law and an implementing rule or regulation, it is the former that prevails.