December 13, 1996
DAR OPINION NO. 120-96
Atty. Jesus V . Kabristante
ARDO and Concurrent PARO
Provincial Agrarian Reform Office
North National Highway,
Dumaguete City
Dear Atty. Kabristante:
This refers to your query whether before the issuance of DAR Clearance over a sale and/or transfer by the Banks of their foreclosed agricultural lands, you will still demand from the parties concerned the requisite documents set forth under A.O. No. 1, Series of 1989. You posed this query in connection to DAR Memorandum Circular No. 5, Series of 1996, clarifying Section 6 of R.A. No. 7881, to quote:
"2. Section 6 of R.A. 7881 provides the following:
Section 6. There shall be incorporated after Section 73 of R.A. 6657 a new Section to read as follows:
Section 73-A. Exception. — The provisions of Section 73, paragraph (e), to the contrary notwithstanding, the sale and/or transfer of agricultural land in cases where such sale, transfer or conveyance is made necessary as a result of a bank's foreclosure of the mortgaged land is hereby permitted."
The net effect of the aforequoted provision is to allow government financial institutions to dispose to third parties their properties which were foreclosed on or after the effectivity of R.A. 7881, i.e. March 12, 1995, under the General Banking Act. However, since said properties fall under CARP coverage, the same shall still be acquired by the government through the DAR for distribution to qualified beneficiaries as mandated under R.A. 6657.
As regards private banks, Section 71 of R.A. 6657 provides that said foreclosed assets are subject to existing laws on their compulsory transfer (that is under the General Banking Act) and acquisition under Section 16 of said Act. This means that private banks may sell to third parties their foreclosed assets but still subject to acquisition under Section 16 of R.A. 6657. In such a case, it is submitted that the DAR Certification/Clearance required under A.O. No. 1, Series of 1989, is no longer necessary as the buyer cannot legally exercise any retention right on the land purchased.
We hope to have clarified the matter with you.
Very truly yours,
(SGD.) LORENZO R. REYES
OIC-Undersecretary
LAFMA