August 21, 2001
DAR OPINION NO. 12-01
FEDERICO B. FLORENDO, JR.
Manager, Acquired Assets Department
Traders Royal Bank
TRB Towers, Roxas Blvd.
Pasay City
Dear Mr. Florendo:
This refers to your request for opinion on whether or not banks still need to secure clearance from this Department before they can dispose any of their "acquired assets" classified as agricultural properties which are registered in their name.
You state that these properties were previously cleared by the respective DAR Offices where they are situated before the mortgage to the bank was annotated on the title as required by the Register of Deeds, and, based on said clearance, the bank was able to register the title in its name upon acquisition thru foreclosure of mortgage or voluntary assignment.
Section 6 of Republic Act No. 7881 (attached), amending certain provisions of R.A. No. 6657, which took effect on 12 March 1995, provides that the transfer and/or sale by banks of agricultural lands in cases where such sale, transfer or conveyance is made necessary as a result of a bank's foreclosure of the mortgaged land is permitted. It can be clearly gleaned that the legislative intent is to allow banks and other financial institutions to dispose of their property under the General Banking Act, especially those assets which are agricultural lands. For clarity, DAR Memorandum Circular No. 05, series of 1996 (herein likewise attached), was issued contemplating that the asset involved is an agricultural land foreclosed on or after 12 March 1995. It must be noted, however, that although private banks may sell to third parties their foreclosed assets, the same are still subject to acquisition under Section 16 of R.A. No. 6657 (CARL), if warranted.
Thank you.
Very truly yours,
(SGD.) VIRGILIO R. DE LOS REYES
Undersecretary for Legal Affairs, and Policy and
Planning