May 28, 1996

DAR OPINION NO. 27-96

PARO Fidel B. Morales

Department of Agrarian Reform

Gango, Ozamis City

Dear PARO Morales:

This refers to your request for advice regarding the CARP coverage of the agricultural lands foreclosed by the Insular Bank of Asia and America (IBAA) embraced by TCT Nos. 9148, 9243 and 9244, respectively.

You state that said landholdings were the subject of a Deed of Absolute Sale dated 29 October 1984 in favor of Mr. Melquidez Azcuna; that said sale, however, remains unregistered to date; and that by reason of the sale, MARO Nena P. Dajao of Lopez Jaena, Misamis Occidental finds difficulty in placing the property under compulsory land acquisition.

The sale of agricultural lands forming part of the foreclosed assets of private banks and other financial institutions is allowed. However, said foreclosed assets are still subject to CARP coverage and should therefore be acquired by the government thru the DAR for distribution to qualified beneficiaries.

Section 71 of CARL provides that banks may acquire title to mortgaged properties, subject to existing laws on compulsory transfer of foreclosed assets and acquisition as prescribed under Section 16 of said Act. Moreover, Section 6 of R.A. 7881 provides that the transfer by banks of such foreclosed assets is permitted. Taken together, these legal provisions mean that while there is no prohibition against the transfer of foreclosed assets of private banks to third persons, said assets are subject to acquisition and redistribution pursuant to CARL.

Applying the aforecited provision to subject foreclosed asset, the sale thereof in 1984 to Melquiadez Azcuna does not place said properties outside CARP coverage. Consequently, they shall be subject to CARP coverage and should therefore be acquired by the government thru the DAR for distribution to qualified beneficiaries.

Please be guided accordingly.

Very truly yours,

(SGD.) LORENZO R. REYES

OIC-Undersecretary
LAFMA