August 9, 1995

DAR OPINION NO. 40-95

PARO Paulino T. Tudlasan, Jr.

DAR — Tagbilaran City

Dear PARO Tudlasan:

This has reference to your request for opinion regarding the application of the Rural Bank of Calape (Bohol), Inc. for DAR Clearance for the registration of the sale in favor of Dr. Reuel Relampagos of a parcel of land registered in the name of the Bank under TCT No. 20346. You state that said application for DAR Clearance was denied by your Office on the ground that said Bank owns more than five (5) hectares of agricultural land.

The DAR Clearance for the registration of the sale in favor of Dr. Relampagos may be issued. However, the property transferred shall be subjected to acquisition and redistribution to qualified beneficiaries pursuant to CARL.

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 RA 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.

Please be guided accordingly.

Very truly yours,

(SGD.) HECTOR D. SOLIMAN
Assistant Secretary Legal Affairs Office