November 27, 1997
DAR OPINION NO. 127-97
Mr. Adolfo V . Antonio, Jr.
Manager
Rural Bank of Taguig, Inc.
Tanjay, Negros Oriental
Dear Mr. Antonio:
This has reference to your letter dated 1 September 1997 seeking opinion or interpretation of Section 73-A of R.A. No. 7881, which amended Republic Act No. 6657 (Comprehensive Agrarian Reform Law), which reads as follows:
"Section 73-A. Exception. — The provisions of Sec. 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. No. 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 Department of Agrarian Reform for distribution to qualified farmer-beneficiaries as mandated under R.A. No. 6657.
Specifically, DAR Memorandum Circular No. 05, Series of 1996 (copy attached) further provides, quote: "As regards private banks, Section 71 of R.A. No. 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. No. 6657". From the foregoing, it clearly appears that the application of Sec. 73-A applies to both government financial institutions and private banks. Consequently, the transactions of private banks shall likewise be governed by the provisions of General Banking Act and other related provisions of R.A. No. 6657.
Thank you for communicating with us and we hope to have clarified the matters with you.
Very truly yours,
(SGD.) ARTEMIO A. ADASA, JR.
Undersecretary for Legal Affairs, and Policy and Planning