August 5, 1994

DAR OPINION NO. 53-94

PARO Antonio G. Evangelista

DAR, Trece Martirez City

Dear PARO Evangelista:

Forwarded herewith are the records pertaining to the claim of Mr. Victorino Herrera that he is the tenant of the property foreclosed by the Rural Bank of Cavite from Antonio Camerino. Relative thereto, take note of the following:

1.         On his right to claim ownership under P.D. 27—The existence of all the requisites for the OLT coverage of the 3-hectare farmlot must be established, to wit:

a)         that Mr. Herrera is indeed a tenant on the farmlot involved;

b)        that the landowner owned, as of 21 October 1972, an aggregate area of 24 hectares or more of tenanted rice/corn land (MAR MEMO Circular No. 18-81); or under as of 21 October 1976 more than 7 hectare of other agricultural lands or land used for residential, commercials, industrial or other urban purposes from which he derived adequate income; and

c)         that the farmlot as of 21 October 1972 was primarily devoted to rice/corn.

It should be noted that so long as the above requisites are present, the coverage of the property under OLT will not be affected by its transfer in favor of the Bank.

2)        Re his claim as FB under RA 6657-Should coverage of the farmlot under OLT not be possible (as when the claim tenancy fails) the same may be covered in favor of Mr. Herrera pursuant to Section 71 of CARL as a foreclosed assets of the bank subject to acquisition as prescribed under Section 16 of said Act.

Considering the aforesited evaluation regarding the matter, you are hereby directed to undertake further investigation on the possibility of covering the land under OLT or CARP, whichever is applicable. If the requisite of OLT coverage were in existence as of the effectivity of PD 27 on 21 October 1972, the property should be covered under OLT notwithstanding the transfer of the property in favor of the Bank. If PD 27 is inapplicable, There is no longer any need to inquire as to the aggregate area of the Bank's landholdings (as the 2nd Indorsement dated October 9, 1990 of MARO Sangalang would imply) because the Bank cannot retain the farmlot considering that under Sec. 25 of RA 337 (the General Banking Act) "no such bank shall hold possession of any real estate under mortgage or trust deed, or the title and possession of any real estate purchased to secure any debt to it, for a longer period than five years". As the bank's holding and ownership is merely temporary (Register of Deeds of Manila vs. China Banking Corporation 4 SCRA 1146), and it is mandated to transfer the property, said transfer should be made pursuant to CARL.

Please take immediate action thereon.

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