October 5, 1999

DAR OPINION NO. 50-99

MEMORANDUM

TO               :      FELICIDAD C. BAÑARES
                           OIC-Provincial Agrarian Reform Officer II
                           Iloilo Province Luna St., La Paz, Iloilo City

SUBJECT    :     Request for DAR Clearance for the Registration of the Deed of Absolute                      Sale of the Property Foreclosed by the Philippine Veterans Bank (PVB)

This refers to the request of Mr. Ricardo D. Caballero for the issuance of DAR Clearance in order that the Deed of Absolute Sale of the properties he acquired from the Philippine Veterans Bank (PVB), approximately 4.1696 hectares of foreclosed agricultural land located at Dumangas, Iloilo, could be registered with the Register of Deeds.

It appears that he was the registered owner of subject properties before they were mortgaged to the Philippine Veterans Bank on 7 August 1968; that said properties were foreclosed and the titles were consolidated in the name of PVB on 12 October 1998; that on 16 December 1998, Mr. Caballero purchased back subject properties as shown in the Deed of Absolute Sale; and that he executed an affidavit, in compliance with DAR Administrative Order No. 01, Series of 1989, showing that his total aggregate landholding, inclusive of the land subject of the Deed of Absolute Sale, does not exceed five (5) hectares.

Based on the foregoing, issuance of DAR Clearance will be in order pursuant to Section 6 of Republic Act No. 7881 as implemented by Memorandum Circular No. 05, Series of 1996. We hereby quote the pertinent provision of M.C. No. 05, Series of 1996:

"2.     Section 6 of R.A. No. 7881 provides the following:

SEC. 6.         There shall be incorporated after Section 73 of Republic Act No. 6657 a new section to read as follows:

"SECTION 73-A.     Exception. — The provisions of Section 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 DAR for distribution to qualified farmer beneficiaries as mandated under R.A. No. 6657.

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." (emphasis and emphasis supplied)

Please be guided accordingly.

(SGD.) DANILO T. LARA

Undersecretary for Legal Affairs, and Policy and Planning

Copy furnished:

Ricardo Caballero

Paradise Street

Dumangas, Iloilo City

Dir. Gloria J. Fabia

BLAD, This Department

PARO Juan Bolaño Jr.

DAR Provincial Office

St. Clement Compound

Luna St., La Paz, Iloilo

The Municipal Agrarian Reform Officer

DAR Municipal Office

Dumangas, Iloilo