February 9, 1998
DAR OPINION NO. 23-98
Mr. Constantino M . Atos
Development Bank of the Philippines
Daet Branch, Magallanes St.
Cor. F. Pimentel Ave.
Daet, Camarines Norte
Dear Mr. Atos:
This has reference to your letter dated 27 October 1997 seeking opinion on the queries posed therein, to wit:
a) Whether or not fishponds foreclosed prior to March 12, 1995 are already covered by the exemption as Provided for in Section 73-A of Republic Act No. 7881 (sic), and therefore could be validly sold to prospective buyers?
b) Was there really such an injunction against the implementation of R.A. No. 7881?
c) If there is, what is now the status of the case, and what is the stand of the Department of Agrarian Reform regarding the matter?
As gleaned from your letter, the DBP (Daet Branch) in the course of their business have foreclosed fishpond Properties before 12 March 1995 (effectivity of R.A. No. 7881 ); that there are already ready buyers over these Properties but Republic Act No. 6657 and Executive Order No. 407 direct you to turn over to DAR all your landholdings suitable for agriculture; that it came to your knowledge that under Section 73-A of R.A. No. 7881 (sic), sale or disposition of agricultural lands as a result of bank's foreclosure is now permitted; and that you were informed unofficially that SENTRO PARA SA TUNAY NA REPORMANG AGRARYO (SENTRA) had questioned the constitutionality of R.A. No. 7881 and as a result of which a writ of injunction was issued by the Supreme Count suspending the implementation of said law pending the resolution of the case.
Anent your first query, DAR Memorandum Circular No. 32, Series of 1997 (copy attached) has now, officially lifted the suspension relative to the implementation of R.A. No. 7881 and its implementing rule (DAR Administrative Order No. 3, Series of 1995). The legal effect of such lifting is that fishponds shall exempt from CARP coverage under certain conditions and, therefore, may be the subject of disposition in favor of third parties. However, before it could be disposed, application for exemption/exclusion is still necessary to prove that the same are indeed fishponds actually, directly and exclusively used as such prior to 12 March 1995, pursuant to DAR. A.O. No. 3, Series of 1995. It bears stressing here that what is contemplated as permissible for sale, transfer or conveyance under Section 6 of R.A. No. 7881 (i.e., Section 73-A of R.A. No. 6657, as amended by R.A. No. 7881), are those agricultural lands foreclosed by government financial institutions (e.g., DBP) on or after 12 March 1995 and before said date, as in the instant case (DAR Memorandum Circular No. 5, Series of 1996).
Anent your second query, the Supreme Court (First, Division ) in a Resolution dated 13 November 1995 granted the prayer of Petitioner SENTRA et al., for the Issuance of a Temporary Restraining Order (TRO) and enjoined the DAR from enforcing the challenged provisions of R.A. No. 7881 and DAR A.O. No. 03, Series of 1995. However, this TRO has been rendered ineffective when the Court of Appeals (CA) Entry of Judgment dated 23 September 1997 was issued certifying that its Decision dated 7 January 1997 dismissing the petition of SENTRA has become final and executory on 6 August 1997. Consequently, this development gave birth to the issuance of DAR Memorandum Circular No. 32, Series of 1997 lifting the aforesaid suspension of the implementation of R.A. No. 7881 and DAR A.O. No. 3, Series of 1995.
Anent your last query, the issue relative to the validity of R.A. No. 7881 was resolved when the decision of the Court of Appeals became final and executory. Accordingly, the processing of applications for exemption/exclusion of fishponds and prawn farms pursuant to R.A. No. 7881 and DAR A.O. No. 3, Series of 1995 may now resume.
We hope to have clarified the matters with you.
Very truly yours,
(SGD.) ARTEMIO A. ADASA, JR.
Undersecretary Legal Affairs, and Policy and Planning
Copy furnished:
Office of the Secretary
Doc. No. 97110169