May 19, 1998
DAR OPINION NO. 61-98
MR. ADOLFO V. ANTONIO, JR.
Manager
Rural Bank of Tanjay, Inc.
Tanjay, Negros Oriental
Dear Mr. Antonio:
This refers to your letter of 19 May 1997 addressed to Administrator Reynaldo Maulit, Land Registration Authority which was indorsed to this Department on 09 March 1998, seeking legal opinion on the applicability of the provision of Section 6 of Republic Act No. 7881, with the following specific queries, to wit:
1) Under said Section is it necessary for the buyers of foreclosed properties (acquired assets) of the bank to get any clearance from the DAR?
2) If required can DAR refuse the issuance of said clearance for any reason? If so, under what circumstances?
3) Are acquired assets foreclosed by the bank before 1995 but negotiated and sold to interested buyers after 1995 covered by the above section?
4) If DAR refuses to issue said clearance, what remedies can the bank avail of under the said section?
As gleaned from your letter, aforesaid queries are raised because of the refusal by the PARO of Negros Oriental to issue clearance on sale of acquired assets alleging that said exceptions apply only to properties foreclosed by the Rural Bank in 1995.
At the outset, we wish to inform you that R.A. No. 7881 as clarified by DAR Memorandum Circular No. 05, Series of 1996 contemplates of agricultural lands foreclosed on or after 12 March 1995, the date of effectivity of said law.
Anent your first and second queries, it is necessary that a DAR clearance be secured since the property that is to be acquired by the buyer from the bank is a foreclosed agricultural land coverable under the Comprehensive Agrarian Reform Program (CARP).
With respect to the third query, the same is answered in the negative. The provision of Section 6 of R.A. No. 7881 contemplates of foreclosure of agricultural lands on or after March 12, 1995. We observe no indication in the language of said Section 6 that agricultural lands foreclosed by banks before the effectivity of said law and negotiated after its effectivity are likewise covered thereof.
Anent your fourth query, the DAR may not decline the issuance of a clearance for the registration of agrilands disposed of by banks as a result of foreclosure of mortgage. This is in accord with the provision of R.A. No. 7881 which allows the bank to dispose of their foreclosed agricultural lance to third persons. It must be understood however that the subject property though allowed to be disposed of to third persons is still covered under the CARP, regardless of its area.
In connection with all the above queries, please find attached copy of DAR Opinion No. 127, series of 1997.
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
Copy furnished:
Administrator Reynaldo Maulit
Atty. Ricardo F. Arandilla
Land Registration Authority
Fast Ave., cor. NIA ROAD
Quezon City
The Provincial Agrarian Reform Officer
DAR-Provincial Office
E.J. Blanco Rd., Piapi Dumaguete City
OSEC Doc. No. 980 30138