February 27, 1997
DAR OPINION NO. 16-97
Mr. Dominador B. Andres
OIC-Regional Director
DAR Region III
Dolores, San Fernando, Pampanga
Dear Dir. Andres:
This has reference to the letter-indorsement of then Regional Director Eugenio B. Bernardo relative to the query of Ms. Lolita C. Cruz, Department Manager III, Land Bank of the Philippines in San Fernando, Pampanga seeking opinion/confirmation on the queries posed therein, to wit:
a) Whether the foreclosed agricultural lands by Government Financial Institutions (GFIs) which are not sold within the five (5) year disposal period from acquisition can be the subject of CARP coverage; and
b) Whether the valuation of the subject property can be determined under DAR Administrative Order No. 6, Series of 1992 as amended by DAR Administrative Order No. 11, Series of 1994.
As gleaned from your letter, one of the issues that cropped up during the DAR/LVO Joint Conference held in Bauang, La Union last April 18-19, 1996 was the refusal of GFIs to execute the Deed of Transfer (DOT) in favor of the Department of Agrarian Reform per Executive Order No. 407; that the Land Bank of the Philippines (LBP) cannot accept claim folders since the same cannot be valued under existing Memorandum of Agreement with the GFIs; that in view of the GFIs' refusal to forward claim folders to LBP, the DAR forwarded the same on the basis of step 15 of the Joint LBP/DAR Memorandum Circular No. 4, Series of 1995 which states that if the GFI refuses to execute Deed of Transfer despite all efforts exerted to convince them, the DAR can proceed with compulsory acquisition; and the situation is further affected with the amendment of Section 73 of R.A. No. 6657 by Section 6 of R.A. No. 7881 which allow banks to sell or dispose foreclosed properties.
Anent your first query, agricultural lands which are foreclosed by the GFIs in the course of their business are subject to compulsory acquisition by the government through the Department of Agrarian Reform for distribution to qualified-beneficiaries. This right of acquisition holds true regardless of whether said landholdings have been sold or remain unsold within the five (5) year period from acquisition. In other words, the right to acquire foreclosed agricultural lands from the banks is absolute.
Moreover, Memorandum Circular No. 5, Series of 1996 (copy attached) expressly allows Government Financial Institutions (GFIs) 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 nonetheless fall under CARP coverage, the same shall be acquired by the government through the DAR for distribution to qualified farmer-beneficiaries as mandated under R.A. No. 6657.
Anent your last query, the answer is in the affirmative. The valuation of properties subject to CARP coverage is fixed by law and invariably applies without distinction. This valuation holds true regardless of whether the acquisition of the subject property is the result of Voluntary Offer to Sell (VOS) or Compulsory Acquisition (CA).
We hope to have clarified matters with you.
Very truly yours,
(SGD.) ARTEMIO A. ADASA, JR.
Undersecretary for Legal Affairs, and Policy and Planning
Copy furnished:
Ms. Lolita C. Cruz
Department Manager III
Land Bank of the Philippines
San Fernando, Pampanga