July 2, 1996
DAR OPINION NO. 54-96
Atty. Henry M. Gelacio
Chief, Legal Division
Provincial Agrarian Reform Office
Kidapawan, Cotabato
Dear Mr. Gelacio:
This has reference to the queries raised by Gary B. Vergara, Legal Officer III of DAR Kidapawan, to wit:
1. Whether or not Section 6 of R.A. 7881 allows now the issuance of clearance covering transactions under E.O. 407; and
2. Whether or not the Deed of Sale executed prior to the effectivity of E.O. 407 is covered by the latter.
The above queries are posed in connection with a Deed of Absolute Sale executed on 14 March 1990 by and between the DBP Kidapawan Branch and Mr. Juanito Arante (vendee) covering a 36,445-sq. m. land under TCT No. 6558 and registered in the name of DBP. To facilitate the transfer of the subject land, the vendee seeks DAR clearance, hence the request for clarification.
At the outset, please be clarified that the net effect of Section 6 of R.A. 7881 is to allow government financial institutions to dispose to third parties their properties which were foreclosed on or after the effectivity of RA 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 RA 6657.
As regards private banks, Section 71 of RA 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 the same are still subject to acquisition under Section 16 of RA 6657 (copy of DAR MC 5, Series of 1996 attached).
As applied to your first, query, DAR clearance may be issued for the registration of transactions involving lands foreclosed by GFIs on or after March 12, 1995 under the General Banking Act.
With regard to your second query, since the property sold to Mr. Arante had been a foreclosed DBP property long before the effectivity of RA 7881, the same squarely falls within the mandate under E.O. 407 for GFIs to turn over to DAR their foreclosed assets. Moreover, as the property is subject to acquisition and redistribution to qualified agrarian reform beneficiaries, it follows that no DAR clearance can be issued for the registration of the sale in favor of Mr. Arante.
Please be guided accordingly.
Very truly yours,
(SGD.) LORENZO R. REYES
OIC-Undersecretary
LAFMA
Copy furnished:
The Regional Director
DAR Cotabato City
PARO Nasser M. Musali
DAR Kidapawan, Cotabato
Mr. Gary B. Vergara
Legal Officer III
DAR Kidapawan, Cotabato