August 14, 1996
DAR OPINION NO. 69-96
Mr. Francisco D. Paule, Jr.
President-Manager
Rural Bank of San Luis (Pampanga), Inc.
San Luis, Pampanga
Dear Mr. Paule:
This has reference to your request for clarification on the requirement imposed by the DAR Regional Director for the incorporation in the Deed of Mortgage involving a land covered by an EP or CLT of the following provision, to wit:
"In the event of foreclosure, only persons who are qualified to purchase lands under Commonwealth Act No. 539, Republic Act No. 1162 as amended, Republic Act No. 3844, as amended, Presidential Decree No. 27, Republic Act No. 6657 or government banking institutions may participate in the public auction sale thereof."
Please be informed that the above requirement is necessitated by the fact that lands covered pursuant to the land transfer programs of the government (whether under PD 27, RA 6657 or other agrarian laws) are governed by legal restrictions on transferability. The requirement contemplates of cases where the mortgage is foreclosed and title to the farmlot used as collateral is transferred in the name of the mortgagee. In such cases, there is a need to verify whether or not the transferee is a qualified beneficiary.
Attached is a copy of DAR Administrative Order No. 8, Series of 1995 (Rules and Procedures Governing the Transferability of Lands Awarded to Agrarian Reform Beneficiaries Pursuant to Presidential Decree No. 27 as amended by Executive Order No. 228 and Republic Act No. 6657), for ready reference.
As regards CLT or EP lands subject of foreclosure, the same are not reverted to the Land Bank but are reallocated to qualified beneficiaries, if said lots have not yet been fully-paid and the 10-year periods mentioned in A.O. 8 have not yet lapsed.
We hope to have clarified matters for you.
Very truly yours,
(SGD.) LORENZO R. REYES
OIC-Undersecretary
LAFMA