September 23, 1998
EXECUTIVE ORDER NO. 26
PROVIDING OPPORTUNITIES FOR THE DEVELOPMENT OF BENEFICIARIES UNDER THE COMPREHENSIVE LAND REFORM PROGRAM TO BECOME PRODUCTIVE ENTREPRENEURS, PROVIDING THE MECHANISM THEREFOR AND FOR OTHER PURPOSES
WHEREAS, the State has launched numerous indispensable programs, projects, incentives and facilities for the realization of the desired agrarian reform;
WHEREAS, the State, thru these undertakings, has envisioned that Comprehensive Agrarian Reform Program beneficiaries shall become independent entrepreneurs of the lands conveyed to them and ultimately serve as the basis of Philippine agriculture; llcd
WHEREAS, it has been observed that despite all these efforts and lapse of time, holders of Certificate of Land Ownership Awards have not freed themselves totally from the bondage of poverty and dependence from government subsidies;
WHEREAS, the State has now pinpointed that the monstrous impediment to the attainment of the desired objectives is the non- acceptability by financial institutions of the lands covered by Certificate of Land Ownership Award as collateral to secure agricultural loans applied for by their registered owners;
WHEREAS, allowing them to use their Certificate of Land Ownership Awards as collateral with the lending institutions will make them invulnerable from "loan sharks" and thereby transforming them into productive partners of the government;
NOW, THEREFORE, I, JOSEPH EJERCITO ESTRADA, President of the Philippines, by virtue of the powers vested in me by law, do hereby order:
SECTION 1. Acceptability as Loan Collateral. — Lands covered by Certificate of Land Ownership Award shall now be accepted as collateral to secure loans by their registered owners, with the consent of the farmers cooperative to which he is a member, with the government financial institutions, as well as, with the private financial institutions: Provided, That the loan proceeds shall be used exclusively in the furtherance of the agricultural productivity of the land and related activities: Provided, further, That the foreclosure of the lands provided herein shall, upon failure of the mortgagor to redeem the same within the period allowed by law, be redeemed by the farmers cooperative to which the mortgagor is a member: Provided, furthermore, That in case of default of said cooperative, the same may be redeemed by any neighboring cooperatives or qualified beneficiaries under the Comprehensive Agrarian Reform Program: Provided, finally, That when the foreclosure of the mortgaged property took place after the lapse of the prohibitory period provided for under Section 27 of the Republic Act No. 6657, the same may be sold to auction to any qualified person, natural or juridical, to own a land. cdrep
SECTION 2. Loan Value. — Holders of Certificate of Land Ownership Award availing of the benefits provided for under this Executive Order shall be allowed the maximum loan value provided for under Republic Act No. 337, as amended.
SECTION 3. Monitoring of Loan Proceeds. — The concerned financial institution, for monitoring purposes, shall notify the Department of Agrarian Reform to ensure that the ban proceeds obtained herein shall be used solely for the productivity of the land and related activities.
SECTION 4. Penalty for Violation. — The deviation by the mortgagor in the use of the loan proceeds obtained herein shall give rise for the aforesaid farmer cooperative to take over the cultivation and management of the land subject of mortgage until the said cooperative has recovered the amount of loan, necessary expenses relative thereto, and a management fee of five (5%) percent of the produced of the land.
SECTION 5. Call on the Monetary Board. — In order to realize the desired objectives of this Executive Order, the Monetary Board is hereby called upon to exempt the lands covered by the Certificate of Land Ownership Award from its authority in reducing the maximum loan ratios of the lands used as collateral to secure a loan.
SECTION 6. Repealing Clause. — All Executive Order, issuances, rules and regulations, or parts thereof, inconsistent with the provisions of this Executive Order are hereby repealed or modified accordingly.
SECTION 7. Effectivity. — This Executive Order shall take effect immediately.
DONE in the City of Manila, this 23rd day of September, in the year of Our Lord, Nineteen Hundred and Ninety-Eight. cda
Republic of the Philippines
DEPARTMENT OF AGRARIAN REFORM
Diliman, Quezon City
NOTICE OF MEETING
Date: 25 July 2001
WHAT: Technical Working Group (TWG) Meeting
WHEN: 27 July 2001 (Friday), 10:00 a.m
WHERE: PARC Room, 4/F Main Bldg., DAR, Quezon City
1. Mr. Emmanuel A. Alfiler PSRS
2. Atty. Ruben B. Alban BALA-LRSD
3. Mr. Rogoberto N. Castro IMR-FOSSO
4. Mr. Remegio O. Somogat Usec-PPLAO
5. Ms. Mirarda de Guzman BLAD-LtDoc
6. Ms. Evelyn H. Maniago BLAD
7. Ms. Analie T. Gadrinab BLAD-LAVD
8. Mr. Gerardo N. Balista Usec-PPLAO
9. Atty. Josephus A. Baterna Asec-PPLAO
10. Mr. Wilfredo D. Cabagua PS
11. Ms. Atanacia M. Guevarra PARC Secretariat
12. Ms. Josefina G. Reyes FOSSO
13. Ms. Leila Garland Cuarteros PSRS
14. Ms. Alice O. Emprese PSRS
1. Implementing Guidelines for Executive Order (E.O) No. 26, Series of 1998, Providing Opportunities for the Development of Beneficiaries Under the Comprehensive Land Reform Program to Become Productive Entrepreneurs, Providing the Mechanisms Therefor and for other Purposes"
(SGD.) MARTHA CARMEL C. SALCEDO
Director, PSRS and Member, GDC
SUBJECT: IMPLEMENTING GUIDELINES FOR EXECUTIVE ORDER NO. 26, SERIES OF 1998, "PROVIDING OPPORTUNITIES FOR THE DEVELOPMENT OF BENEFICIARIES UNDER THE COMPREHENSIVE LAND REFORM PROGRAM TO BECOME PRODUCTIVE ENTREPRENEURS, PROVIDING THE MECHANISM THEREFOR AND FOR OTHER PURPOSES."
Pursuant to Sections 37, 71 and 49 of Republic Act (RA) No. 6657, the Comprehensive Agrarian Reform Law of 1988 and in view of Executive Order (EO) No. 26, Series of 1998, the rules and regulations regarding the acceptability of lands covered by Certificates of Land Ownership Award (CLOAs) as collateral to secure loans by their registered owners are hereby promulgated as follows:
SECTION 1. Coverage — This administrative Order shall apply to all holders of registered CLOAs as defined by Sec. 24 in relation to Sec. 25 of RA 6657;
SEC. 2. Statement of Policies — The acceptability of CLOAs as collateral shall be governed by the following policies:
(a) Lands covered by CLOA shall now be accepted as collateral to secure loans by their registered owners with the government financial institutions as well as with the private financial institutions;
(b) The use of the CLOA as collateral to secure loans shall be with the consent of the farmers cooperative to which the registered owner is a member; aESHDA
(c) The loan proceeds shall be used exclusively in the furtherance of the agricultural productivity of the land and related activities;
(d) In case of foreclosure of the land, the farmer mortgagor may redeem the same within one (1) year after the foreclosure sale and in his default, by the farmer cooperative to which the mortgagor is a member or by any neighboring cooperative or qualified beneficiaries under the Comprehensive Agrarian Reform Program (CARP).
SEC. 3. Definition of Terms — As used in this Order, the following terms shall be defined as follows:
(a) Certificate of Land Ownership Award (CLOA) — Evidence of ownership of the land by a farmer beneficiary or which contains the restrictions and conditions provided under RA 6657, recorded in the Register of Deeds (ROD) concerned and annotated on the Certificate of Title (Sec. 25, RA 6657).
(b) Government Financial Institutions — Refers to the Land Bank of the Philippines (LBP) and the Development Bank of the Philippines (DBP)
(c) Private Financial Institutions — Banking institutions or duly authorized persons and entities to engage in the lending of funds obtained from the public through receipt of deposits or the sale of bonds, securities, or obligations of any kind, and all entities regularly conducting such operations (Sec. 2, RA 337, the General Banking Act).
(c) Loan Value — The maximum allowable loan against the real estate security which shall not exceed seventy per cent (70%) of the appraised value of the real estate security, plus seventy per cent (70%) of the appraised value of insured improvements (Sec. 78, RA 337).
(e) Cooperatives — Refers to organizations composed primarily of small agricultural producers, farmers, farmworkers, or agrarian reform beneficiaries who voluntarily organize themselves for the purpose of pooling land, human, technological, financial or other economic resources, and operated on the principle of one member, one vote.
WHO MAY AVAIL OF LOANS
Sec. 4. Qualifications of Farmer-Mortgagor — Agrarian reform beneficiaries (ARBs) who may avail of the loan and constitute mortgage over their lands covered by CLOAs must have the following qualifications:
(a) They must be registered owner/s of the land covered by the CLOA subject of the mortgage;
(b) They must be authorized by the farmers cooperative to which they are members, to avail of the loan and constitute the mortgage;
(c) They must be qualified to avail of the loan according to the qualifications and requirements of the financing institution.
Sec. 5. Grounds for Disqualification — The following farmer beneficiaries (FBs) are disqualified to avail of loans and constitute mortgages over land covered by CLOAs:
(a) Those who are found to have committed acts constituting the grounds for
(i) cancellation of Emancipation Patents (EPs)/CLOAs, and
(ii) perpetual disqualification as ARB as provided by Department of Agrarian Reform (DAR) Memorandum Circular (MC) No. 19, Series of 1996, in relation to Sec. 37, RA 6657.
(b) Those who are disqualified to avail of loans according to the qualifications/requirements of financial institutions and existing laws.
USE OF LOAN PROCEEDS
Sec. 6. Use of Loan Proceeds — Loan proceeds shall be used exclusively in the furtherance of the agricultural productivity of the land and related activities, such as but not, limited to:
(a) financing fixed asset acquisition;
(b) introducing land improvements; and,
(c) other financing objects that requires security.
NATURE OF LIEN ON CLOA LANDS
Sec. 7. Primary Lien on CLOA Lands — Lands awarded pursuant to RA 6657 are financed by the LBP. As such, the LBP has a primary lien by way of mortgage over such lands and may foreclose the same for non-payment by the FB of an aggregate of three (3) annual amortizations (Sec. 26, RA 6657)
Sec. 8 Subsequent Lien on CLOA Lands — Lands covered by CLOAs used as collateral to avail of loans as provided by EO 26, Series of 1998 and these Rules shall, as she financial institution may deem appropriate after due consultations with the farmer-mortgagor, be treated:
(a) as second mortgage or as an amendment of the primary lien in cases where LBP is the mortgagee;
(b) as a second mortgage in cases where the mortgagee is another financing institution.
Sec. 9. Registration of the Mortgage with the Register of Deeds (ROD) — The registration of the mortgage with the office of the ROD for the province or city where the land lies shall be the operative act to convey or affect the land insofar as third persons are concerned. The registration shall be constructive notice to all persons from the time of such registration, filing or entering. It shall be done by filing with the ROD the instrument, which creates such interest and by a brief memorandum thereof made by the ROD upon the CLOA and signed by him. A similar memorandum shall also be made on the owner's duplicate. The cancellation or extinguishment of such interest shall be registered in the same manner (Sections 51, 52, and 54, PD No. 1529, the Property Registration Decree):
Sec. 10. Loan Value — Holders of CLOAs, availing of the benefits provided for under EO 26, Series of 1998 and these Rules shall be allowed the maximum loan value of not exceeding seventy per cent (70%) of the appraised value of the real estate security; plus seventy per cent (70%) of the appraised value of insured improvements (Sec. 78, RA 337).
MONITORING OF LOAN PROCEEDS
Sec. 11. Notification of the DAR — The concerned financial institution shall notify, the DAR of the loans granted to farmer beneficiaries pursuant to E.O. 26 and these Rules. For monitoring purposes, the financial institution shall furnish the DAR names of the farmer-mortgagor, the amount of loans, the objects of financing, and copies of the monitoring reports the institution has prepared.
Sec. 12. DAR On-the-Spot Inspections — The DAR on its own, and as it may deem appropriate, undertake on-the-spot inspections and verifications based on the information it has received, to ensure that the loan proceeds are used solely for the purpose/s they were incurred.
PRIORITY OF REDEMPTION
Sec. 13. Right of Redemption — In case of foreclosure, the farmer — mortgagor-shall have one year from the date of the foreclosure sale to redeem the property by paying the amount of loan, and all the costs and interests thereon at the rate specified in the mortgage, and all the costs and other expenses incurred by the bank or institution concerned by reason of the execution and sale (Sec. 78, RA 337). AaHTIE
Sec. 14. Priority of Redemption — In case the foreclosure takes place within the prohibitory period of ten (10) years as provided by Sec. 27, RA 6657, and the farmer-mortgagor fails to redeem the land after one year from the date of the foreclosure sale, the land may be redeemed:
(a) by the farmer cooperative to which the mortgagor is a member;
(b) by any neighboring cooperative or qualified beneficiaries under CARP in case:
(i) of default of the said cooperative; or
(ii) when the farmer beneficiary is not a cooperative member
In case the foreclosure of the mortgaged property takes place after the lapse of the ten (10) year prohibitory period, the same maybe sold to auction to any qualified person, natural or juridical, to own a land but still subject to the one as provided by Sec. 78, RA 337 by the farmer mortgagor.
PENALTY FOR VIOLATIONS
Sec. 15. Penalty for Violations — Deviation by the farmer mortgagor in the use of loan proceeds shall:
(a) give rise for the aforesaid farmers cooperative to take over the cultivation and management of the land subject of mortgage until the said cooperative has recovered
(i) the amount of loan;
(ii) the necessary expenses relative thereto; and,
(iii) the management fee of five per cent (5%) of the produce of the land
(b) give the bank the right to terminate the loan and demand immediate repayment of the obligation (Sec. 77, RA 337)
(c) result in sanction against the beneficiary guilty thereof, including the forfeiture of the land transferred to him, or lesser sanctions as may be provided, without prejudice to criminal prosecution (Sec. 37, RA 6657).
Sec. 16. Repealing Clause — All other orders circulars or issuances inconsistent herewith are hereby repealed and modified accordingly.
Sec. 17. Separability Clause — In the event any of the provisions of this Order is declared unconstitutional, the validity of the other provisions shall not be affected by said declaration.
Sec. 18. Effectivity — This Order shall take effect ten (10) days after publication in two (2) newspapers of general circulation.
Diliman, Quezon City, _____________________________.
HORACIO R. MORALES, JR.