Bill allows CARP beneficiaries to mortgage their lands

MANILA, Philippines - The Arroyos in the House of Representatives are pushing for amendments to the Comprehensive Agrarian Reform Law of 1988 to allow farmer-beneficiaries to mortgage their lands.

Former President and re-elected Pampanga Rep. Gloria Macapagal-Arroyo and her son, Camarines Sur Rep. Diosdado Arroyo, filed House Bill 1388, which seeks to amend Sections 27 and 71 of Republic Act 6657.

Under the law, farm workers are barred from using the lands awarded to them as collateral for any loan transaction.

The Arroyos said lifting the restriction would strengthen the farmer-beneficiaries’ capability to avail themselves of long-term and commercial loans from banking and other financial institutions.

“This prohibition effectively impairs their right to avail (themselves) of credit from different sources and consequently limits their options,” the younger Arroyo said.

He said the country’s experience with the implementation of the RA 6657 has shown that this approach does not fully secure the farm workers’ livelihood and productivity.

“Indeed, many of them have found it difficult, if not, nearly impossible to maximize their shares due to deficient funding and the unavailability of credit,” he said.

Under the bill, Section 27 of RA 6657 is amended to include the paragraph “Notwithstanding the foregoing, and subject to the mortgage lien of the LBP as provided by Section 26 of this Act, any farmer beneficiary, regardless of whether or not s/he has fully paid the value of the land awarded to him/her may mortgage the same to any person, bank or other financial institution.”

It further states: “Provided, that the proceeds of any loan obtained shall be exclusively devoted for the improvement and/or development of the land awarded or the procurement of the necessary agricultural inputs and establishment of facilities which will enhance the production, processing or marketing of agricultural products or increase farm productivity and income.”

For this purpose, any document of title evidencing the right of the farmer-beneficiary to the land awarded, which may be issued by the Department of Agrarian Reform, shall be considered as prima facie proof of the farmer-beneficiary’s title over the mortgaged property.

Section 71 of RA No 6657 is also amended to read that “In addition to banks and other financial institutions allowed by law to hold mortgage rights or security interests in agricultural lands to secure loans and other obligations of borrowers, any person, bank or financial institution who acquires a mortgage lien over the land awarded under Section 27 hereof, may acquire title to these mortgaged properties, regardless of area, subject to existing rules on compulsory transfer of foreclosed assets and acquisition as prescribed under Section 16 of the measure.

In November 2011, the Supreme Court ordered the Hacienda Luisita Inc. to distribute some 5,000 hectares of land in Tarlac owned by President Aquino’s family to about 6,000 farmer-beneficiaries.