Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

House Bill No. 1388

Introduced by Representatives
DIOSDADO MACAPAGAL ARROYO and GLORIA MACAPAGAL ARROYO

AN ACT

AMENDING SECTIONS 27 AND 71 OF REPUBLIC ACT NO.
6657, OTHERWISE KNOWN AS THE COMPREHENSIVE
AGRARIAN REFORM LAW OF 1988 THEREBY LIFTING THE
RESTRICTION ON THE RIGHT OF FARMER-BENEFICIARIES
TO MORTAGE AND/OR ENCUMBER THE LANDS AWARDED
TO THEM UNDER THE COMPREHENSIVE AGRARIAN REFORM.
PROGRAM AND ALLOWING THE SUBMISSION OF THE
CERTIFICATE OF LAND OWNERSHIP AWARD AS SUFFICIENT
COLLATERAL FOR LOANS ENTERED INTO WITH BANKS
AND/OR OTHER FINANCIAL INTERMEDIARIES

EXPLANATORY NOTE

Awarding farm workers title to the lands they till is a step towards
achieving genuine land reform. Nevertheless, the country's experience with the
implementation of the Comprehensive Agrarian Reform Law has shown that this
approach does not fully secure our 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.

Our government sought to address this problem by making credit more
accessible through microfinance and other similar schemes. It has been noted,
however, that credit accommodations extended under these programs are short-
term and limited, and thus, unable to sustain our farm workers’ pressing credit
requirements. Therefore, if we truly intend to assist our farm workers obtain


useful credit, we should undertake steps to strengthen their capability to avail of
long-term and commercial loans from banking and other financial institutions.

This proposal, though laudable in its objective, is not as simple since the
Comprehensive Agrarian Reform Law, bars farm workers from using the lands
awarded to them as collateral for any loan transaction. This prohibition effectively
impairs their right to avail of credit from different sources and consequently limits
their options.

Lifting these restrictions in the Comprehensive Agrarian Reform Law
would be a welcome reprieve to our farm workers. Not only will this enhance their
chances of gaining credit but it will also equip them with the necessary tools to
improve their living conditions. Because of these overriding benefits, we ask our
distinguished colleagues to work with us for the immediate passage of this Bill.

\\

N
DIOSDADO ‘Al AL ARROYO GLORIA MACAPAGAL ARROYO
Second District, Camarines Sur Second District, Pampanga


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

House Bill No._ 1388

Introduced by Representatives
DIOSDADO MACAPAGAL ARROYO and GLORIA MACAPAGAL ARROYO

AN ACT

AMENDING SECTIONS 27 AND 71 OF REPUBLIC ACT NO.
6657, OTHERWISE KNOWN AS THE COMPREHENSIVE
AGRARIAN REFORM LAW OF 1988 THEREBY LIFTING THE
RESTRICTION ON THE RIGHT OF FARMER-BENEFICIARIES
TO MORTAGE AND/OR ENCUMBER THE LANDS AWARDED
TO THEM UNDER THE COMPREHENSIVE AGRARIAN REFORM.
PROGRAM AND ALLOWING THE SUBMISSION OF THE
CERTIFICATE OF LAND OWNERSHIP AWARD AS SUFFICIENT
COLLATERAL FOR LOANS ENTERED INTO WITH BANKS
AND/OR OTHER FINANCIAL INTERMEDIARIES

Be it enacted by the Senate and the House of Representatives of the
Philippines in Congress assembled

SECTION 1. Section 27 of Republic Act No. 6657, otherwise known as the
Comprehensive Agrarian Reform Law of 1988 is hereby amended to read as
follows:

“Section 27. Transferability of Awarded Lands. Lands
acquired by beneficiaries under this Act may not be sold,
transferred or conveyed except through hereditary succession, or to
the government, or to the LBP, or to other qualified beneficiaries for
a period of ten (10) years: Provided, however, That the children or
the spouse of the transferor, shall have a right to repurchase the
land from the government or LBP within a period of two (2) years.
Due notice of the availability of the land shall be given by the LBP
to the Barangay Agrarian Reform Committee (BARC) of the


barangay where the land is situated. The Provincial Agrarian
Reform Coordinating Committee (PARCCOM) as herein provided,
shall in turn, be given due notice thereof by the BARC.

If the land has not yet been fully paid by the beneficiary, the
rights to the land may be transferred or conveyed, with prior
approval of the DAR, to any heir of the beneficiary or to any other
beneficiary who, as a condition for such transfer or conveyance,
shall cultivate the land himself. Failing compliance herewith, the
land shall be transferred to the LBP which shall give due notice of
the availability of the land in the manner specified in the
immediately preceding paragraph.

In the event of such transfer to the LBP, the latter shall
compensate the beneficiary in one lump sum for the amounts the
latter has already paid, together with the value of improvements he
has made on the land.

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, 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 ISSUED BY THE
DEPARTMENT OF AGRARIAN REFORM SHALL BE
CONSIDERED AS PRIMA FACIE PROOF OF THE FARMER-
BENEFICIARY’S TITLE OVER THE PROPOERTY MORTGAGED.

SECTION 2. Section 71 of Republic Act No. 6657 is hereby amended to
read as follows:

“Section 71. Bank Mortgages. 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 laws on compulsory transfer of foreclosed assets and
acquisition as prescribed under Section 16 of this Act

SECTION 3. The Department of Agrarian Reform shalll issue the necessary
implementing rules and regulations to implement the provisions of this Act within
one hundred twenty (120) days from its enactment

SECTION 4. Any portion or provision of this Act that may be declared
unconstitutional or invalid shall not have the effect of nullifying other portions and
provisions hereof as long as such remaining portion or provision can still subsist
and be given effect in their entirety

SECTION 5. All laws, decrees, executive orders, proclamations and
administrative regulations, or parts thereof inconsistent herewith are hereby
repealed or modified accordingly.

SECTION 6. This Act shall take effect fifteen (15) days after its publication
in at least two (2) national papers of general circulation.

Approved,