EIGHTEENTH CONGRESS OF 1 TIE 
)
REPLIliLlC OF THE PlllLlPPINES 
)
First Regular Session 
)
SENATE
s. No. 
271
. . O f f 't r  o r  ; : t f
19 JlJL-8 P2 37
Introduced by Senator Ralph G. Recto
AN ACT
EXPEDITING 
THE 
TITLING 
OF 
LANDS 
AWARDED 
UNDER 
THE 
COMPREHENSIVE 
AGRARIAN 
REFORM 
PROGRAM, 
LIFTING 
THE 
RESTRICTIONS ON THE UTILIZATION OF SUCH LANDS AS COLLATERAL FOR 
SECURING 
AG RIC U LT U RAL 
LOANS, AND 
OTHER SIMILAR 
FINANCIAL 
INSTRUMENTS, AND FOR OTHER PURPOSES
Rural credit flow supports economic, agricultural and social activities in rural areas -  
from the procurement of farm inputs to the payment of educational expenses of the fanner’s 
dependents. A study ot the Agricultural Credit Policy Council (ACPC) on agricultural credit 
costs and interest rate sensitivity of small fanners' revealed that more than 80% of the farmer- 
and fisherfolk-respondents contracted loans for agricultural and non-agricultural purposes. 
Without credit, fanning is reduced to a subsistence activity and a poverty trap1 2 for small 
landholders and other agricultural workers.
Despite the significance of a stable rural credit market in the lives of fanners and 
fisherfolk, participation of the formal lending institutions in the agricultural industry has been 
limited. The ACPC study highlighted several concerns in the prevailing rural and agricultural 
credit market. First, only a quarter of the agricultural loans were contracted from fonnal sources, 
with only one percent (1%) sourced from government agencies and instrumentalities3. Second, 
12% of non-borrowing respondents did not contract any loan because they believed they have 
inadequate collateral. Third, 36% of fonnal lenders admitted that they have rejected loan 
applications for having insufficient collateral4. Thus, it is not surprising that nearly a decade 
since the enactment of Republic Act No. 10000, or The Agri-Agra Credit Reform Act of 2009, 
direct compliance of Philippine financial institutions to the credit quota requirement remained at 
a low 26.05%5.
The weak presence of a fonnal rural credit market can be traced back to the 
Comprehensive Agrarian Refonn Law (CARL). Among its provisions, CARL prohibits fanner- 
beneficiaries from selling, transferring or conveying the land for a period often (10) years, and 
from mortgaging the rights to the awarded land until full payment has been conveyed. This 
prohibition, and the absence of self-sustaining agro-economic institutions in lieu of the landlord- 
tenant relationship, isolated the fanner from the market for his product, as well as from the 
sources of technology and financing. It also abetted in the materialization of other problems such 
as illicit rental, sale and mortgaging of awarded lands, infonnal creditors that charge usurious 
loan rates, and ultimately, the emergence of a new class of people -  the landed poor6.
1 Cuevas, A. C. and Sumalde, Z. M. (2015). Costs of Agricultural Credit and Interest Rate Sensitivity of Small Farmers: An
Empirical Study. Quezon City: Agricultural Credit Policy Council.
2 Fabella, R.V. (2003). “Comprehensive Agrarian Rcfomi Program and the Coasc Theorem.” Discussion Paper No. 0302.
Quezon City: University of the Philippines School of Economics.
3 Cuevas, A. C. and Sumalde, Z. M. (2015).
4 Cuevas, A. C. and Sumalde, Z. M. (2015).
5 Figures exclude alternative compliance. Data retrieved from http://www.bsp.gov.ph/banking/pbs_new/7l.htm
6 Fabella, R.V. (20l4).Comprehensivc Agrarian Reform Program (CARP): Time to Let Go. Discussion Paper No. 2014-02.
Quezon City: University of the Philippines School of Economics.
Page 1 of 2


The problems arising from the restrictions on selling, transferring, conveying, and 
mortgaging CARP-awarded lands are further aggravated by the long-delayed land titling and 
subdivision. As of January 2016, only 1.06 million hectares of the estimated 2.17 million 
hectares of lands distributed under the collective CLOA arrangement have been subdivided7. 
This figure represents less than a quarter of the 4.74 million hectares of CARP lands distributed 
from 1972-2016.
The slow subdivision of lands awarded under the agrarian reform program adversely 
affects the financial capacity and long-tenn productivity of fanner-beneficiaries. The sheer 
number of collective CLOAs issued on agricultural lands for individual cultivation, coupled with 
the slow rate of land parcel subdivision, is one of the major causes of property rights instability 
in the countryside8. Moreover, collective CLOA does not improve rural economies as it weakens 
the capacity of local government units to collect real property taxes9 and reduces the capacity 
and incentive for fanner-beneficiaries to plan, invest and improve the productivity of their 
fannland10. Ultimately, lands under collective CLOA arrangement would not help fanner- 
beneficiaries source financial resources given the high uncertainty of ownership and high 
transaction cost that comes with securing and disposing the land.
To remedy this problem, this bill proposes to turn CARP-awarded lands into effective 
resource generation mechanisms that can help farmers-beneficiaries improve their agricultural 
productivity. The bill seeks to expedite the process of subdividing and titling lands under CLOA 
arrangement, thereby removing ownership uncertainties associated with CARP-awarded lands. 
The bill also intends to allow fanner-beneficiaries to use their awarded land as collateral in 
availing loans from banks and other financial institutions for the improvement of the land they 
cultivate, procurement of agricultural inputs and machineries, and establishment of agricultural 
facilities. With these twin provisions, it is hoped that the rural credit market will be revitalized, 
countryside productivity enhanced, fann income increased, and the lives of millions of Agrarian 
Reform Beneficiaries uplifted.
Ultimately, this bill seeks to realize the noble intents of an effective agrarian reform -  a 
program that can promote social justice, effect sound rural development and industrialization, 
and establish owner-cultivatorship of economic-size fanns as the basis of Philippine agriculture.
In view of the foregoing, the swift passage of the proposed measure is earnestly sought.
/mdg
7 De los Reyes, V. (2016). End ofTerm Report of Secretary Virgilio de los Reyes for the Term from July 2010 -  June 2016.
Quezon City: Department of Agrarian Refonn.
8 De los Reyes, V. (2016).
9 Department of Agriculture (2011). DAR leaves choice to farmers: collective or individual CLOA. Retrieved on January 30,
2018 from http://www.officialgazctte.gov.ph/2011/11/28/fdar-lcavcs-choicc-to-farmcrs-collectivc-or-individual-cloa/
10 Fabella, R.V. (2014).
Page 2 of 2


EIGHTEENTH CONGRESS 01 H IE 
)
REPUBLIC OF Tin: PHILIPPINES 
)
First Regular Session 
)
^ 
luue
■ c» 
"v rf'T lnrp
SENATE
11IL -8 P2 37
Introduced by Senator Ralph G. Recto
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AN ACT
EXPEDITING 
THE 
TITLING 
OF 
LANDS 
AWARDED 
UNDER 
THE 
COMPREHENSIVE 
AGRARIAN 
REFORM 
PROGRAM, 
LIFTING 
THE 
RESTRICTIONS ON THE UTILIZATION OF SUCH LANDS AS COLLATERAL FOR 
SECURING AGRICULTURAL 
LOANS, AND 
OTHER SIMILAR 
FINANCIAL 
INSTRUMENTS, AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled:
Section 1. Subdivision and Titling of Awarded Lands under the Comprehensive 
Agrarian Reform Program. Within ninety (90) days from the effectivity of this Act, the 
Department of Agrarian Refonn (DAR) is hereby directed, in consultation with Agrarian Reform 
Beneficiaries (ARBs), relevant national government agencies, and other pertinent stakeholders, 
to establish guidelines and procedures to expedite the subdivision and titling of agricultural lands 
or parts thereof awarded to fanner-beneficiaries under the Comprehensive Agrarian Refonn 
Program (CARP). The subdivision and titling process shall prioritize portions of land that 
represents the home-lots of the fanner-beneficiaries.
Sec. 2. Acceptability of Agricultural Land as Loan Collateral. All agricultural lands shall 
be accepted as collateral by any lender, bank or other financial institution to secure loans of the 
registered owners as appearing in the Emancipation Patent, Homestead Patent, Free Patent, 
Certificate of Land Ownership Award, Original Certificate of Title, or Transfer Certificate of 
Title: Provided, That the loans obtained shall be used in the improving or developing the land 
awarded, procuring agricultural inputs and machineries, establishing facilities that will enhance 
production, processing, marketing, and distribution of agricultural products, or increasing farm 
income.
Sec. 3. Default and Foreclosure of Mortgage. In the event of default by the borrower 
under this Act, the lender, bank, or financial institution may proceed against the security for the 
loan in accordance with existing laws.
Sec. 4. Implementing Rules and Regulations. Within thirty (30) days from the approval 
of this Act, the DAR shall, in coordination with the Department of Agriculture (DA), Land Bank 
of the Philippines (LBP) and other relevant government agencies, promulgate the rules and 
regulations to effectively implement the provisions of this Act.
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Sec. 5. Separability Clause. -  If any provision, section or part of this Act shall be 
declared unconstitutional or invalid, such judgment shall not affect, invalidate or impair any 
other provisions, sections or parts hereof
Sec. 6. Repealing Clause. -  All laws, decrees, orders, rules and regulations which are 
inconsistent with the provisions of this Act are hereby repealed or modified accordingly. Nothing 
in this Act shall be construed to amend existing policies, rules and regulations on extending 
collateral-free loans to small farmers and other marginalized sectors by government financial 
institutions and other institutions engaged in micro-finance activities.
Sec. 7. Effectivity. -  This Act shall take effect fifteen (15) days following its publication 
in at least two (2) newspapers of general circulation or in the Official Gazette.
Approved,
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