THE Department of Justice (DOJ) has endorsed a proposed bill of Pampanga’s Second District Rep. Gloria Macapagal-Arroyo amending the provisions of the Comprehensive Agrarian Reform Law (CARL) to allow farmer-beneficiaries to mortgage the agricultural land awarded to them to any bank or financial institutions.

In a reply-letter to Negros Third District Rep. Pryde Henry Teves, chairman of the Committee on Agrarian Reform, the DOJ through Justice Undersecretary Francisco Baraan III, said it has no legal or constitutional objection to the  proposed House Bill  (HB) 825 authored by Arroyo and her son, Camarines Sur Rep. Diosdado Macapagal-Arroyo.

In fact, the DOJ stressed, the proposed bill is in consonance with Section 5, Article XIII of the 1987 Constitution which provides that “the State shall recognize the right of farmers….to participate in the planning, organization and management of the program and shall provide support to agriculture through appropriate technology….and adequate financial, production, marketing, and other support services.”

H.B. 825 aims to amend Sections 27 and 71 of Republic Act  (RA) 6657, otherwise known as the Comprehensive Agrarian Reform Law (CARL) of 1988 to allow more avenues to the farmer-beneficiary to mortgage the agricultural land awarded to him “to any person, banks or financial institutions other than those allowed by law for its improvement or development.”

Sections 27 and 71 of R.A. 6657 provide prohibition to the farmer-beneficiary from selling, transferring or conveying the agricultural land awarded to him within a period of 10 years and the limitation of the farmer-beneficiary to mortgage the land to banks and financial institutions allowed by law to hold mortgage rights or security interest on the agricultural land.  

“Thus, so long as the interest of the banks and financial institutions as the secondary mortgagees are also protected and safeguards or mechanisms are in place to ensure that the proceeds of the loans obtained by the farmer-beneficiary will be exclusively used for the improvement or development of his agricultural land, we interpose no objection to the enactment of the proposed legislation,” the DOJ said.

 The DOJ also noted that pursuant to Section 26 of CARL, the Land Bank of the Philippines has a superior right of lien on the mortgaged land over the subsequent mortgagee.

“On the other hand, if the person, private bank or financial institution which acquires mortgage rights on the agricultural land forecloses it for non-payment of the obligation by the farmer-beneficiary, while the latter is still under obligation to pay his amortization with the LBP, the land is still subject under the mortgage lien of the LBP.…,” the justice department explained.

However, the DOJ expressed reservation to the proposed bill insofar as it allows the farmer-beneficiary to mortgage the land awarded to him “to any person.”

The DOJ said mortgaging the awarded land to “any person” without a provision on safeguards or monitoring by authorities may open it to unscrupulous  disposition of agricultural land which may circumvent the purpose of the government’s agrarian reform program.

“The convenience of mortgaging the land to a private person as compared to banks which are regulated under RA  337 might invite abuse by the private person,” the DOJ added.