March 10, 1998
DAR OPINION NO. 33-98
PARO Victor C . Cubita
DAR Provincial Office
Kidapawan, Cotabato
Dear PARO Cubita:
This refers your letter dated 30 January 1998 requesting for clarification, regarding the program implementation on land transactions, particularly, on whether or not DAR Clearance can still be issued on lands to be mortgaged to banking institution which are not yet acquired under the different schemes of the program but fall under the last phase of program implementation. It appears that this query is posed on the assumption that the Comprehensive Agrarian Reform Program (CARP) is already on its final phase of implementation.
Anent the supposed final phase of CARP implementation, please be informed that the Department of Justice, thru its Opinion No. 9, Series of 1997 (copy attached), opined that the ten (10) year period of implementation is only a time frame given to the DAR for the acquisition and distribution of public and private agricultural lands covered by R.A. No. 6657. It is a schedule to guide the DAR in setting its priorities, but it is not by any means a limitation of authority in the absence of more categorical language providing to that effect. Moreover, Republic Act No. 8532 (copy attached) provides in Section 1 thereof the following, quote:
"Section 1. Section 63 of Republic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform Law, of 1988 is hereby amended to read as follows:
"Section 63. Funding Source. — The amount needed to implement this Act until the year 2008 shall be funded from the Agrarian Reform Fund."
It is clear therefore that CARP does not end after ten (10) years from the effectivity of R.A. No. 6657 but extends even up to the year 2008.
As regards your query, a Deed of Real Estate Mortgage executed by the original landowner is a transaction that can be registered by the Registry of Deeds even without clearance from the DAR. This is provided for under DAR Administrative Order No. 1, Series of 1989, Rule II-C(4). The same Administrative Order also provides that lands not yet acquired by DAR under R.A. No. 6657 may be the subject matter of mortgage, lien or encumbrance to guarantee any loan obligation secured to develop or improve the same (Rule V-1).
You will please note in relation to your query that a mortgage is a contract by which the debtor secures for the creditor the fulfillment of a principal obligation specifically subjecting to such security real property or real rights over real property in case of non-fulfillment of said obligation at time specified. This means that there is no actual transfer of ownership over the real property subject of the contract of mortgage, and that ownership of the land shall only be consolidated in the mortgagee or purchaser upon the failure of the mortgagor-debtor to exercise his right of redemption or upon the expiration of the redemption period. Thus, agricultural lands may be mortgaged to banking institutions without need for DAR clearance.
However, the aforesaid lands could either way still be subject to acquisition pursuant to Sections 16 and 71 of R.A. No. 6657 (if perchance later foreclosed by the bank) and, if not foreclosed, shall nonetheless still be acquired for distribution to qualified farmer-beneficiaries even beyond the original ten (10) year period of CARP implementation has elapsed, considering the aforecited DOJ Opinion No. 9, Series of 1997 and R.A. No. 8532.
Please be guided accordingly.
Very truly yours,
(SGD.) ARTEMIO A. ADASA, JR.
Undersecretary for Legal Affairs, and Policy and Planning