September 15, 1998
DAR OPINION NO. 95-98
MR. WIRO R. TORRES
Ilaor Norte, Oas, Albay
Dear Mr. Torres:
This refers to your letter dated 30 July 1998 seeking for legal opinion. In brief, you seek clarification for the following:
1. Whether or not a recipient of Emancipation Patent can use such EP as security for loan to a certain person?
2. Whether or not it is legal for a son to take the place of his sick/incapacitated parent as beneficiary of the land granted by the government?
3. Whether or not it is legal for the son to assume his parent's loan and pay said loan in behalf of his sick tenant-parent considering the fact that the son is now actually tilling the land?
The answer to your first query must be qualified. If the Emancipation Patent covers a fully paid farmlot then the same can be legally used as collateral for loan, otherwise, it is not allowed. This is so because EPs are proofs of ownership which can be the subject of a contract of sale or mortgage.
Please note, however, that although transfer of awarded lands under Presidential Decree No. 27, as amended by Executive Order No. 228 and Republic Act No. 6657 may be allowed if their amortization has been fully paid, DAR Administrative Order No. 08, Series of 1995 provides certain conditions that must be met in order that valid transfer thereof can be made, to wit:
a. that the productivity of the land shall be maintained;
b. that the buyer will not exceed the aggregate landownership ceiling provided by law; and
c. that the ownership ceiling of five (5) hectares shall be imposed.
Clearly, therefore, if an EP is made as security, for loan and consequently foreclosed by the mortgagee, the aforesaid conditions must first be complied with before ownership over the awarded land is parted with.
Your second query as we see it relates to an awarded land already covered by an EP, and since EP is a proof of ownership we submit that if the parent-beneficiary is sick or is incapacitated to work on the land it is but right and proper for his children, not necessarily a son, to personally cultivate or work on the land in his behalf. Ownership of the land should, however, still remain with the parent-beneficiary to whom the Emancipation Patent was awarded. It would be different if the parent is merely a tenant wherein the following provision of Republic Act No. 3844, as amended will be applied:
"Sec. 9. Agricultural Leasehold Relation Not Extinguished by Death or Incapacity of the Parties. — In case of death or permanent incapacity of the agricultural lessee to work his landholding, the leasehold shall continue between the agricultural lessor and the person who can cultivate the landholding personally, chosen by the agricultural lessor within one month from such death or permanent incapacity, from among the following: (a) the surviving spouse; (b) the eldest direct descendant or descendants in the order of their age. . . ."
Anent your query as to whether the son can assume the loan, we see no legal impediment for a child to assume the loan obligation of his parent when the latter is incapacitated to fulfill his obligation. It has to be reiterated, however, that ownership of the subject land shall remain with the still living incapacitated parent-beneficiary who shall personally owe and is now indebted to his child by implication of law of the amount paid for the loan. Ownership of the land will not automatically be transferred to the child who assumed the mortgage obligation of his incapacitated parent-beneficiary for if such will be the case, it will in effect unduly prejudice the legitime or inheritance of the other children who likewise have rights to the succession in case of death of their parent beneficiary pursuant to the provisions of the Civil Code, Ministry Memorandum Circular No. 19, Series of 1978, Ministry Memorandum Circular No. 5, Series of 1984 and DAR Administrative Order No. 14, Series of 1988 (copies herewith attached).
Thank you for communicating with us and we hope to have enlightened you on the matter.
Very truly yours,
(SGD.) DANILO T. LARA
Undersecretary for Legal Affairs, and Policy and Planning