September 23, 1998

EXECUTIVE ORDER NO. 26

PROVIDING OPPORTUNITIES FOR THE DEVELOPMENT OF

BENEFICIARIES UNDER THE COMPREHENSIVE LAND REFORM
PROGRAM TO BECOME PRODUCTIVE ENTREPRENEURS, PROVIDING
THE MECHANISM THEREFOR AND FOR OTHER PURPOSES

WHEREAS, the State has launched numerous indispensable

programs, projects, incentives and facilities for the realization of the
desired agrarian reform;
WHEREAS, the State, thru these undertakings, has envisioned that
Comprehensive Agrarian Reform Program beneficiaries shall become
independent entrepreneurs of the lands conveyed to them and
ultimately serve as the basis of Philippine agriculture; llcd
WHEREAS, it has been observed that despite all these efforts and
lapse of time, holders of Certificate of Land Ownership Awards have not
freed themselves totally from the bondage of poverty and dependence
from government subsidies;
WHEREAS, the State has now pinpointed that the monstrous
impediment to the attainment of the desired objectives is the non-
acceptability by financial institutions of the lands covered by Certificate
of Land Ownership Award as collateral to secure agricultural loans
applied for by their registered owners;
WHEREAS, allowing them to use their Certificate of Land
Ownership Awards as collateral with the lending institutions will make
them invulnerable from "loan sharks" and thereby transforming them
into productive partners of the government;
NOW, THEREFORE, I, JOSEPH EJERCITO ESTRADA, President of the
Philippines, by virtue of the powers vested in me by law, do hereby
order:
SECTION 1. Acceptability as Loan Collateral. — Lands
covered by Certificate of Land Ownership Award shall now be accepted
as collateral to secure loans by their registered owners, with the consent
of the farmers cooperative to which he is a member, with the
government financial institutions, as well as, with the private financial
institutions: Provided, That the loan proceeds shall be used exclusively
in the furtherance of the agricultural productivity of the land and related
activities: Provided,further, That the foreclosure of the lands provided
herein shall, upon failure of the mortgagor to redeem the same within
the period allowed by law, be redeemed by the farmers cooperative to
which the mortgagor is a member: Provided, furthermore, That in case
of default of said cooperative, the same may be redeemed by any
neighboring cooperatives or qualified beneficiaries under the
Comprehensive Agrarian Reform Program: Provided, finally, That when
the foreclosure of the mortgaged property took place after the lapse of
the prohibitory period provided for under Section 27 of the Republic Act
No. 6657, the same may be sold to auction to any qualified person,
natural or juridical, to own a land. cdrep
SECTION 2. Loan Value. — Holders of Certificate of Land
Ownership Award availing of the benefits provided for under this
Executive Order shall be allowed the maximum loan value provided for
under Republic Act No. 337, as amended.
SECTION 3. Monitoring of Loan Proceeds. — The
concerned financial institution, for monitoring purposes, shall notify
the Department of Agrarian Reform to ensure that the ban proceeds
obtained herein shall be used solely for the productivity of the land and
related activities.
SECTION 4. Penalty for Violation. — The deviation by the
mortgagor in the use of the loan proceeds obtained herein shall give
rise for the aforesaid farmer cooperative to take over the cultivation and
management of the land subject of mortgage until the said cooperative
has recovered the amount of loan, necessary expenses relative thereto,
and a management fee of five (5%) percent of the produced of the land.
SECTION 5. Call on the Monetary Board. — In order to
realize the desired objectives of this Executive Order, the Monetary
Board is hereby called upon to exempt the lands covered by the
Certificate of Land Ownership Award from its authority in reducing the
maximum loan ratios of the lands used as collateral to secure a loan.
SECTION 6. Repealing Clause. — All Executive Order,
issuances, rules and regulations, or parts thereof, inconsistent with the
provisions of this Executive Order are hereby repealed or modified
accordingly.
SECTION 7. Effectivity. — This Executive Order shall take
effect immediately.
DONE in the City of Manila, this 23rd day of September, in the
year of Our Lord, Nineteen Hundred and Ninety-Eight. cda

Republic of the Philippines

DEPARTMENT OF AGRARIAN REFORM
Diliman, Quezon City
 NOTICE OF MEETING
Date: 25 July 2001
WHAT: Technical Working Group (TWG) Meeting
WHEN: 27 July 2001 (Friday), 10:00 a.m
WHERE: PARC Room, 4/F Main Bldg., DAR, Quezon City
WHO:
1. Mr. Emmanuel A. Alfiler PSRS
2. Atty. Ruben B. Alban BALA-LRSD
3. Mr. Rogoberto N. Castro IMR-FOSSO
4. Mr. Remegio O. Somogat Usec-PPLAO
5. Ms. Mirarda de Guzman BLAD-LtDoc
6. Ms. Evelyn H. Maniago BLAD
7. Ms. Analie T. Gadrinab BLAD-LAVD
8. Mr. Gerardo N. Balista Usec-PPLAO
9. Atty. Josephus A. Baterna Asec-PPLAO
10. Mr. Wilfredo D. Cabagua PS
11. Ms. Atanacia M. Guevarra PARC
Secretariat
12. Ms. Josefina G. Reyes FOSSO

Secretariat
13. Ms. Leila Garland Cuarteros PSRS
14. Ms. Alice O. Emprese PSRS

AGENDA:
1. Implementing Guidelines for Executive Order (E.O) No.
26, Series of 1998, Providing Opportunities for the
Development of Beneficiaries Under the Comprehensive
Land Reform Program to Become Productive Entrepreneurs,
Providing the Mechanisms Therefor and for other Purposes"

(SGD.) MARTHA CARMEL C.

SALCEDO
Director, PSRS and Member, GDC

SUBJECT: IMPLEMENTING GUIDELINES FOR EXECUTIVE ORDER NO.

26, SERIES OF 1998, "PROVIDING OPPORTUNITIES FOR THE
DEVELOPMENT OF BENEFICIARIES UNDER THE
COMPREHENSIVE LAND REFORM PROGRAM TO BECOME
PRODUCTIVE ENTREPRENEURS, PROVIDING THE
MECHANISM THEREFOR AND FOR OTHER PURPOSES."
Pursuant to Sections 37, 71 and 49 of Republic Act (RA) No. 6657, the
Comprehensive Agrarian Reform Law of 1988 and in view of Executive
Order (EO) No. 26, Series of 1998, the rules and regulations regarding the
acceptability of lands covered by Certificates of Land Ownership Award
(CLOAs) as collateral to secure loans by their registered owners are
hereby promulgated as follows:
ARTICLE I
GENERAL PROVISIONS
SECTION 1. Coverage — This administrative Order shall apply to all
holders of registered CLOAs as defined by Sec. 24 in relation to Sec. 25 of
RA 6657;
SEC. 2. Statement of Policies — The acceptability of CLOAs as
collateral shall be governed by the following policies:
(a) Lands covered by CLOA shall now be accepted as
collateral to secure loans by their registered owners with
the government financial institutions as well as with the
private financial institutions;
(b) The use of the CLOA as collateral to secure loans shall be
with the consent of the farmers cooperative to which the
registered owner is a member; aESHDA
(c) The loan proceeds shall be used exclusively in the
furtherance of the agricultural productivity of the land and
related activities;
(d) In case of foreclosure of the land, the farmer mortgagor
may redeem the same within one (1) year after the
foreclosure sale and in his default, by the farmer
cooperative to which the mortgagor is a member or by any
neighboring cooperative or qualified beneficiaries under
the Comprehensive Agrarian Reform Program (CARP).
SEC. 3. Definition of Terms — As used in this Order, the following
terms shall be defined as follows:
(a) Certificate of Land Ownership Award (CLOA) — Evidence
of ownership of the land by a farmer beneficiary or which
contains the restrictions and conditions provided under RA
6657, recorded in the Register of Deeds (ROD) concerned
and annotated on the Certificate of Title (Sec. 25, RA 6657).
(b) Government Financial Institutions — Refers to the Land
Bank of the Philippines (LBP) and the Development Bank of
the Philippines (DBP)
 (c) Private Financial Institutions — Banking institutions or
duly authorized persons and entities to engage in the
lending of funds obtained from the public through receipt
of deposits or the sale of bonds, securities, or obligations
of any kind, and all entities regularly conducting such
operations (Sec. 2, RA 337, the General Banking Act).
(c) Loan Value — The maximum allowable loan against the
real estate security which shall not exceed seventy per cent
(70%) of the appraised value of the real estate security, plus
seventy per cent (70%) of the appraised value of insured
improvements (Sec. 78, RA 337).
(e) Cooperatives — Refers to organizations composed
primarily of small agricultural producers, farmers,
farmworkers, or agrarian reform beneficiaries who
voluntarily organize themselves for the purpose of pooling
land, human, technological, financial or other economic
resources, and operated on the principle of one member,
one vote.
ARTICLE II
WHO MAY AVAIL OF LOANS
Sec. 4. Qualifications of Farmer-Mortgagor — Agrarian reform
beneficiaries (ARBs) who may avail of the loan and constitute mortgage
over their lands covered by CLOAs must have the following qualifications:
(a) They must be registered owner/s of the land covered by
the CLOA subject of the mortgage;
(b) They must be authorized by the farmers cooperative to
which they are members, to avail of the loan and constitute
the mortgage;
(c) They must be qualified to avail of the loan according to
the qualifications and requirements of the financing
institution.
Sec. 5. Grounds for Disqualification — The following farmer beneficiaries
(FBs) are disqualified to avail of loans and constitute mortgages over land
covered by CLOAs:
(a) Those who are found to have committed acts constituting
the grounds for
(i) cancellation of Emancipation Patents (EPs)/CLOAs,
and
(ii) perpetual disqualification as ARB as provided by
Department of Agrarian Reform (DAR) Memorandum
 Circular (MC) No. 19, Series of 1996, in relation to
Sec. 37, RA 6657.
(b) Those who are disqualified to avail of loans according to
the qualifications/requirements of financial institutions
and existing laws.
ARTICLE III
USE OF LOAN PROCEEDS
Sec. 6. Use of Loan Proceeds — Loan proceeds shall be used exclusively in
the furtherance of the agricultural productivity of the land and related
activities, such as but not, limited to:
(a) financing fixed asset acquisition;
(b) introducing land improvements; and,
(c) other financing objects that requires security.
ARTICLE IV
NATURE OF LIEN ON CLOA LANDS
Sec. 7. Primary Lien on CLOA Lands — Lands awarded pursuant to RA
6657 are financed by the LBP. As such, the LBP has a primary lien by way
of mortgage over such lands and may foreclose the same for non-
payment by the FB of an aggregate of three (3) annual amortizations (Sec.
26, RA 6657)
Sec. 8 Subsequent Lien on CLOA Lands — Lands covered by CLOAs used
as collateral to avail of loans as provided by EO 26, Series of 1998 and
these Rules shall, as she financial institution may deem appropriate after
due consultations with the farmer-mortgagor, be treated:
(a) as second mortgage or as an amendment of the primary
lien in cases where LBP is the mortgagee;
(b) as a second mortgage in cases where the mortgagee is
another financing institution.
Sec. 9. Registration of the Mortgage with the Register of Deeds (ROD) —
The registration of the mortgage with the office of the ROD for the
province or city where the land lies shall be the operative act to convey or
affect the land insofar as third persons are concerned. The registration
shall be constructive notice to all persons from the time of such
registration, filing or entering. It shall be done by filing with the ROD the
instrument, which creates such interest and by a brief memorandum
thereof made by the ROD upon the CLOA and signed by him. A similar
memorandum shall also be made on the owner's duplicate. The
cancellation or extinguishment of such interest shall be registered in the
same manner (Sections 51, 52, and 54, PD No. 1529, the Property
Registration Decree):
ARTICLE VI
LOAN VALUE
Sec. 10. Loan Value — Holders of CLOAs, availing of the benefits
provided for under EO 26, Series of 1998 and these Rules shall be
allowed the maximum loan value of not exceeding seventy per cent (70%)
of the appraised value of the real estate security; plus seventy per cent
(70%) of the appraised value of insured improvements (Sec. 78, RA 337).
ARTICLE VII
MONITORING OF LOAN PROCEEDS
Sec. 11. Notification of the DAR — The concerned financial
institution shall notify, the DAR of the loans granted to farmer
beneficiaries pursuant to E.O. 26 and these Rules. For monitoring
purposes, the financial institution shall furnish the DAR names of the
farmer-mortgagor, the amount of loans, the objects of financing, and
copies of the monitoring reports the institution has prepared.
Sec. 12. DAR On-the-Spot Inspections — The DAR on its own, and
as it may deem appropriate, undertake on-the-spot inspections and
verifications based on the information it has received, to ensure that the
loan proceeds are used solely for the purpose/s they were incurred.
ARTICLE VIII
PRIORITY OF REDEMPTION
Sec. 13. Right of Redemption — In case of foreclosure, the farmer
— mortgagor-shall have one year from the date of the foreclosure sale to
redeem the property by paying the amount of loan, and all the costs and
interests thereon at the rate specified in the mortgage, and all the costs
and other expenses incurred by the bank or institution concerned by
reason of the execution and sale (Sec. 78, RA 337). AaHTIE
Sec. 14. Priority of Redemption — In case the foreclosure takes
place within the prohibitory period of ten (10) years as provided by Sec.
27, RA 6657, and the farmer-mortgagor fails to redeem the land after one
year from the date of the foreclosure sale, the land may be redeemed:
(a) by the farmer cooperative to which the mortgagor is a
member;
(b) by any neighboring cooperative or qualified beneficiaries
under CARP in case:
(i) of default of the said cooperative; or
 (ii) when the farmer beneficiary is not a cooperative
member
In case the foreclosure of the mortgaged property takes place after the
lapse of the ten (10) year prohibitory period, the same maybe sold to
auction to any qualified person, natural or juridical, to own a land but still
subject to the one as provided by Sec. 78, RA 337 by the farmer
mortgagor.
ARTICLE IX
PENALTY FOR VIOLATIONS
Sec. 15. Penalty for Violations — Deviation by the farmer
mortgagor in the use of loan proceeds shall:
(a) give rise for the aforesaid farmers cooperative to take
over the cultivation and management of the land subject of
mortgage until the said cooperative has recovered
(i) the amount of loan;
(ii) the necessary expenses relative thereto; and,
(iii) the management fee of five per cent (5%) of the
produce of the land
(b) give the bank the right to terminate the loan and demand
immediate repayment of the obligation (Sec. 77, RA 337)
(c) result in sanction against the beneficiary guilty thereof,
including the forfeiture of the land transferred to him, or
lesser sanctions as may be provided, without prejudice to
criminal prosecution (Sec. 37, RA 6657).
ARTICLE X
FINAL PROVISIONS
Sec. 16. Repealing Clause — All other orders circulars or issuances
inconsistent herewith are hereby repealed and modified accordingly.
Sec. 17. Separability Clause — In the event any of the provisions of
this Order is declared unconstitutional, the validity of the other
provisions shall not be affected by said declaration.
Sec. 18. Effectivity — This Order shall take effect ten (10) days
after publication in two (2) newspapers of general circulation.
Diliman, Quezon City, _____________________________.

HORACIO R. MORALES, JR.

Secretary