QuestionsQuestions (EXECUTIVE ORDER NO. 26)
To provide opportunities and a mechanism for CARP beneficiaries to become productive entrepreneurs by allowing lands covered by a Certificate of Land Ownership Award (CLOA) to be accepted as loan collateral, subject to conditions that ensure agricultural use of the loan proceeds and establish rules on foreclosure redemption.
Lands covered by a Certificate of Land Ownership Award (CLOA) are accepted as collateral to secure loans by their registered owners.
The consent of the farmers cooperative to which the beneficiary (registered owner) is a member is required, in addition to the loan contracting with government or private financial institutions.
The loan proceeds must be used exclusively for the furtherance of agricultural productivity of the land and related activities.
After failure of the mortgagor to redeem within the period allowed by law, the foreclosure/redeemable land shall be redeemed by the farmers cooperative of which the mortgagor is a member.
Any neighboring cooperatives or qualified beneficiaries under CARP may redeem in case of default of the farmers cooperative.
When foreclosure occurs after the lapse of the Section 27 prohibitory period of R.A. 6657, the property may be sold at auction to any qualified person, natural or juridical, to own a land.
They are allowed the maximum loan value provided for under Republic Act No. 337, as amended.
For monitoring purposes, the financial institution must notify the Department of Agrarian Reform to ensure that the loan proceeds are used solely for the productivity of the land and related activities.
The deviation allows the farmers cooperative to take over cultivation and management of the mortgaged land until the cooperative has recovered the loan amount, necessary expenses, and a 5% management fee of the land’s produced.
EO No. 26 calls on the Monetary Board to exempt CLOA lands from its authority in reducing the maximum loan ratios for lands used as collateral.
Both government financial institutions and private financial institutions.
It takes effect immediately (Section 7), and acceptance as collateral under Section 1 applies to lands covered by CLOA, subject to the cooperative consent and the exclusive agricultural use conditions.
The key provisions are the acceptance of CLOA land as collateral (Section 1) and the maximum loan value support (Section 2), combined with conditions that redirect borrowers’ funds exclusively to agricultural productivity and provide cooperative mechanisms for management and redemption in foreclosure scenarios.
It repeals or modifies all Executive Orders, issuances, rules and regulations, or parts thereof, that are inconsistent with EO No. 26.
The issuance and enforceability of CLOAs, the mortgaging of agrarian land as loan collateral, the redemption process after foreclosure, the CARP-related qualification rules, and the interaction with the prohibitory period under Section 27 of R.A. 6657.