QuestionsQuestions (DAR ADMINISTRATIVE ORDER NO. 01, S. 2000)
It is issued pursuant to Section 49 of Republic Act (RA) No. 6657 (Comprehensive Agrarian Reform Law) and Section 7, Chapter 2, Book IV of Executive Order (EO) No. 292 (Revised Administrative Code of 1987).
The AO aligns agrarian reform acquisition rules with the General Banking Act’s rule that banks dispose of acquired foreclosed assets within five years and with RA 6657 provisions allowing banks to acquire title to foreclosed agricultural lands, subject to agrarian reform acquisition mechanisms.
Mortgage is an accessory contract securing a principal obligation with real property. Mortgagor is the person pledging the property as security; mortgagee refers to banks, financial institutions, or other persons holding registered mortgage rights over the land.
Foreclosure is the procedure where the mortgaged property is sold upon default and includes the sale itself. Right of redemption is the mortgagor’s right to reacquire/divest the lien within the period allowed by law; if the mortgagee is a bank, redemption exists in both judicial and extra-judicial foreclosure, and may be exercised within one year from registration of the certificate of sale.
Under Section 6(3) of RA 7353, redemption is within one (1) year from foreclosure if the land is not covered by Torrens title, or within one (1) year from the date of registration of the foreclosure if covered by Torrens title.
Redemption exists only in extra-judicial foreclosure and must be exercised within one (1) year from the date of registration of the certificate of sale with the proper Register of Deeds.
Equity of redemption is the right to redeem after default but before sale confirmation (typically in judicial foreclosure). Right of redemption is after the sale (during the statutory redemption period). Equity of redemption exists in judicial foreclosure and is exercisable within the Rules of Court timeframe before confirmation.
Before deposit of just compensation, the mortgagee is treated as new landowner if (a) the mortgagee is the purchaser in the foreclosure sale and the right of redemption period has expired (where redemption exists), or (b) the mortgagee is the purchaser and the foreclosure sale is confirmed by the court (where only equity of redemption exists).
When, at the time DAR/LBP receives the land transfer claim, the mortgage debt is not yet due and demandable; or it is due but no foreclosure yet; or foreclosure occurred but redemption period has not expired; or foreclosure sale is not yet confirmed where only equity of redemption is available.
The mortgagee may proceed with cancellation of the mortgagor’s title and issuance of a new title in its name under Section 63 of PD 1529 upon expiration of redemption or court confirmation. If the mortgagee fails to cause issuance of title within 30 days from receipt of notice of land valuation and acquisition, transfer to the Republic of the Philippines follows and the mortgagor’s title is cancelled and a new title issued in the name of the Republic without needing a certificate in the mortgagee’s name.
A certified copy of the final court order confirming the sale.
Judicial foreclosure: the final deed of sale executed by the sheriff in favor of the mortgagee. Extra-judicial foreclosure: either a final deed of sale executed by the authorized person under the power of attorney in the mortgage, or an affidavit of non-redemption by the mortgagee; if the mortgagee fails, an affidavit by the PARO is sufficient.
These amounts are deducted from the proceeds of the land transfer claim and paid by LBP if the mortgagee fails to pay within 15 days from notice/demand by the PARO.
Among others: receive DAR/LBP notices and communications (e.g., notice of coverage, valuation, and acquisition); transact with DAR/LBP to the exclusion of other persons; be named recipient of cash/bond deposits; and receive the proceeds of the land transfer claim less applicable deductions.
Rights: payment of the mortgagor’s obligation from land transfer proceeds up to the equivalent of the landowner’s compensation value; and receipt of notices related to the obligation. Obligations: issue a release of mortgage or execute a deed of redemption and deliver the owner’s duplicate title after payment; and sign documents needed for cancellation of the mortgage.
The proceeds are not released until the landowner (mortgagee-as-new-landowner) complies with obligations under Section 9(a) (e.g., surrender of owner’s duplicate title and signing transfer documents). The lien-holder is not paid until compliance with obligations under Section 9(b) (e.g., release/deed of redemption and sign cancellation documents).
DARPO continues processing per AO 2; LBP approves; LBP sends Memorandum of Valuation to PARO; DARPO sends NLVA and notice to consolidate within 30 days; mortgagee accepts/rejects and executes consolidation affidavit/new title and forwards to DARPO; DAR requests LBP to deposit the land transfer claim; then LBP issues Certification of Deposit to DAR.
The procedure under Section 6(b)(2) is undertaken—i.e., DARPO requests ROD to issue title in the name of the Republic of the Philippines using the required consolidation documents, without needing a certificate of title in the mortgagee’s name.
No. It does not apply if the mortgagee is already the registered owner at the start; in such cases, DAR AO No. 2 (1996), as amended, governs.