Question & AnswerQ&A (DAR ADMINISTRATIVE ORDER NO. 01, S. 2000)
The rationale is to implement Section 49 of RA 6657 (Comprehensive Agrarian Reform Law of 1988) and Section 7, Chapter 2, Book IV of Executive Order No. 292 (The Revised Administrative Code of 1987) by revising rules on acquisition of private agricultural lands subject to mortgage or foreclosure, ensuring banks dispose acquired and foreclosed properties within 5 years and the government assumes registered mortgages up to the landowner's compensation value.
Mortgagee refers to banks, financial institutions, and other persons, whether natural or juridical, holding registered mortgage rights over agricultural lands subject to mortgage or foreclosure.
Foreclosure is the procedure by which the mortgaged property is sold upon the mortgagor's default to satisfy the mortgage debt, including the process to terminate the mortgagor's rights and the sale itself.
The mortgagee is deemed the new landowner if before just compensation is deposited: (a) they are the purchaser at the foreclosure sale and the redemption period (if any) has expired; or (b) they are the purchaser and the foreclosure sale has been confirmed by the court in cases where only equity of redemption exists.
The mortgagee is considered a lien-holder if at the time the land transfer claim is received by the LBP: (a) the mortgage debt is not yet due and demandable; (b) the debt is due but not foreclosed; (c) the mortgage was foreclosed but the right of redemption period has not expired or the sale is not yet confirmed by court where only equity of redemption exists.
The mortgagee must comply with claim processing requirements like surrendering the owner's duplicate copy of the title and signing all land transfer documents including Deed of Assignment, Warranties and Undertakings, Deed of Transfer, and Confirmation of Coverage and Transfer.
Proceeds of the land transfer claim will not be released to the landowner/mortgagee until all obligations are complied with, including executing required documents and releasing titles.
The DAR Provincial Agrarian Reform Office processes the claim; the LBP Land Valuation and Loan Collection Office approves it; a Notice of Land Valuation and Acquisition is sent to mortgagee; the mortgagee may accept or reject valuation; consolidation of ownership in mortgagee's name is effected; and then the land transfer claim payment is requested and released accordingly.
The procedure for title transfer in the name of the Republic of the Philippines shall be followed per DAR AO 2 (1996), and the Provincial Agrarian Reform Office will furnish supporting documentation to effect consolidation or cancellation of title as required.
If the mortgagee fails to pay required fees after a 15-day notice, the PARO can instruct the LBP to deduct these fees from the proceeds of the land transfer claim and pay the appropriate agencies to ensure the title registration process is not delayed.