Guidelines on the Issuance of Certificate of Full Payment and Release of Real Estate Mortgage by the LBP to Agrarian Reform Beneficiaries

December 23, 2013

JOINT DAR-LBP MEMORANDUM CIRCULAR NO. 19-13

 

In order to facilitate the issuance of Certificate of Full Payment (CFP) and Release of Real Estate Mortgage (ROREM) by the LBP to Agrarian Reform Beneficiaries (ARBs) who have fully paid their land amortizations, whether or not summary administrative proceedings or just compensation cases are pending, this Joint Memorandum Circular is hereby issued for the information and guidance of all concerned.

I. Coverage

These guidelines shall apply to ARBs who are:

a) Awardees under R.A. No. 6657, as amended, who have fully paid the land amortizations and applicable interests to the LBP pursuant to Section 26 of this Act; and

b) Awardees under Presidential Decree (P.D.) No. 27 who have fully paid the land amortizations and applicable interests to the LBP pursuant to Executive Order (E.O.) No. 228.

II. Legal Bases

a) Section 26 of R.A. No. 6657, as amended, provides that lands awarded pursuant to this act shall be paid by the ARBs to LBP in thirty (30) annual amortizations at six percent (6%) interest per annum. SDEHCc

b) Section 12 of Executive Order (E.O.) No. 229 states that lands acquired and redistributed by the government shall be paid for by the beneficiaries in thirty (30) equal annual payments at six percent (6%) per annum interest, with the first repayment due one year after resale, and a two percent (2%) interest rebate for amortizations paid on time, provided that in no case shall the annual amortizations exceed ten percent (10%) of the land's annual value of gross production. Should the amortization exceed ten percent (10%), the LBP shall reduce the interest rate and/or reduce the principal obligation to make the repayments affordable.

c) Section 6 of E.O. No. 228 provides that the total cost of the land awarded pursuant to P.D. No. 27, including interest at the rate of six percent (6%) per annum with a two percent (2%) interest rebate for amortizations paid on time, shall be paid by the farmer-beneficiary or his heirs to the LBP over a period of up to twenty (20) years in twenty (20) equal amortizations. Lands already valued and financed by the LBP are likewise extended a 20-year period of payment of twenty (20) equal annual amortizations. However, the farmer-beneficiary if he so elects, may pay in full before the twentieth year or may request the LBP to restructure a repayment period of less than twenty (20) years if the amount to be financed and the corresponding annual obligations are well within the farmer's capacity to meet.

d) Section III, Item 2 of DAR AO No. 1, series of 2011 provides that the basis of the amortization by the farmer-beneficiary shall be the DAR valuation determined pursuant to PD 27/EO 228.

e) Department of Justice (DOJ) Opinion No. 67, series of 2013 categorically states that "the Government shall subsidize the amount of the adjustment or increase as a result of the re-evaluation made by either the DARAB or the court in the administrative proceedings or just compensation case, respectively."

III. General Guidelines and Procedures in the Determination of the Land Amortizations to be Paid by the ARBs

1. For claims covered under R.A. No. 6657, as amended, the ARB shall pay the land amortizations based on the amount reflected in the Notice of Land Valuation and Acquisition (NLVA). EDATSI

2. For claims covered under PD 27/EO 228, the ARB shall pay the land amortizations based on the Land Valuation Summary and Farmer's Undertaking (LVSFU).

3. For claims covered under PD 27/EO 228 where valuation is based on Parcellary Map Sheet (PMS), the DAR is required to first generate the Claims Adjustment Folder (CAF) or submit the Final Survey Documents (FSD) to LBP. Subsequently, LBP shall adjust the Land Amortization Schedule (LAS) for any increase or decrease in the total area acquired based on CAF or FSD before the CFP and ROREM may be processed.

4. The amount of amortizations to be paid by the ARBs shall not be affected in case the DARAB or the courts award higher valuation than that initially determined by the DAR and LBP. The same principle shall apply even if the court uses a higher Average Gross Production (AGP) data. The amortization to be paid by the ARB shall be based on the original AGP provided for in the Land Amortization Schedule approved by LBP.

The intent and spirit of Sec. 26, RA 6657 is to enhance affordability and provide government subsidy to the ARBs which will not be affected by the increase in land valuation.

IV. Issuance of Certificate of Full Payment and Release of Real Estate Mortgage by the LBP

1. If the ARB had fully paid the total amortizations based on Section III above, a CFP and ROREM shall be issued by LBP to the ARB for the purpose, among others, of requesting the Register of Deeds (ROD) for the cancellation or release of the lien/encumbrance previously annotated on the Emancipation (EP) or Certificate of Landownership Award (CLOA) titles.

2. The CFP, which is integrated with the ROREM, shall be duly notarized and to be registered with the concerned Register of Deeds. (Please see attached format).

3. The LBP shall issue the prescribed operational procedures in accordance with the usual accounting and auditing rules and regulations. TICDSc

V. Effectivity

This Joint Memorandum Circular shall take effect immediately.

Metro Manila, December 23, 2013.

(SGD.) VIRGILIO R. DE LOS REYESSecretary

(SGD.) GILDA E. PICOPresident & CEO

ATTACHMENT

Certificate of Full Payment and Release of Real Estate Mortgage

KNOW ALL MEN BY THESE PRESENTS:

This Instrument is made and executed by LAND BANK OF THE PHILIPPINES, a banking institution created and existing under R.A. 3844, as amended, with principal office at Landbank Plaza, 1598 M.H. del Pilar corner Dr. Quintos Streets, Malate, Manila, represented herein by its _________________, __________________, hereinafter referred to as the MORTGAGEE, in favor of ________________, of legal age, single/married and a resident of ______________________, hereinafter referred to as the MORTGAGOR.

Witnesseth That:

WHEREAS, the MORTGAGOR is an agrarian reform beneficiary and awardee of a parcel of land pursuant to PD 27/E.O. No. 228/E.O. No. 229/R.A. 6657, under Lot/Survey No. ___________, with an area of ______________, more or less, situated in ____________________, as evidenced by TCT No. ______________ issued by the Register of Deeds for the Province of __________________;

WHEREAS, the MORTGAGEE, as financial intermediary of the government's agrarian reform program, has, by operation of law, a lien by way of mortgage on the land, conditioned upon the MORTGAGOR's full payment of the land amortizations in favor of the MORTGAGEE;

WHEREAS, the Real Estate Mortgage in favor of the MORTGAGEE was annotated on the said title of the MORTGAGOR under Entry No. ______________;

WHEREAS, the MORTGAGOR had already paid the full amortizations on the land transferred to him and financed by the MORTGAGEE pursuant to PD 27/E.O. No. 228/E.O. No. 229/R.A. 6657 to the complete and full satisfaction of the MORTGAGEE;

NOW THEREFORE, for and in consideration of the foregoing premises, particularly the full payment made by the MORTGAGOR in favor of the MORTGAGEE, the MORTGAGEE hereby releases and discharges, absolutely and forever, the Real Estate Mortgage under Entry No. _____________ appearing on TCT No. _______ of the Registry of Deeds for the Province of _____________ and hereby requests the said Registry of Deeds to cancel the said annotation of encumbrance or lien.

IN WITNESS WHEREOF, the MORTGAGEE, thru its authorized representative, hereunto affixes his/her signature this _____ day of ___________, 2013 at ___________________.

LAND BANK OF THE PHILIPPINES

By:

____________________

Signed in the presence of:

 ______________________ ______________________

Republic of the Philippines ) ) s.s.

Acknowledgment

BEFORE ME, Notary Public, for and in the above jurisdiction, personally appeared __________ this _______ day of _____________, exhibiting to me _______________ as competent evidence of his/her identity, known to me and to me known to be the same person who executed the foregoing instrument and he/she acknowledged to me that the same is his/her true and voluntary act and deed as well as that of the Land Bank of the Philippines which he/she represents.

This instrument refers to a Certificate of Full Payment and Release of Real Estate Mortgage and consists of two (2) pages including this page where the Acknowledgment is written, signed by the party and his/her instrumental witnesses on each and every page hereof.

WITNESS MY HAND AND SEAL on the date and place first above written.

Notary Public

Doc. No. _______;