Restrictions on purchasing land under CLOA

A CLOA is a legal document issued by the Department of Agrarian Reform (DAR) to farmer-beneficiaries as proof of ownership of agricultural land awarded to them under the government’s Comprehensive Agrarian Reform Program (CARP).

Republic Act (RA) 6657, or the Comprehensive Agrarian Reform Law of 1988 (CARP Law), was enacted to allow landless farmers and farmworkers to own, directly or jointly, the lands they till or to receive a just share of the fruits thereof. To this end, the State redistributed the ownership of all agricultural lands to landless farmers, subject to the landowners’ retention limits and with due regard to their right to just compensation.

However, farmer-beneficiaries under the CARP are subject to certain limitations in terms of sale, transfer or disposal of the land awarded to them. Sections 26 and 27 of the CARP Law, strictly provide a 10-year holding period, the requirement of a prior DAR clearance or approval, and fully-settled amortization payments, before an awarded land may be validly sold to another person, to wit:

Section 26. Payment by Beneficiaries. — Lands awarded pursuant to this Act shall be paid for by the beneficiaries to the LBP in thirty (30) annual amortizations at six percent (6%) interest per annum.

The LBP shall have a lien by way of mortgage on the land awarded to the beneficiary; and this mortgage may be foreclosed by the LBP for non-payment of an aggregate of three (3) annual amortizations. The LBP shall advise the DAR of such proceedings and the latter shall subsequently award the forfeited landholdings to other qualified beneficiaries. A beneficiary whose land, as provided herein, has been foreclosed shall thereafter be permanently disqualified from becoming a beneficiary under this Act.

Section 27. Transferability of Awarded Lands. — Lands acquired by beneficiaries under this Act may not be sold, transferred or conveyed except through hereditary succession, or to the government, or the LBP, or to other qualified beneficiaries for a period of ten (10) years: provided, however, that the children or the spouse of the transferor shall have a right to repurchase the land from the government or LBP within a period of two (2) years. Due notice of the availability of the land shall be given by the LBP to the Barangay Agrarian Reform Committee (BARC) of the barangay where the land is situated. The Provincial Agrarian Reform Coordinating Committee (PARCCOM) as herein provided, shall, in turn, be given due notice thereof by the BARC.

If the land has not yet been fully paid by the beneficiary, the rights to the land may be transferred or conveyed, with prior approval of the DAR, to any heir of the beneficiary or to any other beneficiary who, as a condition for such transfer or conveyance, shall cultivate the land himself. Failing compliance herewith, the land shall be transferred to the LBP which shall give due notice of the availability of the land in the manner specified in the immediately preceding paragraph.

In the event of such transfer to the LBP, the latter shall compensate the beneficiary in one lump sum for the amounts the latter has already paid, together with the value of improvements he has made on the land.

Thus, while the law permits the sale of land under CLOA, it is necessary that the conveyance must comply with the conditions set by the DAR and the provisions of the CARP Law.

Source: Manila Times

Unconscionable interest rates can be nullified or reduced

While the parties to a loan agreement may freely agree on the interest rate that applies to their transaction, any imposition of interest rate must always be reasonable and fair.

In fact, the Supreme Court ruled that even the willingness of the debtor to assume an exorbitant and unconscionable interest rate does not validate the agreed rate as legally binding and enforceable. This principle was clearly explained in the case of Spouses Castro v. Tan [GR 168940, Nov. 24, 2009], penned by Associate Justice Mariano del Castillo, which states:

“The imposition of an unconscionable rate of interest on a money debt, even if knowingly and voluntarily assumed, is immoral and unjust. It is tantamount to a repugnant spoliation and an iniquitous deprivation of property, repulsive to the common sense of man. It has no support in law, in principles of justice, or in the human conscience nor is there any reason whatsoever which may justify such imposition as righteous and as one that may be sustained within the sphere of public or private morals.”

Relative thereto, any loan agreement stipulating a grossly excessive interest rate is contrary to morals, and therefore void from the beginning, in consonance with Article 1409 of the New Civil Code of the Philippines.

Moreover, to prevent lenders from exploiting borrowers with oppressive rates of interest, the courts are granted the power to reduce unjust or unconscionable contractual interest rates, pursuant to Article 1229 of the said Code, which provides:

“Art. 1229. The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. Even if there has been no performance, the penalty may also be reduced by the courts if it is iniquitous or unconscionable.”

With the foregoing, any debtor who enters into a loan agreement with an excessive interest rate may seek judicial relief to declare the interest void and unenforceable, or to reduce it to a fair and reasonable rate as warranted by the circumstances.

In this regard, one may, therefore, file a civil suit through the courts, either for the annulment of the interest rate in your loan agreement or the reformation of the instrument to fix the appropriate interest rate.

Source: Manila Times

Failure to pay within the period stipulated

In a sales contract involving real property, the agreement that the vendee’s failure to make full payment on the agreed time will render the sale rescinded, the vendee may still pay as long as the vendor does not make a demand for rescission.

Article 1592 of the New Civil Code of the Philippines provides that “in the sale of immovable property, even though it may have been stipulated that upon failure to pay the price at the time agreed upon the rescission of the contract shall of right take place, the vendee may pay, even after the expiration of the period, as long as no demand for rescission of the contract has been made upon him either judicially or by a notarial act. After the demand, the court may not grant him a new term.”

Clearly, Article 1592 of the said Code allows a vendee to pay as long as no demand for rescission has been made by the vendor or seller. This is supported by the decision of the Supreme Court in the case of Province of Cebu vs. Heirs of Rufina Morales, GR 170115, Feb. 19, 2008, penned by Honorable Associate Justice Consuelo Ynares-Santiago, which held:

“Thus, respondents could still tender payment of the full purchase price as no demand for rescission had been made upon them, either judicially or through notarial act. While it is true that it took a long time for respondents to bring suit for specific performance and consign the balance of the purchase price, it is equally true that petitioner or its predecessor did not take any action to have the contract of sale rescinded.

Article 1592 allows the vendee to pay as long as no demand for rescission has been made. The consignation of the balance of the purchase price before the trial court thus operated as full payment, which resulted in the extinguishment of respondents’ obligation under the contract of sale.”

Further, in the earlier case of The City of Cebu vs. Heirs of Rubi, GR 128579, April 29, 1999, penned by Honorable Associate Justice Minerva Gonzaga-Reyes, the high court ruled:

“It is not disputed that the City of Cebu did not give notice of rescission much less make a judicial or notarial demand for rescission. The only subsequent action taken by petitioner was to send to the respondents a ‘Formal Notice’ dated March 4, 1989 ordering the latter to vacate the premises within fifteen days from receipt of notice for the reason that the occupancy of lot 1141-D is presumed to be illegal as the lot is still registered in the name of the City of Cebu. This letter did not amount to a demand for rescission, as indeed there was no reference to the sale much less a declaration that the sale was being rescinded or abrogated from the beginning. It was only when the City of Cebu filed its Answer on June 15, 1989 to the instant complaint for specific performance that the city invoked ‘automatic rescission’ and prayed for relief allowing it to rescind the contract.”

In case, you failed to make the full payment on the stipulated date, you may still tender payment despite the expiration of the period as long as no demand for rescission has been made by the vendor, either through a judicial action or notarial act.

Source: Manila Times