In the past 10 years, over 1.2 million Agricultural Free Patents (AFPs) have been awarded to farmers who are natural born Filipino citizens, occupying and cultivating agricultural public lands since 1960, for as long as they have paid real property tax on the land they use. The AFP is the most numerous type of land title in the hands of farmer entrepreneurs in rural areas.

Commonwealth Act No. 141 served as an important measure for supporting our hard working farmers by providing the AFP as a mechanism for land ownership. However, AFP awardees continue to face a lack of access to credit due to non-tradable and non-bankable agricultural land titles brought about by barriers in the use of these agricultural free patents.

The first barrier is the five year prohibition to encumbrance and alienation which bars owners from selling or loaning against it for five years. The second restriction is the five year repurchase provision which allows the original owner, his widow and legal heirs the right of repurchase five years from the date of sale.

Due to these restrictions, these lands become unattractive to buyers. Because of the uncertainty brought about by restrictions, there are no incentives for new owners to make improvements and additional investments. Banks are also reluctant to lend when these lands are used as collateral because it can affect a bank’s liquidity in case of foreclosure if it cannot dispose acquired assets.

Overall, the existence of the restrictions prevents the patentee from transacting the land in the formal market and instead leaves some with no option but to capitalize on the land through the informal economy where they are vulnerable to lower prices and unregulated informal credit suppliers.

This bill seeks to remove these restrictions which would allow patentees to be able to capitalize on their land in a legal and safe marketplace. By removing such restrictions, patentees will thus hold onto tradable and bankable land titles which they can use to acquire capital. 

Passing this in legislation would allow farmer entrepreneurs to make investments, create jobs, increase productivity, and reduce poverty in rural areas, fulfilling the law’s original intention. 

In view of the foregoing, the passing of this bill is earnestly sought. 

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