AGRARIAN REFORM LAW AND JURISPRUDENCE (A DAR-UNDP SARDIC PUBLICATION AGRARIAN LAW AND JURISPRUDENCE PREFACE This book

has inauspicious beginnings. The original intent of the UNDP-SARDIC project, which eventually bore this book, was to map out special areas for policy reform in agrarian reform law. But as the project team delved deeper into the subject, the long unaddressed need for an organized and systematic presentation of agrarian law and existing jurisprudence was again put to fore. In response to that problem, the project team and the UNDP-SARDIC project decided to widen the scope of the project and, thus, what came of it was not only a map of the difficult problem areas in the law's implementation but also this book. TcHCDI Any foray into the complicated, and often contentious, arena that is agrarian reform law necessitates a complete and well-grounded grasp of the basics. If anything, our study revealed that, even after decades, agrarian reform law remains vastly misunderstood and under-appreciated not only by stakeholders but by agrarian reform law implementors themselves. This is largely due to the dearth of materials on the matter. Over the years, laws and their implementing rules have been refined and promulgated to reflect the lessons learned and the changing times. Simultaneously, the Supreme Court issued rulings that elucidate and interpret the law, as well as repudiate portions thereof. The rights and obligations of the different stakeholders have been constantly redefined and readjusted. Despite these exciting developments, however, there has been little done to mesh all these pieces of knowledge into an organized whole.

This book is an effort towards that end. In a nutshell, this book is a humble attempt in summing up years of agrarian reform law implementation. This book intends to reach out to all sectors and stakeholders to heighten their understanding and appreciation of the agrarian reform in the Philippines, and hopefully help refine the terms of the ongoing debates among them. This book hopes to appeal to both familiar and unfamiliar on the subject. It attempts to present, in an academic fashion, all relevant agrarian reform laws, DAR implementing rules, and pertinent judicial declarations on the matter. Hopefully, this will provide a holistic framework for understanding agrarian law. Extra effort was also exerted to demonstrate agrarian reform in action by giving concrete illustrations and discussion from an operational perspective. Interspersed with the theoretical discussions are the various operational issues and difficulties that DAR implementors faced or are still facing. The authors would like to thank the UNDP-SARDIC project management team for providing the financial and logistic support to see this project through. the members of DAR's management committee who shared with the project team their invaluable insights and experience in agrarian reform implementation. Their contribution in making this book complete and insightful is immeasurable. the DAR-PPLAO support staff for providing administrative and secretariat support; and Antonio Ramos who served as auditor for this project.

This is but a first step. We derive inspiration from the words of T.S. Eliot:

We shall not cease from exploration

And the end of all our exploring

Will be to arrive where we started

And know the place for the first time

[From "Little Gidding"] THE AUTHORS CHAPTER 1

Coverage Program

of

the

Comprehensive

Agrarian

Reform

The Comprehensive Agrarian Reform Program

The Comprehensive Agrarian Reform Program (CARP) is implemented by Republic Act No. 6657 (1988) otherwise known as the "Comprehensive Agrarian Reform Law". Prior to its enactment on 10 June 1988, President Corazon C. Aquino issued Proclamation No. 131 (1987) instituting a comprehensive agrarian reform program, and Executive Order No. 229 (1987) providing the mechanics for its implementation. RA 6657 took effect on 15 June 1988. While expressly repealing specific provisions of prior enactments on agrarian reform, RA 6657 provides that the

provisions 27 (1972) 229 (1987) suppletory

of RA 3844 (1963), Presidential Decree No. and PD 266 (1973), EO 228 (1987) and EO and other laws not inconsistent with it shall have effect.

RA 6657 was enacted pursuant to the constitutional mandate enshrined in Section 4, Art. XIII of the 1987 Constitution, which provides: SEC. 4. The State shall, by law, undertake an agrarian reform program founded on the right of farmers and regular farmworkers, who are landless, to own directly or collectively the lands they till or, in the case of other farmworkers, to receive a just share of the fruits thereof. To this end, the State shall encourage and undertake the just distribution of all agricultural lands, subject to such priorities and reasonable retention limits as the Congress may prescribe, taking into account ecological, developmental, or equity considerations, and subject to the payment of just compensation. In determining retention limits, the State shall respect the right of small landowners. The State shall further provide incentives for voluntary land-sharing. The constitutionality of RA 6657 has been upheld in Association

of Small Landowners v. Secretary of Agrarian Reform, 175 SCRA 342 (1989) and companion
cases. The Supreme Court held that the requirement of public use has already been settled by the Constitution itself. It noted that "[n]o less than the 1987 Charter calls for agrarian reform which is the reason why private agricultural lands are to be taken from their owners, subject to the prescribed retention limits." (at 378) While RA 6657 itself has been held constitutional, the Supreme Court in a subsequent case, Luz Farms v. Secretary of Agrarian Reform, 192 SCRA 51 (1990), declared unconstitutional Sec. 3 (b), 10 and 11 thereof in so far as they include lands devoted to the raising of livestock,

swine and poultry within its coverage. As a result of this ruling, Congress enacted RA 7881 (1995) amending these provisions and incorporating new provisions to existing ones. The amendments adopted the Luz doctrine by removing livestock, swine and poultry farms from CARP coverage.

Scope of CARP
The Constitution in Sec. 4, Art. XIII, mandates the just distribution of all agricultural lands, subject to such priorities and reasonable retention limits that the Congress may prescribe, taking into account ecological, developmental or equity considerations and subject to the payment of just compensation. Prior to RA 6657, the operative law on land distribution was PD 27 (1972). However, PD 27 is limited in scope, covering only tenanted private agricultural lands primarily devoted to rice and corn operating under a system of sharecrop or lease tenancy, whether classified as landed estate or not. The constitutional provision therefore expanded the scope of agrarian reform to cover all agricultural lands. RA 6657 operationalized this constitutional mandate and provides in Sec. 4 thereof that the CARP shall cover, regardless of tenurial arrangement and commodity produced, all public and private agricultural lands, as provided in Proclamation No. 131 and EO 229 including other lands of the public domain suitable for agriculture. More specifically, the following lands are covered by CARP: a) All alienable and disposable lands of the public domain devoted to or suitable for agriculture; b) All lands of the public domain in excess of the specific limits as determined by Congress in Sec. 4 (a) of RA 6657;

c) All other lands owned by the government devoted to or suitable for agriculture; and d) All private lands devoted or suitable for agriculture regardless of the agricultural products raised or that can be raised thereon (Rep. Act No. 6657 [1988], Sec. 4).

Definition of agricultural land

Sec. 3 (c) of RA 6657 defines agricultural lands as follows: (c) Agricultural Land refers to land devoted to agricultural activity as defined in this Act and not classified as mineral, forest, residential, commercial or industrial land. Sec. 3 (b) of RA 6657, as amended by RA 7881 (1995), defines "agricultural activity" as follows: (b) Agriculture, Agriculture Enterprise or Agricultural Activity means cultivation of soil, planting of crops, growing of fruit trees, including the harvesting of such farm products, and other farm activities and practices performed by a farmer in conjunction with such farming operations done by persons whether natural or juridical. In Natalia v. DAR, 225 SCRA 278 (1993), the Supreme Court held: Section 4 of RA 6657 provides that the CARL "shall cover, regardless of tenurial arrangement and commodity produced, all public and private agricultural lands." As to what constitutes "agricultural land," it is referred to as "land devoted to agricultural activity as defined in this Act and not classified as mineral, forest, residential, commercial or industrial land." The deliberations of the Constitutional

Commission confirm this limitation. "Agricultural lands" are only those lands which are "arable and suitable agricultural lands" and "do not include commercial and industrial lands" (at 282, 283).

Agricultural lands reclassified by local governments into "forest conservation zones"

Agricultural lands reclassified by local government units (LGUs) into "forest conservation zones" even prior to the effectivity ofCARL do not become forest land under Sec. 3 (c) of RA 6657 as to be exempted from CARP coverage. It should be noted that under the Constitution, lands of the public domain are classified into agricultural, forest or timber, mineral lands and national parks (CONST., Art. XII, Sec. 3). These classifications are called primary classifications or "classification in the first instance." The same provision of the Constitution also provides that agricultural lands of the public domain may be further classified according to the uses to which they may be devoted. This further classification of agricultural land is referred to as secondary classification. The responsibility over primary classification of lands of the public domain is vested in the President who exercises such power upon the recommendation of the Department of Environment and Natural Resources (DENR) (Com. Act No. 141 [1936], Sec. 6; EO 192 [1987]). On the other hand, the authority to reclassify agricultural lands into residential, commercial or industrial is lodged, among others, in cities and municipalities (Rep. Act No. 7160 [1991], Sec. 20). The group of lands referred to in Sec. 3 (c) of RA 6657 as non-agricultural (i.e., mineral, forest, residential, commercial or industrial) is a mix of primary and secondary classifications. Forest and mineral lands are, under the Constitution and Commonwealth Act No. 141 (1936),

primary classifications, classifications.

while

the

rest

are

secondary

Reclassification by LGUs of agricultural lands into "forest conservation zones" does not have the effect of converting such lands into forest lands as to be exempted from CARP. Firstly, an agricultural land is already a primary classification and, hence, can only be subjected to secondary classification. Secondly, LGUs have no authority or power to make primary classifications considering that such power is the sole prerogative of the President exercising such power upon the recommendation of the DENR. The forest (or mineral) land referred to in Sec. 3 (c) of RA 6657 is therefore to be understood as referring to forest (or mineral) land declared to be such by the President/DENR and not by the LGUs. DAR Administrative Order No. 1 (1990) makes this qualification in its definition of "agricultural land," as follows: . . . Agricultural land refers to those devoted to agricultural activity as defined in R.A. 6657 and not classified as mineral or forest by the Department of Environment and Natural Resources (DENR) and its predecessor agencies, and not classified in town plans and zoning ordinances as approved by the Housing and Land Use Regulatory Board (HLURB) and its preceding competent authorities prior to 15 June 1988 for residential, commercial or industrial use.

Agricultural lands reclassified LGUs into residential, commercial or industrial

Taking into consideration the effectivity of the law, the secondary classifications mentioned in Sec. 3 (c) of RA 6657 are treated according whether they were classified as such before or after the effectivity of the law on 15 June 1988.

If the agricultural land was classified as residential, commercial or industrial by the LGU and approved by the Housing and Land Use Regulatory Board (HLURB), or its predecessor agencies, prior to 15 June 1988, the land will be recognized as so classified under Sec. 3 (c) of RA and is therefore not covered by CARP. However, an exemption clearance from DAR is still necessary to confirm or declare its exempt status. (DAR Adm. O. No. 6 [1994]). This is based on Department of Justice Opinion No. 44 (1990) which provides that with respect to the conversion of agricultural lands covered by RA 6657 to non-agricultural uses, the authority of the DAR to approve such conversion may be exercised from the date of its effectivity or on 15 June 1988. Thus, all lands already classified as commercial, industrial or residential before that date no longer need any conversion clearance from the DAR. If an agricultural land is reclassified after 15 June 1988, the provisions on land conversion under CARL and its implementing rules will apply (Rep. Act No. 6657 [1988], sec. 65; DAR Adm. O. No. 1 [1999]).

Conversion prior to 15 June 1988 through presidential proclamation binding before DAR
The reasoning in DOJ Opinion No. 44 (1990) was validated by the Supreme Court in Natalia v. DAR, supra. This case involved the question of whether or not lands already classified for residential, commercial or industrial use, as approved by HLURB and its precursor agencies, prior to 15 June 1988 are covered by CARP. SDHCac

Natalia Realty, Inc. vs. Department of Agrarian Reform

225 SCRA 278 (1993)

Facts: Petitioner Natalia Realty, Inc. is the owner of a 125.0078-ha land set aside by Presidential Proclamation No. 1637 (1979) as townsite area for the Lungsod Silangan Reservation. Estate Developers and Investors Corporation (EDIC), the developer of the area, was granted preliminary approval and locational clearances by the then Human Settlements Regulatory Commission (HSRC) for the establishment of the Antipolo Hills Subdivision therein. In November 1990, a Notice of Coverage was issued by DAR on the undeveloped portion of the landholding. The developer filed its objections and filed this case imputing grave abuse of discretion to respondent DAR for including the undeveloped portions of its landholding within the coverage of CARP. Issue: Are lands already classified for residential, commercial or industrial use, and approved by HLURB and its precursor agencies prior to 15 June 1988, covered by RA 6657? Held: Sec. 4 of RA 6657 states that the CARL covers "regardless of tenurial arrangement and commodity produced, all public and private and agricultural lands" and as per the transcripts of the Constitutional Commission, "agricultural lands" covered by agrarian reform refers only to those which are "arable and suitable lands" and "do not include commercial, industrial and residential lands." The land subject of the controversy has been set aside for the Lungsod Silangan Reservation by Proclamation No. 1637 prior to the effectivity of RA 6657 and in effect converted these lands into residential use. Since the Natalia lands were converted prior to 15 June 1988, DAR is bound by such

conversion, and thus it was an error to include these within the coverage of CARL.

Exemptions and Exclusions

Sec. 10 of RA 6657, as amended by RA 7881 (1995), specifically enumerates the exemptions and exclusions from CARP, as follows: a) Lands actually, directly or exclusively used for parks and wild-life, forest reserves, reforestation, fish sanctuaries and breeding grounds, watersheds and mangroves (Rep. Act No. 6657 [1988], sec. 10 [a], as amended by Rep. Act No. 7881[1995]). b) Private lands actually, directly and exclusively used for prawn farms and fishponds: Provided, That said prawn farms and fishponds have not been distributed and Certificate of Land Ownership Award (CLOA) issued to agrarian reform beneficiaries (ARBs) under CARP (Sec. 10 [b]). c) Lands actually, directly and exclusively used and found to be necessary for national defense, school sites and campuses, including experimental farm stations operated by public or private schools for educational purposes, seeds and seedling research and pilot production center, church sites and convents appurtenant thereto, mosque sites and Islamic centers appurtenant thereto, communal burial grounds and cemeteries, penal colonies and penal farms actually worked by the inmates, government and private research and quarantine centers and all lands with eighteen percent (18%) slope and over, except those already developed (Sec. 10 [c]).

Lands devoted to raising of livestock, swine and poultry. The Luz Farms Case.

Before its amendment by RA 7881, Sec. 3(b) of RA 6657 included in its definition of agricultural activity the "raising of livestock, poultry or fish". Likewise, the original Sec. 11 of RA 6657 on commercial farming provided that "lands devoted to commercial livestock, poultry and swine raising shall be subject to compulsory acquisition within ten (10) years from the effectivity of the Act." However, the Supreme Court in Luz Farms vs. Secretary of Agrarian Reform, supra, held that Sec. 3 (b) and Sec. 11 of RA 6657(along with Sec. 13 and 32) are unconstitutional in far as they include the raising of livestock and swine in the coverage of CARP.

Luz Farms vs. Secretary of the Department of Agrarian Reform

192 SCRA 51 (1990) Facts: Petitioner Luz Farms is a corporation engaged in livestock and poultry business. It seeks to nullify Sec. 3 (b) and Sec. 11 of RA 6657 in so far as they apply to livestock and poultry business. Held: Sec. 3 (b) and Sec. 11 of RA 6657 are unconstitutional in so far as they include lands devoted to raising livestock, swine and poultry within its coverage. The use of land is incidental to but not the principal factor or consideration of productivity in this industry. The Supreme Court held that: The transcripts of deliberations of the Constitutional Commission of 1986 on the meaning of the word "agricultural," clearly show that it was never the intention of the framers of the Constitution to include

livestock and poultry industry in the coverage of the constitutionally-mandated agrarian reform program of the government. The Committee adopted the definition of "agricultural land" as defined under Section 166 of RA 3844, as land devoted to any growth, including but not limited to crop lands, saltbeds, fishponds, idle and abandoned land (Record, CONCOM, August 7, 1986, Vol. III, p. 11). The Supreme Court noted that the intention of the Committee to limit the application of the word "agriculture" is further shown by the proposal of Commissioner Jamir to insert the word "arable" to distinguish this kind of agricultural land from such lands as commercial and industrial lands and residential properties. The proposal, however, was not considered because the Committee contemplated that agricultural lands are limited to arable and suitable agricultural lands and therefore, do not include commercial, industrial and residential lands (Record, CONCOM, 7 August 1986, Vol. III, p. 30). Moreover, in his answer to Commissioner Regalado's interpellation, Commissioner Tadeo clarified that the term "farmworker" was used instead of "agricultural worker" in order to exclude therein piggery, poultry and livestock workers (Record, CONCOM, August 2, 1986, Vol. II, p. 621). DAR AO 9 (1993) imposes two (2) conditions in order that these lands may be exempted: (a) that the land or portion thereof is exclusively, directly, or actually used for livestock, poultry and swine raising as of 15 June 1988; and (b) the farm must satisfy the ratios of land, livestock, poultry and swine, as follows: cattle, carabao and horse raising maximum of 1 head to 1 hectare; 21 heads

for every 1.7815 hectares of infrastructure sheep and goat raising 7 heads to 1 hectare; 147 heads for every 0.7205 hectare of infrastructure swine raising 21 heads of hogs for every 0.5126 hectare of infrastructure poultry raising 500 layers for every 0.53 hectare of infrastructure or 1000 boilers for every 1.428 hectares of infrastructure

Fishponds and prawn ponds

With the amendment of Sec. 3 (c), 10 and 11 of RA 6657 by RA 7881, fishponds and prawnponds are also exempted from the coverage of CARP, provided that said lands have not been distributed to ARBs and no CLOAs have been issued. To be exempted, the agricultural land must have been actually, directly and exclusively used for prawn farms and fishponds as of 12 March 1995, the date of effectivity of RA 7881. To avail of the exemption, a landowner or his authorized representative still has to file a written application for land exemption/exclusion with the DAR Provincial Office (DAR Adm. O. No. 3 [1995]). In cases were the fishponds or prawn farms have been subjected to CARP, by voluntary offer to sell, commercial farms deferment or notice of compulsory acquisition, they can be exempt from CARP if a simple and absolute majority of the actual regular workers or tenants consent to the exemption within one (1) year from the effectivity of RA 7881 or on 12 March 1995. In cases where the fishponds or

prawnponds have not been subjected to CARP, the consent of the farm workers shall no longer be necessary (Rep. Act No. 6657 [1988], sec. 10[b], as amended). Sec. 4 of RA 7881 also amended RA 6657 by introducing a new provision mandating the introduction of an incentive plan for employees of all fishponds and prawn farms. Operators and entities owning or operating fishponds and prawn farms are directed to execute within six (6) months from its effectivity an incentive plan with their regular fishpond or prawn farm worker's organization, if any, whereby seven point five percent (7.5%) of net profits before tax from the operation of the fishpond or prawn farms are distributed within sixty (60) days at the end of the fiscal year as compensation to regular and other pond workers over and above their current compensation. This incentive plan requirement, however, does not apply to agricultural lands subsequently converted to fishponds or prawn farms provided that the size of the land converted does not exceed the retention limit of the landowner.

Lands used for academic or educational use. The CMU case.

In Central Mindanao University vs. DARAB, 215 SCRA 85 (1992), the Supreme Court passed upon the exemption of lands directly, actually and exclusively used and found to be necessary for school sites and campuses, including experimental farm stations operated by public or private schools for educational purposes provided for under Sec. 10 of RA 6657, as amended.

Central Mindanao University vs. Department of Agrarian Reform Adjudication Board 215 SCRA 86 (1992)
Facts:

On 16 January 1958, President Carlos Garcia issued Proclamation No. 467 reserving for the Mindanao Agricultural College, now the CMU, a piece of land to be used as its future campus. In 1984, CMU embarked on a project titled "Kilusang Sariling Sikap" wherein parcels of land were leased to its faculty members and employees. Under the terms of the program, CMU will assist faculty members and employee groups through the extension of technical know-how, training and other kinds of assistance. In turn, they paid the CMU a service fee for use of the land. The agreement explicitly provided that there will be no tenancy relationship between the lessees and the CMU. When the program was terminated, a case was filed by the participants of the "Kilusang Sariling Sikap" for declaration of status as tenants under the CARP. In its resolution, DARAB, ordered, among others, the segregation of 400 hectares of the land for distribution under CARP. The land was subjected to coverage on the basis of DAR's determination that the lands do not meet the condition for exemption, that is, it is not "actually, directly, and exclusively used" for educational purposes. Issue: Is the CMU land covered by CARP? Who determines whether lands reserved for public use by presidential proclamation is no longer actually, directly and exclusively used and necessary for the purpose for which they are reserved? Held: The land is exempted from CARP. CMU is in the best position to resolve and answer the question of when and what lands are found necessary for its use. The Court also chided the DARAB for resolving this issue of exemption on the basis of "CMU's present needs." The

Court stated that the DARAB decision stating that for the land to be exempt it must be "presently, actively exploited and utilized by the university in carrying out its present educational program with its present student population and academic faculty" overlooked the very significant factor of growth of the university in the years to come. SHECcT The CMU case is unique as it involves land transferred by the state to CMU through PD 467 which provided for its commitment to a specific use and purpose. Thus, the said land was already set aside for a specific purpose and, in effect, was taken outside the coverage of agrarian reform by law. It is submitted that a more accurate basis for the exemption should have been that the exclusive use of the land both present and future has been determined by law, and not because of the determination of the CMU of what it needs and how it intends to use it. In ruling that the CMU is in the best position to determine the use of the land and not DAR, the Supreme Court seems to have overlooked EO 407 (1990), as amended by EO 448 (1991), which provides that DAR is vested with the power to determine whether lands reserved for public uses by presidential proclamation is no longer actually, directly and exclusively used and necessary for the purpose for which they are reserved. Said EO provides that: Sec. 1-A. All lands or portions thereof reserved by virtue of Presidential proclamations for specific public uses by the government, its agencies and instrumentalities, including government-owned or controlled corporations suitable for agriculture and no longer actually, directly and exclusively used or necessary for the purposes for which they have been reserved, as determined by the Department of Agrarian Reform in coordination with the government agency or instrumentality concerned in whose favor the reservation

was established, shall be segregated from the reservation and transferred to the Department of Agrarian Reform for distribution to qualified beneficiaries under the Comprehensive Agrarian Reform Program. Thus, DAR in coordination with the agency or department involved, can determine whether the purpose or use for which the lands reserved continues to exist and therefore establish if they continue to be exempt from CARP coverage. The Supreme Court's statement that lands of universities and academic institutions need not be actually, directly and exclusively used for educational or research purposes at the time of the effectivity of the RA 6657 to be exempt from CARP also fails to consider Sec. 10 of RA 6657. Sec. 10 is explicit that only those lands that are "actually, directly, and exclusively" used and found necessary for the uses enumerated therein are exempt from CARP coverage. A literal interpretation of the provision implies that the exemption applies only to those lands already committed for the enumerated purposes at the date of the effectivity of law on 15 June 1988. Thus, agricultural land acquired by academic institutions for academic, educational, or research purposes after 15 June 1988, or those owned by them but not committed exclusively, actually, and directly to the abovementioned uses before or on such date, are covered by CARP. For its exclusion from acquisition and distribution, and for its commitment to said purposes, the institution may file before DAR for clearance to convert these lands into non-agricultural use.

Lands with 18% slope

Lands with 18% slope or over are exempt from CARP coverage unless these are found to be agriculturally developed as of 15 June 1988.

This rule on exemption is based on PD 705 (1975), or the "Revised Forestry Code of the Philippines," which provides that lands with a slope of 18% or over are generally reserved as forest lands. Sec. 15 thereof states that "no land of the public domain eighteen per cent (18%) in slope or over shall be classified as alienable and disposable" and that "lands eighteen per cent (18%) in slope or over which have already been declared as alienable and disposable shall be reverted to the classification of forest lands by the Department Head, to form part of the forest reserves, unless they are already covered by existing titles or approved public land application, or actually occupied openly, continuously, adversely and publicly for a period of not less than thirty (30) years as of the effectivity of this Code, where the occupant is qualified for a free patent under the Public Land Act. If the land has 18% slope or over and is agriculturally developed as of 15 June 1988, the same shall be allocated to the qualified applicants in the following manner: a) If land is classified as forest land, and therefore is inalienable and indisposable, this shall be allocated by the DENR under its Integrated Social Forestry Program; b) If classified as alienable and disposable, this shall be allocated by the Land Management BureauDENR and DAR pursuant to the provisions of CA 141 and the Joint DAR-DENR AO 2 (1988); and c) If private agricultural land, this shall be acquired in accordance with the provisions of RA 6657 (DAR Adm. O. No. 13 [1990], item E, part II).

Effects of exemption
Sec. 10 of RA 6657 provides that exempted or excluded lands are removed from the coverage of CARP. However, there are two (2) contending views on whether these

exempted or excluded lands are perpetually taken out from coverage of the CARP. The first view is that lands exempted or excluded from the law are permanently taken out from coverage of the CARP. The basis of this interpretation is the phraseology of Sec. 10 which states that exempted lands are "exempt from the coverage of the law." The legal effect of this interpretation is that the owner can use and dispose the land as he deems fit without the need for any clearance from DAR. The second view is that excluded and exempted lands can be covered by CARP when the reason for their exemption ceases to exist. Thus, when the reason for exemption ceases to exist for lands exempt under the Luz Farms ruling or Sec. 10, as amended byRA 7881 (except lands with 18% slope), they are removed from the exemption and are treated like any other agricultural land. It must be remembered that the lands subject of exemption under Sec. 10 of RA 6657 and the Luz Farms ruling are considered agricultural lands as defined by Sec. 3 (c) of RA 6657, that is, they are in fact suitable to agriculture and not classified as mineral, forest, residential, commercial or industrial lands, but are exempt or excluded from CARP by reason of their actual use and their necessity for other purposes. Thus, in the event that these lands cease to be used or necessary for the purposes for which they are exempted, they are removed from the application of Sec. 10 and are then subject to CARP coverage. The second view is anchored on the spirit and intent of the law to cover all agricultural lands suitable to agriculture. Moreover, asRA 6657 is a social welfare legislation the rules of exemptions and exclusions must be interpreted

restrictively and any doubts as to the applicability of the law should be resolved in favor of inclusion. In either case, the security of tenure of tenants enjoyed prior to 15 June 1988 shall be respected even when the lands are exempted. As to farmworkers, the exemption of the land shall not cause the loss of the benefits to which they are entitled under other laws. In addition, they are granted preference in the award of other lands covered by CARP (DAR Adm. O. No. 13 [1990], part II).

Homesteads
In Alita vs. CA, the Supreme Court homesteads are exempt from agrarian reform. stated that

Alita vs. Court of Appeals 170 SCRA 706 (1989)

Facts: Subject matter of the case consists of two (2) parcels of land acquired by respondents' predecessors-in-interest through homestead patent under the provisions of CA 141. Respondents wanted to personally cultivate these lands, but the petitioners refused to vacate, relying on the provisions of PD 27 and PD 316 and appurtenant regulations issued by the then Ministry of Agrarian Reform. Issue: Are lands obtained through homestead patent covered under PD 27? Held:

No. While PD 27 decreed the emancipation of tenants from the bondage of the soil and transferring to them ownership of the land they till, the same cannot be invoked to defeat the very purpose of the enactment of the Public Land Act or CA 141. In Patricio v. Bayog, 112 SCRA 45, it was held that: The Homestead Act has been enacted for the welfare and protection of the poor. The law gives a needy citizen a piece of land where he may build a modest house for himself and family and plant what is necessary for subsistence and for the satisfaction of life's other needs. The right of the citizens to their homes and to the things necessary for their subsistence is as vital as the right to life itself. They have a right to live with a certain degree of comfort as become human beings, and the State which looks after the welfare of the people's happiness is under a duty to safeguard the satisfaction of this vital right. In this regard, Sec. 6 of Article XIII of the 1987 Constitution provides: Section 6. The State shall apply the principles of agrarian reform or stewardship, whenever applicable in accordance with law, in the disposition or utilization of other natural resources, including lands of public domain under lease or concession suitable to agriculture, subject to prior rights, homestead rights of small settlers, and the rights of indigenous communities to their ancestral lands. Moreover, Sec. 6 of RA 6657 contains a proviso supporting the inapplicability of PD 27 to lands covered by homestead patents like those of the property in question, reading: Section 6. Retention Limits. . . . Provided further, That original homestead grantees or their

direct compulsory heirs who still own the original homestead at the time of the approval of this Act shall retain the same areas as long as they continue to cultivate said homestead. xxx xxx xxx

While homestead lots are declared exempt under PD 27, they are not expressly declared as such under RA 6657. However, Sec. 6 of RA 6657 provides that homesteaders are allowed to retain the total homestead lot subject to the conditions provided in the same section and as set DAR MC 4 (1991), to wit: a) That the original homestead grantee or his/her direct compulsory heirs still own the land on 15 June 1988; b) The original homestead grantee or his or her compulsory heirs cultivate the land as of 15 June 1988 and continue to cultivate the same. It also provides that the tenants of lands covered by homestead patents exempted from PD 27 or retained under RA 6657 shall not be ejected therefrom but shall remain as leaseholders therein.

Schedule of Implementation
Sec. 7 of RA 6657 lays out the schedule of acquisition and distribution of all agricultural lands through a period of ten (10) years from the effectivity of the Act:

Phase Covered
I Presidential Rice and corn 1988-1992 Decree No. 27;

Lands Schedule
lands under

 all idle or abandoned lands; all private lands voluntarily offered by the owners for agrarian reform; all lands foreclosed by the government financial institutions; all lands acquired by the Presidential Commission on Good Government (PCGG); and all other lands owned by the government devoted to or suitable for agriculture II All alienable and disposable public agricultural 1992-1995 lands; all arable public agricultural lands under agroforest, pasture and agricultural leases already cultivated and planted to crops in accordance; all public agricultural lands which are to be opened for new development and resettlement; and all private agricultural lands in excess of fifty (50) hectares, III-A four (24) and III-B areas above the Private agricultural lands with 1994-1998 Landholdings above twenty1998-1992 hectares up to fifty hectares;

retention limit up to 24 hectares Though Sec. 7 of RA 6657 provides a fixed time table for the implementation of the CARP law, this provision should be interpreted as merely directory, rather than mandatory in character. This is the gist of DOJ Opinion No. 9 (1997). It has been held that the difference between a mandatory and a directory provision is often determined on grounds of expediency. Where a provision embodies a rule of procedure rather than one of substance, the provision as to time will be regarded as directory only notwithstanding the mandatory nature of the language used. Sec. 5 of RA 6657 is more procedural in nature than substantive. The ten (10)-year period is merely a time frame given to DAR for the acquisition and distribution of public and private agricultural lands covered by RA 6657. It is merely a guide to DAR in setting its priorities, and it is not, by any means, a limitation of its authority. Hence, Sec. 5 of RA 6657 should not be construed as a prescriptive period, the lapse of which bars the DAR from covering the land under CARP. Thus, DAR need not wait for the full coverage of those lands in the first phase before those in the succeeding phases could be covered. DAR may also proceed with the coverage of lands in different phases simultaneously. In view of the passing of the ten (10)-year period in 1998, Congress passed RA 8532 (1998) providing for the funding for land acquisitions for another ten (10) years.

Idle or abandoned lands

Sec. 22 of Art. XVIII of the 1987 Constitution and Sec. 18 (h) of EO 229 prioritizes the immediate expropriation or acquisition of idle or abandoned lands. Sec 3 (e) of RA 6657 defines idle or abandoned land as "any agricultural land not cultivated, tilled or developed to

produce any crop nor devoted to any specific economic purpose continuously for a period of three (3) years immediately prior to the receipt of notice of acquisition by the government as provided under RA 6657. However land that has become permanently or regularly devoted to nonagricultural purposes is not to be considered as idle or abandoned. Neither can it be considered as abandoned or idle any land which has become unproductive by reason of force majeure or any other fortuitous event, provided that prior to such event, such land was previously used for agricultural or other economic purpose."

Lands owned by government

To expedite the disposition of lands owned by the government, President Corazon C. Aquino issued EO 407 (1990) directing all government instrumentalities, government agencies, government owned and controlled corporations or financial institutions to transfer to the Republic of the Philippines, through the DAR, all landholdings suitable for agriculture. Sec. 3 of EO 407 (1990) likewise provides for the redistribution and award of fishponds, pasturelands and other lands of public domain suitable for agriculture subject of cancelled or amended lease agreement to the agrarian reform beneficiaries. EO 448 (1991) and EO 506 (1992) amendedEO 407 by including all lands or portions thereof reserved by virtue of presidential proclamations for specific public uses by the government, its agencies and instrumentalities, and no longer actually, directly and exclusively used or necessary for the purposes for which they have been reserved. These also excluded national parks and other protected areas, proposed national parks, game refuge, bird sanctuaries, wild-life reserves, wilderness areas and other protected areas, including old growth or virgin forests and all forests above 1,000 meters elevation or above 50 percent slope until such time that they are segregated for agricultural purposes

or retained under the National Integrated Protected Areas System.

Commercial farms
Sec. 11 of RA 6657 allowed the deferment of the coverage of commercial farms. Deferred commercial farms shall be subject to immediate compulsory acquisition and distribution after ten (10) years from the effectivity of RA 6657 on 15 June 1988. For new farms, the ten (10)-year deferment will begin from the first year of commercial production and operation. For a commercial farm to be qualified for deferment, it must have been planted to commercial crop or devoted to commercial farming operations before 15 June 1988. DAR AO 16 (1988) provided a 60-day period for the filing of applications of deferment which lapsed on 2 May 1989. DAR AO 16 (1988) explicitly allows the DAR to automatically subject the lands to redistribution when it determines that the purpose for which deferment is granted no longer exists as when the particular farm areas ceases to be commercially productive. During the deferment period, the DAR shall initiate steps to acquire the lands. Final land transfer to the beneficiaries shall be effected at the end of the deferment period. The acquisition and distribution of these deferred commercial farms are governed byDAR AO 9 (1998).

Retention
Sec. 4, Art. XIII of the 1987 Constitution subjects the distribution of agricultural lands for agrarian reform to "reasonable retention limits as Congress may prescribe. Sec. 6 of RA 6657 operationalizes this mandate and observes the right of persons to own, or retain, directly or indirectly public or private agricultural land, the size of which shall vary according to factors governing a viable family-size farm

in such as commodity produced terrain, infrastructure, and soil fertility, but in no case shall exceed five (5) hectares. The retention limits under Sec. 6 of RA 6657 covers all persons whether natural or juridical. Juridical persons like corporations and partnerships are therefore subject to the five (5)-hectare limit. With respect to married couples, their maximum retention limit is determined by the nature of their property relations. For marriages covered by the New Civil Code, in the absence of an agreement for the judicial separation of property, spouses who own only conjugal properties may retain a total of not more than five (5) hectares of such properties. However, if either or both of them are landowners in their own respective rights (capital and/or paraphernal), they may retain not more than five (5) hectares of their respective landholdings. In no case, however, shall the total retention of such couple exceed ten (10) hectares. (DAR Adm. O. No. 5 [2000], sec. 9 [g]). For marriages covered by the Family Code, which took effect on 3 August 1988, a husband owning capital property and/or a wife owning paraphernal property may retain not more than five (5) hectares each provided they executed a judicial separation of properties prior to entering into the marriage. In the absence of such an agreement, all properties (capital, paraphernal and conjugal) shall be considered to be held in absolute community, i.e., the ownership relation is one, and, therefore, only a total of five (5) hectares may be retained. (DAR Adm. O. No. 5 [2000], sec. 9 [h]). The five (5)-hectare retention limit applies to all lands regardless of how acquired (i.e., by purchase, award, succession, donation) as the law does not distinguish. Thus, a child who was awarded three (3) hectares as a preferred beneficiary under Sec. 6 of RA 6657and subsequently

acquires a five (5)-hectare landholding of his parent by succession can retain only five (5) hectares of the total landholding. Landowners have the obligation to cultivate directly or through labor administration, and thereby make productive the area he retains. He is also prohibited from making any constructions therein or commit it to purposes incompatible with its agricultural nature. Before a landowner can commit the retained land to non-agricultural purposes, he must first secure a conversion order from DAR, otherwise he can be held liable for premature conversion (see DAR Adm. O. No. 1 [1999]).

Award to children
If a landowner has children, three (3) hectares may be awarded to each subject to the following qualifications: a) that he is at least fifteen (15) years old as of 15 June 1988; and b) that he is actually tilling the land or directly managing it (Rep. Act No. 6657 [1988], sec. 6). DAR MC 4 (1994) defined the term "directly managing" as the cultivation of the land through personal supervision under the system of labor administration. DHcESI The award to the child is not to be taken from the retained land of the landowner and is awarded to the child in his own right as a beneficiary. Thus, the award is not automatic. The child is merely given a preference over other beneficiaries. As the right of the child is derived from his being a beneficiary, he must not only meet the requirements of preference laid out in Sec. 6 of RA 6657, but also all the other qualifications of a beneficiary enumerated under Sec.

22 of RA 6657. Thus, he must also be landless, a resident of the barangay or municipality where the land is located, and must have the willingness, aptitude and ability to cultivate and make the land as productive as possible. Moreover, he is subject to the same liabilities, responsibilities and limitations imposed on all agrarian reform beneficiaries.

Exceptions to the 5-hectare retention limit

The five (5)-hectare retention limit under RA 6657 does not apply to original homestead grantees or their direct compulsory heirs at the time of the approval of RA 6657 who continue to cultivate the same, and to those entitled to retain seven (7) hectares under PD 27. In the Association cases, the Supreme Court held that landowners who failed to exercise their rights to retain under PD 27 can avail of their rights of retention under Sec. 6 of RA 6657 and retain only five (5) hectares. However, in the resolution of the Supreme Court on the motion for consideration in the said case, the Court qualified that those who, prior to the promulgation of RA 6657, complied with the requirements under Letter of Instruction (LOI) Nos. 41, 45 and 52 regarding the registration of the landholdings, shall be allowed to enjoy the seven (7) hectare retention limit. All those who refused to comply with the requirements cannot, in view of the passage of CARL, demand that their retention limit be determined under PD 27. Thus, the following OLT owners are still entitled to retain seven (7) hectares even if they exercised their right of retention underPD 27 after 15 June 1988: a) Those landowners who complied requirement of either LOI 41, 45 or 52; with the

b) Those who filed their applications before the deadline set (27 August 1985 as provided by AO. 1 [1985])

whether or 41, 45 or 52;

not

they

have

complied

with LOI

Nos.

c) Those who filed their applications after the deadline but complied with the requirements of LOI 41, 45 or 52; and d) Heirs of a deceased landowner who manifested, while still alive, the intention to exercise the right of retention prior to 23 August 1990 (the finality of the Supreme Court decision in Association of Small Landowners vs. Hon. Secretary of DAR; supra) (DAR Adm. O. No. 4 [1991]).

Exercise of right of retention

While Sec. 6 of RA 6657 acknowledges the right of the landowners to choose the area to be retained, it requires that the area be compact and contiguous, and shall be least prejudicial to the entire landholding and the majority of the farmers therein (DAR Adm. O. No. 5 [2000], sec 2 [b]). Sec. 4 of DAR AO 5 (2000) provides that under the Compulsory Acquisition (CA) scheme, the landowner shall exercise his right of retention within sixty (60) days from receipt of the Notice of Coverage from DAR. Failure to exercise this right within the prescribed period means that the landowner waives his right to choose which area to retain. Thereafter, the Municipal Agrarian Reform Officer (MARO) shall designate the retained area for the landowner. Under the Voluntary Offer to Sell (VOS) scheme, the right of retention shall be exercised at the time the land is offered for sale. The offer should specify and segregate the portion covered by VOS and the portion applied for retention; otherwise, the landowner shall be deemed to have waived his right of retention over the subject property (DAR Adm. O. No. 5 [2000], sec. 4).

As a matter of policy, all rights acquired by the tenantfarmers under PD 27 and the security of tenure of the farmers or farmworkers on the land prior to the approval of RA 6657 shall be respected (DAR Adm. O. No. 5 [2000], sec. 2 [c]). In case the area selected by the landowner or awarded for retention by the DAR is tenanted, the tenant has two (2) options: a) To remain as a lessee. If he chooses to remain in the area retained, he shall be considered a lease holder and shall lose his right to be a beneficiary; or b) Be a beneficiary in the same or another agricultural land with similar or comparable features. The tenant must exercise either option within one (1) year after the landowner manifests his choice of the area for retention, or from the time the MARO has chosen the area to be retained by the landowner, or from the time an order is issued granting the retention (DAR Adm. O. No. 5 [2000], sec. 10). Sec. 10 of DAR AO 5 (2000) further provides that in case the tenant declines to enter into leasehold and there is no available land to transfer, or if there is, the tenant refuses the same, he may choose to be paid disturbance compensation by the landowner. Where Certificates of Land Transfer (CLTs), Emancipation Patents (EPs) or Certificates of Land Ownership Award (CLOAs) have already been issued on the land chosen by the landowner as retention area, the DAR shall immediately inform the agrarian reform beneficiaries (ARBs) concerned and provide them the opportunity to contest the landowner's claim. Moreover, the DAR shall ensure that the affected ARBs, should they so desire, be given priority in the distribution of other lands of the

landowner or other lands identified by the DAR for redistribution, subject to the rights of those already in the area (DAR Adm. O. No. 5 [2000], sec. 11)

Waiver of right of retention

Sec. 7 of DAR AO 5 (2000) provides that the following acts constitute waiver on the landowner's right of retention: a) Executing an affidavit, letter or any other document duly attested by the MARO, Provincial Agrarian Reform Officer (PARO) or Regional Director (RD) indicating that he is expressly waiving his retention right over subject landholding; b) Signing of the Landowner-Tenant Production Agreement and Farmer's Undertaking (LTPA-FU) or Application to Purchase and Farmer's Undertaking (APFU) covering subject property; c) Entering into a Voluntary Land Transfer/Direct Payment Scheme (VLT-DPS) agreement as evidenced by a Deed of Transfer over the subject property; d) Offering the subject landholding under VOS scheme and failure to indicate his retained area; e) Signing/submission of other documents indicating consent to have the entire property covered, such as the form letter of the LBP on the disposition of the cash and bond portions of a land transfer claim for payment, and the Deed of Assignment, warranties and undertaking executed in favor of the LBP; f) Performing laches; and acts which constitute estoppel by

g) Doing such act or acts as would amount to a valid waiver in accordance with applicable laws and jurisprudence.

Public Lands
Public lands pertain to all lands that were not acquired by private persons or corporations either by grant or purchase. These lands are either (a) disposable (alienable) public lands or (b) non-disposable public lands. CA 141 (1936), otherwise known as the "Public Land Act", governs the administration and disposition of lands of the public domain. Sec. 9 thereof classifies alienable or disposable lands of the public domain as (a) agricultural; (b) residential, commercial, industrial or for similar productive purposes; (c) educational, charitable, or other similar purposes; or (d) reservations for town sites and for public and quasi-public uses. Non-disposable public lands or those not susceptible of private appropriation and include the following: (a) timber lands which are governed by PD 705 (1975) or the Revised Forestry Code; and (b) mineral lands which are governed by RA 7942 (1995) or the Philippine Mining Act of 1995 and other related laws. All lands of the public domain are under the exclusive jurisdiction of the DENR except those placed by law and/or by executive issuances under the jurisdiction of other government agencies. Under Sec. 3 and 5 of CA 141, the Secretary of Agriculture and Natural Resources (now the Secretary of DENR) is the executive officer charged with carrying out the provisions of the Public Land Act. It is empowered to prepare and issue such forms, instructions, rules and regulations consistent with the Public Land Act. Sec. 6 of CA 141 (see also EO 192 [1987]) reserves the power to classify lands in the public domain into either agricultural (disposable), timber or mineral lands to the

President, with the recommendation of the Secretary of DENR. Under Sec. 4 of RA 6657, public and private agricultural lands and lands of the public domain suitable for agriculture are covered by CARP. It provides, among others, that all alienable and disposable lands of the public domain devoted or suitable or devoted to agriculture (Sec 4 [a]) and all lands of the public domain in excess of the specific limits of the public domain as determined by Congress (Sec. 4 [b]) shall be covered by CARP. It has also been determined that public agricultural lands that are untitled and privately claimed are covered by CARP. In response to a query by DAR, the Department of Justice issued Opinion No. 176 (1992)which stated: . . . Thus, it has been held that there should be no distinction in the application of the law where non is indicated therein (SSS vs. City of Bacolod, 115 SCRA 412) . . . By said rule, the term "private agricultural lands" in the aforementioned section should be interpreted as including all private lands, whether titled or untitled. . . . RA 6657 has created an overlapping of jurisdictions between the DENR and the DAR over the disposition of these lands. RA 6657mandates DAR to acquire and distribute these public lands to agrarian beneficiaries while CA 141 vests upon the DENR the power to control, survey, classification, lease, sale or any other form of concession or disposition and management of the lands of the public domain. To resolve the overlapping mandates of the DENR and DAR in the disposition and distribution of public lands for CARP purposes, the two agencies issued Joint DAR-DENR MC 9 (1995) which recognizes that lands of the public domain are under the jurisdiction of the DENR unless placed by law and/or by executive issuances under the jurisdiction of other

government departments or entities. Under the said circular, the disposition of non-registrable lands of the public domain is the exclusive responsibility of the DENR under its various programs (i.e., the Integrated Social Forestry). In this instance, the role of the DAR is to assist the DENR in identifying and screening of farmer beneficiaries. The responsibility and authority of DAR to distribute public lands shall be limited to the following: a) Lands proclaimed by the President as DAR Resettlement Projects and placed under the administration of the DAR for distribution to qualified farmer beneficiaries under CARP; b) Lands which are placed by law under the jurisdiction of DAR; and c) Lands previously proclaimed for the various government departments, agencies and instrumentalities and subsequently turned over to the DAR pursuant to EO 407 (1990), as amended by EO 448 and 506. Untitled public alienable and disposable lands are still within the exclusive jurisdiction of DENR pursuant to CA 141. However, in accordance with DOJ Opinion No. 176 (1992), Joint DAR-DENR MC 14 (1997) provides that all untitled public alienable and disposable lands are deemed "private" if the criteria specified in RA 6940 for the determination of whether or not a person has already acquired a recognizable private right over a landholding is met, namely: a) Continuous occupancy and cultivation by oneself or through one's predecessors-in-interest for at least thirty (30) years prior to the effectivity of RA 6940 on 16 April 1990;

b) The land must have been classified as alienable and disposable for at least thirty (30) years prior to the effectivity on 16 April 1990; c) and d) One must have paid the real estate tax thereon; There are no adverse claims on the land.

For these privately claimed public alienable and disposable lands, the DENR first issues a Free Patent to qualified applicants for the retained area of not more than five (5) hectares. The DAR shall then cover the excess area and issue a CLOA or EP and distribute these to qualified beneficiaries. TcCDIS For untitled public alienable and disposable lands which are tenanted and with claimants not qualified under the criteria specified inRA 6940, the disposition shall be under the jurisdiction of the DENR. The role of the DAR in this case is limited to the documentation and protection of the leasehold arrangement between the public land claimant and the tenants. If the alienable and disposable land is not tenanted but has actual farm occupants, and the public land claimant lacks the requisite thirty (30)-year possession, these shall be under the jurisdiction of the DENR and the appropriate tenurial instrument shall be applied. It is submitted, however, that these alienable and disposable lands that are privately claimed by claimants who are not qualified under the criteria set under RA 6940 (1990) should be turned over to DAR for distribution under CARP. As these claimants/tenants are mere occupants and can not be granted Free Patents by the DENR, these land should instead be committed for agrarian purposes.

A recently issued DENR MC 22 (1999) entitled "DENR Jurisdiction over all Alienable ad Disposable Lands of the Public Domain," seems to abrogate or set aside Joint DARDENR MC 14 (1997). It directs all Regional Executive Directors to strictly exercise DENR's jurisdiction over all alienable and disposable lands of the public domain, including those lands not specifically placed under the jurisdiction of other government agencies, and prepare the same for disposition to qualified and legitimate recipients under the People's Alliance for the Rehabilitation of Environment of the Office of the Secretary of the DENR. This recent issuance impliedly prohibits the turnover of alienable and disposable lands to CARP, and thus, effectively removes remaining public alienable and disposable lands out of the scope of CARP. While merely an administrative order that can not overturn legislation on the matter, DENR MC 22 (1999) poses another roadblock which if not corrected or legally challenged in court can derail the already delayed coverage of public agricultural lands. Sec. 7 of RA 6657 explicitly provides that alienable and disposable public agricultural lands are among the priority lands for distribution. Needless to say, the political implications of government's reluctance to commit public agricultural lands for agrarian ends in the face of its relentless expropriation of private landholdings is serious.

Ancestral Lands
Sec. 9 of RA 6657 defines ancestral lands as those lands that include, but not limited to, lands in actual, continuous and open possession of an indigenous cultural community and its members. Sec. 3 (b) of RA 8371 (1997) or the "Indigenous Peoples Rights Act of 1997," has a more encompassing definition, to wit: Sec. 3.

Definition of Terms. . . .

b). Ancestral Lands Subject to Section 56 hereof, refers to lands occupied, possessed and utilized by individuals, families, and clans who are members of the ICCs/IPs (indigenous cultural communities/indigenous peoples) since time immemorial, by themselves or through their predecessors-in-interests, under claims of individual or traditional group ownership continuously, to the present, except when interrupted by war, force majeure or displacement by force, deceit, stealth or as a consequence of government projects and other voluntary dealings entered into by government and private individuals/corporations, including, but not limited to, residential lots, rice terraces or paddies, private forests, swidden farms and treelots;

Policy for ancestral lands under CARP

CARP ensures the protection of the right of ICCs/IPs to their ancestral lands to ensure their economic, social and cultural well being. Systems of land ownership, land use, and modes of settling land disputes of the ICCs/IPs shall be recognized and respected in line with principles of selfdetermination and autonomy. The Presidential Agrarian Reform Committee (PARC), notwithstanding any law to the contrary, has the power to suspend the implementation of the CARP with respect to ancestral lands for the purpose of identifying and delineating such lands. It shall also respect laws on ancestral domain enacted by the respective legislators of autonomous regions, subject to the provisions of the Constitution and the principles enunciated in RA 6657 and other national laws. However, the full protection of the rights of the ICCs/IPs to their ancestral lands under CARP is hampered by various legal constraints. For one, while Sec. 9 respects or protects the rights of the ICCs/IPs to their ancestral

lands as means to protect their economic, social and cultural well-being, its definition of ancestral lands is circumscribed by the limitation that the Torrens System shall be respected. This is a fundamental legal setback to the rights of ICCs/IPs. It should be noted that the vested rights of these communities to ancestral lands have been recognized to have pre-existed the Regalian Doctrine which underlie the government's perspective to full ownership and control over natural resources as well as the current legal system that regulates private property rights. CARP involves alienable and disposable lands only while ancestral lands of ICCs/IPs encompass forest and mineral lands and other lands of the public domain which are by definition inalienable and indisposable. Thus, the benefit of being awarded CLOAs over ancestral lands to these ICCs/IPs are limited to private agricultural lands and public agricultural lands transferred to DAR. In any case, to promote and protect the rights of the ICCs/IPs over ancestral lands situated in inalienable and indisposable public lands, DAR issues member/s of the ICCs who are engaged in agricultural activities over the said lands CARP Beneficiary Certificate (CBC). Though these do not vest title, it likewise recognizes the claim of the ICC over these lands and allows them to access support services from DAR. RA 8371 (1997) has a more expansive definition of ancestral domains and ancestral lands which includes lands that are legally determined as indisposable and inalienable public lands. RA 8371 is a clear departure from earlier law and regulation for not only does it expand the definition of ancestral lands but recognizes the right of the ICCs/IPs to own these lands. National Commission on Indigenous Peoples (NCIP), a body created by RA 8371, is vested, among others with the power and issue Certificates of Ancestral Domain/Land Titles over ancestral lands.

CHAPTER 2

Agricultural Leasehold Agricultural Tenancy Definition and nature of agricultural tenancy

Agricultural tenancy is defined as "the physical possession by a person of land devoted to agriculture, belonging to or legally possessed by another for the purpose of production through the labor of the former and of the members of his immediate farm household in consideration of which the former agrees to share the harvest with the latter or to pay a price certain or ascertainable, whether in produce or in money, or both." (RA 1199 [1954], sec. 3) In Gelos vs. CA, 208 SCRA 608 (1992), the Supreme Court held that agricultural tenancy is not a purely factual relationship. The written agreement of the parties is far more important as long it is complied with and not contrary to law.

Gelos vs. Court of Appeals 208 SCRA 608 (1992)

Facts: Rafael Gelos was employed by Ernesto Alzona and his parents as their laborer on a 25,000-sq. m farmland. They executed a written contract which stipulated that as hired laborer Gelos would receive a daily wage of P5.00. Three (3) years later, Gelos was informed of the termination of his services and was asked to vacate the property. Gelos refused and continued working on the land. Alzona filed a complaint for illegal detainer. The lower court found Gelos as tenant of the property and entitled to remain thereon as such. The decision was reversed by the Court of Appeals. DHACES

Issue: What is the nature of the contract between Gelos and Alzona? Held: The parties entered into a contract of employment, not a tenancy agreement. The agreement is a lease of services, not of the land in dispute. . . . The petitioner would disavow the agreement, but his protestations are less than convincing. His wife's testimony that he is illiterate is belied by his own testimony to the contrary in another proceeding. Her claim that they were tricked into signing the agreement does not stand up against the testimony of Atty. Santos Pampolina, who declared under his oath as a witness (and as an attorney and officer of the court) that he explained the meaning of the document to Gelos, who even read it himself before signing it. . . . Gelos points to the specific tasks mentioned in the agreement and suggests that they are the work of a tenant and not of a mere hired laborer. Not so. The work specified is not peculiar to tenancy. What a tenant may do may also be done by a hired laborer working under the direction of the landowner, as in the case at bar. It is not the nature of the work involved but the intention of the parties that determines the relationship between them. As this Court has stressed in a number of cases, "tenancy is not a purely factual relationship dependent on what the alleged tenant does upon the land. It is also a legal relationship. The intent of the parties, the understanding when the farmer is installed, and as in this case, their written agreements, provided these are complied with and are not contrary to law, are even more important."

Classes of agricultural tenancy

Agricultural tenancy is classified into share tenancy and leasehold tenancy (M. A. GERMAN, SHARE AND LEASEHOLD TENANCY, 13 [1995]). Share tenancy means "the relationship which exists whenever two persons agree on a joint undertaking for agricultural production wherein one party furnishes the land and the other his labor, with either or both contributing any one or several of the items of production, the tenant cultivating the land personally with aid of labor available from members of his immediate farm household, and the produce thereof to be divided between the landholder and the tenant." (Rep. Act No. 3844 [1963]. Sec. 166 [25]). With the passage of RA 3844, share tenancy has been declared to be contrary to public policy and abolished (Rep. Act No. 3844[1963], sec. 4) except in the case of fishponds, saltbeds, and lands principally planted to citrus, coconuts, cacao, coffee, durian and other similar permanent trees at the time of the approval of said Act (Rep. Act No. 3844 [1963], sec. 35). When RA 6389 (1971) was enacted, agricultural share tenancy has been automatically converted to leasehold but the exemptions remained. It was only under RA 6657 when the exemptions were expressly repealed. Leasehold tenancy exists when a person who, either personally or with the aid of labor available from members of his immediate farm household undertakes to cultivate a piece of agricultural land susceptible of cultivation by a single person together with members of his immediate farm household, belonging to or legally possessed by, another in consideration of a fixed amount in money or in produce or in both (Rep. Act No. 1199 [1954], sec. 4). Under RA 6657, the only agricultural tenancy relation that is recognized is leasehold tenancy. Said law expressly repealed Sec. 35 of RA 3844, making all tenanted

agricultural leasehold.

lands

throughout

the

country

subject

to

Leasehold tenancy may be established by operation of law, that is, through the abolition of share tenancy under Sec. 4 of RA 3844; through the exercise by the tenant of his right to elect leasehold; or by agreement of the parties either orally or in writing, expressly or impliedly, which was the condition before 1972 (M.A. German, supra, at 27). Leasehold relation is instituted in retained areas with tenant(s) under RA 6657 or PD 27 who opts to choose to remain therein instead of becoming a beneficiary in the same or another agricultural land with similar or comparable features. The tenant must exercise his option within one (1) year from the time the landowner manifests his choice of the area for retention (Rep. Act No. 6657 [1988], sec. 6). Leasehold relation also exists in all tenanted agricultural lands that are not yet covered under CARP (DAR Adm. O. No. 5 [1993]). The institution of leasehold in these areas ensure the protection and improvement of the tenurial and economic status of tenant-tillers therein. (Rep. Act No. 6657 [1988], sec. 6).

Leasehold tenancy distinguished from civil law lease

In Gabriel vs. Pangilinan, 58 SCRA 590 (1974), the Supreme Court distinguished leasehold tenancy from civil law lease. There are important differences between a leasehold tenancy and a civil law lease. The subject matter of leasehold tenancy is limited to agricultural land; that of civil law lease may be either rural or urban property. As to attention and cultivation, the law requires the leasehold tenant to personally attend to, and cultivate the agricultural land, whereas the civil law lessee need not

personally cultivate or work the thing leased. As to purpose, the landholding in leasehold tenancy is devoted to agriculture, whereas in civil law lease, the purpose may be for any other lawful pursuits. As to the law that governs, the civil law lease is governed by the Civil Code, whereas leasehold tenancy is governed by special laws (at 596).

Elements of Agricultural Tenancy

The following are the essential requisites for the existence of a tenancy relation: a) b) The parties are the landholder and the tenant; The subject is agricultural land;

c) There is consent by the landholder for the tenant to work on the land, given either orally or in writing, expressly or impliedly; d) The purpose is agricultural production;

e) There is personal cultivation or with the help of the immediate farm household; and f) There is compensation in terms of payment of a fixed amount in money and/or produce. (Carag vs. CA,

151 SCRA 44 [1987]; Gabriel vs. Pangilinan, 58 SCRA 590 [1974]; Oarde vs. CA, 280 SCRA 235 [1997]; Qua vs. CA, 198 SCRA 236 [1991])
The Supreme Court emphasized in numerous cases that "(a)ll these requisites must concur in order to create a tenancy relationship between the parties. The absence of one does not make an occupant of a parcel of land, or a cultivator thereof, or a planter thereon, ade jure tenant. This is so because unless a person has established his status as a de jure tenant, he is not entitled to security of tenure nor

is he covered by the Land Reform Program of the Government under existing tenancy laws." (Caballes v. DAR, 168 SCRA 254 [1988]) In the case of Teodoro vs. Macaraeg, 27 SCRA 7 (1969), the Court found all the elements of an agricultural leasehold relation contained in the contract of lease executed by the parties.

Teodoro vs. Macaraeg 27 SCRA 7 (1969)

Facts: Macaraeg had been the lessee of the property of Teodoro for the past seven (7) years when he was advised by the latter to vacate the property because it would be given to another tenant. Thereafter, a new tenant was installed who forbade Macaraeg from working on the riceland. On the other hand, Teodoro denied that Macaraeg was his tenant and claimed that he had always leased all of his 39-hectare riceland under civil lease. He further claimed that after the expiration of his "Contract of Lease" with Macaraeg in 1961, the latter did not anymore renew his contract. Held: The Contract of Lease between the parties contains the essential elements of a leasehold tenancy agreement. The landholding in dispute is unmistakably an agricultural land devoted to agricultural production. More specifically, the parties stipulated that "the property leased shall be used or utilized for agricultural enterprise only." Furthermore, the parties also agreed

that the farmland must be used for rice production as could be inferred from the stipulation that "the rental of nine (9) cavans of palay per hectare for one agricultural year . . . must be of the same variety (of palay) as that produced by the LESSEE." The land is definitely susceptible of cultivation by a single person as it is of an area of only four and a half (4-1/2) ha. This court has held that even a bigger area may be cultivated personally by the tenant, singly or with the help of the members of his immediate farm household. From the stipulation that "the rental must be of the same variety as that produced by the LESSEE," it can reasonably be inferred that the intention of the parties was that Macaraeg personally work the land, which he did as found by the Agrarian Court, thus: "In the instant case, petitioner (Macaraeg) cultivated the landholding belonging to said respondent (Teodoro) for the agricultural year 1960-61 in consideration of a fixed annual rental." (italics supplied) Moreover, there is no evidence that Macaraeg did not personally cultivate the land in dispute. Neither did Teodoro allege, much less prove, that Macaraeg availed of outside assistance in the cultivation of the said riceland. Teodoro is the registered owner of the disputed landholding and he delivered the possession thereof to Macaraeg in consideration of a rental certain to be paid in produce. Evidently, there was a valid leasehold tenancy agreement. Moreover, the provision that the rental be accounted in terms of produce 9 cavans per hectare is an unmistakable earmark, considering the other stipulations, that the parties did actually enter into a leasehold tenancy relation (at 16-17;underscoring supplied).

Agricultural tenancy relation is different from farm employer-farm employee relation. The Court clarified the difference in the case of Gelos vs. CA, 208 SCRA 608 (1992), as follows: On the other hand, the indications of an employeremployee relationship are: 1) the selection and engagement of the employee; 2) the payment of wages; 3) the power of dismissal; and 4) the power to control the employee's conduct although the latter is the most important element. According to a well-known authority on the subject, tenancy relationship is distinguished from farm employer-farm worker relationship in that: "In farm employer-farm worker relationship, the lease is one of labor with the agricultural laborer as the lessor of his services and the farm employer as the lessee thereof. In tenancy relationship, it is the landowner who is the lessor, and the tenant the lessee of agricultural land. The agricultural worker works for the farm employer and for his labor he receives a salary or wage regardless of whether the employer makes a profit. On the other hand, the tenant derives his income from the agricultural produce or harvest." (at 614)

Parties: landholder and tenant Tenant defined.

A tenant is "a person who by himself, or with the aid available from within his immediate household, cultivates the land belonging to or possessed by another, with the latter's consent for purposes of production, sharing the produce with the landholder or for a price certain or ascertainable in produce or in money or both, under the leasehold tenancy system." (Rep. Act No. 1199 [1954], sec. 5 (a)).

An overseer of a coconut plantation is not considered a tenant.

Zamoras vs. Su, Jr. 184 SCRA 248 (1990)

Facts: Zamoras was hired by Su as overseer of his coconut land in Dapitan City. Zamoras was tasked to have the land titled in Su's name. He was also "assigning portions of the land to be worked by tenants, supervising the cleaning, planting, care and cultivation of the land, the harvesting of coconuts and selling of the copra." As compensation, he was paid salary of P2,400 per month plus 1/3 of the proceeds of the sales of the copra. Su got another 1/3 of the proceeds while the other third went to the tenants. In 1981, Su obtained a loan from Anita Hortellano and the latter was authorized by Su to harvest the coconuts. Meanwhile, he informed Zamoras that he was being temporarily laid-off until the loan is settled. Zamoras filed a case for illegal termination and breach of contract before the Regional Arbitration Branch of the Ministry of Labor. The Labor Arbiter held that Zamoras' dismissal was without just cause and ordered Zamoras reinstatement. On appeal, the National Labor Relation Commission reversed the Labor Arbiter by holding that there is no employee-employer relation existing between the parties but a landlord-tenant relation hence jurisdiction rests with the agrarian court. Zamoras assailed the decision of NLRC. Held: The NLRC's conclusion that a landlord-tenant relationship existed between Su and Zamoras is not

supported by the evidence which shows that Zamoras was hired by Su not as a tenant but as overseer of his coconut plantation. As overseer, Zamoras hired the tenants and assigned their respective portions which they cultivated under Zamoras' supervision. The tenants dealt directly with Zamoras and received their one-third share of the copra produce from him. The evidence also shows that Zamoras, aside from doing administrative work for Su, regularly managed the sale of copra processed by the tenants. There is no evidence that Zamoras cultivated any portion of Su's land personally or with the aid of his immediate farm household. The following circumstances indicate an employeremployee relationship between them: 1. Zamoras was selected and hired by Su as overseer of the coconut plantation. 2. His duties were specified by Su. 3. Su controlled and supervised the performance of his duties. He determined to whom Zamoras should sell the copra produced from the plantation. 4. Su paid Zamoras a salary of P2,400 per month plus one-third of the copra sales every two months as compensation for managing the plantation." There is no tenancy relation because the element of personal cultivation does not exist.

Castillo vs. CA 205 SCRA 529 (1992)

Facts: Alberto Ignacio filed a complaint for injunction against Castillo alleging that he is the agricultural tenant of the latter. He claims that Castillo allowed him to construct a rest house in the property and that, thereafter, Castillo started cutting fruit-bearing trees on the land and filled with adobe stones the area intended for vegetables. On

the other hand, Castillo denied that Ignacio was his tenant but that the latter was only a "magsisiga" of the landholding and that he did not ask permission from Ignacio when he constructed his rest house. The trial court found no tenancy relationship between the parties but this was reversed by the Court of Appeals. Held: The element of personal cultivation is absent in this case. The alleged tenant "is a businessman by occupation and this is his principal source of income. He manufactures hollow blocks. He also has a piggery and poultry farm as well as a hardware store on the land adjoining the subject land. To add to that, the respondent farms the riceland of one Dr. Luis Santos. It is thus evident that the working hours of the respondent as a businessman and his other activities do not permit him to undertake the work and obligations of a real tenant. This is further supported by the undisputed fact that the respondent cannot even personally perform the work of a smudger because on 22 October 1986, the respondent hired some 20 people who are not members of his family to cut and burn the grass in the premises of the subject land." (at 535-536). An owner tilling his own agricultural land is not a tenant within the contemplation of the law (Baranda vs. Baguio, 189 SCRA 194 (1990). In Oarde vs. CA, et al., 280 SCRA 235 (1997), certifications of tenancy/non-tenancy issued by DAR are not conclusive. "The certifications issued by administrative agencies or officers that a certain person is a tenant are merely provisional and not conclusive on courts, as ruled by this Court in Cuao vs. Court of Appeals, citing Puertollano vs. IAC. Secondly, it is well-settled that the "findings of

or certifications issued by the Secretary of Agrarian Reform, or his authorized representative, in a given locality concerning the presence or absence of a tenancy relationship between the contending parties is merely preliminary or provisional and is not binding upon the courts." (at 246)

Landholder-lessor
A landholder-lessor is defined as "any person, natural or juridical, either as owner, lessee, usufructuary or legal possessor of agricultural land, who lets, leases or rents to another said property for purposes of agricultural production and for a price certain or ascertainable either in an amount of money or produce." (Rep. Act No. 1199 [1954], sec. 42). Thus, consent need not be necessarily given personally by the registered owner as long as the person giving the consent is the lawful landholder as defined by law.

Bernas vs. Court of Appeals 225 SCRA 119 (1993)

Facts: Natividad Deita is the owner of a 5,831-sq m property which she entrusted to her brother, Benigno, so that he could use the fruits thereof to defray the cost of his children's education in Manila. The property was leased by Bernas pursuant to a production sharing arrangement executed between Bernas and Benigno. Natividad played no part in this arrangement. In 1985, the lots were returned by Benigno to his sister but when the owners sought to take possession, Bernas refused to relinquish the property. Bernas was claiming that he was an agricultural lessee entitled to security of tenure. Natividad filed an action for recovery of possession. The

trial court ruled in favor of Bernas but this was subsequently reversed by the CA. Issue: Is consent by a legal possessor, even if without the consent of landowner, sufficient to create tenancy relationship? Held: Yes. As legal possessor of the property, Benigno had the authority and capacity to enter into an agricultural leasehold relation with Bernas. "The law expressly grants him, as legal possessor, authority and capacity to institute an agricultural leasehold lessee on the property he legally possessed." (at 125-126)

Subject is agricultural land

For agricultural tenancy to exist, the subject of the agreement must be an agricultural land. RA 6657 defines the term "agricultural land" as "land devoted to agricultural activity as defined in this Act and not classified as mineral, forest, residential, commercial or industrial land." (see discussion on scope of CARP, Chapter I). Under RA 3844, "agricultural land" refers to land devoted to any growth, including but not limited to crop lands, salt beds, fish ponds, idle land and abandoned land. The area of agricultural land that a lessee may cultivate has no limit, but he should cultivate the entire area leased. The three (3) hectare limit under RA 6657 applies only to the award that may be given to the agrarian reform beneficiary.

Consent by landholder

As discussed earlier, consent must be given by the true and lawful landholder of the property. In Hilario vs. IAC, 148 SCRA 573 (1987), the Supreme Court held that tenancy relation does not exist where a usurper cultivates the land.

Hilario vs. Intermediate Appellate Court 148 SCRA 573 (1987)

Facts: Salvador Baltazar was working on the land pursuant to a contract executed between him and Socorro Balagtas involving a two (2)-ha property. According to Baltazar, in 1965, he relinquished 1.5 ha to certain individuals and what remained under his cultivation was -ha owned by Corazon Pengzon. After Socorro's death, no new contract was executed. Sometime in 1980, the Hilarios started cultivating a 4,000-sq m portion of the property and enjoined Baltazar from entering the same. The Hilarios claimed that they acquired the landholding from the Philippine National Bank after a foreclosure proceeding. On the other hand, Corazon Pengzon explained that she did not get any share from the produce of the land since 1964 and she would not have accepted it knowing that she did not own the property anymore. Held: Baltazar is not a tenant because no consent was given by Pengzon. As held in Tiongson v. Court of Appeals, 130 SCRA 482, tenancy relationship can only be created with the consent of the true and lawful landholder through lawful means and not by imposition or usurpation. "So the mere cultivation of the land by usurper cannot confer upon him any legal right to work the land as tenant and enjoy the protection of security of

law (Spouses Appeals, 130 SCRA 482)." tenure of the

Tiongson vs. Court

of

Successors-in-interest of the true and lawful landholder/owner who gave the consent are bound to recognize the tenancy established before they acquired the agricultural land.

Endaya vs. Court of Appeals 215 SCRA 109 (1992)

Facts: Spouses San Diego owned a 2.0200-ha rice and corn land. The property has been cultivated by Pedro Fideli as a tenant of the couple under a 50-50 sharing agreement. In 1974, a lease contract was executed between spouses San Diego and a certain Regino Cassanova for a period of four (4) years at P400.00 per ha per annum rental and gave him the authority to oversee the planting of crops. The contract was subsequently renewed to last until 1980. In both cases, Fideli signed as witness. While the contract was subsisting, Fideli continuously worked on the property, sharing equally with Cassanova the net produce of the harvests. In 1980, the land was sold to spouses Endaya. Fideli continued tilling the land despite the Endaya's demand to vacate the property. Fideli refused to leave and deposited with Luzon Development Bank the landowner's share in the harvests. Fideli filed a complaint praying that he be declared the agricultural tenant of the Endayas. The trial court ruled in favor of the Endayas but the same was subsequently reversed by the CA holding that Fideli is an agricultural lessee entitled to security of tenure. Held:

It is true that the Court has ruled that agricultural tenancy is not created where the consent of the true and lawful owners is absent. But this doctrine contemplates a situation where an untenanted farm land is cultivated without the landowner's knowledge or against her will or although permission to work on the farm was given, there was no intention to constitute the worker as the agricultural lessee of the farm land. The rule finds no application in the case at bar where the petitioners are successors-in-interest to a tenanted land over which an agricultural leasehold has long been established. The consent given by the original owners to constitute private respondent as the agricultural lessee of the subject landholding binds private respondents who, as successors-in-interest of the Spouses San Diego, step into the latter's shoes, acquiring not only their rights but also their obligations. (at 118; underscoring supplied).

Purpose is agricultural production

Tenancy status arises only if an occupant of a parcel of land has been given its possession for the primary purpose of agricultural production.

Caballes vs. Department of Agrarian Reform 168 SCRA 248 (1988)

Facts: Spouses Caballes acquired subject land from the Millenes family. Prior to the sale, Abajon constructed his house on a portion of the property, paying a monthly rental to the owner. Abajon was also allowed to plant on a portion of the land and that the produce thereof would be shared by them on a 50-50 basis. When the new owners took over, they told Abajon to transfer his dwelling to the southern portion of the property because

they would be building a poultry near Abajon's house. Later, the Caballes asked Abajon to leave because they needed the property. Abajon refused. During the trial the former landowner testified that Abajon dutifully gave her 50% share of the produce of the land under his cultivation. Held: The fact of sharing alone is not sufficient to establish a tenancy relationship. The circumstances of this case indicate that the private respondent's status is more of a caretaker who was allowed by the owner out of benevolence or compassion to live in the premises and to have a garden of some sort at its southwestern side rather than a tenant of the said portion. Agricultural production as the primary purpose being absent in the arrangement, it is clear that the private respondent was never a tenant of the former owner, Andrea Millenes. Consequently, Sec. 10 of RA 3844, as amended, does not apply. Simply stated, the private respondent is not a tenant of the herein petitioner.

Personal cultivation Cultivation

Under DAR AO 5 (1993), cultivation is not limited to the plowing and harrowing of the land, but also the husbanding of the ground to forward the products of the earth by general industry, the taking care of the land and fruits growing thereon, fencing of certain areas, and the clearing thereof by gathering dried leaves and cutting of grasses. In coconut lands, cultivation includes the clearing of the landholding, the gathering of the coconuts, their piling, husking and handling as well as the processing thereof into copra, although at times with the aid of hired laborers.

Meaning of "Personal Cultivation"

"Personal cultivation" exists when a person cultivates the land by himself and with the aid available from his immediate farm household. In Oarde vs. CA, et al., supra, the Court held that the element of personal cultivation is essential for an agricultural leasehold. There should be personal cultivation by the tenant or by his immediate farm household or members of the family of the lessee or other persons who are dependent upon him for support or who usually help him in his activities (Evangelista vs. CA, 158 SCRA 41). The law is explicit in requiring the tenant and his immediate family to work the land (Bonifacio vs. Dizon, 177 SCRA 294), and the lessee cannot hire many persons to help him cultivate the land (De Jesus vs. IAC, 175 SCRA 559). In Gabriel vs. Pangilinan, supra, the Court held that the tenancy relation was severed when the tenant and/or his immediate farm household ceased from personally working the fishpond when he became ill and incapacitated.

Compensation in money and/or produce

In Matienzo v. Servidad, 107 SCRA 276 (1981), the Supreme Court held that: A tenant is defined under section 5(a) of Republic Act No. 1199 as a person who, himself, and with the aid available from within his immediate household, cultivates the land belonging to or possessed by another, with the latter's consent for purposes of production, sharing the produce with the landholder under the share tenancy system, or paying to the landholder a price certain or ascertainable in produce or in money or both, under the leasehold tenancy system. From the above definition of a tenant, it is clear that absent a sharing arrangement, no tenancy relationship had ever existed between the parties. What transpired was that plaintiff was made overseer over a 7-hectare land area; he was to supervise

applications for loans from those residing therein; he was allowed to build his house thereon and to plant specified plants without being compensated; he was free to clear and plant the land as long as he wished; he had no sharing arrangement between him and defendant; and he was not obligated to pay any price certain to nor share the produce, with the latter. CaSHAc

Security of Tenure
Under Sec. 7 of RA 1199, "the agricultural leasehold relation once established shall confer upon the agricultural lessee the right to continue working on the landholding until such leasehold relation is extinguished. The agricultural lessee shall be entitled to security of tenure on his landholding and cannot be ejected therefrom unless authorized by the Court for causes herein provided." The Supreme Court has consistently ruled that once a leasehold relation has been established, the agricultural lessee is entitled to security of tenure. The tenant has a right to continue working on the land except when he is ejected therefrom for cause as provided by law (De Jesus vs. IAC, 175 SCRA 559 [1989]).

Transfer of ownership or legal possession does not affect security of tenure.

In Tanpingco vs. IAC, 207 SCRA 653 (1992), the Court upheld the validity of donation but the donee must respect the rights of the tenant and ordered the donee to pay the tenant disturbance compensation.

Tanpingco vs. Intermediate Appellate Court 207 SCRA 653 (1992)

Facts:

In 1985, Tanpingco filed a complaint for payment of disturbance compensation against Benedicto Horca, Sr. Tanpingco alleged that he is the tenant-lessee in Horca's riceland under a leasehold contract; that he was asked to desist from working on the land because it was already donated to the Ministry of Education, Culture and Sports; and that he is willing to accept disturbance compensation or in the alternative to remain as tenantlessee of the subject land. Issue: Is the security of tenure of a tenant affected by the transfer of ownership or legal possession of an agricultural land? Held: Under Art. 428 of the Civil Code, the owner has the right to dispose of a thing without other limitations than those established by law. As an incident of ownership, therefore, there is nothing to prevent a landowner from donating his naked title to the land. However, the new owner must respect the rights of the tenant. Sec. 7 of RA No. 3844, as amended, gives the agricultural lessee the right to work on the landholding once the leasehold relationship is established. It also entitles him to security of tenure on his landholding. He can only be ejected by the court for cause. Time and again, this Court has guaranteed the continuity and security of tenure of a tenant even in cases of a mere transfer of legal possession. As elucidated in the case of Bernardo v. Court of Appeals (168 SCRA 439 [1988]), security of tenure is a legal concession to agricultural lessees which they value as life itself and deprivation of their landholdings is tantamount to deprivation of their only means of livelihood. Also, under Section 10 of the same Act, the law explicitly provides that the leasehold

relation is not extinguished by the alienation or transfer of the legal possession of the landholding. The only instances when the agricultural leasehold relationship is extinguished are found in Section 8, 28 and 35 of the Code of Agrarian Reforms of the Philippines. The donation of the land did not terminate the tenancy relationship. However, the donation itself is valid." (at 657-658; underscoring supplied).

Constitutionality of the provision on security of tenure

The constitutionality of the provision on security of tenure has long been settled by the Supreme Court in the case of Primero vs. Court of Agrarian Relations, 101 Phil. 675 (1957).

Primero vs. Court of Agrarian Relations 101 Phil. 675 (1957)

Facts: Primero owns a tenanted riceland in Cavite. Because of his desire to let the property to one Porfirio Potente, he notified his tenant advising the latter to vacate the land. The tenant refused. Primero filed a case with CAR which subsequently dismissed the same. On appeal, Primero assailed the constitutionality of Sec. 9 and 50 of RA 1199 claiming that said provisions are limitations on freedom of contract, a denial of equal protection of law, and an impairment of, or limitation on, property rights. Held:

The provisions of law assailed as unconstitutional do not impair the right of the landowner to dispose or alienate his property nor prohibit him to make such transfer or alienation; they only provide that in case of transfer or in case of lease, as in the instant case, the tenancy relationship between the landowner and his tenant should be preserved in order to insure the well-being of the tenant or protect him from being unjustly dispossessed by the transferee or purchaser of the land; in other words, the purpose of the law in question is to maintain the tenants in the peaceful possession and cultivation of the land or afford them protection against unjustified dismissal from their landholdings. Republic Act 1199 is unquestionably a remedial legislation promulgated pursuant to the social justice precepts of the Constitution and in the exercise of the police power of the state to promote the commonwealth. It is a statute relating to public subjects within the domain of the general legislative powers of the State and involving the public rights and public welfare of the entire community affected by it. Republic Act 1199, like the previous tenancy laws enacted by our lawmaking body, was passed by congress in compliance with the constitutional mandates that "the promotion of social justice to insure the well-being and economic security of all the people should be the concern of the State" (Art II, sec. 5) and that "the state shall regulate the relations between landlord and tenant in agriculture" (Art. XIV, sec. 6). (at 680). In Pineda vs. de Guzman, 21 SCRA 1450 (1967), the Supreme Court also held: Section 49 of the Agricultural Tenancy Act, Republic Act 1199, as amended, enunciates the principle of security of tenure of the tenants, such that it prescribes that the relationship of landholder and tenant can only be terminated for causes provided by law. The principle

is epitomized by the axiom on land tenure that once a tenant, always a tenant. Attacks on the constitutionality of this guarantee have centered on the contention that it is a limitation on freedom of contract, a denial of the equal protection of the law, and an impairment of or a limitation on property rights. The assault is without reason. The law simply provides that the tenancy relationship between the landholder and his tenant should be preserved in order to insure the well-being of the tenant and protect him from being unjustly dispossessed of the land. Its termination can take place only for causes and reasons provided in the law. It was established pursuant to the social justice precept of the State to promote the common weal. (Primero vs. Court of

Industrial Relations, 1957) (at 1456).

G.R.

No.

L-10594,

May

29,

Rights and Responsibilities of the Parties Rights and responsibilities of lessee

The lessee shall have the following rights: a) To have possession and peaceful enjoyment of the land; b) To manage and work on the land in a manner and method of cultivation and harvest which conform to the proven farm practices; c) To mechanize all or any phase of his farm work;

d) To deal with millers and processors and attend to the issuance of quedans and warehouse receipts of the produce due him/her; e) To continue in the exclusive possession and enjoyment of any homelot the lessee may have occupied upon the effectivity of RA 3844;

f) To be indemnified for the costs and expenses incurred in the cultivation and for other expenses incidental to the improvement of the crop in case the lessee surrenders, abandons or is ejected from the landholding; g) To have redemption; and the right of pre-emption and

h) To be paid disturbance compensation in case the conversion of the farmholding has been approved (Rep. Act No. 3844[1963], sec. 23, 24, 25, 11, 12, 36) On the other hand, the lessee shall have the following responsibilities under Sec. 26 of RA 3844: a) Cultivate and take care of the farm, growing crops, and other improvements on the land and perform all the work therein in accordance with proven farm practices; b) Inform the lessor within a reasonable time of any trespass committed by third persons on the farm, without prejudice to his/her direct action against the trespasser; c) Take reasonable care of the work animals and farm implements delivered to him/her by the lessor and see to it that they are not used for purposes other than those intended, or used by another without the knowledge and consent of the lessor; d) Keep the farm and growing crops attended to during the work season; and e) To pay the lease rental to the lessor when it falls due.

One of the rights of a lessee is to be entitled to a homelot. But only the tenant-lessee has this right and that members of the immediate family of the tenants are not entitled to a homelot.

Cecilleville Realty and Service Corporation vs. Court of Appeals 278 SCRA 819 (1997)
Facts: Petitioner Cecilleville Realty owns a parcel of land, a portion of which is occupied by Herminigildo Pascual. Despite repeated demands, Herminigildo refused to vacate the property and insisted that he is entitled to occupy the land since he is helping his mother, the corporation's tenant, to cultivate the property. Held: Only a tenant is granted the right to have a home lot and the right to construct or maintain a house thereon. And here, private respondent does not dispute that he is not petitioner's tenant. In fact, he admits that he is a mere member of Ana Pascual's immediate farm household. Under the law, therefore, we find private respondent not entitled to a homelot. Neither is he entitled to construct a house of his own or to continue maintaining the same within the very small landholding of petitioner. . . . Thus, if the Court were to follow private respondent's argument and allow all the members of the tenant's immediate farm household to construct and maintain their houses and to be entitled to not more than one thousand (1,000) square meters each of home lot, as what private respondent wanted this Court to dole-out, then farms will be virtually converted into rows, if not colonies, of houses.

In sugarcane lands, the lessee shall have the following rights to be exercised by him personally or through a duly registered cooperative/farmers' association of which he is a bona fide member (DAR Adm. O. No. 5 [1993]): a) To enter into a contract with the sugar central millers for the milling of the sugarcane grown on the leased property; b) To be issued a warehouse receipt (quedan) or molasses storage certificate by the sugar central for the manufactured sugar, molasses and other by-products; c) To have free access to the sugar central's factory, facilities, and laboratory for purposes of checking and/or verifying records and procedures in the processing of sugarcane through professional representation; d) To be furnished a weekly statement of cane and sugar account showing, among other things, the tonnage of the delivered cane and analysis of the crusher juice; e) To be given 30 days notice in writing before the sugar and other by-products are sold through public auction; and f) To be provided with the standard allocation by the miller/sugar central. tonnage

Rights and responsibilities of lessor

The lessor shall have the following rights: a) To inspect and observe the extent of compliance with the terms and conditions of the leasehold contract; b) To propose a change in the use of the landholding to other agricultural purposes, or in the kind of crops planted;

c) To require the lessee, taking into consideration his/her financial capacity and the credit facilities available to him/her, to adopt proven farm practices necessary to the conservation of the land, improvement of the fertility and increase in productivity; and d) To mortgage 3844 [1963], sec. 29): expected rentals (Rep. Act No.

The lessor may propose a change in use but the change shall be agreed upon by the landowner and the lessee. In case of disagreement, the matter may be settled by the Provincial Agrarian Reform Adjudicator (PARAD), or in his absence the Regional Agrarian Reform Adjudicator (RARAD) (DAR Adm. O. No. 5 [1993]) The lessor shall have the following obligations: a) To keep the lessee in peaceful possession and cultivation of the land; and b) To keep intact such permanent useful improvements existing on the landholding at the start of the leasehold relation (Rep. Act No. 3844 [1963], sec. 30). Sec. 31 of RA 3844 provides that the prohibited to perform any of the following acts: lessor is

a) To dispossess the lessee of his/her landholding except upon authorization by the Court; b) To require the lessee to assume, directly or indirectly, the payment of the taxes or part thereof levied by the government on the land; c) To require the lessee to assume, directly or indirectly, any rent or obligation of the lessor to a third party;

d) To deal with millers or processors without written authorization of the lessee in cases where the crop has to be sold in processed form before payment of the lease rental; e) To discourage, directly or indirectly, the formation, maintenance or growth of unions or organizations of lessees in his/her landholding; and f) For coconut lands, indiscriminate cutting of coconut trees will be deemed prima facie evidence to dispossess the tenant of his/her landholding unless there is written consent of the lessee and there is PCA certification, copy of the findings and recommendations of which shall be furnished to affected tenants or lessees, or a resolution from the Municipal Board allowing the cutting for valid reasons (DAR Adm. O. No. 5 [1993] and DAR Adm. O. No. 19 [1989]).

Termination of Tenancy Relation Causes for termination of leasehold relation

Section 8 of RA 3844 provides that agricultural leasehold relation shall be extinguished by the following acts or omissions: a) Abandonment of the landholding without the knowledge of the agricultural lessor; b) Voluntary surrender of the landholding by the agricultural lessee, written notice of which shall be served three months in advance; or c) Absence of an heir to succeed the lessee in the event of his/her death or permanent incapacity. Conversion of the land to non-agricultural uses also extinguishes the leasehold relation because the subject land

is no longer an agricultural land and the purpose is no longer agricultural production. However, under Sec. 16 of DAR AO 1 (1999), the tenant affected by the conversion is entitled to disturbance compensation which must be paid within sixty (60) days from the issuance of the order of conversion.

Abandonment
In the case of Teodoro vs. Macaraeg, supra, it was held that the word "abandon," in its ordinary sense, means to forsake entirely, to forsake or renounce utterly. "The emphasis is on the finality and the publicity with which some thing or body is thus put in the control of another, and hence the meaning of giving up absolutely, with intent never again to resume or claim one's rights or interests." In other words, the act of abandonment constitutes actual, absolute and irrevocable desertion of one's right or property. . . . Likewise, failure to cultivate the land by reason of the forcible prohibition to do so by a third party cannot also amount to abandonment, for abandonment presupposes free will." (at 19-20; underscoring supplied).

Voluntary surrender of property

The tenant's intention to surrender landholding cannot be presumed, much less determined by mere implication, but must be convincingly and sufficiently proved.

Nisnisan, et al vs. Court of Appeals 294 SCRA 173 (1998)

Facts: Spouses Gavino and Florencia Nisnisan are the owners of a 4.9774 hectare land in Davao del Sur. Policarpio, the son of Gavino, has been cultivating one (1) ha of said

land since 1961. In 1976, Gavino and Policarpio executed a leasehold contract which stipulates a sharing arrangement of 1/3:2/3 of the harvest. In 1978, Gavino sold two (2) ha of the land, including the land tenanted by Policarpio, to spouses Mancera. As a result of the sale, Policarpio and family were ousted. They then filed an action for reinstatement of tenancy against the Manceras. The Manceras, on the other hand, countered that spouses Nisnisan have no cause of action because they voluntarily surrendered their landholding. Issue: Is the tenant deemed to have voluntarily surrendered subject landholding? Held: Other than their bare allegations, private respondents failed to present any evidence to show that petitionersspouses surrendered their landholding voluntarily after the private respondents purchased the subject property. Moreover, the filing of the complaint for reinstatement of leasehold tenancy by petitioners-spouses against private respondents before the CAR militates against the private respondents' claim that petitioners-spouses voluntarily surrendered their landholding to them. Under Sec. 8 of RA 3844, voluntary surrender, as a mode of extinguishing agricultural leasehold tenancy relations, must be convincingly and sufficiently proved by competent evidence. The tenant's intention to surrender the landholding cannot be presumed, much less determined by mere implication.

Effect of death or permanent incapacity of tenantlessee on leasehold relation

Under Sec. 9 of RA 3844, in case of death or permanent incapacity, the leasehold relation continues between the

lessor and the person who can cultivate the land personally, chosen by the lessor within one month from such death or incapacity, from among the following: a) b) The surviving spouse; The eldest direct descendant by consanguinity;

c) The next eldest descendant or descendants in the order of age. The age requirement is applied under the presumption that all heirs/successors are qualified. The leasehold relation is not terminated by death or permanent incapacity of the landholder-lessor. It binds his legal heirs (Rep. Act No. 3844 [1963], sec. 9). Also, Sec. 10 of RA 3844 provides that the mere expiration of the term or period in a leasehold contract nor by sale, alienation or transfer of the legal possession of the landholding does not extinguished leasehold. In these cases, the transferee is subrogated to the rights and substituted to the obligations of the lessor.

Dispossession of Tenants
Under Sec. 36 of RA 3844, dispossession of tenants may be authorized by the Court in a judgment that is final and executory if after due hearing it is shown that: a) The lessee failed to substantially comply with the terms and conditions of the contract or with pertinent laws unless the failure is caused by a fortuitous event or force majeure; b) The lessee planted crops or used the land for a purpose other than what has been previously agreed upon;

(Note: Under DAR AO 5 [1993], the lessee is now allowed to intercrop or plant secondary crops after the rental has been fixed, provided the lessee shoulders the expenses.) c) The lessee failed to adopt proven farm practices necessary to conserve the land, improve its fertility, and increase its productivity taking into consideration the lessee's financial capacity and the credit facilities available to him; d) There has been substantial damage, destruction or unreasonable deterioration of the land or any permanent improvement thereon due to the fault or negligence of the lessee; e) The lessee failed to pay lease rental on time except when such non-payment is due to crop failure to the extent of 75% as a result of a fortuitous event; f) The lessee employed a sub-lessee; or

g) The landholding is declared by the DAR to be suited for residential, commercial, industrial or some other urban purposes subject to payment of disturbance compensation to the lessee. (Note: Under Sec. 36 [1] of RA 3844, as amended by RA 6389, disturbance compensation is equivalent to five [5] times the average of the gross harvest on his landholding during the last five [5] preceding calendar years.) In the case of Garchitorena vs. Panganiban, 6 SCRA 338 (1962), it was held that when non-payment of lease rentals occurs for several years, said omission has the effect of depriving the landowner of the enjoyment of the possession and use of the land.

Under Sec. 36 (1) of RA 3844, as amended, a lessor who ejects his tenant without the court's authorization shall be liable for: a) fine or imprisonment;

b) damages suffered by the agricultural lessee in addition to the fine or imprisonment for unauthorized dispossession; c) payment of attorney's fees incurred by the lessee; and d) the reinstatement of the lessee.

Determination of Lease Rentals

The lease rental shall not be more than the equivalent of 25% of the average normal harvest during the three (3) agricultural years preceding the following dates: 10 September 1971, the date of effectivity of RA 6389 for tenanted rice and corn lands; 15 June 1988 or date the tenant opted to enter into leasehold agreement, whichever is sooner, for tenanted sugar lands; or 15 June 1988 or date of leasehold agreement by the parties concerned, whichever is sooner, for all other agricultural lands after deducting the amount used for seeds and the cost of harvesting, threshing, loading, hauling and processing whichever is applicable (DAR Adm. O. No. 5 [1993]). DAR AO 5 (1993) defines "normal harvest" as the usual or regular produce obtained from the land when it is not affected by any fortuitous event like drought, earthquake, volcanic eruption, and the like. If there had been no normal

harvest, the estimated normal harvest during the three (3) preceding agricultural years shall be considered as the normal harvest. "Agricultural year" refers to the period of time required for raising a particular product, including the preparation of the land, sowing, planting and harvesting of crops and, whenever applicable, threshing of said crops: Provided, however, That in case of crops yielding more than one harvest from one planting, "agricultural year" shall be the period from the preparation of the land to the first harvest and thereafter from harvest to harvest. In both cases, the period may be shorter or longer than a calendar year. The law states that only the amount used for seeds and the cost of harvesting, threshing, loading, hauling, and processing, whichever is applicable, are considered allowable deductions from the normal harvest in order to determine the lease rental. The lease rental shall cover the whole farmholding attended to by the lessee. Computation of lease rental shall include both primary and secondary crops existing as of 15 June 1988. Secondary crops which are planted to an aggregate area of half a hectare or less shall not be included in the computation of the lease rental (DAR Adm. O. No. 5 [1993]). If the land has been cultivated for a period of less than three agricultural years prior to 15 June 1988, the initial rental shall be based on the average normal harvest during the preceding agricultural years when the land was actually cultivated. After the lapse of the first three (3) normal harvests, the final rental shall be based on the average normal harvest during these three (3) preceding agricultural years. CHAPTER 3

Land Acquisition Registration of Landholdings and Landowners

Sec. 14 of RA 6657 requires all persons, natural or juridical, and government entities that own or claim to own agricultural lands, whether, in their names or in the name of others, are required, to file a sworn statement with the assessor's office, containing the following data: a) the description and area of the property;

b) the average gross income from the property for at least three (3) years; c) the therein; names of all tenants and farmworkers

d) the crops planted in the property and the area covered by each crop as of 1 June 1987; e) the terms of mortgages, lease, and management contracts subsisting as of 1 June 1987; and f) the latest declared market value of the land as determined by the city or provincial assessor. The registration drive, denominated as Listasaka II, is governed by Department of Finance MC 5 (1988).

Effect of failure to register

Under Sec. 4 of EO 229 (1987), which originally provided for the compulsory registration of agricultural landholdings, if the landowner fails to register within the prescribed period, the government shall base the valuation of his property for landowner compensation purposes on the City/Provincial Assessor's value.

The effects of non-registration provided in Sec. 40 of EO 229, however, are now deemed superseded by Sec. 14 of RA 6657which does not provide for such effects. In the Association cases, the Supreme Court stated: The complaint against the effects of non-registration of the land under E.O. No. 229 does not seem to be viable any more as it appears that Section 4 of the said Order has been superseded by Section 14 of the CARP Law. This repeats the requisites of registration as embodied in the earlier measure but does not provide, as the latter did, that in case of failure or refusal to register the land, the valuation thereof shall be that given by the provincial or city assessor for tax purposes. On the contrary, the CARP Law says that the just compensation shall be ascertained on the basis of the factors mentioned in its Section 17 and in the manner provided for in Section 16.

Registration of Potential Beneficiaries

The law requires the DAR to register all potential beneficiaries and compile a data bank containing pertinent information on them. The registration of beneficiaries is governed by DAR AO 10 (1989). The objectives of this activity include the validation of data reported by landowners under the LISTASAKA program, and to provide basic data for the planning and development of support programs. Beneficiaries of PD 27 who have culpably sold, disposed of, or abandoned their lands, and landowners of PD 27 beneficiaries who already own or have already received at least three (3) hectares of land are excluded from registration, they being disqualified to become beneficiaries under Secs. 22 and 23 of RA 6657.

Effect of farmer's failure to register

The failure of a farmer to register does not have any effect prejudicial to his rights as a potential farmerbeneficiary. DAR AO 10 (1989) does not provide for any penalty against the failure of a farmer to register. He may simply avail of the next registration period. Under this administrative order, the registration of new qualified registrants is undertaken as a continuing activity of the DAR.

Landholdings Covered by CARP

The schedule of acquisition and distribution of agricultural lands covered by CARP is provided for under Sec. 7 of RA 6657. Land distribution and acquisition covers three phases. However, this does not mean that in the implementation of the program, a particular category should be finished first before going to the next category. In other words, the three (3) phases as outlined in Sec. 7 should not be interpreted as an exclusive order of priority. Rather, what is contemplated is simultaneous over-all implementation (Records of the Senate, Volume I, No. 101, pp. 3239-32340; Speech of Rep. Roo, Congressional Deliberations, 6 October 1987). The guiding principle in the implementation of the program is the readiness of the different farmer groups to work fully without restraints on the land and make the land productive (Sponsorship Speech of Rep. Andolana, Congressional Deliberations, 23 September 1987). It is within this framework that the following lands are to be acquired by the Republic of the Philippines for ultimate distribution to the qualified farmer-beneficiaries: rice and corn lands under PD 27/EO 228; idle or abandoned lands; lands foreclosed by private and government financial institutions; private agricultural lands; lands acquired by the Presidential Commission on Good Government (PCGG), and public agricultural lands.

Rice and corn lands under PD 27 and EO 228

At the time of the deliberations on House Bill No. 400, otherwise known as "An Act Instituting a Comprehensive Agrarian Reform Program and Providing the Mechanism for Its Implementation," and Senate Bill No. 249, otherwise known as "An Act Instituting a Comprehensive Agrarian Reform Program to promote Social Justice and Industrialization, Providing the Mechanism for its Implementation and for Other Purposes," the agrarian reform program was already in place, albeit limited in scope. Specifically, on 21 October 1972 then President Marcos, through PD 27, instituted the agrarian reform program and placed all tenanted rice and corn lands under its coverage. On 17 July 1987, President Aquino issued EO 228 which declared full ownership by qualified farmer beneficiaries of lands they acquired by virtue of PD 27. During the congressional deliberations, it was noted that as of 1987 or fourteen (14) years of implementation of PD 27, approximately 547,000 hectares involving 397,896 beneficiaries had been left untouched. The inclusion of rice and corn lands underPD 27 and EO 228 in the CARP is to be seen as a mere continuation of an unfinished business. (Speech of Rep. Gillego, Congressional Deliberations, 6 October 1987).

Idle or abandoned land

The DAR is mandated to initiate the expropriation or acquisition of idle or abandoned agricultural lands at the earliest possible time for distribution to farmerbeneficiaries of the agrarian reform program (Const. Art. XVIII, sec 22; EO 229, sec 18[h]). Idle or abandoned land refers to any agricultural land not cultivated, tilted or developed to produce any crop nor devoted to any specific economic purpose continuously for a period of three (3) years immediately prior to the receipt of notice of acquisition by the government as provided under this Act, but not include land that has become permanently or

regularly devoted to non-agricultural purposes. It does not include land which has become unproductive by reason of force majeure or any other fortuitous event, provided that prior such event, such land was previously used for agricultural or other economic purpose (RA 6657, sec 3 [e]).

Private agricultural lands

Private agricultural lands within the context of RA 6657 refer to those lands devoted to agricultural activity and not classified as residential, commercial or industrial owned by persons, whether natural or juridical, other than the government or its instrumentalities. Abandoned private agricultural lands, commercial farms and agricultural lands subject of mortgage or foreclosure by natural or juridical persons, private banking or financial institutions are special classes of private agricultural lands subject of acquisition or distribution to farmer-beneficiaries.

Agricultural lands under mortgage or foreclosure

Mortgage is an accessory contract whereby the debtor (or a third person) guarantees the performance of the principal obligation by subjecting real property or real rights as security in case of non-fulfillment of said obligation within the period agreed upon. A mortgage follows the property whoever the possessor may be and subjects it to the fulfillment of the obligation for whose security it was constituted. (Bonnevie vs. Court of Appeals, 125 SCRA 122, [1983]). Therefore, even if the ownership of the mortgaged property changes, the encumbrance, unless extinguished by any means allowed by law, subsists. The parties to such contract, the mortgagee and the mortgagor under the law, have their respective rights and obligations. It is the essence of the mortgage contract that when the principal obligation becomes due, the things in which the mortgage consists may be alienated for the payment to the creditor. (New Civil Code, Art. 2087) This remedy is referred to as

foreclosure. In the foreclosure proceedings, the mortgaged property is sold on default of the mortgagor in satisfaction of the mortgage debt. The nature and the legal effects of and legal relationships formed by a contract of mortgage gives rise to an important issue: at what point may the creditor be considered as the landowner and when may he be treated as a mere lienholder for the purpose of placing the landholdings under CARP coverage? When placing mortgaged private agricultural lands under CARP, it is important to distinguish between the status of creditor as landowner and creditor as lienholder/mortgagee. The significance of this distinction lies in the rights and obligations to which the landowner and mortgagee are entitled and subjected to as enumerated in Sec. 8 and 9 of DAR AO 1 (2000). Thus, the creditormortgagee shall be considered as the landowner for the purpose of covering the properties under CARP under two (2) circumstances: (a) when the mortgagee is the purchaser in the foreclosure sale and the redemption period has already expired where the right of redemption exists; or (b) when the mortgagee is the purchaser in the foreclosure sale and said sale is confirmed by the court in cases where only equity of redemption is provided (DAR Adm. O. No. 1 [2000], sec. 4). On the other hand, the creditor is considered as a lienholder or mortgagee if as of the date the land transfer claim was received by the Land Bank of the Philippines (LBP) from the DAR and either of the following circumstances obtain: the mortgage debt is not yet due and demandable; or the mortgage debt is already due and demandable but the mortgagee has not foreclosed on the property; or the mortgage has already been foreclosed but the period to exercise the right of redemption has not expired or the foreclosure sale has not yet been confirmed by the court in

cases where there is only equity of redemption (DAR Adm. O. No. 1 [2000], sec. 5) It is likewise important to state that mortgages and other claims registered with the register of deeds shall be assumed by the government (when landholdings subject or mortgage or claim is acquired for CARP purposes) up to an amount equivalent to the landowner's compensation value as provided in Sec. 72 (b) of RA 6657. In other words, the government shall assume the mortgage indebtedness not exceeding the just compensation due the landowner. For instance, the debt secured by the mortgage is P100,000.00. Assuming that when the mortgaged landholding is placed under the CARP and acquired by the government, the landowner's just compensation is determined to be P80,000.00. In this case, what the government merely assumes is P80,000.00 out of the P100,000.00 indebtedness. This amount is what the government is obligated to pay the landowner by virtue of its acquisition under CARP. It cannot be made to pay the balance of P20,000.00. Said amount is collectible from the debtor/mortgagor. The obligation of the debtor to pay the debt to the mortgagee stands although the mortgaged property to secure the payment of said debt may have been transferred to a third person. (Mccullough & Co. vs. Veloso, 46 Phil. 1, [1924]).

Commercial farms
Commercial farms are private agricultural lands devoted to commercial livestock, poultry and swine raising, and aquaculture including saltbeds, fishponds and prawn ponds, fruit farms, orchards, vegetable and cut-flower farms, and cacao, coffee and rubber plantations. These farms are subject to immediate compulsory acquisition and distribution after ten (10) years from the effectivity ofRA 6657 or 15 June 1988. In the case of new farms, the ten (10)-year period begins from the first year of commercial production

and operation as determined by DAR (Rep. Act No. 6657 [1988], sec. 11). Upon the expiration of the ten (10)-year deferment period on 15 June 1998, the DAR issued AO 9 (1998), otherwise known as "Rules and Regulations on the Acquisition, Valuation, Compensation and Distribution of Deferred Commercial Farms." All commercial farms whose deferment expired as of 15 June 1998 shall be subject to immediate acquisition and distribution under the CARP. Those whose deferments have yet to expire will be acquired and distributed only upon expiration of their respective deferment periods as originally determined by the DAR or earlier if the DAR determines that the purpose for which it was deferred no longer exists and revokes its deferment (DAR Adm. O. No. 9 [1998], sec. 2 [a]). All infrastructure facilities and improvements including buildings, roads, machineries, receptacles, instruments or implements permanently attached to the land which are necessary and beneficial to the operations of the farm as determined by the DAR, and shall be subject to acquisition upon the recommendation of the ARBs (DAR Adm. O. No. 9 [1998], sec. 2 [d]). Commercial farms with expired deferment period shall be acquired through VOS, CA or direct payment scheme. The acquisition of facilities and improvements as a general rule, shall be encouraged through the direct payment scheme (DAR Adm. O. No. 9 [1998], sec. 24).

Corporate farms
Corporate farms are those owned or operated by corporations or other business associations (Rep. Act No. 6657 [1988], sec. 29). Corporate farms may be acquired through voluntary land transfer, VOS, CA and voluntary stock distribution plan (Rep. Act No. 6657[1988], sec. 31). It must be noted that corporate farm owners cannot avail of the ten-year deferment period under DAR AO 9 (1998). Only

commercial farms are subject of deferment. (Rep. Act No. 6657 [1988], sec. 11; DAR Adm. O. No. 9 [1998]).

Lands owned by the State in proprietary capacity

Under Sec. 1 of EO 407 (1990), all government instrumentalities were directed to transfer to the Republic of the Philippines through the DAR all landholdings suitable for agriculture. The government instrumentalities directed to do so included government agencies, government owned and controlled corporations or financial institutions such as the Development Bank of the Philippines, Philippine National Bank, Republic Planters Bank, Asset Privatization Trust, Presidential Commission on Good Government, Department of Agriculture, State Colleges and Universities, Department of National Defense and others.

Modes of Acquisition of Private Agricultural Lands

CARP is founded on the right of landless farmers and regular farmers to own directly or collectively the lands they till through the just distribution of all agricultural lands. To achieve this end, a mechanism is provided in the law for the identification, acquisition, distribution of agricultural lands. As earlier discussed, CARP covers both private and public agricultural lands. Since the State owns the latter, they just need to be identified and distributed to the beneficiaries. Private agricultural lands, upon the other hand, generally have to go through the acquisition process before their ultimate distribution to the farmers. In order for the acquisition process to be completed, several requisites must be satisfied. First, the land should be privately owned and found suitable for agriculture. Second, there are beneficiaries willing to take over the ownership of the land and make it more productive. Third, the landowner is paid just compensation or deposit in cash or LBP bonds is made in his name if the value is contested.

Finally, title to the land is transferred in the name of the Republic of the Philippines. It must be clarified, however, that full payment of just compensation is not necessarily required in Voluntary Land Transfer (VLT)/Direct Payment Scheme (DPS) because the terms of payment of just compensation are governed by the mutual agreement of the parties, i.e., the farmer-beneficiary and the landowner. Likewise, under EO 407, the payment of just compensation to the government instrumentality as landowner may come even after land distribution, that is, thirty (30) days from the registration of the ownership documents by the Register of Deeds in favor of the Department of Agrarian Reform (Exec. Order No. 407 [1990], sec. 1, par. 4). In the same manner that full payment of just compensation is not always necessary to complete acquisition, transfer of title to the Republic of the Philippines is not necessary in VLT/DPS since the landholding is directly transferred from the landowner to the beneficiary. The modes by which private agricultural lands may be acquired are as follows: Operation Land Transfer (OLT), Voluntary Offer to Sell (VOS), Voluntary Land Transfer/ Direct Payment Scheme (VLT/DPS), Compulsory Acquisition (CA), and Voluntary Stock Distribution in the case of corporate farms.

Operation Land Transfer

Operation Land Transfer (OLT) is a mechanism established for the implementation of PD 27 (1972) and EO 228 (1987). It is a mode by which ownership of tenanted rice and corn lands is transferred to tenant-beneficiaries. It must be stressed that for lands to come under OLT pursuant to PD 27, there must be first showing that they are tenanted lands. (Castro vs. CA, 99 SCRA 722 [1980])

LOI 227 (1974) was issued by then President Marcos directing the immediate extension of the OLT to the landholdings of over seven (7) hectares. Subsequently, LOI 474 (1976) was issued placing all tenanted rice and corn lands with areas of seven (7) ha or less belonging to landowners who own other agricultural lands exceeding seven (7) ha or lands used for residential, commercial, industrial, or other urban purposes from which they derive adequate income to support themselves and their families. LOI 474 was subjected to constitutional scrutiny in the case of Zurbano vs. Estrella, 137 SCRA 333 (1989). In this case, petitioners who are owners of 56.14 ha of coconut lands and 1.86 ha of ricelands, assailed the constitutionality of LOI 474, arguing that it is a class legislation and therefore a violation of the equal protection clause. Furthermore, petitioners averred that said issuance is violative of the due process clause as it would be, as applied to them, a taking of private property without just compensation. The Supreme Court in upholding its constitutionality held that: . . . there is no legal basis for declaring LOI No. 474 void on its face on equal protection, due process and taking of property without just compensation grounds. The Constitution decrees no less than the emancipation of tenants, and there are safeguards therein to assure that there are no arbitrariness or injustice in its enforcement. There are, moreover, built-in safeguards to preclude any unlawful taking of the property. There is no merit to the contention that LOI 474 denies equal protection. To condemn as class legislation an executive act intended to promote the welfare of tenants is to ignore not only the letter of the Constitution incidentally cited in the petition itself requiring the formulation and implementation of an agrarian reform program aimed at emancipating the tenant from the bondage of the soil, but also the nation's history. . . . The

attack on due process ground is unavailing as on the face of the challenged measure fairness and justice may easily be discerned. Nothing in its language lend support to the contention that consequences so harsh and drastic would attend its implementation. In language, scheme and framework, this Letter of Instruction reveals the plan and purpose to attain the goal envisioned by the Constitution but with due regard to the land owners affected. . . . Neither is there any merit on the contention that there would be a taking of private property for public use without just compensation. The Constitution itself imposes the duty of the State to emancipate the tenants from the bondage of the soil. What is more, even a month before its adoption by the 1971-1972 Constitutional Convention, P.D. No. 27 was issued. Its validity, to repeat, was unanimously sustained by this Tribunal. No other conclusion could have been reached, conforming as it did to what the fundamental law ordained. In the case of Locsin vs. Valenzuela, 194 SCRA 195 (1991), the Supreme Court explained the legal effect of land being placed under OLT as vesting ownership in the tenant. However, in a subsequent case, Vinzons-Magana vs. Estrella, 201 SCRA 536 [1991], the High Tribunal, citing Pagtalunan vs. Tamayo which predated the Locsin case, ruled that the mere issuance of a certificate of land transfer does not vest ownership in the farmer/grantee. There seems to be an inconsistency regarding the treatment of the legal effect of the placing of the property under the Operation Land Transfer. This is because the issuance of a Certificate of Land Transfer (CLT) over a landholding presupposes that the property has already been covered under the OLT. Therefore, if indeed, as the Locsin doctrine enunciated, ownership of the land is transferred to the farmer at the time the property is placed under OLT, then, it necessarily follows the CLT, being an instrument issued subsequent to the coverage of the land under OLT, is

evidence of ownership. However, the latter case of VinzonsMagana disputes this conclusion. In the case of Locsin vs. Valenzuela, 194 SCRA 195 (1991), the petitioners are owners of a landholding which was subject to the lifetime usufructuary of private respondent. The subject landholding was placed under the Operation Land Transfer. Petitioners filed a collection suit against the private respondent claiming that the payments made by the tenants in the subject properties should be considered as amortization payments for the price of land and as such should belong to the landowners and not to the usufructuary. The Court, upholding the petitioners contention, by construing PD No. 27 in relation to PD No. 57, Department Circular No. 8, dated 1 April 1975 and EO No. 228 dated 17 July 1987, ruled that under PD No. 27, the tenant-farmer became owner of the land as of 21 October 1972. . . . Reading the foregoing provisions together, we observe that under Presidential Decree No. 27, the basic statute, the tenant-farmer became owner of a familysize farm of five (5) hectares or, if the land was irrigated, three (3) hectares, and that the tenant-owner had to pay for the cost of the land within fifteen (15) years by paying fifteen (15) equal annual amortization payments. Thus, it appears clear that ownership over lands (like Lot No. 2-C-A-3) subjected to Operation Land Transfer moved from the registered owner (the old landowner) to the tenants (the new landowners). The fifteen (15) annual amortizations to be paid by the tenants-owners were intended to replace the landholdings which the old landowners gave up in favor of the new landowners, the tenants-owners. It follows that in respect of land subjected to Operation Land Transfer, the tenants-farmers became owners of the land they tilled as of the effective date of Presidential Decree No. 27, i.e., 21 October 1972. Pending full payment of the cost of the land to the old landowner by

the Land Bank of the Philippines, the leasehold system was "provisionally maintained" but the "lease rentals" paid by the tenants-farmers prior to such full payment by the Land Bank to the old landowner, would be credited no longer as rentals but rather as "amortization payments" of the price of the land, the unamortized portion being payable by the Land Bank. In respect of lands brought within the coverage of Operation Land Transfer, the leasehold system was legally and effectively terminated immediately on 21 October 1972 (notwithstanding the curious statement in Department Circular No. 8 that it was "provisionally maintained"). It was in respect of lands not yet subjected to the terms and effects of Operation Land Transfer that the leasehold system did continue to govern the relationship between the "landowner and his tenant-tillers". The exemption of the old landowner from the capital gains tax on the amortization payments made to him by the tenants-purchasers, under Presidential Decree No. 57 (supra), underscores the fact, referred to above, that ownership or dominion over the land moved immediately from landowner to tenant-farmer, rather than upon completion of payment of the price of the land. In general, capital gains are realized only when the owner disposes of his property. . . . In the case of Pagtalunan vs. Tamayo, 183 SCRA 252 (1990), petitioner sought to intervene in the expropriation proceedings filed by the Republic of the Philippines over the subject parcel of land. Petitioner argues that he, being a bona fide tenant of and holder of Certificate of Land Transfer covering the subject properties, is entitled to the proceeds of the expropriation. The Supreme Court, in rejecting petitioner's contention, ruled that the petitioner, being merely a CLT holder is not the owner of the subject property and thus, not entitled to just compensation. In explaining the nature of the CLT, the Court stated that:

. . . However, a careful study of the provisions of Pres. Decree No. 27, and the certificate of land transfer issued to qualified farmers, will reveal that the transfer of ownership over these lands is subject to particular terms and conditions the compliance with which is necessary in order that the grantees can claim the right of absolute ownership over them. Under Pres. Decree No. 266 which specifies the procedure for the registration of title to lands acquired under Pres. Decree No. 27, full compliance by the grantee with the abovementioned undertakings is required for a grant of title under the Tenant Emancipation Decree and the subsequent issuance of an emancipation patent in favor of the farmer/grantee [Section 2, Pres. Decree No. 226]. It is the emancipation patent which constitutes conclusive authority for the issuance of an Original Certificate of Transfer, or a Transfer Certificate of Title, in the name of the grantee. The mere issuance of the certificate of land transfer does not vest in the farmer/grantee ownership of the land described therein. The certificate simply evidences the government's recognition of the grantee as the party qualified to avail of the statutory mechanisms for the acquisition of ownership of the land tilled by him as provided under Pres. Decree No. 27. Neither is this recognition permanent nor irrevocable. Failure on the part of the farmer/grantee to comply with his obligation to pay his lease rentals or amortization payments when they fall due for a period of two (2) years to the landowner or agricultural lessor is a ground for forfeiture of his certificate of land transfer [Section 2, Pres. Decree No. 816]. Clearly, it is only after compliance with the above conditions which entitle a farmer/grantee to an

emancipation patent that he acquires the vested right of absolute ownership in the landholding a right which has become fixed and established, and is no longer open to doubt or controversy . . . . At best, the farmer/grantee, prior to compliance with these conditions, merely possesses a contingent or expectant right of ownership over the landholding. . . . was reiterated in the case of Vinzons-Magana vs. Estrella, 201 SCRA 536 (1991). In this case, the petitioner assailed the constitutionality of LOI No. 474 and its implementing guideline, DAR Memorandum Circular No. 78-1978 . Moreover, petitioner prayed for the cancellation of the CLT over the subject landholding arguing that the issuance of the CLT in favor of the tenant without first expropriating the property to pay the petitioner landowner the full market value thereof before ceding and transferring the land to the tenant is unconstitutional as it is confiscatory and violative of the due process clause. The Supreme Court, brushing aside the petitioner's theory, held that the issue of the constitutionality of the taking of private property under the CARP law has already been settled by the Court. Moreover, citing the Pagtalunan case, the Court explained the nature of the CLT, stating that it does not vest in the farmer/grantee ownership of the land described therein. Therefore, there is no taking of property without payment of just compensation. It is noted that in all three cases, the facts from which the controversy arose occurred prior to the issuance of EO 228 of then President Aquino which declared that full ownership to qualified beneficiaries of the lands covered by PD No. 27 as of 21 October 1972. Likewise, all cases were promulgated after the issuance of EO No. 228 in 1987. Therefore, it cannot be said that the reason behind the Locsin ruling declaring the effect of OLT as vesting ownership in the tenant is the fact that EO 228, which categorically clarified the legal effect of PD No. 27, was The Pagtalunan doctrine

factored in the discussion of the case. Why then was EO No. 228 not considered in the subsequent case of VinzonsMagana when it was already in effect then? The ponente instead referred to the pre-Locsin case ofPagtalunan vs. Tamayo. In so doing, it ignored altogether the legal implications of the Locsin doctrine.

Voluntary Offer to Sell

Voluntary Offer to Sell (VOS) is a scheme whereby the landowners voluntarily offer their agricultural lands for coverage regardless of phasing. It does not, however, mean that landholdings voluntarily offered for sale are automatically accepted by DAR. A VOS may be rejected if the landholding is not suitable for agriculture, or has a slope of more than eighteen percent (18%) and is undeveloped. Likewise, said offer may be refused if there are no takers or persons willing to be agrarian reform beneficiaries and, lastly, the only identified ARBs are the qualified children of the landowner. [DAR A. O. No. 06 (1997)] As a general rule, withdrawal of VOS shall no longer be allowed after the receipt by the DAR of the letter offer for VOS, i.e., CARP Form No. 1. (DAR A.O. No. 06 [1997], II [A]). However, DAR may allow the withdrawal of voluntary offers to sell if the withdrawal of VOS is for the purpose of acquisition and compensation through the Voluntary Land Transfer/ Direct Payment Scheme (VLT/DPS), provided, that the claim folder has not yet been forwarded to the LBP for the computation of the land value. (DAR A.O. No. 06 [1997] II [A] 2nd par.). DAR may also allow the withdrawal of VOS if the subject landholding is determined by DAR to be more suitable for a townsite, resettlement site or individual site needed to address a matter of national interest or concern in calamity situation (DAR A.O. No. 06 [1997], II [C]).

In case lands voluntarily offered for sale are subsequently found to be outside the coverage of CARP, such lands shall be reconveyed to the original transferors. The manner of reconveyance is governed by A.O. No. 09, Series of 1997. In the case of commercial farms, the offer to sell must have been submitted before the expiration of the deferment period in order that their acquisition through VOS may be allowed, otherwise the property shall be placed under compulsory acquisition (Section 8 [a] DAR A. O. No. 021998). Landowners who voluntarily offer their lands for sale shall be entitled to an additional five percent (5%) cash payment. It must be noted, however, that banks and other financial institutions are not covered by said incentive. (Rep. Act No. 6657, [1988 ], Sec. 19)

Voluntary Land Transfer/ Direct Payment Scheme

Voluntary Land Transfer or Direct Payment Scheme (VLT/DPS) is a mode of acquisition whereby the landowner and the beneficiary enter into a voluntary arrangement for the direct transfer of the lands to the latter. Not all private agricultural lands may be subject of voluntary land transfer. For instance, lands mortgaged with banking and/or financial institutions cannot be the subject of VLT/DPS. All notices for voluntary land transfer must be submitted to the DAR within the first year of the implementation of the CARP. Negotiations between the landowners and qualified beneficiaries covering any voluntary land transfer which remain unresolved after one (1) year shall not be recognized and such land shall instead be acquired by the government and transferred pursuant to the Comprehensive Agrarian Reform Law. [Rep. Act No. 6657 (1988), sec. 20.] It must be stressed that this should not be construed to mean that VLT/DPS is no longer allowed after one year

from the effectivity of R.A. 6657. It is submitted that VLT/DPS may be entered into even beyond 15 June 1989, or one year after the effectivity of R.A. No. 6657. It is argued that that the exact moment when the one-year period under Section 20, par (a) of R.A. No. 6657 within which notices of VLT/DPS may be filed commences from the date when the land subject of the VLT/DPS is scheduled for acquisition and distribution according to the various phases of implementation described under Section 7 and 11 and the landowner is served a notice of acquisition of his landholding. If the law intended that the one year period be reckoned from the approval or effectivity of RA 6657, it would have expressly said so, as it did in the provisions on priorities (Sec. 7), commercial farms (Sec. 11), and stock transfer option (Sec. 31). Instead, the law used the phrase "within the first year of implementation of the CARP" which is at the time Section 16 is implemented relative to specific and distinct classes of agricultural lands. [Memorandum of Asst. Sec. Peaflor for the Secretary, August 23, 1999, p. 6.] Section 20 (b) of R.A. No. 6657 provides that the terms and conditions of the transfer under this mode shall not be less favorable to the transferee than those of the government's standing offer to purchase from the landowner and to resell to the beneficiaries, if such offers have been made and are fully known to both parties.(Sec. 20 (b)) However this does not mean that existence of "a standing government offer" is not essential to the consummation of a VLT/DPS. The restriction imposed under Section 20 (b) relative to the government's standing offer, is not absolute. The law itself subjects its application only in instances where there is a prior offer by the government and that the same is known to both the landowner and the qualified beneficiaries. [Memorandum of Asst. Sec. Peaflor for the Secretary, August 23, 1999, p. 6.]

The terms and conditions of VLT/DPS should include the immediate transfer of possession and ownership of the land in favor of the identified beneficiaries. Certificates of Land Ownership Award (CLOAs) shall be issued to the ARBs with proper annotations. [DAR A.O. No. 08, 1997 (Section II (E).]. The voluntary agreement shall include sanctions for non-compliance by either party and shall be duly recorded and its implementation monitored by the DAR. [Rep. Act No. 6657 (1988), sec. 20.] Direct payments in cash or in kind may be made by the farmer-beneficiary to the landowner under terms to be mutually agreed upon by both parties, which shall be binding upon them, upon registration with the approval by the DAR. Said approval should be received by the farmer-beneficiary within thirty (30) days from the date of registration. In the event they cannot agree on the price of land, the procedure for compulsory acquisition as provided in Section 16 shall apply. The LBP shall extend financing to the beneficiaries for purposes of acquiring the land. [Rep. Act No. 6657 (1988), sec. 21.] A pressing issue respecting VLT/DPS is its application to commercial farms. One school of thought espouses the theory that VLT/DPS cannot apply to commercial farms as Section 11 of R.A. No. 6657 specifically requires their ". . . immediate compulsory acquisition and distribution . . ." beginning 15 June 1998. Hence, it is argued that commercial farms may be acquired only through compulsory acquisition. It is submitted that commercial farms may be acquired not only through compulsory acquisition but through VLT/DPS as well. There is no dispute that commercial farms whose deferments have expired as of 15 June 1998 are subject to immediate compulsory acquisition and distribution as provided in Section 11 of R.A. No. 6657. It should be

stressed, however, that all acquisitions under R.A. No. 6657 are compulsory in nature, in the sense that the landowners whose agricultural lands are covered by CARP have really no choice except to submit to the program. The procedures for acquisition of private lands are provided for under Chapter V, Section 16 (a) to (f). The procedure for land acquisition are further elaborated by Chapter VI, Section 17 through Section 21. These provisions prescribe specific rules for valuation and payment which include, among others, Section 20 on voluntary land transfer and Section 21 on direct payment of beneficiaries. Thus, even as the process of compulsory acquisition under Section 16 is already in motion, the option available under Sections 20 and 21 may still be exercised. The foregoing framework of acquisition is the context within which the phrase "immediate compulsory acquisition," as used in Section 11 should be understood. The situation now is that before commercial farms could be compulsorily acquired and distributed pursuant to Section 16, the preliminary steps for their acquisition have to be continued or pursued, to wit: identification of beneficiaries, inspection or technical survey and valuation. During this period, the landowners and the qualified beneficiaries may, by reason of the options available under Section 20 and 21, manifest their intent to voluntarily arrange for direct transfer and payment of the property. In short, the phrase "immediate compulsory acquisition" under Section 11 of R.A. No. 6657, when taken in the context of the procedures for acquiring lands under CARP, still includes VLT/DPS as an option for valuation and payment of commercial farms subject of acquisition. [Memorandum of Asst. Sec. Peaflor for the Secretary, August 23, 1999, pp. 2-5] DPS involving commercial farms may be availed of any time during the acquisition process, after the preparation of

the master list but prior to the transmittal of the claim folder to the LBP. If the notice of acquisition is served by the parties upon to the DAR prior to the preparation of the master list, the notice shall be validated by the MARO with identified ARBs included in the master list, in a referendum to be held for this purpose. Acquisition under DPS of lands with liens and encumbrances may be allowed provided that the amount corresponding to the mortgage over the subject landholding shall be deducted from the total value of the land to be paid by the ARBs. Provided further that said agreement shall be upon mutual consent of both the ARBs and the landowner, duly concurred with by the mortgagee or lienholder. In case of delinquent real estate taxes, the ARBs may be allowed to assume such liability to be deducted from the total value of the land. Upon mutual consent of the ARBs and the landowner, duly concurred with by the mortgagor or the lienholder, the ARBs may assume the mortgage, provided that such obligation shall not exceed the annual amortization otherwise due to the land pursuant to Section 26 of RA 6657, if the subject landholding was acquired under VOS or CA [DAR A. O. No. 09 (1998), Section 9 (b)].

Compulsory Acquisition
Compulsory acquisition is a mode whereby the land is expropriated by the State in accordance with the procedure outlined in Section 16 of R.A. No. 6657. All private agricultural lands which have become due under the phase of implementation as provided in Section 7 of R.A. No. 6657are subject to compulsory acquisition. However, where the landowner opts for other modes of acquisition such as voluntary offer to sell or voluntary land transfer, compulsory acquisition is suspended. In these cases, if negotiations fail, CA is resumed. Likewise, all idle or abandoned agricultural lands regardless of size are subject to compulsory acquisition. Lands subjected to Compulsory Acquisition may be allowed to shift to Voluntary

Land Transfer/Direct Payment Scheme or Voluntary Offer to Sell provided that the claim folder had not yet been forwarded to the LBP for the computation of land value. [DAR A. O. 06, (1997) II (D).]

Voluntary stock distribution of corporate farms

Voluntary stock distribution is an alternative arrangement to the physical distribution of lands wherein corporate owners voluntarily divest a portion of their capital stock, equity or participation in favor of their workers or other qualified beneficiaries. Stock ownership is based on the capital stocks of the corporation and is equivalent to the agricultural land actually devoted to agricultural activities valued in relation to the total assets of the corporation. (Rep. Act No. 6657 [1988], sec. 31 as implemented by DAR Adm. O. No. 10 [1988] and DAR Adm. O. No. 1 [1991]) To safeguard the rights of farmer-beneficiaries, corporate farms with a voluntary stock distribution plan must comply with the following conditions: 1) The books of the corporation or association shall be subject to periodic audit by certified public accountants chosen by the beneficiaries; 2) Irrespective of the value of their equity in the corporation or association, the beneficiaries shall be assured of at least one (1) representative in the board of directors, or in a management or executive committee, if one exists, of the corporation or association; and 3) Any shares acquired by such workers and beneficiaries shall have the same rights and features as all other shares. Moreover, any transfer of shares of stock by the original beneficiaries shall be void unless said transaction is in favor of a qualified and registered beneficiary within the same corporation. (Rep. Act No.

6657 [1988], sec. 31 as implemented by DAR Adm. O. No. 10 [1988]). However, corporate farm owners cannot avail of voluntary stock distribution at present. Section 31 of RA 6657 states that "if within two (2) years from the effectivity of CARP, the land or stock transfer has not been made or the plan for such stock distribution has not been approved by the Presidential Agrarian Reform Council (PARC) within the same period, the agricultural land of the corporate owners or corporation shall be subject to compulsory acquisition under existing DAR rules and regulations.

The Case of Hacienda Luisita

Hacienda Luisita, Inc. is a corporate farm owning a total of 4,916 hectares planted to sugarcane located in Tarlac. In May 1988, it applied to avail of the stock distribution plan under CARP. The application was approved in November 1988. The farm has a total of 355,531,462 shares of stocks with a par value of P1.00 per share. Onethird of these shares is subject for distribution to the farmworker-beneficiaries (FBs) under the stock distribution plan. The shares for the FBs are to be distributed in a span of 30 years. At the time of application for stock distribution, there were about 6,000 FBs within the farm. Under its stock distribution plan, FBs are supposed to receive cash dividends accruing to their respective shares, homelots, representation in the Board of Directors, production based incentives, and other fringe benefits.

Procedure for Acquisition of Private Agricultural Lands

The procedure for the acquisition of private agricultural lands as provided for in Sec. 16, RA 6657 are as follows: a) After having identified the land, the landowners and the beneficiaries, the DAR shall send its notice to acquire the land to the owners thereof, by personal

delivery or registered mail, and post the same in a conspicuous place in the municipal building and barangay hall of the place where the property is located. Said notice shall contain the offer of the DAR to pay a corresponding value in accordance with the valuation set forth in Sections 17 and 18, and other pertinent provisions hereof. DAR identifies the land to be covered by CARP as well as the landowners and beneficiaries thereof on the basis of a master list or inventory of landholdings prepared by the field offices pursuant to the Land Acquisition and Distribution Tracing System (LADTRACKS) and the CARP Scope Validation Project. Said master list in turn is obtained from the LISTASAKA statements as verified or complemented by the records of the Register of Deeds and Assessor's Offices, review of town plan and zoning ordinances, field surveys, interviews and community consultations and general knowledge of the land ownership pattern in the barangays or municipalities. The identification of lands is done by the DAR Municipal Office (DARMO) which gathers documents such as OCT/TCT, tax declaration, copy of the approved survey plan of the property and prepares the claim folder of the landowner. Thereafter, the DARMO conducts preliminary ocular inspection to determine initially whether or not the property may be covered under CARP. If the property is coverable under CARP, the process of acquisition continues. DARMO sends the landowner the Notice of Coverage and Field Inspection with a copy of the Pre-OCI Report by personal delivery with proof of service or by registered mail with return card. However, in the case of deferred commercial farms, the Order of Deferment previously issued over the landholding shall serve, upon expiration of the deferment period of the subject commercial farm, as the Notice of Coverage, supported by the Compliance Work Program and Summary of Exceptions

originally submitted with the approved deferment application. However, for record purposes, the landowner shall be served a Notice of Expiration of Deferment which shall contain a reminder of his right to retention should he wish to exercise the same. [Section 9 (a) (1), DAR A.O. No. 02-1998]. The landowner is invited to join the field investigation to select his retention area and to submit his statement of production and income. If the landowner cannot be contacted or refuses to accept said Notice, the notice shall be effected by publication in a newspaper of national circulation. Likewise, a notice on the schedule of the field investigation shall be sent to the BARC, DENR, DA, LBP and prospective beneficiaries. The DARMO then shall post a copy of the notice of coverage and field inspection for seven working days in the bulletin board of the barangay and municipal halls where the property is located and issues Certification of Posting Compliance. Thereafter, the DARMO shall conduct joint field investigation of the property with the LBP, DENR, DA BARC, landowner and prospective ARBs. Jointly with the LBP and BARC, the DARMO shall prepare the Field Investigation Report and the Land Use Map. The DARMO shall screen/select qualified ARBs and cause the signing of the Application Purchase and Farmer's Undertaking (APFU).The DARMO shall forward the claim folder to DARPO for review and completion of documents. The land is then surveyed. The claim folder is sent to the Land Bank for valuation. At this stage, the DARPO sends the Notice of Land Valuation and Acquisition to the Landowner (DAR A. O. No. 02 (1996)as amended by DAR A.O. No. 1 (1998).] In the preliminary stage of the acquisition process, notice to the landowner is vital to the validity of coverage and acquisition of the landholding. The Supreme Court had occasion to discuss and stress the importance of these notices in the case of Roxas & Co. vs. CA, G.R. No. 127876, December 17, 1999. In this case, petitioner Roxas and Co., a domestic corporation owns three haciendas. Notices of

acquisition informing the landowner that two of the haciendas were being compulsorily acquired were sent by the DAR and served on the administrator in his address in the hacienda. The administrator participated in the acquisition proceedings as representative of the owner. Subject landholdings were acquired by the DAR and subsequently distributed to the beneficiaries. The petitioner assailed the validity of the acquisition proceedings on the ground, among others, that it was denied due process as no notice of acquisition was ever served on it. The Supreme Court held that: . . . the procedure in sending notices is important to comply with the requisites of due process especially when the owner is a juridical entity. . . . The Notice of Acquisition in Section 16 of the CARL is required to be sent to the landowner by personal delivery or registered mail. Whether the landowner be a natural or juridical person to whose address the Notice may be sent by personal delivery or registered mail, the law does not distinguish. The DAR administrative orders also do not distinguish. In the proceedings before the DAR the distinction between natural and juridical persons in the sending of notices may be found in the Revised Rules of Procedure of the DARAB. Service of pleadings before the DARAB is governed by Section 6, Rule V of the DARAB Revised Rules of Procedure. Notices and Pleadings are served on private domestic corporations or partnerships in the following manner: 6. Service Upon Private Domestic or Partnership. If defendant is a corporation organized under the laws of the Philippines or a partnership duly registered service may be made on the president, manager, secretary, cashier, agent or any of its directors or partners" "Section

Similarly, the Revised Rules of Court of the Philippines, in Section 13, Rule 14 provides:

Service upon private domestic corporation or partnership. If the defendant is a corporation

"Section 13. organized under the laws of the Philippines or a partnership duly registered, service may be made on the president, manager, secretary, cashier, agent or any of its directors." Summonses, pleadings and notices in cases against private domestic corporation before the DARAB and the regular courts are served on the president, manager, secretary, cashier, agent or any of its directors. These persons are those through whom the private domestic corporation or partnership is capable of action. Jaime Pimentel (the administrator) is not the president, manager, secretary, cashier, agent or any of its director of the landowner corporation. Is he, the administrator of the two Haciendas, considered an agent of the corporation? The purpose of all rules for the service of process on a corporation is to make it reasonably certain that the corporation will receive prompt notice in an action against it. Service must be made on a representative so integrated with the corporation as to make it a priori supposable that he will realize his responsibilities and know what he should do with any legal papers served on him, and bring home to the corporation notice of the filing of the action. The DAR's evidence does not indicate whether the administrator's duties is so integrated with the corporation that he would immediately realize his responsibilities and know what he should do with any legal papers served on him. . . ." It is submitted that the DARAB Rules and Procedure and the Rules of Court were improperly applied to the

aforecited case. The rules on service of summons provided in the Rules Court should have not been applied since what is involved in this case is acquisition proceedings which is administrative in nature. Moreover, it must be emphasized that the DAR, in adjudicating agrarian reform matters, is not bound by technical rules of procedure. (Sec. 50, R.A. 6657). What is important in administrative adjudication is the right to be heard. Said requirement was substantially complied with in this case considering that the administrator, who takes charge of the daily operations of the subject properties, participated in the acquisition proceedings. Therefore, it cannot be argued that there was denial of due process. Finally, the application of the DARAB Rules of Procedure is erroneous. This is so since the matter of service of notice of acquisition does not fall within the jurisdiction of the DARAB. b) Within thirty (30) days from the date of receipt of written notice by personal delivery or registered mail, the landowner, his administrator or representative shall inform the DAR of his acceptance or rejection of the offer. c) If the landowner accepts the offer of the DAR, the Land Bank of the Philippines (LBP) shall pay the landowner the purchase price of the land within thirty (30) days after he executes and delivers a deed of transfer in favor of the government and surrenders the Certificate of Title and other muniments of title. d) In case of rejection or failure to reply, the DAR shall conduct summary administrative proceedings to determine the compensation for the land requiring the landowner, the LBP and other interested parties to submit evidence as to the just compensation for the land, within fifteen (15) days from the receipt of the notice. After the expiration of the above period, the matter is deemed submitted for decision. The DAR shall decide

the case within thirty (30) days after it is submitted for decision. The constitutionality of the aforementioned provision was upheld by the Supreme Court in the case of Association of

Small Land Owners in the Philippines, Inc., vs. Secretary of Agrarian Reform, 175 SCRA 343 (1989):
Objection is raised, however, to the manner of fixing the just compensation, which it is claimed is entrusted to the administrative authorities in violation of judicial prerogatives. Specific reference is made to Section 16(d), which provides that in case of the rejection or disregard by the owner of the offer of the government to buy his land. . . To be sure, the determination of just compensation is a function addressed to the courts of justice and may not be usurped by any other branch or official of the government. . . . A reading of the aforecited Section 16(d) will readily show that it does not suffer from the arbitrariness that rendered the challenged decrees constitutionally objectionable. Although the proceedings are described as summary, the landowner and other interested parties are nevertheless allowed an opportunity to submit evidence on the real value of the property. But more importantly, the determination of the just compensation by the DAR is not by any means final and conclusive upon the landowner or any other interested party, for Section 16(f) clearly provides: Any party who disagrees with the decision may bring the matter to the court of proper jurisdiction for final determination of just compensation. The determination made by the DAR is only preliminary unless accepted by all parties concerned. Otherwise, the courts of justice will still have the right to review with

finality the said determination in the exercise of what is admittedly a judicial function." Said ruling was reiterated in the case of VinzonsMagana vs. Estrella, 201 SCRA 538 (1991). The factors to be considered in the determination of just compensation as enumerated in Section 17 of R.A. No. 6657 are not exclusive. The DAR and LBP are not confined in their determination of just compensation to the factors/criteria set forth in said provision. Notably, Section 17 does not provide hard and fast rules which must be strictly adhered to by DAR and LBP in the determination of just compensation. While said section provides that the factors/criteria mentioned therein" shall be considered" it does not expressly state that only these factors/criteria and no other shall be considered. The factors/criteria set forth in Sections 17, 18 and other pertinent provisions for that matter should be deemed as mere standards to guide the proper officials in the determining just compensation, but in no case shall control or limit such determination, the ultimate consideration being that the compensation be the full and fair equivalent of the property taken from its owner by the expropriator. [DOJ Opinion No. 109 (1991), July 25, 1991).] In the case of Land Bank of the Philippines vs. CA and Pascual, G. R. No. 128557, December 29, 1999, the Supreme Court ruled that in the determination of just compensation pursuant to Section 18 of R.A. No. 6657, consent of the farmer-beneficiary is not needed. Furthermore, the Court ruled that once the Land Bank agreed to the valuation, it is its duty to pay the landowner said amount. In this case, private respondent's properties were subjected to Operation Land Transfer. Consequently, the PARO issued a valuation of the land which was rejected by the private respondent who filed a case before the PARAD seeking to annul the PARO's valuation. The PARAD, ruled in favor of private

respondent, came up with its own valuation, and directed the petitioner LBP to pay private respondent said amount. Petitioner refused to pay the value of the land as determined by the PARAD arguing among others that since it merely guarantees or finances the payment of the value of the land, the farmer-beneficiary's consent, is indispensable and that the only time the petitioner becomes legally bound to finance the transaction is when the farmer-beneficiary approves the appraised value of the land. In other words, petitioner asserts that the landowner, the DAR, the Land Bank and the farmer-beneficiary must all agree to the value of the land as determined by them. The Court, brushing aside petitioner's contention, stated: A perusal of the law however shows that the consent of the farmer-beneficiary is not required in establishing the vinculum juris for the proper compensation of the landowner. Section 18 of R. A. No. 6657 states 18. Valuation and Mode of Compensation. The LBP shall compensate the landowner in such amount as may be agreed upon by the landowner and the DAR and the LBP in accordance with the criteria provided for in Sections 16 and 17 and other pertinent provisions hereof, or as may be finally determined by the court as just compensation for the land. Sec. As may be gleaned from the aforementioned section, the landowner, the DAR and the Land Bank are the only parties involved. The law does not mention the participation of the farmer beneficiary. . . . Once the Land Bank agrees with the appraisal of the DAR, which bears the approval of the landowner, it becomes its legal duty to finance the transaction. In the instant case, petitioner participated in the valuation

proceedings held in the Office of the PARAD through its counsel . . . e) Upon receipt by the landowner of the corresponding payment or, in case of rejection or no response from the landowner, upon the deposit with an accessible bank designated by the DAR of the compensation in cash or in LBP bonds in accordance with this Act, the DAR shall take immediate possession of the land and shall request the proper Register of Deeds to issue a Transfer Certificate of Title (TCT) in the name of the Republic of the Philippines. The DAR shall thereafter proceed with the redistribution of the land to the qualified beneficiaries. The CARP Law conditions the transfer of possession and ownership of the land to the government on the receipt by the landowner of the corresponding payment or the deposit by the DAR of the compensation in cash or LBP bonds with an accessible bank. Until then, title remains with the landowner. No outright change of ownership is contemplated either. (Association of Small Land Owners in the Philippines vs. Secretary of Agrarian Reform), 175 SCRA 343 (1989.) It must be noted, however, that the opening of a trust account and issuance of a certification from Land Bank that a certain sum has been earmarked for the landowner does not constitute substantial compliance with Section 16(e) of R.A. No. 6657. In the case ofLBP vs. CA [248 SCRA 149 (1995)] respondent landowners assailed the acquisition of their properties on the ground that there was a taking without just compensation. They averred that the "earmarking," "reservation" and "deposit in trust" made by the DAR and the Land Bank pursuant to DAR A. O. No. 09-1990 is not equivalent to just compensation under R.A. No. 6657. The Court nullified DAR A.O. No. 09-1990, ruling as follows:

. . . It is very explicit from Section 16 (e) that the deposit must be made only in "cash" or in "LBP bonds." Nowhere does it appear nor can it be inferred that the deposit can be made in any other form. If it were the intention to include a "trust account" among the valid modes of deposit, that should have been made express, or at least, qualifying words ought to have appeared from which it can be fairly deduced that a "trust account" is allowed. In sum, there is no ambiguity in Section 16 (e) of R. A. No. 6657 to warrant an expanded construction of the term "deposit." . . . . . . The ruling in the Association of Small Landowners case [that payment of the just compensation is not always required to made fully in money] merely recognized the extraordinary nature of the expropriation to be undertaken under R. A. No. 6657 thereby allowing a deviation from the traditional mode of payment other than in cash. It did not, however, dispense with the settled rule that there must be full payment of just compensation before title to the expropriated property is transferred. . . . What the Supreme Court nullified was merely the form in which the deposit was made, i.e., the deposit in trust and not the deposit per se as payment to the landowners for the expropriated lands. Thus, in effect, the Court in making such pronouncement, upheld the validity of deposit per se as payment of just compensation. f) Any party who disagrees with the decision may bring the matter to the court of proper jurisdiction for final determination. In the case of Association of Small Landowners, the Supreme Court explained that the determination of just compensation is a function addressed to the courts of justice. [175 SCRA 343 (1989)].

The operating procedures for the acquisition of private agricultural lands are outlined in the following administrative issuances: DAR A. O. No. 2, Series of 1996 entitled "Revised Rules Governing the Acquisition of Agricultural Lands Subject of Voluntary Offer to Sell (VOS) and Compulsory Acquisition (CA) Pursuant to R. A. 6657" as amended by DAR A. O. No. 2-98; DAR A. O. No. 09, Series of 1998 entitled "Rules and Regulations on the Acquisition, Valuation, Compensation and Distribution of Deferred Commercial Farms"; DAR A. O. No. 08, Series of 1997 entitled "Revised Rules on the Acquisition and Distribution of Compensable Agricultural Lands Under VLT/DPS"; DAR A. O. No. 12, Series of 1990 entitled "Policy Guidelines and Operating Procedures in the Identification and Acquisition of Idle and Abandoned Lands".

Reconstitution of Lost or Damaged Title

A pressing operational problem besetting agrarian reform implementors is the delay in the acquisition and distribution of agricultural lands with lost or destroyed titles. To address this concern, DAR Memorandum Circular No. 05, Series of 1994 was issued outlining the procedures on the reconstitution of lost or destroyed titles. Reconstitution of a certificate of title denotes restoration of the instrument which is supposed to have been lost or destroyed in its original form and condition. The purpose of the reconstitution of title or any document is to have the same reproduced, after proper proceedings, in the same

form they were when the loss or destruction occurred. (Heirs of Pedro Pinote vs. Dulay 198 SCRA 12 [1990]) There are two types of reconstitution of titles: judicial and administrative. Judicial reconstitution partakes of a land registration proceeding and is perforce a proceeding in rem. (Republic vs. Intermediate Appellate Court, 157 SCRA 62 [1988]). Judicial reconstitution is governed by Republic Act No. 26 in relation to Section 110 of P. D. No. 1529. Administrative reconstitution of title is likewise governed by Republic Act No. 26, as amended by Republic Act No. 6732. Under DAR Memorandum Circular No. 5 (1994), the Department of Agrarian Reform (DAR), through the duly authorized DAR lawyer, may file a petition for administrative or judicial reconstitution when the notice of coverage over landholdings whose titles were lost or destroyed has already been issued. As a general rule, the remedy for the reconstitution of lost or destroyed original copies of certificates of titles in the offices of the Register of Deeds is the filing of a petition for judicial reconstitution of title. However, administrative reconstitution of lost or destroyed original copies of certificates of title may be availed of in case of substantial loss or destruction of land titles due to fire, flood or other force majeure where the number of certificates lost or damaged is at least ten (10) percent of the total number of titles in the custody of the Register of Deeds but in no case shall the number of titles lost or damaged be less than five hundred (500) as determined by the Administrator of the Land Registration Authority. (Section 1, R.A. No. 6732 [1989]). Detailed discussion of the procedures for the filing of petition for reconstitution are provided for in R.A. No. 6732 as implemented by LRA Circular dated 26 July 1989, R.A. No. 26 as amended, LRA Circular No. 35 dated

13 June 1983 and DAR Memorandum Circular No. 05, Series of 1994. CHAPTER 4

Just Compensation Definition

Just compensation means the equivalent for the value of the property at the time of its taking. It means a fair and full equivalentfor the loss sustained. All the facts as to the condition of the property and its surroundings, its improvements and capabilities should be considered. (Export Processing Zone Authority vs. Dulay, 149 SCRA 305 [1987]). In the case of Association of Small Landowners in the Philippines, Inc. vs. Secretary of Agrarian Reform, supra, the Supreme Court further explained the meaning of "just compensation". It said: Just compensation is defined as the full and fair equivalent of the property taken from its owner by the expropriator. It has been repeatedly stressed by this Court that the measure is not the taker's gain but the owner's loss. The word "just" is used to intensify the meaning of the word "compensation" to convey the idea that the equivalent to be rendered for the property to be taken shall be real, substantial, full, ample. As held in Republic of the Philippines v. Castellvi, there is compensable taking when the following conditions concur: (1) the expropriator must enter a private property; (2) the entry must be for more than a momentary period; (3) the entry must be under warrant or color of authority; (4) the property must be devoted to public use or otherwise informally appropriated or injuriously affected; and (5) the utilization of the property for public use must be in such a way as to oust

the owner and deprive him of beneficial enjoyment of the property. All these are envisioned in the measures before us (at 378, 379). (T)he content and manner of the just compensation provided for in the afore-quoted Section 18 of the CARP Law is not violative of the Constitution. We do not mind admitting that a certain degree of pragmatism has influenced our decision on this issue, but after all this Court is not a cloistered institution removed from the realities and demands of society or oblivious to the need for its enhancement. The Court is as acutely anxious as the rest of our people to see the goal of agrarian reform achieved at last after the frustrations and deprivations of our peasant masses during all these disappointing decades. We are aware that invalidation of the said section will result in the nullification of the entire program, killing the farmer's hopes even as they approach realization and resurrecting the spectre of discontent and dissent in the restless countryside. That is not in our view the intention of the Constitution, and that is not what we shall decree today" (at 388).

Determination of Just Compensation

Under Sec. 17 of RA 6657, the factors considered in the determination of just compensation are: a) b) c) d) e) f) cost of acquisition; current value of like properties; nature of land; actual use; income; sworn valuation by the landowner;

g) h)

tax declaration; assessment by government assessors;

i) social and economic benefits contributed by farmers and farmworkers and by the government; and j) non-payment of taxes or loans secured from government financing institutions on land. The provisions of RA 6657 on just compensation do not provide hard-and-fast rules which must be strictly adhered to by DAR and the LBP in determining just compensation. Notably, while Section 17 provides that the factors/criteria mentioned therein "shall be considered" in determining just compensation, it does not expressly state that only these factors/criteria, and no others, shall be considered. . . . The factors/criteria set forth in Section 17, and in Section 18 and other pertinent provisions for that matter, should be deemed as mere standards to guide the proper officials in determining just compensation, but should in no case control or limit such determination, the ultimate consideration being that the compensation be the "full and fair equivalent of the property taken from its owner by the expropriator". . . . In every case, what should control is the "just-ness" of the proposal taking into account the "revolutionary" nature of the expropriation under the CARL. (DOJ Opinion No. 109 (1991))."

Valuation or Computation General formula

The basic formula for the valuation of lands covered by Voluntary Offer to Sell and Compulsory Acquisition is: LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1) Where : LV = Land Value CNI = Capitalized Net Income CS = Comparable Sales MV = Market Value per Tax Declaration The above formula is used if all the three (3) factors are present, relevant, and applicable (DAR Admin. O. No. 5 [1998]). In any case, the resulting figure in the equation is always multiplied to the number of area or hectarage of land valued for just compensation. To illustrate the formula wherein all of the factors above mentioned are present: Area : 3 hectares Income : P24,900 Market Value : P10,000 P 5,000 Capitalized Net Comparable Sales :

The land value is : LV = (24,900 x 0.6) + (5,000 x 0.3) + (10,000 x 0.1) = (14,940) + (1,500) + (1,000) = (17,440) x (3 hectares) = P 52,320

Computation of land value

Whenever one of the factors in the general formula is not available, the computation of land value will be any of the three (3) computations or formulae: LV = (CNI x 0.9) + (MV x 0.1)

[if the comparable sales factor is missing] LV = (CS x 0.9 ) + (MV x 0.1) [if the capitalized net income is unavailable] LV = MV x 2 [if only the market value factor is available] In case the comparable sales factor (CS) is relevant or applicable, the land value is computed in accordance with the general formula where MV is based on the lowest productivity classification of the land. In every case, the value of idle land using the formula MV x 2 should not exceed the lowest value of land within the same estate under consideration or within the same barangay or municipality (in that order) approved by LBP within one (1) year from receipt of claimfolder (DAR Admin. O. No. 5 [1998]).

Computation of land value under certain conditions Valuation of lands planted to permanent but not yet fruitbearing crops
There are times when the land being valued is planted to permanent crops which are not yet productive or not yet fruit-bearing at the time of the Field Investigation (FI) of the land. The land value is equivalent to the value of the land plus the cumulative development cost (CDC) of the crop from land preparation up to the time of FI. In equation form, the land value can be computed as: LV = (MV x 2) + CDC Where:

a) The market value (MV) to be used is the applicable unit market value (UMV) classification of idle land. b) The cumulative development cost (CDC) is grossed-up from the date of FI up to the date of LBP Claim Folder (CF) receipt for processing but in no case should the grossed-up CDC exceed the current CDC data based on industry. In case the CDC data provided by the landowner could not be verified, DAR and LBP should secure the said data from concerned agency/ies or, in the absence thereof, should establish the same. However, the resulting land value should not exceed the value of productive land similar in terms of crop and plant density within the estate under consideration or within the same barangay or municipality (in that order) approved by LBP within one (1) year from receipt of CF (DAR Admin. O. No. 5 [1998]).

Lands with permanent but not yet productive crops introduced by farmer-beneficiaries
When the permanent but not yet fruit-bearing crops are introduced by the farmer-beneficiaries, the land valuation formula used is the same as if only the MV is available provided the MV used is the applicable UMV classification of idle land. In equation form: LV = MV x 2 In any case, the resulting land value should not exceed the value of productive land similar in terms of crop and plant density within the estate under consideration or within the same barangay or municipality (in that order) approved by LBP within one (1) year from receipt of CF. And in case the CS is relevant or applicable, the land value is computed

in accordance with the general formula where MV is based on the applicable classification of the land (DAR Admin. O. No. 5 [1998]).

Use of Salvage Value on valuation of lands planted to permanent but no longer productive or ready for cutting crops
When lands being valued are planted to permanent but no longer productive or the crops are ready for cutting, the computation considers the applicable UMV classification of idle land plus the salvage value of the standing trees at the time of the FI. In equation form: LV = (MV x 2) + Salvage Value But the resulting land value should not exceed the value of productive land similar in terms of crop and plant density within the estate under consideration or within the same barangay or municipality (in that order) approved by LBP within one (1) year from receipt of CF. In case where CS is relevant or applicable, the land value is computed in accordance with the general formula where MV is based on the lowest productivity classification of the land (DAR Admin. O. No. 5 [1998]).

Land value under Voluntary Offer to Sell

In VOS, the computed value using the applicable formula should not exceed the landowner's offer. The landowner's offer is grossed up from the date of the offer up to the date of receipt of CF by LBP from DAR for processing. The date of receipt of CF by LBP from DAR means the date when the CF is determined by the LBP-LVLCO to be complete with all the required documents and valuation inputs duly verified and validated, and ready for final computation/processing.

Factors of Land Value

Computation of Capitalized Net Income

Capitalized Net Income refers to the difference between the product of the gross sales and selling prices (AGP x SP) and total cost of operations (CO) capitalized at 12%. Expressed in equation form: (AGP x SP) - CO CNI = 0.12 Where: CNI = Capitalized Net Income AGP = Annual Gross Production corresponding to the latest available 12-months' gross production immediately preceding the date of FI. SP = (selling prices) The average of the latest available 12-months' selling prices prior to the date of receipt of the CF by LBP for processing, such prices to be secured from the Department of Agriculture (DA) and other appropriate regulatory bodies or, in their absence, from the Bureau of Agricultural Statistics. If possible, SP data is gathered from the barangay or municipality where the property is located. In the absence thereof, selling prices may be secured within the province or region. CO = Cost of Operations Whenever the cost of operations could not be obtained or verified, an assumed net income rate (NIR) of 20% is used. Landholdings planted to coconut which are productive at the time of FI will continue to use the assumed NIR of 70%. DAR and LBP will continue to conduct joint industry studies to establish the applicable NIR for each crop covered under CARP. 0.12 = Capitalization Rate

(DAR Admin. O. No. 5 [1998]) To illustrate the computation of capitalized net income: Number of coconut trees : 95 trees/hectare Selling Prices : P6.74/kg.

Hence:
AGP = 95 trees/ha. x 30 nuts/tree 4.5 nuts/kg. = 633.33 kg. CNI = 633.33 kg. x 6.74/kg. x 70% NIR for coconut land 12 % = P24,900.56/hectare

Comparable Sales
Comparable sales refers to any one or the average of all the applicable sub-factors, namely sales transactions (ST), acquisition cost (AC) and market value based on mortgage (MVM): Where: ST = (Peso Value of Sales Transactions) The criteria in the selection of the comparable sales transaction (ST) shall be as follows: a) When the required number of STs is not available at the barangay level, additional STs may be secured from the municipality where the land being offered/covered is situated to complete the required three comparable STs. In case there are more STs available than what is required at the municipal level, the most recent transactions shall be considered. The same rule applies at the provincial level when no STs are available at the municipal level. In all cases, the

combination of STs sourced from the barangay, municipality and province should not exceed three transactions. b) The land subject of acquisition as well as those subject of comparable sales transactions should be similar in topography, land use, i.e., planted to the same crop. Furthermore, in case of permanent crops, the subject properties should be more or less comparable in terms of their stages of productivity and plant density. c) The comparable sales transactions should have been executed within the period 1 January 1985 to 15 June 988, and registered within the period 1 January 1985 to 13 September 1988. d) STs are grossed up from the date of registration up to the date of receipt of CF by LBP from DAR for processing. AC or Acquisition Cost is deemed relevant when the property subject of acquisition was acquired through purchase or exchange with another property within the period 1 January 1985 to 15 June 1988 and registered within the period 1 January 1985 to 13 September 1988, and the condition of said property is still substantially similar from the date of purchase or exchange to the date of FI. AC is grossed up from the date of registration of the deed of sale/exchange up to the date of receipt of CF by LBP from DAR for processing. MVM or Market Value Based on Mortgage. For MVM to be relevant or applicable, the property subject of acquisition should have been mortgaged as of 15 June 1988 and the condition of the property is still substantially similar up to the date of FI. MVM refers to the latest available appraised value of the property (DAR Admin. O. No. 5 [1998]).

Market Value
MV or Market Value per Tax Declaration is the latest Tax Declaration (TD) and Schedule of Unit Market Value (SUMV) issued prior to receipt of CF by LBP. The Unit Market Value (UMV) is grossed-up from the date of its effectivity up to the date of receipt of CF by LBP from DAR processing.

Formula in Grossing-Up of Valuation Inputs

The basic formula in the grossing-up of valuation inputs such as LO's Offer, Sales Transaction (ST), Acquisition Cost (AC), Market Value Based on Mortgage (MVM) and Market Value per Tax Declaration (MV) is: Grossed-up Valuation Input = Consumer Adjustment Factor The various valuation inputs are multiplied with the RCPI Adjustment Factor. The RCPI Adjustment Factor refers to the ratio of the most recent available RCPI for the month issued by the National Statistics Office as of the date when the CF was received by LBP from DAR for processing and the RCPI for the month as of the date/effectivity/registration of the valuation input. Expressed in equation form: Most Recent RCPI for the Month as of the Date of Receipt of CF by LBP from DAR RCPI Adjustment Factor = Month Issued as of the Date/ RCPI for the Valuation Input x Regional Price Index (RCPI)

Effectivity/Registra tion of the Valuation Input (DAR Admin. O. No. 5 [1998])

Valuation of deferred commercial farms

The formulae provided under DAR AO 5 (1998) are used in the computation of valuation for deferred commercial farms (DAR Adm. O. No. 9 [1998]).

Valuation of lands of corporate farms

Agricultural lands owned by corporate farms are valued by considering the following factors: a) factors for compensation; and the determination of just

b) factors needed to stimulate the growth of cooperatives and participation of worker-beneficiaries (Rep. Act No. 6657[1988], sec. 17 in relation to DAR Adm. O. No. 5 [1998])

Valuation of lands planted to sugarcane

There is a different computation for valuation of lands planted to sugarcane because of the so-called "ratooning". In the valuation of lands planted to sugar, the effects of ratooning are considered. Ratooning is the cutting of the straw close to the ground at harvesting time after all the standing water has been drained out to allow the young tillers to sprout out of the rootstocks and develop into mature normal bearing plants in three or four months with the aid of fertilizer, manure or compost (Rep. Act No. 1199 [1954], sec. 5, par. [g-2]). The method of ratooning affects land valuation of the property. Majority of sugar planters practice at least up to two (2) ratoons. This method reduces the cost of production

for sugar planters. Hence, the computation of the land value is adjusted. The applicable guideline in the valuation of lands planted to sugarcane is the Joint DAR-LBP MC 15 (1999).

Valuation of rubber plantations

Valuation of rubber plantations are governed by Joint DAR-LBP MC 7 and 8 (1999). Under the old rubber land valuation guideline or the Land Valuation Guidelines No. 6 (1990), the recognized income of rubber plantations is based on processed crumb rubber. Under one of the latest guidelines, the standard income approach to valuation, measures the net income or productivity of the land based on the farm produce (in their raw forms) and not on the entire agri-business income enhanced by the added value of farm products due to processing. It appropriately determines the Capitalized Net Income of rubber plantations based on the actual yield and farm gate prices of raw products (field latex and cuplump) and the corresponding cost of production. Furthermore, the growing market for old rubber trees which was not considered in the old LVG is now considered. There are also other several situations which are considered in the computation of just compensation for rubber plantations. There are rubber claims pending with the Department of Agrarian Reform Adjudication Board (DARAB) for reasons such as landowner's rejection of the valuation but the plantation remains under the management of the landowner. Due to the time gap between the original date of FI and the date of DARAB's order to recompute the property (during which period, the age and productivity of the trees change), the valuation should be made on the basis of the age and productivity of the trees at the time of recomputation (Joint DAR-LBP Memo. Circ. No. 8, [1999]).

Compensation for Mt. Pinatubo areas

Under Joint DAR-LBP AO 3 (1994), agricultural lands affected by the Mt. Pinatubo eruptions have been classified into three categories based on the NEDA Region III Geographic Information System Database, to wit: Under the Category I, are those areas actually affected by the lahar and pyroclastic deposits, including those areas which have become silted, eroded or continuously flooded for an indefinite period of time. Under the Category II, are those areas not yet affected but have the possibility of being actually affected. Under the Category III, are those areas actually covered or affected by ashfall but which remain productive. The general rule is, lands under Category III shall be acquired and landowners shall be compensated. While compensation of lands under Categories I and II shall be effected under the following conditions: a) Claims have been approved by the LBP and: Landowner has executed a Deed of Assignment, Warranty and Undertaking on or before the issuance of the Joint DAR-LBP Administrative Order No. 3, Series of 1994; or Transfer Certificate of Title was already registered in the name of RP on or before the issuance of the same administrative order; or Partial payment was already effected.

b) Emancipation Patents/Certificates of Land Ownership Award have been registered on or before 12

June 1991 regardless of whether or not the claimfolder is with the LBP.

Summary Administrative Proceedings Land Bank of the Philippines

The Land Bank of the Philippines is primarily responsible for the determination of the land valuation and compensation for all private lands suitable for agriculture under either the voluntary offer to sell or compulsory acquisition arrangement as governed byRA 6657. The DAR makes use of the determination of the land valuation and compensation by the LBP, in the performance of its functions (Exec. Order. No. 405 [1990], sec. 1).

Public participation
There are several provisions of laws which encourage public participation in the determination of land valuation, namely: a) Sec. 3 of EO 129-A states:

. . . partnership between government and organization of farmers and farmworkers in agrarian reform policy formulation, program implementation and evaluation shall be institutionalized . . . b) Sec. 18 of RA 6657 provides:

The LBP shall compensate the landowners in such amount as may be agreed upon by the landowner and the DAR and the LBP . . . c) DAR AO 14 (1990) emphasizes Sec. 47 of RA 6657 on BARC's assistance in the initial determination of the value of the land.

Preliminary determination of just compensation cases

The summary administrative proceeding is conducted before the Provincial Agrarian Reform Adjudicator if the compensation offered does not exceed two (2) million pesos; or before the Regional Agrarian Reform Adjudicator if the government's offer is more than two (2) million pesos but does not exceed five (5) million pesos; or before the Department of Agrarian reform Adjudication Board if the offer is more than five (5) million pesos (DAR Adm. Order No. 8 [1993]). Under DAR MC 1 (1995), valuation cases involving PD 27 lands are cognizable only by the Secretary of DAR (reiterating Sec. 12 of PD 946 [1976]). But in the recent case of Land Bank of the Phils. vs. CA, G.R. No. 128557, 29 December 1999, the Supreme Court declared that it was an error for the Secretary of Agrarian Reform to issue DAR MC 1 (1995) directing the DARAB to refrain from hearing valuation cases involving PD 27 lands. It is the DARAB which has the authority to determine the initial valuation of lands involving agrarian reform pursuant to Sec 1 (b), Rule II, 1994 Revised Rule of the DARAB although such valuation may only be considered preliminary as the final determination of just compensation is vested in the courts. The PARAD's, RARAD's, or DARAB's summary administrative proceeding is merely a preliminary determination of the just compensation due to the landowner. The landowner has the right to question such preliminary determination of the Adjudication Board before the Special Agrarian Courts. determination made by the DAR is only preliminary unless accepted by all parties concerned. Otherwise, the courts of justice will still have the right to review with finality the said determination in the exercise of what is admittedly a judicial function" (Association of Small "The

Landowners in the Philippines, Inc. vs. Secretary of Agrarian Reform, 175 SCRA 345 [1989], at p. 382).
The Regional Trial Courts have not been completely divested of jurisdiction over agrarian reform matters. Section 56 of RA 6657, on the other hand, confers "special jurisdiction" on "Special Agrarian Courts", which are Regional Trial Courts designated by the Supreme Court at least one (1) branch within each province to act as such. These Regional Trial Courtsqua Special Agrarian Courts have, according to Section 57 of the same law, original and exclusive jurisdiction over: 1) "all petitions for the determination of just compensation to land-owners," and 2) "the prosecution of all criminal offenses under . . . (the) Act (at 890).Vda. de Tangub vs. CA, 191 SCRA 885 (1990) Although the proceedings are described as summary, the landowner and other interested parties are nevertheless allowed an opportunity to submit evidence on the real value of the property. But more importantly, such determination of just compensation by the DAR, as earlier stated is by no means final and conclusive upon the landowner or any other interested party for Section 16 (f) clearly provides: "Any party who disagrees with the decision may bring the matter to the court of proper jurisdiction for final determination of just compensation" Magana vs. Estrella, 201 SCRA 536 (1991). In Phil. Veterans Bank vs. Court of Appeals, G.R. No. 132767, 18 January 2000, petitioner Bank argued that the DAR Adjudicators have no jurisdiction to determine just compensation for the taking of lands under CARP because such jurisdiction is vested in Regional Trial Courts designated as Special Agrarian Courts. Hence, Petitioner could file its petition with the RTC beyond the 15-day period of appeal from the decision of the DAR Adjudicator. The RTC dismissed the petition of Petitioner for being filed beyond the 15-day period for appeal. The Supreme Court

reiterated its ruling in Republic vs. Court of Appeals, supra, and said: . . . this rule is an acknowledgment by the DARAB that the power to decide just compensation cases for the taking of lands under R.A. No. 6657 is vested in the courts. It is error to think that, because of Rule XIII, S 11, the original and exclusive jurisdiction given to the courts to decide petitions for determination of just compensation has already been transformed into an appellate jurisdiction. It only means that, in accordance with settled principles of administrative law, primary jurisdiction is vested in the DAR as an administrative agency to determine in a preliminary manner the reasonable compensation to be paid for the lands taken under the Comprehensive Agrarian Reform Program, but such determination is subject to challenge in the courts. The jurisdiction of the Regional Trial Courts is not any less "original and exclusive" because the question is first passed upon by the DAR, as the judicial proceedings are not a continuation of the administrative determination. For the matter, the law may provide that the decision of the DAR is final and unappealable. Nevertheless, resort to courts cannot be foreclosed on the theory that courts are the guarantors of the legality of administrative action.

Valuation of PD 27 Lands
Under Sec. 2 of EO 228, land valuation shall be based on the Average Gross Production (AGP) as determined by the Barangay Committee on Land Production (BCLP). The formula is: Rice Lands LV = AGP x 2.5 x P 35 * Corn Lands LV = AGP x 2.5 x P 31** * government support price for one cavan of 50 kilos of palay on October 21, 1972

** government support price for one cavan of 50 kilos of corn on October 21, 1972 Lease rentals paid to the landowner by the farmerbeneficiary after 21 October 1972 shall be considered as advance payment for the land. The factor of government support price provided under EO 228 does not undervalue PD 27 lands. Under DAR AO 13 (1994), an increment of 6% yearly interest compounded annually on lands covered by PD 27 and EO 228 is granted. The formula is: (Computed land value using the original formula) x (1.06)n where : n = number of years from date of tenancy up to effectivity date The landowners qualified to receive the compensation based on the increment formula are: a) Those whose lands are actually tenanted as of October 21, 1972 or thereafter and Operation Land Transfer (OLT) covered; b) Those who opted for government financing thru LBP as the mode of compensation; and c) Those who have not yet been paid for the value of the land. For those who were partially paid, the yearly increment of 6% compounded annually shall only be applied to the unpaid balance. According to the above mentioned administrative issuance, the said grant of increment is reckoned from the effectivity date of PD 27or date when the land was actually tenanted up to the effectivity date of DAR AO 13 (1994) or up to 27 October 1994 only. It seems the grant of increment cannot be applied after this effectivity

date even if the actual payment can be had after 27 October 1994. In the case of Benosa vs. CA, G.R. No. 122231, 27 November 1995, on the issue of granting interest to the landowner, it was held: It is settled that the landowners are entitled to legal interest on the amount payable from the time the property was taken until full payment is made (National

Power Corporation vs. Angas, 208 SCRA 542; Commissioner of Public Highways vs. Burgos, supra; Ortula vs. Republic, 22 SCRA 477; Republic vs. Delente, supra). DAR Administrative Order No. 13, series of
1994 which grants increment of 6% yearly interest compounded annually on lands covered by P.D. No. 27 and E.O. No. 228, squarely recognizes the above rule and thus applies to the private respondents. In LBP vs. CA, supra, the Supreme Court decided not to apply the 6% increment to the valuation because the Court of Appeals affirmed the PARAD's use of the 1992 Gross Selling Price in the valuation of the private respondent's land (following the ruling in the Court of Appeals case of Galeon vs. Pastoral, CA-G.R. No. 23168; Rollo, p. 36)

Mode of Compensation
Landowners may be paid in cash or in kind. Payment in kind is justified in the case of Association of Small

Landowners of the Philippines, Inc. vs. Secretary of Agrarian Reform, 175 SCRA 343 (1989) as follows:
It cannot be denied from these cases that the traditional medium for the payment of just compensation is money and no other. And so, conformably, has just compensation been paid in the past solely in that medium. However, we do not deal here with the traditional exercise of the power of eminent domain.

This is not an ordinary expropriation where only a specific property of relatively limited area is sought to be taken by the State from its owner for a specific and perhaps local purpose. What we deal with here is a revolutionary kind of expropriation. The expropriation before us affects all private agricultural lands wherever found and of whatever kind as long as they are in excess of the maximum retention limits allowed their owners. This kind of expropriation is intended for the benefit not only of a particular community or of a small segment of the population but of the entire Filipino nation, from all levels of our society, from the impoverished farmer to the land-glutted owner. Its purpose does not cover only the whole territory of this country but goes beyond in time to the foreseeable future, which it hopes to secure and edify with the vision and the sacrifice of the present generation of Filipinos. Generations yet to come are as involved in this program as we are today, . . . . Accepting the theory that payment of the just compensation is not always required to be made fully in money, we find further that the proportion of cash payment to the other things of value constituting the total payment, as determined on the basis of the areas of the lands expropriated, is not unduly oppressive upon the landowner. It is noted that the smaller the land, the bigger the payment in money, primarily because the small landowner will be needing it more than the big landowners, who can afford a bigger balance in bonds and other things of value. No less importantly, the government financial instruments making up the balance of the payment are "negotiable at any time". The other modes, which are likewise available to the landowner at his option, are also not unreasonable because payment is made in shares of stock, LBP bonds, other properties or

assets, tax credits, and other things of value equivalent to the amount of just compensation. The recognized rule indeed, is that title to the property expropriated shall pass from the owner to the expropriator only upon full payment of the just compensation. Jurisprudence on this settled principle is consistent both here and in other democratic jurisdictions" (at 386, 388 and 389).

Cash Payment
Under Sec. 18 of RA 6657, the proportion of payment in cash, dependent on the area/hectarage of the land valued is subject to the following: a) above 50 hectares, insofar hectarage is concerned = 25% cash b) cash c) as the excess

above 24 hectares and up to 50 hectares = 30% 24 hectares and below = 35% cash

For voluntary offer to sell, the cash portion is increased by 5%.

Payment in kind
Landowners may be paid with: a) Shares of stock in government owned or controlled corporation, LBP preferred shares, physical assets or other qualified investments. b) c) Tax credits; or LBP bonds

Features of LBP bonds

The new ten (10)-year LBP bonds have attractive features which are more acceptable and marketable than the other investment instruments. As provided under Sec. 18 of RA 6657, these features are: 1) Its market interest rates are aligned with 91-day treasury bill rates, net of applicable final withholding tax, payable twice a year six months from date of issue and every six months thereafter. 2) One-tenth of the bond's face value matures every year from date of issue up to the tenth year. 3) The bond is fully guaranteed by the national government. 4) The bond is non-denominated. Upon request, it can be split according to amounts desired by the bondholder. 5) The bonds are highly transferable and negotiable. Such LBP bonds may be used by the landowner, his successors in interest or his assigns, up to the amount of their face value, for any of the following: a) Acquisition of land or other real properties of the government, including assets under the Asset Privatization Program and other assets foreclosed by government financial institutions in the same province or region where the lands for which the bonds were paid are situated; b) Acquisition of shares of stock of governmentowned or controlled corporations or shares of stock owned by the government in private corporations; c) Substitution for surety or bail bonds for the provisional release of accused persons, or performance bonds;

d) Security for loans with any government financial institution, provided the proceeds of the loans shall be invested in an economic enterprise, preferably in a small-and medium-scale industry, in the same province or region as the land for which the bonds are paid; e) Payment for various taxes and fees to government; Provided, That the use of these bonds for these purposes will be limited to a certain percentage of the outstanding balance of the financial instruments: Provided, further, That the PARC shall determine the percentage mentioned above; f) Payment for tuition fees of the immediate family of the original bondholder in government universities, colleges, trade schools, and other institutions; g) Payment for fees of the immediate family of the original bondholder in government hospitals; and h) Such other uses as the PARC may from time to time allow. The 100% face value and negotiability of LBP bonds are well described in the case of Gonzales vs. GSIS, 107 SCRA 492 (1981). Petitioner filed a petition for mandamus to compel the respondent Government Service Insurance System (GSIS) to accept 6% interest-bearing bonds issued by the Land Bank of the Philippines at their par or face value as payment for petitioners' outstanding housing loan. The act of the GSIS in discounting the LBP bonds was found invalid. The Court ruled: Land Bank bonds are certificates of indebtedness, approved by the Monetary Board of the Central Bank, fully tax-exempt both as to principal and income, and bear interest at the rate of 6% per annum redeemable at the option of the Land Bank at or before maturity, which

in no case shall exceed 25 years. They are fully negotiable and unconditionally guaranteed by the Government of the Republic of the Philippines. These bonds are deemed contracts and the obligations resulting therefrom fall within the purview of the non-impairment clause of the Constitution, and any impairment thereof may take any encroachment in any respect upon the obligation and cannot be permitted. Thus, the value of these bonds cannot be diminished by any direct or indirect act, particularly, since said bonds are fully guaranteed by the Government of the Republic of the Philippines. They are issued not in the open market nor for the captive market of landowners and to facilitate the speedy transfer of lands to the tenant-farmers in support of the land reform program of the Government. They are not ordinary commercial paper in that sense subject to discounting (at 498, 499 and 502).

Mode of Payment for PD 27 Landowners

The landowners shall be paid in any of the following modes, at their option (Exec. Order No. 228 [1987], sec. 3): a) Bond payment over ten (10) years, with ten percent (10%) of the value of the land payable immediately in cash, and the balance in the form of LBP bonds bearing market rates of interest that are aligned with 90-day treasury bills rates, net of applicable final withholding tax. One-tenth of the face value of the bonds shall mature every year from the date of issuance until the tenth year. The LBP bonds issued hereunder shall be eligible for the purchase of government assets to be privatized. b) Direct payment in cash or in kind by the farmerbeneficiaries with the terms to be mutually agreed upon by the beneficiaries and landowners and subject to the approval of the DAR; and

c) Other modes of payment as may be prescribed or approved by the PARC. Under Sec. 9 of EO 229, landowners who voluntarily offer to sell their lands are given the same incentive given to PD 27landowners under EO 228, which is the exemption from the payment of capital gains tax and other taxes and fees. CHAPTER 5

Land Redistribution Qualified Agrarian Reform Beneficiaries Under CARP

Section 22 of RA 6657 enumerates the groups of farmers and tillers who are qualified to become beneficiaries of the Comprehensive Agrarian Reform Program. They are the following: (a) Children of landowners, Section 6 of R.A. 6657; (b) (c) (d) (e) (f) who qualify under

Agricultural lessees and share tenants; Regular farmworkers; Seasonal farmworkers; Other farmworkers; Actual tillers or occupants of public lands; or cooperatives of the above

(g) Collectives beneficiaries; and (h)

Others directly working on the land.

Section 22 also provides that "[t]he lands covered by the CARP shall be distributed as much as possible to landless residents of the same barangay, or in the absence thereof,

landless residents of the same municipality", following the order of priority quoted above.

Qualifications of Agrarian Reform Beneficiary

According to Section 22 of RA 6657, to qualify as an agrarian reform beneficiary, one must: (a) be landless;

(b) be at least 15 years old or head of a family at the time the property was transferred in the name of the Republic of the Philippines; and (c) have the willingness, ability, and aptitude to cultivate the land and make it as productive as possible. The requirements enumerated in Section 22 are the minimum or basic qualifications for a farmer to become a beneficiary of land under the agrarian reform program.

Qualifications of landowner's children as preferred beneficiaries

As provided in Section 6, three (3) hectares of agricultural land may be awarded to each child of the landowner, on the condition that he is at least 15 years of age at the time of the award, and that he is actually tilling the land or directly managing the farm. "Directly managing the farm" refers to the cultivation of the land through personal supervision under the system of labor administration. Children of landowners are classified as preferred beneficiaries, and the land awarded to them does not form part of the retention right of the parent-landowners. The transfer of the land to them is effected by the issuance of CLOAs.

The rules on payment for the value of the land by the Land Bank and the payment of amortizations by the beneficiary do not apply in the case of preferred beneficiaries, unless there has been a tenancy relationship between the parent-landowners and the children. In the latter case, the Land Bank shall finance the acquisition of the property. The rights and obligations of landowners' children as preferred beneficiaries are governed by Memorandum Circular No. 4, Series of 1994.

"Landless Persons" Under CARL

Section 25 of RA 6657 provides that a landless person is one who owns less than three (3) hectares of agricultural land. Section 7 also provides that an owner-tiller may still be awarded another parcel of agricultural land under the program, provided that he is actually cultivating that land, and only to the extent of the difference between the area of the land he owns and the award ceiling of three (3) hectares. A tenant who owns one hectare of agricultural land may still qualify as a beneficiary for two more hectares.

Persons Disqualified as Agrarian Reform Beneficiaries

The following persons are disqualified from becoming agrarian reform beneficiaries: a) Those who are not included in the enumeration in Section 22; b) Those who fail to prescribed under Section 22; meet the qualifications

c) Those who have culpably sold, disposed of, or abandoned their land received under CARP or P.D. 27;

d) Those whose land has been foreclosed by the Land Bank, or repossessed by the landowner in case of Voluntary Land Transfer/Direct Payment Scheme, for non-payment of an aggregate of three annual amortizations; e) Those who have converted their land to nonagricultural use without prior approval by DAR; and f) Those guilty of negligence or misuse of the land or any support extended to him (Sec. 22).

Grounds for disqualification of beneficiary

Under DAR Memorandum Circular No. 19 (1996), the following violations will result in the disqualification of a farmer from being a beneficiary or from continuing as such under the agrarian reform program: (a) Misuse or diversion of financial and support services extended to the beneficiary; (b) Misuse of the land;

(c) Material misrepresentation of the beneficiary's basic qualifications as provided under Section 22 of R.A. No. 6657, P.D. No. 27, and other agrarian reform laws; (d) Sale, transfer, lease, or other forms of conveyance by the beneficiary of rights over the land, in circumvention or R.A. No. 6657, P.D. No. 27, and other agrarian reform laws; (e) Continuous neglect or abandonment of the awarded land over a period of two calendar years as determined by the Secretary or his authorized representative;

(f) Failure to pay an aggregate of three (3) consecutive amortizations to the Land Bank or to the landowner, except in cases of fortuitous events; (g) (h) Illegal conversion of the land by the beneficiary; Waiver of rights to awarded lands; land to

(i) Beneficiary's surrender of awarded landowner or other non-beneficiary; and

(j) Other acts or omissions that circumvent laws related to the implementation of the agrarian reform program. A separate chapter on prohibited acts, supra., discusses these violations in detail.

Squatters disqualified to become CARP beneficiaries

the case Central Mindanao University vs. DARAB, G.R. No. 100091, October 22, 1992, the university entered into a contract with members of the faculty and staff for an experimental rice project, under which the latter were given tracts of land for cultivation. It was expressly stipulated in the contract that no landlord-tenant relationship arose between the parties. After the term of the project has expired, the university served notices to vacate on the occupants of the land. The occupants refused to vacate the land, claiming that they are now entitled to be awarded the land they are tilling pursuant to the land reform program. In The Supreme Court held that squatters are disqualified from becoming CARP beneficiaries because they are "guilty of committing prohibited acts of forcible entry or illegal detainer, [and therefore] do not qualify as beneficiaries of and may not avail themselves of the rights and benefits of agrarian reform".

The Supreme Court also ruled that "a person entering upon the lands of another, not claiming in good faith the right to do so by virtue of any title of his own, or by virtue of some agreement with the owner or with one whom he believes holds title to the land, is a squatter. Squatters cannot enter

the land of another surreptitiously or by stealth, and under the umbrella of the CARP, claim rights to said property as landless peasants." (Emphasis supplied.) Selection of Beneficiaries
The Municipal Agrarian Reform Officer or the Agrarian Reform Program Technologist, with the participation of the BARC, screens the beneficiaries. A farmer who claims priority over those who have been identified by the MARO as beneficiaries should file a written protest with the MARO or the PARO who is processing the claim folder. Once the protest is filed, the MARO/PARO shall comment on the protest and submit the same to the Regional Director who shall rule on the protest. If the parties disagree with the RD's decision, they can file a written motion for reconsideration. If the motion is denied, the farmers can appeal to the Secretary.

Landowner not entitled to select beneficiaries

It is not the landowner who distributes his land, so he does not have the right to select who the transferees. Land acquisition and land distribution are two different transactions. It is the government which buys the land from the landowner and then sells it to the beneficiaries. It is not a direct transaction between the landowner and the beneficiaries. This rule also applies to voluntary land transfer/direct payment scheme. Even under this scheme, it is not the landowner who determines who will be the beneficiaries. The

beneficiaries must qualify under the law, and it is still the MARO and the BARC who do the screening.

Farmworker defined
A farmworker is defined by Section 3 (g), R.A. 6657 as a natural person who renders service for value as an employee or laborer in an agricultural enterprise or farm regardless of whether his/her companion is paid on a daily, weekly, monthly, or "pakyaw" basis. The term includes an individual whose work has ceased because of a pending agrarian dispute and who has not obtained a substantially equivalent and regular farm employment.

Special qualifications for farmworkers in commercial farms

Aside from the minimum qualifications in Section 22 of R.A. 6657, Section 4 of Administrative Order No. 9, Series of 1998, provides for special qualifications for farmworkers in commercial farms, which are as follows: (a) they must be at least 18 years old upon filing of application as agrarian reform beneficiary; (b) they must have the willingness, aptitude, and ability to cultivate and make the land productive; and (c) they must have been employed in the commercial farm between June 15, 1988 and June 15, 1998 or upon expiration or termination of the deferment. Farmworkers who have worked longest on the land continuously shall be given priority.

Specific disqualifications for commercial farmworkers

Section 5 of Administrative Order No. 9, Series of 1998, provides that the following shall be grounds for the disqualification of potential beneficiaries: a) Mandatory retirement;

b) Optional retirement or resignation, provided that the farmworker has not filed any case questioning such retirement or resignation; c) d) Dismissal for cause by final judgment; Waiver or refusal to be a beneficiary; and

e) Violation of agrarian reform laws and regulations as determined with finality by the proper tribunal or agency. Questions have been raised on whether dismissal for cause distinguishes between just and authorized causes as these two categories are defined in Presidential Decree No. 442, otherwise known as the Labor Code of the Philippines. "Just cause" may consist in serious misconduct, willful disobedience of reasonable and lawful orders of the employer, gross neglect and abandonment of duties, dishonesty and loss of confidence of the employer in the employee, commission of crime or offense by the employee against the person or immediate family of the employer, and analogous cases (see LABOR CODE, Article 282). "Authorized cause", on the other hand, may be one of the following: introduction of labor-saving devices, redundancy, retrenchment due to legitimate business losses, closure of business, and ailment or disease of the employee (see LABOR CODE, Article 283). Just cause is distinguished from authorized cause in the Labor Code because while just causes have something to

do with the moral depravity and fault of the employee, termination for authorized causes is due to circumstances beyond the control of the employee. It is evident from the history of the provision of the administrative issuances on qualified farmworkers that the intention is to distinguish between just and authorized causes. For one, the list of qualifications in Section 4, Administrative Order No. 9, Series of 1998 provides that the potential beneficiary "must have been employed in the commercial farm between June 15, 1988 and June 15, 1998 or upon expiration or termination of the deferment". This new provision makes the qualifications encompass even those whose services have been terminated by the commercial farm as of the time the deferment period expires. Secondly, the original rules governing the acquisition of commercial farms, Administrative Order No. 6, Series of 1998, in item (b), no. 2, letter M, Part IV thereof, provides for dismissal from service for cause as a ground for disqualification. Retrenchment as a ground for disqualification is listed as a separate item, namely, item (d). This shows that item (b) refers only to dismissal for just causes, and does not include dismissal for authorized causes. Administrative Order No. 6, Series of 1998 was eventually superseded by Administrative Order No. 9, Series of 1998. The latter administrative order removed retrenchment as a ground for disqualification. Only dismissal for cause (meaning just cause) has been retained. Thirdly, Administrative Order No. 9, Series of 1998, item (h), Section 6, Article II, which provides for the prioritization of beneficiaries, still includes retrenched workers among the potential beneficiaries. The provision states: The Beneficiary Screening Committee shall prioritize the potential ARBs pursuant to Section 22 of R.A. 6657. They

shall be ranked according to the length of their continuous service in the commercial farm reckoned from June 15, 1988 up to the expiration of the deferment period; residency, i.e. whether residing in the same barangay or municipality; whether they have been validly retrenched, i.e. with approval of the Dept. of Labor and Employment; the nature of their work, i.e. whether directly related to farm activities, and such other factors as the Committee may deem appropriate. (Underscoring supplied.)

Different Categories of Farmworkers

Section 3, R.A. 6657 identifies these categories as follows: (a) Regular farmworker is a natural person who is employed on a permanent basis by an agricultural enterprise or farm. (b) Seasonal farmworker is a natural person who is employed on a recurrent, periodic, or intermittent basis by an agricultural enterprise or farm, whether as a permanent or a non-permanent laborer, such as "dumaan" and "sacada". (c) Other farmworker is a farmworker who is neither a regular nor a seasonal farmworker, such as a farmworker who performs farm activities but is not paid for his or her labor. DAR A.O. No. 9, Series of 1998, on the other hand, identifies two more categories: (a) Technical farmworker is a natural person employed by an agricultural enterprise or farm, who is highly educated and trained and performs functions in scientific, engineering, medical, teaching, and other fields, but who is not vested with managerial or supervisory functions, such as chemists, agronomists, veterinarians, and soil analysts.

(b) Managerial or supervisory farmworker is a natural person who is employed by an agricultural enterprise or farm vested with powers and prerogatives (1) to lay down and execute management policies; (2) to hire, transfer, suspend, layoff, recall, discharge, assign, or discipline employees; and/or (3) to effectively recommend such managerial actions.

Categories of farmworkers beneficiaries under CARP

qualified

to

become

Farmworkers who are directly working on the land at the time DAR conducts actual investigation and documentation of the agricultural enterprise, whether as regular, seasonal, or other farmworkers are qualified beneficiaries. Under A.O. No. 9, Series of 1998, however, other farmworkers who are directly employed by the agri-business enterprise or corporation may be considered as beneficiaries, provided they meet the basic qualifications prescribed in Section 22.

Selection of Beneficiaries of Commercial Farms

Under A.O. No. 9, Series of 1998, there is a Beneficiary Screening Committee responsible for the qualification, identification, and selection of agrarian reform beneficiaries for acquired commercial farms. The Committee is composed of the following: (1) The Chairman; (2) Provincial Agrarian Reform Officer, as

The Municipal Agrarian Reform Officer;

(3) The Provincial Agrarian Reform Coordinating Committee (PARCCOM) Chairman or his duly authorized representative;

(4) The Barangay Agrarian Reform Council (BARC) Chairman or his duly authorized representative from each of the barangays where the subject commercial farm is situated; and (5) The Barangay Chairman or his duly-authorized representative, from each of the barangays where the subject commercial plantation is situated; as members. The Committee comes up with a master list of qualified beneficiaries, and a waiting list of those who possess the minimum qualifications and none of the disqualifications, but who could not otherwise be accommodated in the updated master list.

Remedy of farmworker excluded from master list

A farmworker who is excluded from the masterlist may file a written protest with the Beneficiary Screening Committee. The Committee Chairman shall furnish a copy of the protest to the beneficiaries whose inclusion in the list is being questioned. The protestees shall file their answer or comment on the protest, and the Chairman shall transmit the records to the Regional Director for the latter's decision. The Regional Director shall resolve the protest based on substantial evidence showing the qualification or disqualification of the beneficiary subject of the protest. No motion for reconsideration of the decision of the Regional Director shall be allowed, but such decision may be appealed to the Office of the Undersecretary for Field Operations and Support Services, whose decision shall be final and executory. Notwithstanding the appeal, the decision of the Regional Director shall not be stayed.

Managerial and supervisory farmworkers

Managerial and supervisory farmworkers may qualify as CARP beneficiaries provided that they have been identified as qualified beneficiaries prior to their promotion, and that

they give up their managerial or supervisory positions (see A.O. No. 9, Series of 1998). In the case, however, of supervisory or managerial employees whose responsibilities do not actually conform to the definition of supervisory or managerial farmworkers, there are two views on the matter. One holds that supervisory and managerial employees of commercial farms are disqualified from becoming beneficiaries since the laws and regulations specify the rank and not the job description. The other view is that they are qualified so long as they are directly working on the land, and possess all the qualifications and none of the disqualifications for becoming an agrarian reform beneficiary. It is our opinion that these so called "supervisory or managerial" employees can qualify as beneficiaries. The definition of supervisory or managerial farmworkers in A.O. No. 9, Series of 1998, provides that to be considered a supervisor or a manager, the farmworker must be vested with the power to formulate and implement management policies; to hire, fire, assign, and discipline employees; and/or to effectively recommend such managerial actions. Jurisprudence supports the view that this power is essential before an employee may be considered as supervisory or managerial. InFranklin Baker Company vs. Trajano, G.R. No. 75039, January 28, 1988, it was held: To make one a supervisor, the power to recommend must not be merely routinary or clerical in nature but requires the use of independent judgment. In other words, the recommendation is (1) discretionary or judgmental, not clerical; (2) independent, not a dictation of someone else; and (3) effectively considered in the management decision. If these qualities are lacking or, worse, if the power to recommend is absent, then the person is not really a supervisor but a rank-and-file employee.

There are instances when the position of a farmworker is denominated "managerial" or "supervisory" even when he is not performing the functions enumerated in the definition. Hence, it is our view that the functions performed, rather than the rank, should be determinative of the status of the farmworker. They should still qualify as beneficiaries, provided they meet all the qualifications and possess none of the disqualifications, subject to the rules on prioritization set down under the law.

Seasonal farmworkers
Section 22 includes seasonal farmworkers among the beneficiaries qualified to receive land under R.A. 6657, following the order of priority set forth in the law. There is a view that seasonal farmworkers are entitled "only to a just share of the fruits of the land", but not to own land. This view finds support in Fortich vs. Corona, G.R. No. 131457, August 19, 1999, wherein the Supreme Court said: Again, as expressed in the opinion of Mr. Martin, intervenors, who are admittedly not regular but seasonal farmworkers, have no legal or actual and substantive interest over the subject land inasmuch as they have no right to own land. Rather, their right is limited only to a just share of the fruits of the land. The Court based its observation on Article XIII, Section 4 of the Constitution, which provides: The State shall, by law, undertake an agrarian reform program founded on the rights of farmers and regular farmworkers, who are landless, to own directly or collectively the lands they till or, in the case of other farmworkers, to receive a just share of the fruits thereof.

It is our view, however, that the fact that seasonal farmworkers may not have been given a constitutional right does not mean that they do not have a statutory right. Congress, in interpreting and implementing Article XIII, Section 4 of the Constitution enacted Section 22 of RA 6657 which explicitly includes seasonal farmworkers among the qualified beneficiaries. Moreover, the observation made by the Supreme Court is only an obiter dictum and cannot be made the basis for the loss or acquisition of legal rights. Moreover, even a collective or cooperative of, among others, "seasonal farmworkers" and "other farmworkers" may be awarded lands under the agrarian reform program.

Collectives or Cooperatives as Qualified Beneficiaries

A collective or cooperative composed of the beneficiaries listed in Sec. 22 (a) to (e) of R.A. 6657, to wit: agricultural lessees and share tenants, regular farmworkers, seasonal farmworkers, other farmworkers, and actual tillers or occupants of public lands, can, by itself, be an awardee of land under CARP. Sec. 25 of R.A. 6657, in fact, provides that "(t)he beneficiaries may opt for collective ownership, such as co-ownership or farmers cooperative or some other form of collective organization". Cooperatives refer to "organizations composed primarily of small agricultural producers, farmers, farmworkers, or other agrarian reform beneficiaries who voluntarily organize themselves for the purpose of pooling land, human, technological, financial, or other economic resources, and operated on the principle of one member, one vote. A juridical person may be a member of a cooperative, with the same rights and duties as a natural person." (Section 3 [k] of R.A 6657). The aggregate size of land that may be awarded to an association or a cooperative shall not exceed the total number of members multiplied by the award ceiling of three

hectares, except where the Presidential Agrarian Reform Council (PARC) approves the award of an area exceeding this limit. Thus, a cooperative composed of 25 members, for instance, can receive a maximum award of 75 hectares. (see Sec. 25, R.A 6657)

Inclusion of names of members of collective or cooperative not mandatory

Memorandum Circular No. 24, Series of 1996, Memorandum Circular No. 14, Series of 1994, and Administrative Order No. 3, Series of 1993, governing the issuance of collective CLOAs, expressly require the listing of the names of all members in the CLOA issued to a collective or cooperative. The purpose of this requirement is to "protect a farmer-member from possible summary and unjust separation by the cooperative or association" (Part IV-A-1). It is our view that inclusion in the CLOA of the names of all the members of a collective or cooperative is not necessary in all cases. Where the CLOA is under coownership, the names of all the co-owners (i.e. individual farmer-beneficiaries) should be listed in the collective CLOA. However, where the CLOA is awarded in the name of the association or cooperative, there is no need to include the names of the individual members thereof in the collective CLOA. Sec. 25 of R.A. 6657, in fact, provides that "(t)itle to the property shall be issued in the name of the coowners or the cooperative or collective organization as the case may be." (Underscoring supplied)

Women as Beneficiaries under CARP

Women are qualified to become agrarian reform beneficiaries in their own right, not only as spouses of agrarian reform beneficiaries. For as long as a female farmer's rights have vested and have been established

separately from her husband's or her father's, she is entitled to receive land under the program. The term "vested right" has been defined in the case of Balboa vs. Farrales, G.R. No. 27059, February 14, 1928, as some right or interest in property which has become fixed and established and is no longer open to doubt or controversy". The Supreme Court, citing American cases, explained that "rights are vested when the right to enjoyment, present or prospective, has become the property of some particular person or persons as a present interest". Involved in the Balboa case was an application for homestead patent. During the pendency of his application, however, the law granting him the right to such patent was repealed. The Supreme Court upheld his claim, stating that at the time the law was repealed, the applicant has complied with all the requirements for the issuance of a patent, hence, his right to the patent has vested. "At least on that date," said the Court, "his right to the land, as owner, ripened into a vested right. It was no longer expectant as depending on some events or the performance of some conditions." Other rights as beneficiaries have been granted to women through other DAR administrative issuances. Under Memorandum Circular No. 10, Series of 1986, support services in terms of loan assistance in an amount not to exceed three thousand pesos (P3,000.00) has been guaranteed for qualified rural women's pre-cooperative groups. Under Memorandum Circular No. 4, Series of 1992, a budget has been allocated for support services that will empower women beneficiaries. Under Part II.D of Administrative Order No. 2, Series of 1993, farmworkers who are husband and wife may be separately entitled to three (3) hectares each provided that their vested rights to the land have been duly established. Each of the spouses shall be issued a separate CLOA.

Requirement for separate cultivation by spouses of beneficiaries

Under Memorandum Circular No. 18, Series of 1996, women who are spouses of agrarian reform beneficiaries are required to also cultivate the land, aside from the cultivation undertaken by her husband. We are of the opinion that separate cultivation must be required of women only where they are recipients of land in their own right, and should no longer be required of women whose spouses receive land under the program. To require separate cultivation by spouses of male agrarian reform beneficiaries would work against, rather than protect, the interests of women. This requirement fails to recognize the role of women in the rural household, particularly in agrarian areas. Women are usually given reproductive tasks, such as upbringing of children, household chores, and other work having to do with the maintenance of the home. An additional burden of cultivating the land would be harshly onerous upon women who are spouses of beneficiaries. The Civil Code and the Family Code recognize that the role of women in traditional families is the maintenance of the household. In both Codes, maintenance of the home is recognized as the wife's contribution to the conjugal partnership of gains or to the absolute community of property as to entitle her to one-half share of the marital partnership property. As long as the wife works in the home, all properties received or acquired during the subsistence of the marriage is considered part of the conjugal partnership of gains or of the absolute community of property. There is no reason for R.A. 6657 to be given a different interpretation as regards the rights of women to land awarded to their spouses under the Comprehensive Agrarian Reform Program.

Modes of Distribution: Individual vs. Collective Ownership

It is the policy of the CARP to establish ownercultivatorship of economic-sized farms as basis of Philippine agriculture. In line with this is the award of three hectares to the individual beneficiaries as the distribution limit. With a view of equitable land distribution and ownership, DAR is mandated to distribute agricultural lands to as many tenants and farmworkers as possible. Furthermore, the distribution of land shall be made directly to individual beneficiaries. In general, lands shall be distributed directly to the individual worker beneficiaries. In case it is not economically feasible and sound to divide the land then it shall be collectively owned by the worker beneficiaries who shall form into a worker cooperative or association which will deal with the corporation or business association. [Rep. Act No. 6657 (1988) Sec. 29; DAR A.O. No. 10 (1990), II (B)] The beneficiaries may opt for collective ownership such as co-ownership or farmer's cooperative or some other form of collective organization. The total area that may be awarded under a collective CLOA shall not exceed the total number of co-owners or members of the cooperative or collective organization multiplied by the award limit of three hectares except in meritorious cases as determined by the PARC, pursuant to Section 25 of R.A. No. 6657. Collective co-ownership CLOAs may be issued to cover any CARPable lands whether private lands or public lands within proclaimed DAR settlement projects or public lands turned over to the DAR by other government agencies and institutions pursuant to E.O. No. 407 as amended. [Rep. Act No. 6657 (1988), sec. 25.] Lands covered by collective CLOAs on a co-ownership basis shall be subdivided in accordance with the actual occupancy of the ARBs, provided it does not exceed three (3) hectares.

Landholding covered by CLOAs in the name of cooperative or farmer's organization, may, at the option of the organization, also be subdivided based on the share of each member provided that the subdivision as determined by the DAR shall be economically feasible. [DAR A. O. No. 03 (1993), III (E).] Subdivision of lands under collective CLOA is governed by A.O. No. 03, Series of 1993.

Factors Considered in Land Distribution

In the equitable distribution of lands subject of CARP, actual occupancy of a tenant shall be the basis of the award, provided it does not exceed three hectares. For untenanted lands, all the farmworkers therein shall be considered as potential beneficiaries in the estate; provided that the proportional share of each will not exceed three (3) hectares; otherwise, additional ARBS, shall be considered. For unoccupied lands, each identified ARB may be allowed the award ceiling of three hectares, provided that there are enough lands for distribution under CARP in the barangay to accommodate others who are equally qualified but who may not have been considered as awardees in such land under acquisition. In all cases, the aggregate award to an ARB shall not exceed the limit of three hectares and his total land ownership as a result of the award shall not exceed three (3) hectares. (DAR A.O. No. 10 [1990], II [D])

Distribution Procedure
The MARO, upon completion of land acquisition, validates the list of qualified beneficiaries who were identified during the acquisition phase who are still present and qualified to receive the land. Through a letter or CARP Beneficiary Certificate (CBC), the identified ARBs are formally notified by the MARO that they have qualified to receive the land. The ARBs are consulted by the MARO as to their preferred mode of distribution . Thereafter the

Land Distribution Folders are prepared and based on the ARBs preference and submitted to the PARO. Upon transmittal, the PARO reviews all documents and generates the Certificates of Land Ownership Award (CLOAs). If the ARBs prefer individual parcels, the PARO requests the DENR to conduct subdivision survey. The PARO then submits the CLOAs to the DAR Regional Office which causes them to be signed by the Secretary. Lastly, the PARO registers the CLOAs with the Register of Deeds and forwards the same to the MARO for distribution. (DAR A.O. No. 19 [1990]). A compelling issue in respect to land distribution is the matter of physical possession by DAR as a necessary prerequisite to its distribution to the ARBs. It is submitted that physical possession is not necessary for land to be distributed. Nothing in R.A. No. 6657requires DAR to take physical possession as a precondition for redistributing lands subject of acquisition. What is required is "immediate possession" under Section 16 or "actual possession" under Section 24. Actual possession of the land consists in the manifestation of acts of dominion over it of such a nature as a party would naturally exercise over his own property. (Ramos vs. Dir. of Lands [39 Phil 175 [1918]). In issuing the CLOA, the Republic of the Philippines, which became the registered owner of subject property, acting through DAR, exercised an act of dominion over the landholding as redistribution involves disposition or alienation. Having manifested its dominion over the land, the Republic of the Philippines through DAR, is deemed to be, for all legal intents and purposes, in actual possession thereof. Redistribution is not limited to the installation of farmers in the landholding. The generation and distribution of CLOAs is embraced within the concept of redistribution.

Distribution of Homelots

A homelot refers to a parcel of agricultural land used by the ARB as the site of his permanent dwelling including the area utilized for raising vegetables, poultry, pigs and other animals and engaging in minor industries. The area of the homelot may not exceed 1,000 square meters. It is an integral part of the farm and an indispensable factor in farm operations. The procedure for the acquisition and distribution of farmlots likewise apply to homelots. If the homelot of a tenant-beneficiary falls within the retained area of the landowner, the beneficiary may be made to transfer his dwelling to his farmlot or other area to be designated for his homelot which shall be mutually agreed upon by the parties. Provided that the landowner shoulders the cost of the transfer of his dwelling and the agreed cost of other improvements introduced by the tenant-beneficiary on said homelot. [DAR A.O. No. 12 [1991], II [C])

Distribution of Commercial Farms and Facilities

Commercial farms may be distributed collectively individually. Qualified beneficiaries shall be awarded maximum of three (3) hectares or a minimum of one hectare each in case the land is not sufficient accommodate them. or a (1) to

To expedite the acquisition, the commercial farms shall be initially distributed collectively or under co-ownership. In the case the beneficiaries desire to partition the land, DAR shall first determine whether it is economically feasible to divide the land, in coordination with the Department of Agriculture and other concerned agencies. Thereafter, the beneficiaries may, by majority vote, decide whether to proceed with the partition or not. In the event the beneficiaries decide to partition, the land shall be allocated to the individual beneficiaries by drawing lots in the presence of DAR Representatives. (Section 17 DAR A.O. No. 2-1998)

Facilities and improvements acquired shall be distributed collectively, through a Deed of Transfer which shall specify the names of the ARBs and duly annotated in the CLOAs generated over the subject landholding where said facilities and improvements are found. Areas where the facilities and landholdings are found are deemed common areas and shall not be partitioned individually. (Section 28DAR A.O. No. 02-98) Collective CLOAS shall be generated within thirty (30) days upon receipt by the PARO of the certified copy of the certificate of title in the name of the Republic of the Philippines. In individual CLOAs shall be generated within thirty (30) days upon receipt of the approved Segregation Plan (ASP). However in the case of individual distribution and considering the time and financial constraints particularly in the conduct of individual surveys, a collective CLOA may be generated in the interim over the subject landholding (Section 18, DAR A.O. No. 02-1998) CLOAs shall be registered immediately upon generation. (Section 20 DAR A.O. No. 02-98)

Distribution of Corporate Farms

The general rule is that corporate farms are distributed directly to the individual worker-beneficiaries. However, in case it is not economically feasible and sound to divide the land, corporate farms shall be owned collectively by the worker-beneficiaries who shall form a cooperative or association which will deal with the corporation or business association. In the latter case, the individual members of the cooperatives or corporations shall have homelots and small farmlots for family use, to be taken from the land owned by the cooperative or corporation. (Rep. Act No. 6657 [1988], sec. 29).

Corporate farms owning management contract

or

operating

under

lease

or

Pending final land transfer, corporate farms that own or operate under lease or management contract and realize gross sales in excess of P5 million are mandated to execute a production and profit sharing (PPS) plan provided under DAR AO No. 8 (1988). The PPS plan is imposed in order to allow the farmworkers in corporate farms to realize an improvement in their farm income pending final transfer of the farm. All farmworkers in a corporate farm, whether classified as regular, seasonal, technical or other farmworkers are entitled to PPS. On the other hand, managerial and supervisory employees are excluded from entitlement to PPS. (DAR Adm. O. No. 8 [1988]) PPS are distributed to farmworkers, over and above the compensation they are currently receiving, based on the following schedules: 1. Three (3%) of Annual Gross Sales from 15 June 1988 until final land or corporate stock transfer to the farmworker-beneficiaries is effected, provided that the employer is not obligated to pay more than 100% of the regular annual compensation of the farmworkerbeneficiaries; 2. In addition, 10% of net profit after tax, provided that in cases where the retention right is allowed, the amount to be distributed shall be reduced by an amount equivalent to the proportion of the retained area to the total land area. (DAR Adm. O. No. [1988]) To ensure that corporate farm employers comply with the PPS provisions, the Secretary of DAR or his authorized representatives shall have the power to order and administer compliance with the PPS provisions and to require

submission of reports, compel the production of books and documents, compel answers to interrogatories, issue subpoena and subpoena duces tecum, and enforce its writs through Sheriffs or other duly deputized officers. Moreover, Sections 73 and 74 of RA 6657 regarding prohibited acts and omissions and the penalties therefor, are applicable to any person or entity found to be violating any PPS provision. (DAR Adm. O. No. 8 [1988])

Proof of Ownership of Awarded Lands

The Certificate of Land Ownership Award evidences the ARB's ownership in respect to private agricultural lands covered underR.A. No. 6657 (Rep. Act No. 6657 [1988], sec. 24). Ownership of public lands, upon the other hand, are evidenced by Free Patents. Emancipation Patents is the ARBs proof of ownership of lands awarded under Operation Land Transfer. Discussing the nature of an Emancipation Patent, the Supreme Court ruled in the case of VinzonsMagana vs. Estrella (201 SCRA 536 [1991]) that it is only compliance with the prescribed conditions which entitles the farmer/grantee to an emancipation patent by which he acquires the vested right of absolute ownership in the landholding a right which has become fixed and established and is no longer open to doubt and controversy. The pronouncement of the court respecting the impregnable character of an Emancipation Patent should be qualified. The mere issuance of an Emancipation Patent does not put the ownership of the ARB beyond attack and scrutiny. It must be noted that P.D. No. 946 vests the Court of Agrarian Relations (now the DAR Adjudication Board) jurisdiction over cases involving the cancellation of emancipation patents issued under P.D. No. 266 (Pres. Decree [1976], sec. 12 [g]). This only goes to show that ownership of awarded lands covered by Emancipation Patents may be challenged. The aforecited Supreme Court ruling presupposes that the issuance of emancipation

patents to the ARB is not tainted with any irregularity such that it acquires the character of indefeasiblity. The VinzonsMagana ruling must be appreciated in this context.

Rights and Obligations of Beneficiaries

Once a Certificate of Land Ownership Award has been issued to a beneficiary and registered in his name, it serves as an evidence of title to the land, entitling the beneficiary to occupy the land, cultivate it, and maintain possession of the same. cSIADH An agrarian reform beneficiary is obliged to exercise the diligence of a good father of a family in the use, cultivation, and preservation of the land and the improvements thereon. His rights to the land, as well as to support services to which he may be entitled as a beneficiary shall be forfeited in the event that he neglects, abandons, misuses, or sells the land. The beneficiary is also obliged to keep the land awarded to him intact, and he may not subdivide the land in favor of his children or heirs. The three hectares have been identified as an economic-sized family farm which must be preserved as a single operating unit to promote the farm's economic viability. Even if the beneficiary dies, his heirs are not allowed to divide the land into smaller units. However, such heirs are entitled to receive the land by way of hereditary succession. This means that the land may be transferred either to the spouse of the beneficiary, or in his or her absence or incapacity, to the eldest child who meets the qualifications to be a CARP beneficiary, particularly the requirement of willingness, aptitude, and ability to cultivate the land and make it productive. The heir who succeeds to the land is under obligation to pay the other heirs their legal shares in the property of the deceased beneficiary. In the absence of qualified heirs or children, he

land shall revert to the DAR, which shall identify a new beneficiary the land. A beneficiary is likewise obliged to comply with the provisions of R.A. 6657. Memorandum Circular No. 19, Series of 1996,supra., provides for the grounds for perpetual disqualification of agrarian reform beneficiaries. The grounds enumerated in this Memorandum Circular are violations of various provisions of R.A. 6657 and administrative rules and regulations issued pursuant to this law.

Protection of Rights of Member-Beneficiaries

The protection of rights of member-beneficiaries may be ensured in the articles of incorporation and in the by-laws of the organization, which the member-beneficiaries themselves enact and approve. Restrictions in the transfer of shares or membership rights, by providing that such transfer shall be valid only if made in favor of another qualified beneficiary, may be adopted. The contract of membership may likewise contain provisions ensuring that the rights of memberbeneficiaries to ownership or other privileges as members are protected. The interests of farmer-members may also be adequately protected according to the exit provisions in Republic Act No. 6938, otherwise known as the Cooperative Code. Articles 31 and 32 of the Code provides: Art. 31. Termination of Membership. (1) A member of a cooperative may, for any reason, withdraw his membership from the cooperative by giving a sixty (60)-day notice to the board of directors. The withdrawing member shall be entitled to a refund of his share capital contribution and all other interests in the cooperative: Provided, That such refund shall not be made if upon such payment the value of the assets of the cooperative would be less than the aggregate amount of

its debts and liabilities exclusive of his share capital contribution. (2) The death, insanity, insolvency or dissolution of a member shall be considered an automatic termination of membership. (3) A member may be terminated by a vote of the majority of all the members of the board of directors for any of the following causes: (a) When a member has not patronized the services of the cooperative for an unreasonable period of time as may be fixed by the board of directors; When a member has continuously failed to comply with his obligations; When a member has acted in violation of the by-laws and the rules of the cooperative; and For any act or omission injurious or prejudicial to the interest or the welfare of the cooperative.

(b) (c)

(d)

A member whose membership the board of directors may wish to terminate shall be informed of such intended action in writing and shall be given an opportunity to be heard before the said board makes its decision. The decision of the board shall be in writing and shall be communicated in person or by registered mail to the member and shall be appealable, within thirty (30) days after the decision is promulgated, to the general assembly whose decision therein, whether in a general or special session, shall be final. Pending a decision by the general assembly, the membership remains in force. Art. 32. Refund of Interests. All sums computed in accordance with the bylaws to be due from a

cooperative to a former member shall be paid to him either by the cooperative or by the approved transferee, as the case may be, in accordance with this Code.

Transferability of Awarded Lands

Section 27 prohibits the sale, transfer, or conveyance of lands acquired by beneficiaries under R.A. 6657 within ten (10) years from the date of award. This restriction on the transferability of the land is annotated on the certificate of title in the Register of Deeds. Lands awarded pursuant to E.O. 228 and P.D. No. 27 may be alienated only upon full payment of amortizations on the purchase price. However, the lands acquired under CARP may be alienated through hereditary succession, or in favor of the government, the Land Bank, or other qualified beneficiaries even before the expiration of the ten-year period. This provision presumes that the land to be alienated has been fully paid for by the beneficiaries. If the land has not yet been fully paid for, only the rights to the land may be sold, transferred, or conveyed, and with prior approval of the DAR, and only to the heirs of the beneficiary or to another beneficiary. The buyer of agricultural land alienated under this section is still subject to the aggregate ownership ceiling of five (5) hectares.

Mortgage of awarded land not equivalent to sale, disposition, or conveyance

Mortgage is a land transaction allowed by the law, and hence is not a sale, disposition, or conveyance contemplated by the prohibition. The governing administrative issuance on land transactions is DAR Administrative Order No. 1, Series of 1989. Section II.3.d provides:

The following are not prohibited transactions and may be registered by the Register of Deeds without prior clearance from DAR: d. Deed of real estate mortgage executed by the . . . beneficiary. Since mortgage is not a prohibited transaction, it follows that it is not tantamount to selling, disposing of, or conveying the awarded land, which are prohibited transactions. Moreover, the framers of the law, in not expressly prohibiting mortgage, may have anticipated circumstances in which the farmer-beneficiary is left with no alternative but to mortgage his land in order to respond to emergency situations such as sickness in the family (see Torres vs. Ventura, 187 SCRA 96, at 103).

Farmer-beneficiary may alienate complete payment of amortizations

even

without

The second paragraph of Section 27 of R.A. 6657 allows a farmer-beneficiary to transfer or convey his rights to the land, provided that prior approval of the DAR has been obtained, to any qualified heir of the beneficiary or to any other beneficiary. An essential condition of such transfer or conveyance is that the transferee shall cultivate the land himself and maintain its productivity as agricultural land. The failure to comply with this condition shall result in the availability of the land for distribution to another qualified agrarian reform beneficiary.

Disqualification of beneficiary transferred right to awarded land

who

sold

or

Section 73 (f) provides that the sale, transfer, or conveyance by a farmer-beneficiary of the right to use or any usufructuary right over the land must be made "in order to circumvent the provisions" of R.A. 6657. This must be harmonized with Section 27, which allows the farmer-

beneficiary to transfer or convey the land or his rights to the land, provided that it is with the prior approval of DAR. Administrative Order No. 8, Series of 1995, governs the procedure for obtaining this consent. Administrative Order No. 10, Series of 1989 provides that beneficiaries who have sold the land they received under R.A. 6657 orP.D. 27 are no longer qualified to receive land under R.A. 6657, without any qualification on the manner of disposition. We believe, however, that the law intends to preserve the land in the hands of the beneficiary and to make him benefit from the land for as long a time as feasible. The administrative issuances regarding the obtention of consent to convey the land merely exempt the vendor from criminal prosecution for circumventing R.A. 6657, and cannot be construed to give the farmer-beneficiary license to convey the land without forfeiting his right to become a beneficiary again.

Manner of Payment by Beneficiaries

For lands acquired by DAR through the compulsory acquisition scheme or through voluntary offer to sell, Section 26 provides that lands awarded to beneficiaries shall be paid for by the farmers in thirty (30) annual amortizations at six per cent (6%) interest per annum. These are regular annual amortizations, payable to the Land Bank of the Philippines. For lands acquired under the VLT/DPS scheme, Section 21 provides that payment shall be made directly by the farmer-beneficiaries to the landowner under the terms and conditions mutually agreed upon by the parties. Such terms and conditions shall be subject to the approval by the DAR. Pursuant to Section 20, the DAR is mandated to ensure that these terms and conditions are not less favorable to the

farmer-beneficiary than those which would have prevailed had the DAR acquired the land under the compulsory acquisition scheme. If the landowner and the farmer cannot agree on the price of the land, Section 21 provides that the land shall be subject to compulsory acquisition, following the procedure under Section 16. Payment by the beneficiaries, in any case, shall start one year from the date of the registration of the CLOA with the Register of Deeds. Joint DAR-LBP Memorandum Circular No. 30, Series of 1997 states that in case occupancy of the land occurred before the date the CLOA is registered, then the basis for the amortization schedule would be the date of CLOA registration. If the occupancy date occurred after the date of CLOA registration, then the occupancy date would be the basis for the amortization schedule.

Computation of amount of amortizations

Under Administrative Order No. 2, Series of 1998, the basis of computation shall be the cost of the land and the permanent improvements thereon. Pursuant to the mandate of the law that the payments shall be made affordable to the beneficiaries, however, Administrative Order No. 2, Series of 1998 provides that the amortizations may be reduced to: (1) 2.5% of annual gross production (AGP) for the first three years (2) 5% of the AGP for the fourth and fifth years

(3) 10% of the AGP for the sixth to thirtieth years, if this amortization ceiling is lower than the regular amortization.

The annual gross production is defined as the peso value of the annual yield/produce per hectare of the land awarded to farmer-beneficiaries, which is reflected in the valuation portion of the Claim Valuation and Processing Form. In the case of VLT/DPS, for the purposes of computing the regular amortization, the AGP shall be that agreed upon by the parties during the proceedings for the determination of just compensation, and shall not be changed throughout the period for payment of the value of the land. The ceiling on the payments for lands voluntarily offered or compulsorily acquired shall be the same. This is pursuant to the provision that, although the terms and conditions of the VLT/DPS shall be mutually agreed upon by the landowners and the farmer-beneficiaries, these should not be less favorable to the ARB that those that would prevail had the land been acquired by the government compulsorily (see Section 20 [b], R.A. 6657).

Effect of default in payment by beneficiary

In the case of land acquired under the VLT/DPS scheme, the land may be repossessed in case the beneficiary fails to pay an aggregate of three (3) consecutive annual amortizations from the date of receipt of the amortization schedule, except if loss of crops occurs due to fortuitous event or force majeure. Section 19 (c) provides that the voluntary agreement entered into by the landowners and the beneficiaries under VLT/DPS shall include sanctions for non-compliance by either party, subject to the approval by the DAR. In the case of land voluntarily offered for sale or compulsorily acquired, the failure of the beneficiary to pay at least three (3) annual amortizations to the Land Bank gives the bank the right to foreclose the land, with the exception of loss of crops due to force majeure. In both

cases, the beneficiary shall be permanently disqualified from becoming a beneficiary again.

Failure to pay due to fortuitous event

If the default is occasioned by natural calamity and/or force majeure, or any other instance when the failure to produce is not due to the fault of the farmer, the scheduled amortization payment is limited to the maximum amount of 10% of the annual gross production (see Section IV, A.O. No. 2, Series of 1992). The default due to fortuitous event shall not result in the permanent disqualification of the beneficiary.

Effect of higher valuation

The amount of regular annual amortization is not affected in case the landowner is granted by the courts a higher valuation than that pegged by the DAR/LBP/BARC during the valuation process. The only effect of this change is to increase government assistance or subsidy.

Repossessed land does not revert to former landowner

In case awarded land is repossessed by the government, the DAR shall cancel the CLOA issued to the beneficiary, and transfer the land to either of the following: a) A qualified heir of the beneficiary who shall assume the balance of the value of the land; or b) In the absence of a qualified heir, a new qualified beneficiary who, as a condition for such transfer, is willing to abide by the terms of the existing VLT/DPS agreement, and who will pay for the entire value of the land.

Beneficiary in default will not forfeit payments

If the land is sold to a new beneficiary other than an heir of the former beneficiary, the landowner shall refund the payments to the latter, in one lump sum or in installments, and shall pay for the improvements made by the former beneficiary, less the lease rentals for the duration of his use of the land and other charges allowed by law.

Assistance to farmer-beneficiaries in making payments

Administrative Order No. 2, Series of 1998 defines "assistance to farmers" as follows: (a) The difference between the regular annual amortization (based on the amount paid or approved for payment to the landowner) and the affordable amount during the first five (5) years after the award of the land to the ARBs where the affordable amount is lower that the regular amortization; (b) The difference between the regular annual amortization and ten percent (10%) of the AGP during the 6th to 30th year, whenever such 10% AGP is lower that the regular amortization; and (c) Rebate of 2% of interest in case the beneficiary makes an early payment.

Production and Profit Sharing

Under Sections 13 and 32 of RA 6657, individuals or entities owning agricultural lands and operating under lease or management contract are required to execute production and profit-sharing plan with their farmworkers or farmworkers' organization, pending final distribution of the land or implementation of the stock distribution scheme. The provisions under AO 8 (1988) governs production and profit sharing plan under RA 6657.

A production and profit-sharing plan is required in order to improve the income of farmworkers pending final land transfer or stock distribution or full control in the case of deferred commercial farms and lease-back arrangements. The following employers are required to execute production and profit-sharing plan provided that their annual gross sales exceed P5 million: 1) Any enterprise owning or operating agricultural lands under lease, management contract, production venture or other similar arrangement; 2) Multinational corporations agricultural activities; and engaged in

3) Commercial farms devoted to aquaculture including salt beds, fishponds and prawn ponds, fruit farms, orchards, vegetable and cut-flower farms, and cacao, coffee and rubber plantation. All farmworkers of covered employers, regardless of duration, who are directly working on the land of the corporation or other entities, whether classified as regular, seasonal, technical or other farmworkers are covered in the mandated production and profit-sharing plan. To qualify, however, said employees must not own more than three (3) hectares of agricultural land. Covered employers are required to pay the following, over and above the compensation currently received by the farmworkers: 1) Three (3%) of Annual Gross Sales from 15 June 1988 until final land or corporate stock transfer to the farmworker-beneficiaries is effected, provided that the employer is not obligated to pay more than 100% of the regular annual compensation of the farmworkerbeneficiaries.

2) In addition, 10% of net profit after tax, provided that in cases where the retention right is allowed, the amount to be distributed shall be reduced by an amount equivalent to the proportion of the retained area to the total land area. [AO 8 (1988)] Existing production and profit-sharing granted prior to the effectivity of CARP shall be credited as compliance with the mandated production and profit-sharing plan. However, where the benefits received are less than what is provided under RA 6657, covered employers shall pay the difference to the farmworkers. Non-compliance with the provisions on production and profit-sharing is a violation covered by the provisions on prohibited acts and omissions and the penalties therein under Sections 73 and 74 of RA 6657. The enforce the above mandate, DAR through its Secretary or authorized representatives has the following powers: 1) To order and administer compliance with the Production and Profit-Sharing provisions of RA 6657; 2) To require covered employers to submit report on the distributed production and profit shares; 3) To compel the production of books and other relevant documents of covered employers; 4) To compel answers to questions needing clarifications to shed light on problems encountered in the implementation of the plan; 5) To issue subpoena; and

6) To enforce its writs through sheriffs or other duly deputized officers.

Tax Exemption
Transfers of ownership under R.A. No. 6657 are tax exempt as provided in Section 66 thereof, as follows: Transactions under this Act involving transfer of ownership, whether from natural or juridical person, shall be exempted from taxes arising form capital gains. These transactions shall also be exempted from the payment of registration fees, and all other taxes and fees for the conveyance or transfer thereof; Provided, That all arrearages in real property taxes, without penalty or interest, shall be deductible from the compensation to which the owner may be entitled. It is submitted that tax-exempt transactions contemplated in the above-quoted provision only involve lands placed under the coverage of the CARP and acquired through any of the modes of acquisition provided under the law, i.e., compulsory acquisition, voluntary offer to sell, voluntary land transfer or direct payment scheme for the purposes of transferring these to the beneficiaries. Hence, transfer of homelots to farmers as disturbance compensation in the case of lands already exempted from CARP coverage is taxable. This is so since the farmertransferees in this case did not acquire the land as agrarian reform beneficiaries within the context of R.A. No. 6657. It must be emphasized that tax exemptions are to be strictly construed against the taxpayer. Therefore, any transaction not expressly enumerated in Section 66 of R.A. No. 6657 should be construed as not included in the tax-exempt provision of the law. (Memorandum of Asst. Sec. Peaflor for the Secretary, 06 April 2000)

Standing Crops
Section 28 provides that the landowner is entitled to retain his or her share in the standing crops unharvested at the time the DAR shall take possession of the land under

the compulsory acquisition scheme, and shall be given reasonable time to harvest the same to the extent of the share pertaining to him/her. Standing crops refer only to those crops existing at the time DAR takes possession of the land. In the case of sugarlands, the term shall include the original crop only, excluding future harvests from ratoons, if what is existing at the time the DAR takes possession of the land is the original crop. If what is existing at the time of possession is already the first or second crop, the landowner shall be entitled to harvest his/her share in that ratoon crop.

Support Services
Agrarian reform involves not only land redistribution, but also the totality of factors and support services designed to uplift the economic status of the beneficiaries and all other arrangements which will allow the beneficiaries to receive a just share of the fruits of the lands they work. (Section 3 (a) R.A. No. 6657). To address the latter, the Office of Support Services was created to provide general support and coordinative services in the implementation of the program. (Section 35, R.A. No. 6657). Notwithstanding the enactment of R.A. No. 7905 otherwise known as "An Act to Strengthen the Implementation of the Comprehensive Agrarian Program and for other Purposes" support services by the government remained limited because of fiscal constraints. Only 370,000 beneficiaries within the Agrarian Reform Communities (ARCs) out of 3.34 million as of 1998 are reached by such services. (CARP Annual Report, 1998, PARC Secretariat). Thus, the Department saw the need to mobilize the private sector to ensure adequate support services. It is within this framework that Joint Economic Enterprises was conceived. Joint Economic Enterprises refer to partnerships or arrangements between beneficiaries and investors to implement an agribusiness enterprise in

agrarian reform areas. The arrangement finds legal basis in Section 35 and 44 of R.A. No. 6657, as amended by R.A. No 7905, as follows: There is hereby created the Office of Support Services under the DAR to be headed by an Undersecretary. . . . This Office shall provide general support and coordinative services in the implementation of the program. Particularly in carrying out the provisions of the following services to farmer beneficiaries and affected landowners: . . . (2) Infrastructure development and public works projects in areas and settlements that come under agrarian reform . . . . For the purpose of providing the aforecited infrastructure and facilities, the DAR is authorized to enter into contracts with interested private parties on long term basis or through joint venture agreements or build-operate-transfer schemes, . . . (10) Assistance in the identification of ready markets for agricultural produce and training in other various aspects of marketing . . . The PARCCOM shall coordinate and monitor the implementation of the CARP in the province . . ., in addition, it shall recommend to the PARC the following: . . . 3) continuous processing of applications for lease back agreements, joint venture agreements and other schemes that will optimize the operating size for agricultural production and also promote both security of income to farmer beneficiaries; Provided that lease back arrangements should be the last resort. (Underscoring supplied)

Joint Economic Enterprises

The parties to a joint economic enterprise are the agrarian reform beneficiaries and investors who may either be private individuals, partnerships or corporations; nongovernment organizations; cooperatives or associations of

beneficiaries; government-owned or controlled corporations and other entities (Section 6 DAR A. O. No. 2-1999) It must be noted that the beneficiaries referred to include holders of Emancipation Patents (EPs) of Certificates of Land Ownership Awards (CLOAs). Qualified beneficiaries of agricultural lands for distribution under the agrarian reform program may also avail of the same provided that the land is distributed to the beneficiaries before an agribusiness agreement is executed. Small landowners may engage in joint economic enterprises involving their retained areas. (Section 4, DAR A.O. No. 2-1999) In a joint economic enterprise, ownership of land remains with the beneficiaries. Only the use thereof, where necessary, is conveyed. The purposes for which a joint economic enterprise is to be established are production, processing and marketing of products, or introduction, maintenance, rehabilitation or upgrading of agricultural capital assets, infrastructure or facilities, or provision of management expertise, technology, equipment and other services to beneficiaries. The equity and interest of the parties to a joint economic enterprise depend on the nature of enterprise and extent of participation. Parties hall exercise shared responsibility and co-determination on matters affecting the viability of land and income of beneficiaries. The parties shall agree on the period and cause the annotation of the agreement on the titles of the properties. (Section 6, DAR A.O. No. 2-99)

Types of Joint Economic Enterprises Joint Venture

In a joint venture, the beneficiaries contribute use of the land together with the facilities and improvement while the investor provides capital and technology for production, processing and marketing of goods, or for construction, rehabilitation, upgrading of agricultural capital assets,

infrastructure and facilities. The joint venture has a personality separate and distinct from the parties. The equity of beneficiaries in a joint venture depends on the value of use of land and improvements at the minimum, equal to lease rental. The equity of the beneficiaries is not subject to dilution. The joint venture is to be managed jointly by the investors and the ARBs. The beneficiaries are given a fixed number of seats in its board of directors corresponding to their equity interest. The beneficiaries and/or their dependents are to be given preference for employment in the joint venture.

Production, Processing and Marketing Agreement

In a production, processing and marketing agreement, the beneficiaries engage in production and processing of agricultural products and directly sell them to the investor who provides loans and technology. Incorporated in said agreement is a price review mechanism taking into consideration industry practice, prevailing market prices and other appropriate factors.

Build Operate Transfer Scheme

In a build-operate-transfer scheme, the investor builds or rehabilitates facilities and improvements necessary to make the lands productive and directly operates the same for a certain period. The facilities and improvements are constructed at the investor's own expense, and he shall not be allowed to access, for this purpose, government funds that would, otherwise be available as financing or capital for beneficiaries. In said scheme, the beneficiaries receive reasonable rent for the use of land. Upon expiration of the agreed period, ownership of the facilities and other improvements is consolidated in the name of the beneficiaries.

Management Contract

In a management contract beneficiaries hire the services of a contractor with managerial skills and capability to manage and operate the farm in exchange for a fixed wage and/or commission. The beneficiaries, in turn provide labor. All income from the operation of the farm accrue exclusively to the ARBs. In this arrangement, a human resource development program for the members of the cooperative, association or federation is to be implemented to facilitate transfer of technology and management techniques to enable them to directly manage and operate the farm.

Service Contract
In a service contract, beneficiaries engage for a fee the services of a contractor for mechanized land preparation, cultivation, harvesting, post-harvest operations and other activities. The service contractors may include other ARBs with necessary equipment and facilities for mechanized farm operations. Beneficiaries who wish to engage in service contracting but with limited financial capability may avail of loan facilities or credits pursuant to Section 35 of R.A. No. 6657 as amended.

Lease Contract
In a lease contract, beneficiaries bind themselves to give investor enjoyment or use of their land for a price certain and for a definite period. In this arrangement, the investor provides capital to operate the farm, construct facilities and other improvements, process and market agricultural products. The lessee may either be a former landowner or other investors. However, under Section 44 of R.A. No. 6657, as amended by R.A. No. 7905, leaseback arrangements should be the last resort. This means that the ARBs and the investor (former landowner) must first consider other types of agribusiness arrangements before deciding on a lease. The lessee/investor is to give priority to qualified and willing ARBs and their dependents for

employment in the enterprise. In such cases, the ARBs are to be treated as employees of the lessee/investor and are entitled to the mandated minimum wage and other economic benefits granted under the Labor Code and other existing laws.

Combinations or Phased Arrangements

Combinations or phased arrangements combine the features of any or all of the preceding forms of agribusiness enterprises, or provide for a phased implementation thereof. For instance, production and processing of agricultural corps may be covered by contract growing, while marketing may be under a joint venture. Small growers may engage production, while a corporation may undertake processing and marketing. Initially, the arrangement may provide for leaseback, followed by a contract growing, and finally, joint venture.

Other Schemes
Other schemes refer to other agribusiness arrangements or schemes that optimize the operating size of distributed lands for agricultural production consistent with existing laws and regulations. (Section 7, DAR A.O. No. 2-99) CHAPTER 6

Adjudication of Agrarian Reform Matters Jurisdiction of DAR

Sec. 50 of RA 6657 provides that the DAR is vested with primary jurisdiction to determine and adjudicate agrarian reform matters and shall have exclusive jurisdiction over all matters involving the implementation of agrarian reform, except those falling under the exclusive jurisdiction of the DA and the DENR. In the exercise of its jurisdiction, DAR shall not be bound by technical rules of procedure and evidence but shall proceed to hear and decide

all cases, disputes or controversies in a more expeditious manner, employing all reasonable means to ascertain the facts of every case in accordance with justice and equity and the merits of the case. Adjudication of agrarian reform matters involves the exercise by the DAR Secretary of its exclusive jurisdiction over agrarian law implementation (ALI) cases or the exercise by the DAR Adjudication Board (DARAB) of its jurisdiction under the 1994 DARAB Revised Rules of Procedure. Petitions for the determination of just compensation to landowners and the prosecution of all criminal offenses under RA 6657 falls within the original and exclusive jurisdiction of the Special Agrarian Courts (SACs).

Restraining orders or injunctions issued by regular courts

Any restraining order or injunction issued by courts against DAR pursuant to the implementation of CARP is null and void as it violates the express provisions of Sec. 55 and 68 of RA 6657. Sec. 55 provides that no court in the Philippines shall have jurisdiction to issue any restraining order or writ of preliminary injunction against the PARC or any of its duly authorized or designated agencies in any case, dispute or controversy arising from, necessary to, or in connection with the application, implementation, enforcement, or interpretation of agrarian laws. On the other hand, Sec. 68 states that no injunction, restraining order, prohibition or mandamus shall be issued by the lower courts against DAR, DA, DENR and DOJ in their implementation of CARP.

ALI Cases
Under DAR AO 6 (2000), ALI cases refer to those agrarian cases falling under the exclusive jurisdiction of the DAR Secretary. These cases strictly involve the

administrative implementation of RA 6657 and other agrarian laws, rules and regulations. These cases include the following: a) Classification and identification of landholdings for coverage under CARP, including protests or oppositions thereto and petitions for lifting of coverage; b) Identification, qualification or disqualification of potential farmer-beneficiaries; c) Subdivision surveys of lands under CARP;

d) Issuance, recall or cancellation of Certificates of Land Transfer (CLTs) and CARP Beneficiary Certificates (CBCs) in cases outside the purview of PD 816, including the issuance, recall or cancellation of EPs or CLOAs not yet registered with the Register of Deeds; e) Exercise landowner; of the right of retention by the

f) Application for exemption under Section 10 of RA 6657 as implemented by DAR AO 13 (1990); g) Application for exemption pursuant to DOJ Opinion No. 44 (1990) as implemented by DAR AO 6 (1994); h) Application for exemption under DAR AO No. 9 (1993); i) Application for exemption under Section 1 of RA 7881 as implemented by DAR AO 3 (1995); j) Issuance of certificate of exemption for lands subject of VOS and CA found unsuitable for agricultural purposes pursuant to DAR MC 34 (1997);

k) Application for conversion of agricultural lands to residential, commercial, industrial or other nonagricultural uses including protests or opposition thereto; l) Right of the ARBs to homelots; of excess area of the FBs

m) Disposition landholdings;

n) Transfer, surrender or abandonment by the FBs of his farmholding and its disposition; o) Increase of farmer-beneficiary; p) Conflict of settlements; and awarded claims area in awarded by the and

landed

estates

q) Such other matters not mentioned above but strictly involving the administrative implementation of RA 6657 and other agrarian laws, rules and regulations as determined by the Secretary. (DAR Adm. O. No. 6 [2000], sec. 2). In the adjudication of ALI cases, the Secretary or his authorized representative may exercise quasi-judicial powers granted under Section 50 of RA 6657. He or his authorized representative shall have the power to summon witnesses, administer oaths, take testimony, require submission of reports, compel the production of books and documents and answers to interrogatories and issue subpoena, and subpoena duces tecum and to enforce its writs through sheriffs or other duly deputized officers. He or his authorized representative shall likewise have the power to punish direct and indirect contempts in the same manner and subject to the same penalties as provided in the Rules of Court.

Likewise, the Regional Director or the DAR official having jurisdiction over the case, shall, motu propio or at the instance of a party, have the authority to issue a Cease and Desist Order or Status Quo Order pending the resolution of the case in the following instances: a) where grave or irreparable damage will result to the parties; b) where the doing or continuance of certain acts will render the case moot and academic; or c) where there is a need to maintain peace and order and prevent injury or loss of life or property. In this regard, the issuing authority may request the assistance of law enforcement agencies to implement the order. (Sec. 17, DAR Adm. O. 6 [2000]) Moreover, the DAR shall not take cognizance of any agrarian controversy unless a certification from the BARC has been submitted stating that the dispute underwent mediation and conciliation without any success of settlement. However, if no certification is issued by the BARC within thirty (30) days after a matter or issue is submitted to it for mediation or conciliation the case or dispute may be brought before the PARC. (Rep. Act No. 6657 [1988], sec. 53)

Jurisdiction over ALI Cases

The Secretary shall have exclusive original jurisdiction over all ALI cases. However, this jurisdiction may be delegated to certain DAR officials in accordance with existing rules and regulations (DAR Adm. O. No. 6 [2000], sec. 6).

Protest/Petition for Lifting of Notice Coverage/Application for Exemption or Exclusion

of

Under Sec. 7 of DAR AO 6 (2000), the Regional Director shall exercise primary jurisdiction over protests or petitions for lifting of notice of coverage. The Secretary shall exercise exclusive jurisdiction for application for the issuance of exemption clearance under DAR AO 6 (1994) involving lands with an area of more than five (5) hectares. For lands with an area of five (5) hectares and below, the issuance of such clearance is delegated to the Regional Directors (DAR Adm. O. No. 6 [2000], sec. 8 [a]). Applications for exemption or exclusion under DAR AO 13 (1990), DAR AO 9 (1993), DAR AO 3 (1995) and DAR MC 34 (1997) and other pertinent rules and regulations, shall be under the jurisdiction of the concerned DAR officials identified therein, except those involving lands five (5) hectares and below situated within the provinces of Cavite, Laguna, Batangas, Rizal and Quezon (CALABARZON) which are now delegated to the concerned Regional Director. 1

Conversion
Jurisdiction over applications for conversion shall pertain to the DAR officials authorized to approve or disapprove applications for conversion of agricultural lands to non-agricultural uses pursuant to Sec. 22 of DAR AO 1 (1999) (DAR Adm. O. No. 6 [2000], sec. 9).

Other ALI Cases

The jurisdiction over other ALI cases shall generally pertain to the Regional Directors, except those cases specifically delegated to other DAR officials under existing rules and regulations, or those that may subsequently be promulgated by the Secretary (DAR Adm. O. No. 6 [2000], sec. 11).

Flashpoint Cases
Flashpoint cases are ALI cases which fall within the jurisdiction of the Regional Director or the Director of the Bureau of Agrarian Legal Assistance (BALA) and determined or certified by the Secretary or the Head Executive Assistant which (a) threatens to disrupt the status quo in a particular area and endanger life and limb as a result of the use of force from either the landowners' side or farmer-beneficiaries' side or other parties; (b) are the subject of massive pickets or which may immediately result in concerted mass actions either in the DAR Central Office or in the field offices or at the site of the conflict; or (c) are of such nature that the Secretary may assign for immediate resolution. (DAR Memo. Circ. No. 13 [1997]) The following are the procedure in the resolution of flashpoint cases: a) Once a case has been certified as a flashpoint case by the HEA or the Secretary, the Director of the Special Concerns Staff (SCS) shall issue an Order directing the Head of Office/Unit concerned where the case is pending to transmit the entire case records, together with his comments or recommendations, to the Office of the SCS Director within 48 hours from notice of the directive. b) Within 24 hours from receipt of the case records, the SCS Director shall issue a directive to all concerned parties to submit their respective position papers and such other documentary evidence within ten (10) days from notice. A clarificatory hearing, dialogue/conciliation/mediation or ocular inspection may be conducted when appropriate. c) Within five (5) working days from the conclusion of the investigation/review/evaluation, the SCS Director

shall rule on the case or submit his recommendation for the resolution of the case. d) An aggrieved party may file a notice of appeal, together with the appeal memorandum, to the Assistant Secretary for Policy, Planning and Legal Affairs Office (PPLAO). The latter office shall forward the records, together with the evaluation on appeal made and proposed resolution, to the Office of the Secretary. e) The Secretary shall have five (5) working days to decide on the appeal. The decision rendered by the Secretary shall be immediately executory notwithstanding any duly perfected appeal. (DAR Memo. Circ. No. 13 [1997]) However, a certification that a case is considered flashpoint shall merely serve to accord utmost priority to the resolution thereof but shall not divest the concerned DAR official of the authority to resolve such cases, unless specifically directed in the national interest, or the Secretary himself has assumed jurisdiction over the case. (Adm. O. No. 6 [2000], sec. 11)

Resolution of Disputes in Joint Economic Enterprises (JEE)

The following are the hierarchy of dispute resolution methods involving joint economic enterprises: 1) voluntary methods;

2) mediation or conciliation by trained mediators or conciliators; 3) arbitration; and depending on the

4) To any of the following principal cause of action:

a) DAR Adjudication Board (DARAB) if it involves interpretation of an agribusiness agreement or an agrarian dispute as defined in Sec. 3 (d) of RA 6657; b) Securities and Exchange Commission (SEC) if it involves an intra-corporate dispute; c) Cooperative Development Authority (CDA) if it involves an intra-cooperative dispute; or d) National Labor Relations Commission (NLRC) if it involves employer-employee relations. (DAR Adm. O. No. 2 [1999]) In this regard, the Secretary may issue such writs or orders, as may be appropriate, to maintain the status quo and preserve peace and order in the farm subject of a JEE, in the following cases: a) where there is clear and imminent threat to life or property; b) where the dispute will cause serious and irreparable damage to either party or to the agribusiness enterprise; or c) where, in his judgment, there is an urgent need to protect the national interest. (DAR Adm. O. No. 2 [1999]) Sec. 14 of DAR AO 6 (2000) provides that the filing of an application for exemption, exclusion, conversion, retention or protest against coverage shall have the following effects in so far as land acquisition and distribution are concerned: a) If the application or petition is filed before the issuance of the notice of coverage, the notice of coverage

shall not be issued until the application or petition is finally resolved; b) If the application, protest or petition is filed after issuance of the notice of coverage, the DAR may proceed with the processing of the claimfolder notwithstanding the pendency of the application, protest or petition in accordance with the activities outlined under DAR AO 2 (1996), as amended. The processing of the claimfolder may be suspended by the PARO if upon proper review and evaluation of the Field Investigation Report (FIR) submitted by the MARO, and upon personal verification of the allegations in the application, protest or petition, it is determined that the subject landholding is in fact exempted or excluded from CARP coverage. Otherwise, the PARO may forward the claimfolder to the LBP for further processing. c) In case the application, protest or petition is filed while the claimfolder is pending with LBP, or where the claimfolder has been forwarded by the PARO notwithstanding such application, protest or petition, the LBP shall continue with the processing of the land compensation claim, except that the Certification of Deposit (COD) shall not be issued to the PARO until the application, protest or petition is finally resolved.

Period in filing actions

Under Sec. 13 of DAR AO 6 (2000), petitions for lifting of notice of coverage shall be filed within thirty (30) days from receipt of the Notice of Coverage by the affected party. Failure by the affected party to file the protest or petition within the prescribed period shall be deemed a waiver of his right thereto. If the action is filed after the expiration of the thirty (30)-day period, the protest or petition shall no longer be entertained or shall be summarily dismissed by the MARO or the PARO, except in the following instances:

a) the protest or petition is based on allegations that subject landholding is exempted from CARP coverage under DAR AO 6 (1994); or b) upon evaluation of pertinent documents and based on the physical conditions obtaining in the property, it is determined by DAR that the subject landholding is exempted from CARP coverage pursuant to DAR AO 13 (1990), DAR AO 9 (1993),DAR AO 3 (1995) and DAR MC 34 (1997) notwithstanding the issuance of the Notice of Coverage.

DARAB Cases DAR Adjudication Board (DARAB)

The creation of DARAB was mandated under EO 129A (1987) which aims at reorganizing and strengthening the DAR. The DARAB was created under the Office of the Secretary of the DAR and is given the powers and functions to adjudicate specific agrarian reform cases. Before the creation of the DARAB, the Courts of Agrarian Relations (CAR) had the original and exclusive jurisdiction over agrarian reform matters. PD 946 (1976) entitled "Reorganizing the Courts of Agrarian Relations, Streamlining their Procedures and for Other Purposes," gave the CARs original and exclusive jurisdiction over agrarian reform matters, except those that fall under the jurisdiction of the Secretary of the DAR. With the passage of BP 129 (1980) or the Judiciary Reorganization Act, the CARs were integrated into the RTCs and the jurisdiction of the former was vested in the latter courts. However, with the promulgation of EO 229(1987), entitled "Providing the Mechanisms for the Implementation of the Comprehensive Agrarian Reform Program (CARP)," the RTCs were divested of their special jurisdiction to try agrarian reform matters.

Under EO 229 (1987), the DAR is vested with primary jurisdiction to determine and adjudicate agrarian reform matters and has the exclusive jurisdiction over all matters involving the implementation of agrarian reform, except those that fall under the exclusive jurisdiction of the DA and the DENR. This is also clearly provided in Sec. 50 of RA 6657. In Machete vs. Court of Appeals 250 SCRA 176 (1995), private respondent Celestino Villalon filed a complaint for collection of back rentals and damages before the Regional Trial Court against the petitioners. The complaint alleged that the parties entered into a leasehold agreement with respect to the private respondent's landholdings in Bohol. Petitioners moved to dismiss the complaint on the ground of lack of jurisdiction of RTC over the subject matter. Petitioners alleged that the subject matter of the complaint falls squarely within the jurisdiction of the DAR in the exercise of its quasi-judicial powers. The Supreme Court declared the dispute to be agrarian in nature and therefore outside the jurisdiction of the RTC. The Supreme Court held that: Section 17 of EO 229 vested the DAR with quasi-judicial powers to determine and adjudicate agrarian reform matters as well as exclusive original jurisdiction over all matters involving implementation of agrarian reform except those falling under the exclusive original jurisdiction of the Department of Agriculture and the Department of Environment and Natural Resources in accordance with law. Executive Order 129-A, while in the process of reorganizing and strengthening the DAR, created the Department of Agrarian Reform Adjudication Board (DARAB) to assume the powers and functions with respect to the adjudication of agrarian reform cases" (at 179, 180).

In an earlier case, Quismundo vs. CA, 201 SCRA 609 (1991), the Supreme Court explained in detail the purpose for the creation of the quasi-judicial body, to wit: Executive Order No. 229, which provides for the mechanism for the implementation of the Comprehensive Agrarian Reform Program instituted by Proclamation No. 131, dated July 22, 1987, vests in the Department of Agrarian Reform quasi-judicial powers to determine and adjudicate agrarian reform matters. However, with the enactment of Executive Order No. 229, which took effect on August 29, 1987, fifteen (15) days after its release for publication in the Official Gazette, the regional trial courts were divested of their general jurisdiction to try agrarian reform matters. The said jurisdiction is now vested in the Department of Agrarian Reform. The foregoing holding is further sustained by the passage of Republic Act No. 6657, the Comprehensive Agrarian Reform Law, which took effect on June 15, 1988. The said law contains provisions which evince and support the intention of the legislature to vest in the Department of Agrarian Reform exclusive jurisdiction over all agrarian reform matters. The resolution by the DAR is to the best advantage of the parties since it is in a better position to resolve agrarian disputes, being the administrative agency presumably possessing the necessary expertise on the matter. Further, the proceedings therein are summary in nature and the department is not bound by the technical rules of procedure and evidence, to the end that agrarian reform disputes and other issues will be adjudicated in a just, expeditious and inexpensive proceeding" (at 613, 614, 615).

Powers and Functions of DARAB

DARAB is composed of seven (7) members with the DAR Secretary as its Chairman. The members are: two (2) Undersecretaries designated by the Secretary, the Assistant Secretary for Legal Affairs, and three (3) Assistant Secretaries appointed by the President upon the recommendation of the Secretary. A Secretariat is also constituted to support the Board (Exec. Order No. 129A [1987], sec. 13). Under Sec. 13 of EO 129-A (1987), the Board is empowered to delegate its powers and functions to the regional offices of the Department in accordance with the rules and regulations it has promulgated. With the implementing authority of the Secretary under Sec. 34 of the same EO and Sec. 49 of RA 6657, the Board promulgated the present Rules and Procedures of DARAB whereby adjudicators are specifically designated to adjudicate agrarian reform cases in the regions and provinces. As earlier noted, the DARAB was created under the Office of the Secretary of the Department (Exec. Order No. 129-A [1987], sec. 13). It was established to strengthen the Department (Exec. Order No. 229 [1987]). However, DARAB has no jurisdiction on matters which strictly involve the administrative implementation of RA 6657 and other agrarian laws. Those are within the exclusive jurisdiction of the Secretary of DAR. Under DAR MC 13 (1997), the DAR Secretary has the authority to certify as flashpoint or urgent case, only ALI cases but not cases within the jurisdiction of DARAB. With respect to the regular courts, Supreme Court Administrative Circular No. 3 (1992) provides: The Court reiterates to all court judges the need for a careful consideration of the proper application of the CARL (RA 6657) to avoid conflict of jurisdiction with

the DARAB. The trial court judges are directed to take note of the rulings in Vda. de Tangub vs. CA, 191 SCRA 885 and Quismundo vs. CA, 201 SCRA 609. In Ualat vs. Judge Ramos, 265 SCRA 345 (1996), the respondent judge of MTC was fined P20,000.00 with stern warning from the Supreme Court for gross ignorance of law for taking cognizance of an ejectment case despite allegations of tenancy between the parties.

Ualat vs. Judge Ramos 265 SCRA 345 (1996)

Facts: Complainants filed an administrative case against respondent Judge Ramos for taking cognizance of the illegal detainer case filed by their landowner against them. It was shown that the respondent judge had knowledge of a previously filed DARAB case and the fact that the illegal detainer case falls within the exclusive jurisdiction of the DAR. Despite the separate affidavits of the complainants containing allegation of landlord-tenant relationship, the respondent judge took cognizance of the illegal detainer case. Issue: Was the action of Judge Ramos proper? Held: The Supreme Court in finding the respondent Judge liable for ignorance of the law opined: "As can be readily seen from the answer filed by complainants Sabio and Ualat in the civil case, they alleged the existence of an agrarian tenancy relationship between themselves and the landowner. Additionally, in the

proceedings before respondent Judge, complainants were even represented by a lawyer from the DAR. These matters should have been sufficient to put respondent Judge on notice that complainants were claiming protection under our agrarian laws. At that point, he ought to have realized that there existed a genuine issue involving agricultural tenancy among the parties with respect to the subject property. Knowledge of existing agrarian legislation and prevailing jurisprudence on the subject, together with an ordinary degree of prudence would have prompted respondent Judge to refer the case to the DAR for preliminary determination of the real nature of the parties' relationship, as required by law" (at 357). However, DARAB has no jurisdiction with respect to agrarian matters involving the prosecution of all criminal offenses under RA 6657 and the determination of just compensation for landowners (Rep. Act No. 6657 [1988], sec. 57). Jurisdiction over said matters are lodged with the Special Agrarian Courts (SACs). The Court of Appeals and Supreme Court maintain their appellate jurisdiction over agrarian cases decided by DARAB. In this regard, the Supreme Court in the case of Vda. de Tangub vs. CA, 191 SCRA 885 (1990) held that: The Regional Trial Courts have not, however, been completely divested of jurisdiction over agrarian reform matters. Section 56 of RA 6657, on the other hand, confers "special jurisdiction" on "Special Agrarian Courts", which are Regional Trial Courts designated by the Supreme Court at least one (1) branch within each province to act as such. These Regional Trial Courts quaSpecial Agrarian Courts have, according to Section 57 of the same law, original and exclusive jurisdiction over: 1) "all petitions for the determination of just compensation to land-owners," and 2) "the

prosecution of all criminal offenses under . . . (the) Act" (at 890).

Barangay Agrarian Reform Committee (BARC)

This is originally the Barangay Agrarian Reform Council created under EO 229 (1987). RA 6657 changed the nomenclature of BARC from "council" to "committee" and expanded its scope of functions. It is through the organization of the BARCs that the implementation of CARP is envisioned to be truly community based where the public can participate in decision-making and resolution of agrarian reform disputes. This committee is composed of the following: a) Representative/s beneficiaries; b) Representative/s non-beneficiaries; c) d) e) of of farmer farmer and and farmworker farmworker

Representative/s of agricultural cooperatives; Representative/s of other farmer organizations; Representative/s of the Barangay Council; of non-government

f) Representative/s organizations (NGOs); g) h) i)

Representative/s of Landowners; DA Official assigned to the area; DENR Official assigned to the area;

j) DAR Agrarian Reform Technologist assigned to the area who shall act as the Secretary; and

k) Land Bank of the Philippines representative (Exec. Order No. 229 [1987], sec. 19). Sec. 46 and 47 of RA 6657 defined the BARC functions in addition to those provided under Sec. 19 of EO 229. DAR AO 14 (1990) provides for the guidelines in the formation, organization and strengthening of the BARCs.

Primary and Exclusive Jurisdiction of DARAB

Original

and

Appellate

Sec. 1, Rule II of the DARAB Revised Rules and Procedures provides that the Board has primary and exclusive jurisdiction, both original and appellate, to determine and adjudicate all agrarian cases including but not limited to the following: a) All agrarian disputes involving the implementation of the CARP under RA 6657, EOs 228, 229, and 129-A, RA 3844 as amended by RA 6389, PD 27 and other agrarian laws and their implementing rules and regulations; b) Cases involving rights and obligations of persons, whether natural or juridical, engaged in the management, cultivation and use of all agricultural lands covered by the CARP and other agrarian laws; c) Cases involving the valuation of land, and the preliminary determination and payment of just compensation, fixing and collection of lease rentals, disturbance compensation, amortization payments and similar disputes concerning the functions of the LBP; d) Cases involving the annulment or cancellation of lease contracts or deeds of sale or their amendments involving lands under the administration and disposition of the DAR or LBP;

e) Cases arising from or connected with membership or representation in compact farms, farmers' cooperative and other registered farmers' associations or organizations, related to lands covered by the CARP and other agrarian laws; f) Cases involving the sale, alienation, mortgage, foreclosure, preemption and redemption of agricultural lands under the coverage of the CARP or other agrarian laws; g) Cases involving the issuance, correction and cancellation of Certificates of Landownership Award (CLOAs) and Emancipation Patents (EPs) which are registered with the Land Registration Authority; h) Cases previously falling under the original and exclusive jurisdiction of the defunct Court of Agrarian Relations under Section 12 of PD 946, except subparagraph (Q) thereof and PD 815; i) And such other agrarian cases, disputes, matters or concerns referred to it by the Secretary of the DAR.

DARAB's Jurisdiction over Agrarian Disputes

The Supreme Court, in several cases, had the occasion to explain what is an agrarian dispute case for DARAB to try and adjudicate. In the case of Machete vs. CA, 250 SCRA 176 (1995), the private respondents asked for collection of back rentals and damages before the RTC while the petitioners moved for the dismissal of the case because of lack of jurisdiction. The Court ordered the transmittal of the case to DARAB and ruled that:

Section 3, par. (d), of RA 6657 defines the term "agrarian dispute" as referring to any controversy relating to tenurial arrangements, whether leasehold, tenancy, stewardship or otherwise, over lands devoted to agriculture, including disputes concerning farm workers' associations or representation of persons in negotiating, fixing, maintaining, changing or seeking to arrange terms or conditions of such tenurial arrangements (at 182). the case of Central Mindanao University vs. DARAB, 215 SCRA 86 (1992), on the issue of jurisdiction of the DARAB in ordering the petitioner to segregate its 400 hectares land and including it under the CARP for distribution to qualified beneficiaries, the Court opined: In Under Section 4 and Section 10 of RA 6657, it is crystal clear that the jurisdiction of the DARAB is limited only to matters involving the implementation of CARP. More specifically, it is restricted to agrarian cases and controversies involving lands falling within the coverage of the aforementioned program. It does not include those which are actually, directly and exclusively used and found to be necessary for, among such purposes, school sites and campuses for setting up experimental farm stations, research and pilot production centers, etc. (at 99). Sec. 17 of EO 129-A is merely a repetition of Sec. 50 of RA 6657. There is no doubt that the DARAB has jurisdiction to try and decide any agrarian dispute in the implementation of the CARP. An agrarian dispute is defined by the same law as any controversy relating to tenurial rights whether leasehold, tenancy, stewardship or otherwise over lands devoted to agriculture (at 100). In Isidro vs. CA, 228 SCRA 503, one of the issues raised is the jurisdiction of the MTC in taking cognizance of a case involving an agricultural land. The petitioner refused to vacate the land despite the demand of the private

respondent. The Supreme Court held that there exists no tenurial relations between the parties, to wit: An agrarian dispute refers to any controversy relating to tenurial arrangements, whether leasehold, tenancy, stewardship or otherwise, over lands devoted to agriculture, including disputes concerning farmworkers associations or representation of persons in negotiating, fixing, maintaining, changing or seeking to arrange terms or conditions of such tenurial arrangements. It includes any controversy relating to compensation of lands acquired under RA 6657 and other terms and conditions of transfer of ownership from landowners to farmworkers, tenants and other agrarian reform beneficiaries, whether the disputants stand in the proximate relation of farm operator and beneficiary, landowner and tenant, or lessor and lessee (at 510).

Cases under the Court of Agrarian Relations

DARAB has jurisdiction over cases previously falling under the original and exclusive jurisdiction of the defunct Court of Agrarian Relations under PD 946 (1976), except sub-paragraph (Q) thereof and PD 815 (1975). The subparagraph (Q) exception under this cited provision refers only to cases involving violations of the penal provisions of RA 1199, as amended. Hence, the other provisions of RA 1199, as amended, still fall within the jurisdiction of DARAB. Included in DARAB's jurisdiction is Section 21 ofRA 1199, as amended, which provides that: Section 21. Ejectment; Violation; Jurisdiction. All cases involving the dispossession of a tenant by the landholder or by a third party . . . . The 'third party' mentioned in the said sec. 21 should be construed to mean a person who is neither landholder or tenant, but who acts for, openly, secretly, or factually for the landholder. For instance, a sheriff enforcing an execution

sale against the landholder; or a purchaser or transferee of the land, or a mere dummy of the landowner (De Luna v. CA, 221 SCRA 703 [1993]).

Jurisdiction of the Regional Adjudicator (RARAD) and the Provincial Adjudicator (PARAD)
Sec. 2, Rule II of the DARAB Revised Rules and Procedures provides that the RARAD and the PARAD has concurrent original jurisdiction with the Board to hear, determine and adjudicate all agrarian cases and disputes, and incidents in connection therewith, arising with their assigned territorial jurisdiction. The RARAD is the Executive Adjudicator in his/her region directly responsible to the Board. He/she shall: 1) Direct supervision over the PARADs;

2) Recommend to the Board the territorial assignments and the disciplinary measures appropriate to the PARADs; 3) Adjudicate agrarian disputes and land valuation cases; 4) Hear and handle other cases which cannot be handled by the PARADs: a) by reason of PARADs disqualification or inhibition; b) PARADs cannot handle the case properly;

c) because of the complexity and sensitivity of the case; d) e) delegated just compensation cases; and those assigned by the Board.

The RARAD has concurrent original jurisdiction with the PARAD.

Appellate Jurisdiction of the Board

Under Sec. 5, Rule II of the DARAB Revised Rules and Procedures, the Board has the jurisdiction to review all the decisions of the Adjudicators. However, under DAR MC 7 (1991), reiterating Sec. 1, par. (c) of the Revised DARAB Rules and Procedures, it is emphasized that DARAB has no jurisdiction over cases involving annulment or cancellation of orders and decisions of the Secretary. Not all decisions or orders of the PARAD and RARAD are reviewable by the Board. Under DAR AO 8 (1993), the PARADs, RARADs and DARAB has original and exclusive jurisdiction in the preliminary determination of just compensation cases which are appealable only to the Special Agrarian Courts.

Mediation/Conciliation at Barangay Level

The BARC does not function as an adjudicator at the barangay level. The BARC is mandated to mediate and conciliate agrarian disputes at the barangay level. In a mediation/conciliation, BARC's objective is to persuade the contending parties to settle their dispute amicably. The BARC does not act as an adjudicator. It is the responsibility of the BARC to promote a speedy and cost-free administration of justice, prevent a dispute from going out of the barangay level to DARAB level, and help the landowners and farmer-beneficiaries commit themselves in complying with their agreements. This in turn is envisioned to help in the efficient and successful implementation of the CARP. Where the land in dispute straddles two (2) or more barangays or the parties involved reside in different

barangays, the BARC of the barangay where the biggest portion of the property lies, shall have the authority to conduct the mediation or conciliation proceedings, unless for convenience and accessibility and upon agreement of parties such proceedings should be held in another barangay within the municipality or adjacent municipality where the land in dispute is located (DARAB Revised Rules and Procedures[1994] Rule III, sec. 3) Under the DARAB Revised Rules and Procedures, DARAB can take cognizance of an agrarian dispute even without the BARC Certification if: 1) The dispute does not involve any of the following: a) Valuation lands to compensation for landowners; determine just

b) One of the parties is a public or private corporation, partnership, association or juridical person, or a public officer/employee wherein the dispute relates to the performance of his official functions; c) Issue involved is an administrative implementation of agrarian laws and policies; and d) Cases beyond the compromise. determined by the Secretary ambit mediation/conciliation as or

2) The required certification cannot be complied with for valid reasons like the non-existence or nonorganization of the BARC or the impossibility of convening it. The PARO shall conduct mediation and conciliation proceedings and issue a certification to that effect.

3) It involves resolving and disposing of preliminary incidents related to the case, such as motion for the issuance of status quo orders, temporary restraining orders, preliminary injunctions and such similar motions necessitating immediate action (DARAB Revised Rules and Procedures [1994], Rule III, secs. 1 and 2). The lack of a BARC certification is not a ground for dismissal of an action. A complainant is given every opportunity to secure said certification.

Powers and Duties of DARAB

Under the DARAB Revised Rules and Procedures, the powers and duties of the Adjudicators include but are not limited to the following: a) Personally conduct a hearing, take control of the proceedings, employ reasonable means to ascertain the facts of the case, determine the real parties in interest, define and simplify the issues of the case, and thresh out preliminary matters. b) To subpoena, summon witnesses, examine witnesses, may limit the right of parties/counsels to ask questions to clarify the points of law at issue or of facts involved, may limit the presentation of evidence to matters relevant to the issues, and endeavor to settle the case amicably/approve compromise agreements. c) To hold a party in contempt, to issue writs and interlocutory orders, and may award actual, compensatory, exemplary and moral damages and attorney's fees.

Special Agrarian Courts (SACs)

Special agrarian courts are Regional Trial Courts within each province designated by the Supreme Court to exercise

special jurisdiction in addition to its regular jurisdiction. The Supreme Court may designate more branches to constitute such additional SACs as may be necessary to cope with the number of agrarian cases in each province. (Rep. Act No. 6657 [1988], sec. 56) Sec. 57 of RA 6657 provides that the SACs shall have original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners and the prosecution of all criminal offenses under RA 6657. In Republic vs. Court of Appeals, 758 SCRA 263 (1996), the Supreme Court held that "any effort to transfer the original and exclusive jurisdiction to the DAR adjudicators and to convert the original jurisdiction of the RTCs into appellate jurisdiction would be contrary to Section 57 of RA 6657 and therefore would be void."

Judicial Review Orders or Decisions of DAR Secretary

The decisions of the DAR Secretary in ALI cases may be appealed to the Office of the President or the Court of Appeals, at the option of the appellant. Sec. 54 of RA 6657 states that any decision, order, award or ruling of the DAR on any agrarian dispute or on any matter pertaining to the application, implementation, enforcement, or interpretation of this Act and other pertinent laws on agrarian reform may be brought to the Court of Appeals by certiorari. On the other hand, Sec. 15 and 20, Book VII of EO 292 (1987) or the Administrative Code of 1987, as implemented by DAR MC 3 (1994) provides that an appeal from the decision/order issued by DAR shall be perfected within fifteen (15) days after receipt of a copy of the decision/order complained of by the party adversely affected. Said appeal shall be perfected by filing with the DAR a notice of appeal, serving copies thereof upon the

prevailing party and the Office of the President and paying the required fees. The DAR shall upon perfection of the appeal transmit the records of the case to the Office of the President.

DARAB Decisions
Any decision, order, resolution, award or ruling of DARAB on any agrarian dispute or on any matter pertaining to the application, implementation, enforcement, interpretation of agrarian reform laws or rules and regulations promulgated thereunder, may be brought within fifteen (15) days from receipt of a copy thereof, to the Court of Appeals by certiorari. (Rep. Act No. 6657 [1988], sec. 54; Revised DARAB Rules [1994], Rule XIV, sec. 1) Notwithstanding an appeal to the Court of Appeals, the decision of DAR shall be immediately executory. (Rep. Act No. 6657[1988], sec. 50; Revised DARAB Rules [1994], Rule XIV, sec. 1)

Decisions of Special Agrarian Courts

An appeal may be taken from the decision of the Special Agrarian Courts by filing a petition for review with the Court of Appeals within fifteen (15) days from receipt of notice of the decision. (Rep. Act No. 6657 [1988], sec. 60) Note: 1. The transfer of jurisdiction over applications for CALABARZON areas from the Center for Land Use Policy, Planning and Implementation (CLUPPI) 2 to the Regional Director shall take effect upon implementation of the DAR reorganization, or as directed by the Secretary (DAR Admin. O. No. 6 [2000], sec. 36) CHAPTER 7

Land Use Conversion

Definition
DAR AO 1 (1999), entitled "Revised Rules and Regulations on the Conversion of Agricultural Lands to Non-agricultural Uses," defines "land use conversion" as "the act or process of changing the current use of a piece of agricultural land into some other use as approved by DAR." (Sec. 2(k)). Pursuant to the Memorandum of the President dated 16 April 1999, this administrative order serves as the primary guidelines on the conversion of agricultural lands to non-agricultural uses. RA 8435 (1997), also known as the "Agriculture and Fisheries Modernization Act of 1997," provides for a similar definition: "agricultural land use conversion refers to the process of changing the use of agricultural land to nonagricultural uses." (Sec. 4).

Conversion versus Reclassification

DAR's conversion authority is most often seen as synonymous with the power of local government units (LGUs) to reclassify lands within their territorial jurisdiction. This misconception has resulted in a lot of conflicts and confusion not only between the two agencies but among other concerned sectors. "Reclassification" refers to the "act of specifying how agricultural lands shall be utilized for non-agricultural uses such as residential, industrial, commercial, as embodied in the land use plan, subject to the requirements and procedures for conversion. It also includes the reversion of non-agricultural lands to agricultural use." (Joint HLURB, DAR, DA, DILG Memo. Circular Prescribing the Guidelines to Implement MC 54, [1995], sec. 2[2.3]). On the other hand, conversion is defined by the same Memorandum Circular as the "act of changing the current use of a piece of agricultural land into some other use." [Id., sec. 2[2.2])

Under section 20 of RA 7160 (1991) or the "Local Government Code of 1991," a city or municipality may authorize the reclassification of agricultural lands and provide for the manner of their utilization or disposition under the following circumstances: a) when the land ceases to be economically feasible and sound for agricultural purposes as determined by the DA; or b) where the land shall have substantially greater economic value for residential, commercial, or industrial purposes, as determined by the sanggunian concerned. Said Act mandates that the reclassification should be made after conducting public hearing and that it shall be limited to the following percentage of the total agricultural land area at the time of the passage of the ordinance: (a) for highly urbanized and independent component cities, fifteen percent (15%); (b) for component cities and third class municipalities, ten percent (10%); and (c) for fourth to sixth class municipalities, five percent (5%): Provided, further, that agricultural lands distributed to agrarian reform beneficiaries pursuant to RA 6657 shall not be affected by the said reclassification and the conversion of such lands into other purposes shall be governed by Section 65 of said Act. This percentage ceiling on the land area which the LGUs can reclassify is not absolute. The President may, when public interest so requires and upon recommendation of the National Economic and Development Authority (NEDA), authorize a city or municipality to reclassify lands in excess of the limits cited above (Rep. Act No. 7160 [1991], sec. 20 [b]). Also, LGUs are mandated to exercise such authority in accordance with MC 54 (1993) of the Office of the President entitled "Prescribing the Guidelines Governing Section 20 of RA 7160, otherwise known as the Local Government Code

of 1991, Authorizing Cities and Municipalities to Reclassify Agricultural Lands Into Non-agricultural Uses." Under these Guidelines, the following types of agricultural lands shall not be covered: a) Agricultural lands distributed to agrarian reform beneficiaries subject to Sec. 65 of RA 6657; b) Agricultural lands already issued a notice of coverage or voluntarily offered for coverage under CARP; c) Agricultural lands identified (1992), as non-negotiable for conversion. under AO 20

On the other hand, the power of the DAR to approve or disapprove land use conversion applications is exclusive (Exec. Order No. 129-A [1982], sec. 5[e]; see OP Memorandum Circular No. 54, Sec. 4, [1993] Book IV, Title XI, Chapter 1, sec. 3 [13]; RA 6657[1988[, sec. 65). It is distinct from the power of LGUs to reclassify agricultural land under Section 20 of the Local Government Code. This is evident in Sec. 20 (e) of RA 7160 which provides: "Nothing in this Section shall be construed as repealing, amending or modifying in any manner the provisions of RA 6657." In his commentary, Sen. Aquilino Q. Pimentel, principal author of the Local Government Code of 1991, stated as follows:

Sanggunian Power to Reclassify Not to Convert. This is

one section of the Code which evoked a lot of discussion among the members of the Conference Committee. The proposal to allow local governments to reclassify land and provide for the manner of their utilization or disposition was made by Congressman Pablo Garcia of Cebu, who argued that the central government has no business dictating to the local governments how to classify land within their jurisdiction. Some legislators,

however, felt that to allow local governments to reclassify land may open the door to a nationwide frustration of the goals of the agrarian reform law. Congressman Garcia disputed the argument by pointing out that the power he had sought to invest the local governments with was not to convert land for any purpose contrary to the provisions of the Comprehensive Agrarian Reform Law but merely to "reclassify" land. (A.Q. Pimentel, Jr., The Local Government Code of 1991, The Key to National Development 111). DAR's role in the reclassification process is the issuance of a certification that the lands sought to be reclassified are not distributed or not covered by a notice of coverage or not voluntarily offered for coverage under CARP. This certification must be secured by the sanggunian concerned prior to the enactment of an ordinance reclassifying the agricultural land (OP Memorandum Circular No. 54, [1993], sec. 2 (b) (2)). After the reclassification by the LGU, a DAR conversion clearance shall still be required prior to actual change of use of the land as explicitly provided in OP Memorandum Circular No. 54 (1993), to wit: "actions on applications for land use conversion shall remain as the responsibility of DAR". (Sec. 4; Underscoring supplied.) The case of Fortich, et al. v. Corona, et al., G.R. No. 131457 (19 August 1999) illustrates the confusion between reclassification and conversion. In said case, a statement was made that LGUs have authority to convert or reclassify agricultural lands without DAR approval. The Supreme Court resolved two (2) separate motions for reconsideration filed by respondents and intervenors of the Court's resolution dated 17 November 1998 as well as their motion to refer the case to the Court en banc. The Supreme Court

stated that "(t)he crux of the controversy is the validity of the "Win-Win" Resolution dated 7 November 1997 of the Office of the President which is "void and of no legal effect considering that the March 29, 1996 decision of the Office of the President had already become final and executory even prior to the filing of the motion for reconsideration which became the basis of the said "Win-Win" Resolution." (at 5). The DAR clarified its position on this issue through a Memorandum of the DAR Secretary dated 13 October 1999, to wit: It should be stressed that the motions in Fortich were denied on the ground that the "win-win" resolution is void and has no legal effect because the decision approving the conversion has already become final and executory. This is the ratio decidendi or reason of the decision. The statement that LGUs have authority to convert or reclassify agricultural lands without DAR approval is merely a dictum or expression of the individual views of the ponente or writer of the Resolution of August 19, 1999. It does not embody the Court's determination and is not binding.

Expropriated Lands Not Subject to DAR Conversion Clearance

Agricultural lands expropriated by LGUs pursuant to the power of eminent domain need not be subject of DAR conversion clearance prior to change in use. This was the Court's pronouncement in Province of Camarines Sur vs. CA, 222 SCRA 173 (1993).

Province of Camarines Sur vs. Court of Appeals

222 SCRA 173 (1993)

Facts: The Governor of Camarines Sur filed two (2) separate cases for expropriation against Ernesto and Efren San Joaquin pursuant to Sangguniang Panlalawigan Resolution No. 129 authorizing the Governor to purchase or expropriate properties owned by the San Joaquins for the establishment of a pilot farm for non-food and nontraditional agricultural crops and a housing project for provincial government employees. The San Joaquins moved to dismiss the complaints on the ground of inadequacy of the price offered. The motion was denied and a writ of possession was issued in favor of the province. On appeal with the CA, the San Joaquins asked the appellate court to, among others, nullify the resolution issued by the Sanggunian. The CA asked the Office of the Solicitor General to comment to the petition. The Solicitor General stated that the approval of the Office of the President is not needed but the province must first secure the approval of the DAR of the plan to expropriate the lands of petitioners. The CA set aside the order of the trial court allowing the province to take possession and ordered the suspension of the expropriation proceedings until after the submission of the DAR approval to convert the property. Issue: Is DAR approval still necessary before an LGU can expropriate agricultural lands for conversion to nonagricultural use? Held:

It is true that local government units have no inherent power of eminent domain and can exercise it only when expressly authorized by the legislature (City of Cincinnati v. Vester, 281 US 439, 74 L.ed. 950, 50 S Ct. 360). It is also true that in delegating the power to expropriate, the legislature may retain certain control or impose certain restraints on the exercise thereof by the local governments (Joslin Mfg. Co. v. Providence, 262 US 668 67 L. ed. 1167, 43 S Ct. 684). While such delegated power may be a limited authority, it is complete within its limits. Moreover, the limitations on the exercise of the delegated power must be clearly expressed, either in the law conferring the power or in other legislation. Resolution No. 129 [1988] was promulgated pursuant to Section 9 of B.P. Blg. 337, the Local Government Code, which provides: . . . Section 9 of B.P. Blg. 337 does not intimate in the least that local government units must first secure the approval of the Department of Land Reform for the conversion of lands from agricultural to non-agricultural use, before they can institute the necessary expropriation proceedings. Likewise, there is no provision in the Comprehensive Agrarian Reform Law which expressly subjects the expropriation of agricultural lands by local government units to the control of the Department of Agrarian Reform. The closest provision of law that the Court of Appeal could cite to justify the intervention of the Department of Agrarian Reform in expropriation matters is Section 65 of the Comprehensive Agrarian Reform Law, which reads: . . . The opening, adverbial phrase of the provision sends signals that it applies to lands previously placed under

the agrarian reform program as it speaks of "the lapse of five (5) years from its award." The rules on conversion of agricultural lands found in Section 4 (k) and 5(l) of Executive Order No. 129-A, Series of 1987, cannot be the source of the authority of the Department of Agrarian Reform to determine the suitability of a parcel of agricultural land for the purpose to which it would be devoted by the expropriating authority. While those rules vest on the Department of Agrarian Reform the exclusive authority to approve or disapprove conversions of agricultural lands for residential, commercial or industrial uses, such authority is limited to the applications for reclassifications submitted by the land owners or tenant beneficiaries.. Statutes conferring the power of eminent domain to political subdivisions cannot be broadened or constricted by implication (Schulman v. People, 10 N.Y. 2d. 249, 176 N.E. 2d. 817, 219 NYS 2d. 41). To sustain the Court of Appeals would mean that the local government units can no longer expropriate agricultural lands needed for the construction of roads, bridges, schools, hospitals, etc., without first applying for conversion of the use of the lands with the Department of Agrarian Reform, because all of these projects would naturally involve a change in the land use. In effect, it would then be the Department of Agrarian Reform to scrutinize whether the expropriation is for a public purpose or public use. (at 179181; underscoring supplied).

Authority to Approve/Disapprove Conversion

Under Sec. 4 and 5 of EO 129-A (1987), the DAR is mandated to "approve or disapprove the conversion, restructuring or readjustment of agricultural lands into non-

agricultural uses." It authorizes DAR to "have exclusive authority to approve or disapprove conversion of agricultural land for residential, commercial, industrial, and other land uses as may be provided for by law." Also, Sec. 4 of OP MC 54 (1993), provides that "action on application for land use conversion on individual landholdings shall remain as the responsibility of the DAR, . . . , pursuant to RA No. 6657 and EO 129-A." Moreover, RA 6657 provides: Section 65. Conversion of Lands. After the lapse of five (5) years from its award, when the land ceases to be economically feasible and sound for agricultural purposes, if the locality has become urbanized and the land will have greater economic value for residential, commercial or industrial purposes, the DAR upon application of the beneficiary or the landowner, with due notice to the affected parties, and subject to existing laws, may authorized the reclassification or conversion of the land and its disposition; Provided, That the beneficiary shall have fully paid his obligations. In the case of Roxas v. CA, G.R. No. 127876, 16 December 1999, the authority of the DAR to approve or disapprove conversion was reiterated by the Court: Respondent DAR's failure to observe due process in the acquisition of petitioner's landholdings does not ipso facto give this Court the power to adjudicate over petitioner's application for conversion of its haciendas from agricultural to non-agricultural. The agency charged with the mandate of approving or disapproving applications for conversion is the DAR." (at 4546;underscoring supplied). The Court further stated that, "(t)he DAR's mandate over applications for conversion was first laid down in Section 4 (j) and Section 5 (l) of Executive Order No. 129-A, Series of

1987 and reiterated in the CARL and Memorandum Circular No. 54, Series of 1993 of the Office of the President. (at 46). DAR's authority to allow conversion is not limited only to lands awarded under CARP. As stated in DOJ Opinion No. 44 (1990): Being vested with exclusive original jurisdiction over all matters involving the implementation of agrarian reform, it is believed to be the agrarian reform law's intention that any conversion of a private agricultural land to non-agricultural uses should be cleared before hand by the DAR. True, the DAR's express power over land use conversion is limited to cases in which agricultural lands already awarded have, after five years, ceased to be economically feasible and sound for agricultural purposes, or the locality has become urbanized and the land will have a greater economic value for residential, commercial or industrial purposes. But to suggest that these are the only instances when the DAR can require conversion clearances would open a loophole in R.A. No. 6657, which every landowner may use to evade compliance with the agrarian reform program. Hence, it should logically follow from the said department's express duty and function to execute and enforce the said statute that any commercial or industrial property should first be cleared by the DAR. xxx xxx xxx

Based on the foregoing premises, we reiterate the view that with respect to conversions of agricultural lands covered by RA No. 6657 to non-agricultural uses, the authority of DAR to approve such conversion may be exercised from the date of the law's effectivity on June 15, 1988.This conclusion is based on a liberal

interpretation of R.A. No. 6657 in the light of DAR's mandate and the extensive coverage of the agrarian reform program. (Underscoring supplied.)

DAR Officials Authorized to Issue Conversion Orders

Under Sec. 22 (a) of DAR AO 1 (1999), the following DAR officials shall approve or disapprove applications for land use conversion: a) The Regional Director for areas of not more than five (5) hectares; b) The duly authorized Undersecretary for areas above five (5) hectares but not more than fifty (50) hectares; c) The Secretary for areas of more than fifty (50) hectares, except for those highly restricted from conversion which shall be subject to his approval regardless of the area. For purposes of determining the appropriate approving authority, the total area for conversion shall refer to the aggregate area of all applications regardless of the number of applications and the nature of the proposed project where (a) the properties are owned by the same person or entity or the owners of which are represented by the same person or entity; and (b) the properties are located in the same barangay or adjacent barangays within the same municipality/ies or city/ies. In case the subject land is adjacent to an area previously issued with conversion order, the foregoing test shall be applied to determine the appropriate approving authority (DAR Adm. O. No. 1 [1999], sec. 22 [b] and [c]).

Scope of Land Use Conversion

Under DAR AO 1 (1999), the following agricultural lands are subject to DAR's conversion authority: a) Those to be converted to residential, commercial, industrial, institutional and other non-agricultural purposes; b) Those to be devoted to another type of agricultural activity such as livestock, poultry, and fishpond the effect of which is to exempt the land from CARP coverage; c) Those to be converted to non-agricultural use other than that previously authorized; and d) Those reclassified to residential, commercial, industrial, or other non-agricultural uses on or after the effectivity of RA 6657 on June 15, 1988 pursuant to the Local Government Code. Sec. 3 (b) of DAR AO 1 (1999) states that the change in use of land from one agricultural activity to another use which would exempt the land from CARP coverage under Sec. 10 of RA 6657 and DOJ Opinion No. 44 [1990] requires conversion clearance. Hence, landowners of agricultural lands devoted to coconuts must first secure a conversion clearance from DAR if they want to convert the same to poultry farm or fishpond. Also, DAR AO 1 (1990) requires landowners to secure another conversion clearance if the change that will be undertaken is not what has been authorized in a previous conversion order. In short, if DAR issues a conversion order authorizing the landowner to change the use of the property from agricultural use, e.g. coconut plantation to a memorial park, the owner cannot develop the property into a residential subdivision without getting another conversion clearance specifically allowing the residential use of the land.

Agricultural lands outside DAR's conversion authority

The following lands do not require DAR conversion clearance or are not subject to conversion: a) Agricultural lands reclassified to nonagricultural uses prior to 15 June 1988 (DAR Adm. O. No. 1 [1999], sec. 3 (d) andDOJ Opinion No. 44, [1990]). (These lands are subject to DAR exemption clearance); b) Agricultural lands considered non-negotiable for conversion (DAR Adm. O. No. 1 [1999], sec. 4); c) Lands within the Strategic Agriculture and Fisheries Development Zones (SAFDZs) which are subject to the five (5) year moratorium period beginning 10 February 1998 up to 9 February 2003 (Rep. Act No. 8435 [1997], sec. 9; DA Adm. O. No. 6 [1998], rule 9). (Except as to 5% thereof).

Areas highly restricted from conversion

Under Sec. 2 (b) and 5 of DAR AO 1 (1999), areas highly restricted from conversion refer to the following: a) Irrigable lands not covered projects with firm funding commitment; by irrigation

b) Agro-industrial croplands, or lands presently planted to industrial crops that support the economic viability of existing agricultural infrastructure and agrobased enterprises; c) Highlands or areas located in elevations of 500 meters or above and have the potential for growing semitemperate and usually high-value crops; d) Lands issued with notice of land valuation and acquisition, or subject of a perfected agreement between

the landowner and the beneficiaries under the voluntary land transfer/direct payment scheme; e) Environmentally critical areas as determined by the DENR in accordance with law. The conversion of these areas, if at all, shall undergo a more stringent process and the applicant must clearly show that conversion is far more beneficial to the community and the public at large. Applications involving areas highly restricted from conversion are deliberated upon by the PARC Land Use Technical Committee and subject to the Secretary's approval regardless of the area. The applicant is also required to submit the following additional requirements: (a) a project feasibility study; and (b) environmental compliance certificate, if within environmentally critical area.

Lands non-negotiable for conversion

Under Sec. 4 of DAR AO 1 (1999), areas non-negotiable for conversion are not eligible for conversion. Applications for conversion involving these areas shall not be given due course, regardless of whether all or some portions thereof are within areas highly restricted from conversion or within priority development areas for conversion. These lands include the following: a) Agricultural lands within protected areas designated as such under the National Integrated Protected Areas System including watershed and recharged acquifers, as determined by the DENR; b) All irrigated lands, as delineated by the DA and/or NIA, where water is available to support rice and other crop production; c) All irrigated lands where water is not available for rice and other crop production but are within areas

programmed for irrigation facility rehabilitation by the DA and/or NIA; and d) All agricultural lands with irrigation facilities operated by private organizations.

Conversion moratorium under RA 8435

Under RA 8435, the following lands within the SAFDZs are not eligible for conversion for a period of five (5) years starting on 10 February 1998 until 9 February 2003: a) All irrigated lands;

b) Irrigable lands already covered by irrigation projects with firm funding commitments; and c) Lands with existing or having the potential for growing high-value crops. The 5-year conversion moratorium is not absolute. Five percent (5%) of said lands within SAFDZs may be converted upon compliance with existing laws, rules and regulations. DAR and DA, upon the recommendation of the Regional and National SAFDZ Committees, shall jointly determine the maximum 5% equivalent to the total area of land eligible for conversion. (DAR Adm. O. No. 1 [1999], sec. 7 (b), (c ); DA Adm. O. No. 6, [1998], rule 9.5.2). Upon expiration of the moratorium, conversion may be allowed, if at all, on a case to case basis, subject to existing laws, rules and regulations on land use conversion (DAR Adm. O. No. 1 [1999], sec. 7 [d]).

Lands within SAFDZs

SAFDZs refer to Strategic Agriculture and Fisheries Development Zones. They are areas within the Network of Protected Areas for Agricultural and Agro-industrial

Development (NPAAAD) identified for production, agroprocessing and marketing activities to help develop and modernize, with the support of the government, the agriculture and fisheries sectors in an environmentally and socio-culturally sound manner (Rep. Act No. 8435 [1997], sec. 4). Lands within SAFDZs shall be identified by the DA on the basis of the criteria prescribed in RA 8435.

Priority development areas for conversion

Under Sec. 6 of DAR AO 1 (1999), the following are priority development areas for conversion: a) Specific sites in regional agri-industrial centers/regional industrial centers identified by the Department of Trade and Industry and the DA; b) Tourism development areas identified by the Department of Tourism as indicated in the current Medium Term Philippine Development Plan; c) Sites identified and proposed to be developed by LGUs into socialized housing projects which are presently used for agricultural purposes; d) Sites intended for socialized housing projects under EO 184, series of 1994; e) Agricultural areas intended projects pursuant to RA 7916. for ECOZONE

Conversion of agricultural lands within priority development areas requires DAR clearance. However, the period within which to process and evaluate applications involving lands within these areas is shorter. Processing of applications is conducted within 13 days from submission of complete set of documentary requirements. Also, an environmental compliance certificate is not a pre-condition to the approval of the conversion application; instead, it

forms part of the conditions of the order of conversion where applicable.

SHOPC
Under present guidelines, socialized housing projects are considered priority development areas. (DAR Memo. Circular No. 9 [1999], sec. 1 [1.6].) Under DAR AO 2 (2000), Mass Housing Desks shall be created at the CLUPPI which shall be responsible for the receipt, processing and disposition of all applications for conversion for socialized and low-cost housing projects. Applicants for conversion involving socialized and lowcost housing projects are exempt from the posting of cash bond, submission of Certification of Eligibility for Conversion from DA and Environmental Compliance Certificate from DENR. (DAR Adm. O. No. 2 [2000], sec. 3) Likewise, applications for conversion involving socialized and low-cost housing projects shall be processed for a period of thirteen (13) working days upon receipt of the completed application pursuant to Sec. 1 of EO 258 (2000). (DAR Adm. O. No. 2 [2000], sec. 4)

Criteria for Conversion

Under Sec. 8 of DAR AO 1 (1999), the following criteria shall guide the resolution of applications for conversion: 1) Conversion may be allowed if the land subject of application is not among those considered non-negotiable for conversion; 2) Conversion may be allowed under the following cases, in accordance with Section 65 of RA 6657:

a) when the land has ceased to be economically feasible and sound for agricultural purposes; or b) the locality has become urbanized and the land will have greater economic value for residential, commercial, industrial or other non-agricultural purposes. 3) Conversion of lands within SAFDZs shall take into consideration the following factors: a) The conversion is consistent with the natural expansion of the municipality or locality, as contained in the approved physical framework and land use plan; b) The area to be converted is not the only remaining food production area of the community; c) The conversion shall not hamper availability of irrigation to nearby farmlands; the

d) Areas with low productivity will be accorded priority for conversion; and e) Sufficient disturbance compensation shall be given to the farmers whose livelihoods are negatively affected by the conversion. 4) Conversion may be allowed when the environmental impact assessment or initial environmental examination, as may be appropriate, shall have determined that it shall not adversely affect air and water quality and the ecological stability of the area. Under the previous guidelines, conversion may be allowed if the land has been reclassified by the LGUs to nonagricultural uses, but said criterion has been deleted under the present guidelines. That the land has been reclassified

to non-agricultural use as per zoning certification remains one of the factors to consider in resolving whether to approve or disapprove an application for conversion. It is not an indispensable condition, however, for the approval of the application. Thus, conversion may be allowed even if the property has not yet been reclassified to non-agricultural use if the conditions under RA 6657 or RA 8435 warrant the same. It is evident that the thrust of DAR conversion guidelines is to give the department sole and exclusive prerogative to decide on conversion applications. Certifications issued by other agencies are given persuasive effect but the final determination belongs to the DAR.

Bonds and Disturbance Compensation

Under the present guidelines, applicants are required to post two (2) kinds of bonds: cash bond and performance bond. They are also required to pay disturbance compensation in appropriate cases.

Cash Bond
Cash bond is posted by the applicant upon filing of the application equivalent to two point five percent (2.5%) of the total zonal value of the land. It is refundable upon issuance of the order of conversion or convertible into performance bond at the option of the applicant (DAR Adm. O. No. 1 [1999], sec. 15). The cash bond is forfeited in favor of the government in the event actual conversion activities are undertaken by the applicant prior to approval of the application for conversion (DAR Adm. O. No. 1 [1999], sec. 15).

Performance Bond

Performance bond is posted in favor of DAR to guarantee the payment of the amount of security as penalty in the event it is established that the applicant/developer is in default of their obligations under the order of conversion. It shall be effective for the duration of the project approved under the conversion order. The performance bond shall be in the form of either of the following: a) Cash, manager's check, cashier's check, irrevocable letter of credit, bank draft equivalent to 2.5% of the total zonal value of the land; or b) Bank guarantee equivalent to 5% of the total zonal value of the land; or c) Surety equivalent to 15% of the total zonal value of the land (DAR Adm. O. No. 1 [1999], sec. 15 [c). The performance bond shall be forfeited in favor of the government in case of violation of the conditions of the conversion order such as non-payment of disturbance compensation, failure to develop or complete the project within the period prescribed, etc. (DAR Adm. O. No. 1 [1999], sec. 15, last par.)

Disturbance Compensation
Under RA 3844, disturbance compensation is given only to de jure tenants. However, under the present conversion guidelines, tenants, farmworkers, or bona fide occupants who will be affected by the conversion of the property to nonagricultural uses are all entitled to disturbance compensation (DAR Adm. O. No. 1 [1999], sec. 15 [a]). Disturbance compensation, in cash or in kind or both, shall be paid by the landowner or developer, as may be appropriate, in such amounts or under such terms as may be mutually agreed upon between the affected tenants, farmworkers or occupants and the landowner or developer

but it should not be less than five (5) times the average of the gross harvests on their landholding during the last five (5) preceding calendar years. Any agreement for the payment between them shall be subject to DAR's approval and compliance monitoring (DAR Adm. O. No. 1 [1999], sec. 15 (a)). Payment of disturbance compensation or compliance with the terms and conditions of the approved agreement must be made within sixty (60) days from the date of approval of the application for conversion (DAR Adm. O. No. 1 [1999], sec. 15 [b]). In case of disagreement between the parties, the issue on disturbance compensation may be brought by either of them before the DAR Adjudication Board for resolution (DAR Adm. O. No. 1 [1999], sec. 15 [c]).

Protests and Oppositions

Sec. 21 of DAR AO 1 (1999) states that the DAR admits protest or opposition against any application for conversion which is resolved by the approving authority simultaneously with the application. It may be filed by any person who will be displaced or directly affected by the proposed land use conversion such as occupants, tenants, farmworkers, identified beneficiaries, bona fideresidents of adjoining properties or communities against the application with the DAR Regional Office or Central Office, as appropriate (DAR Adm. O. No. 1 [1999], sec. 18 and 19). The protest must be in writing and filed within fifteen (15) days from the date of posting of the Notice of Application. However, if the oppositor is an identified beneficiary under the agrarian reform program of the land applied for and who failed to file a written protest within the said period due to fraud, accident, mistake or excusable neglect, he shall have the right to intervene at any time during the pendency of the application.

Protests or oppositions may be filed on the following grounds: a) The conversion; area applied for is non-negotiable for

b) The adverse effects or the displacement to be caused by the proposed conversion far outweigh the social and economic benefits to the affected communities; c) facts; d) Misrepresentation or concealment of material Illegal/premature conversion;

e) Existence of proof that conversion was resorted to as a means to evade CARP coverage and to dispossess the tenant farmers of the land tilled by them. (DAR Adm. O. No. 1 [1999], sec. 20)

Effects of Approval of Conversion Application

An order of conversion is generally subject to the following conditions: a) Payment of disturbance compensation within 60 days from issuance of the order; b) Posting of conspicuous place; c) a notice of conversion in a

Development of the land within a specific period;

d) Withdrawal or cancellation of the order for misrepresentation of facts integral to its issuance or for violation of the rules and regulations on land use conversion.

Sec. 23 of DAR AO 1 (1999) also provides for the following effects:

First, the conversion of an agricultural land to nonagricultural uses is limited to the specific use of the land authorized in the order. In case the landowner decides to use the land for purposes other than that authorized, a new application must be filed which must go through the process of conversion again. Otherwise, he may be charged for unauthorized conversion (DAR Adm. O. No. 1 [1999], sec. 40 (d) and 2 [y]).

Second, all conversion orders are subject to the schedule

indicated in the detailed site development plan and work and financial plan submitted by the applicant. The rules, however, require that the period of development should not extend beyond five (5) years from the issuance of the order except as authorized by the Secretary or the approving official on meritorious grounds.

Third, the conditions of the order are binding not only

upon the applicant but also upon successors-in-interest of the property.

Fourth, duly authorized representatives of DAR should

be allowed free and unhampered access to the property subject of the conversion order for compliance monitoring purposes.

Fifth, the use authorized in the order of conversion shall

be annotated on the title of the subject property.

Sixth, the order is without prejudice to ancestral domain

claims of indigenous peoples pursuant to RA 8371.

Effect on tenants, farmworkers or occupants of property

Upon payment of disturbance compensation or compliance with the terms and conditions of the agreement for

disturbance compensation, the tenants, farmworkers or occupants are expected to give up all their rights over the land such as possession, tenancy, etc., in favor of the landowner or developer. In Gonzales v. CA, 174 SCRA 398, it was held that an agricultural leasehold cannot be established on land which has been converted to residential use.

Grounds for Revocation/Withdrawal/Cancellation Conversion Order

of

Under Sec. 35 of DAR AO 1 (1999), a petition for cancellation/revocation/withdrawal of the order of conversion may be filed at the instance of DAR or any aggrieved party on the following grounds: a) Misrepresentation or concealment of facts or circumstances material to the grant of conversion; b) Non-compliance with the conditions of the order of conversion; c) Lack of jurisdiction of the approving authority; the agreement on

d) Non-compliance with disturbance compensation;

e) Conversion to use other than that authorized in the conversion order; and/or f) Any other violation regulations of DAR. of relevant rules and

The period within which to file the petition varies depending on the ground raised by the petitioner: a) The petition must be filed before the approving authority within 90 days from discovery of facts which would warrant such cancellation but not more than one

year from issuance of the order if the basis is misrepresentation or concealment, or non-compliance with the agreement on disturbance compensation; b) The petition must be filed with 90 days from discovery of such facts but not beyond the period for development stipulated in the order if the basis is noncompliance with the conditions of the order, conversion to use other than that authorized, or any other violation of relevant rules and regulations of DAR; c) Where the ground is lack of jurisdiction, the petition shall be filed with the Secretary at any time. In the event the conversion order is cancelled or withdrawn, the land subject thereof shall revert to the status of agricultural lands and shall be subject to CARP coverage as circumstances may warrant. (Sec. 37, AO 1 (1999)). CHAPTER 8

Prohibited Acts and Omissions Preliminary Considerations

RA 6657, RA 8435 and RA 3844 are the primary sources of prohibited acts and omissions under the agrarian reform program which are criminal in nature and punishable with fine and imprisonment, or both. As a rule, the prosecution of these acts does not preclude the DAR from pursuing administrative cases against the offenders for the same acts or on the basis of the same facts. Other acts and omissions in violation of agrarian laws are also administratively sanctioned. As the principal agency tasked with the implementation of CARP, the DAR is vested with the power to establish and promulgate operational policies, rules and regulations for agrarian reform implementation (see Exec. Order No. 129-A (1987), sec. 4 [c]). Moreover, Sec. 50 of RA 6657 vests DAR with

the primary jurisdiction to determine and adjudicate agrarian reform matters and exclusive original jurisdiction over all matters involving the implementation of agrarian reform.

Prohibited Acts and Omissions by Landowners under RA 6657

Sec. 73 of RA 6657 enumerates acts and omissions which are criminally punishable. Other provisions of RA 6657 proscribing certain acts and omissions not included in Sec. 73 are subject to administrative regulation or sanctions.

Ownership and Possession Allowable Limits

1.

of Land

Beyond

Sec. 73 (a) of RA 6657 prohibits "The ownership or possession, for the purpose of circumventing the provisions of this Act, of agricultural lands in excess of the total retention limits or award ceilings by any person, natural or juridical, except those under collective ownership by farmerbeneficiaries."

Elements:
a) Offender is any person, natural or juridical;

b) Person owns or possess agricultural lands in excess of retention limit or award ceilings, except in the case of collective ownership by farmer beneficiaries; and c) The purpose of ownership or possession is to circumvent the provisions of RA 6657;

Prohibited Sale, Transfer, Conveyance or Change in the Nature of the Land

2)

Sec. 73(e) of RA 6657 also prohibits "The sale, transfer, conveyance or change of the nature of lands outside urban centers and city limits either in whole or in part after the effectivity of this Act. The date of the registration of the deed of conveyance in the Register of Deeds with respect to titled lands and the date of the issuance of the tax declaration to the transferee of the property with respect to unregistered lands, as the case may be, shall be conclusive for the purpose of this Act." CIHTac

Elements:
a) b) The offender is any person; The person either effects the i. or ii. sale, transfer or conveyance of the land; change the nature of the land.

c) The land must be outside of urban centers and city limits; d) The transaction or the change of the nature of the land may be of the whole or a portion of the land; and e) The transaction or the change of the nature of the land was effected after 15 June 1988. DAR AO 1 (1989) provides for administrative sanctions for the sale, transfer, conveyance of lands outside urban centers. The elements of the administrative offense is similar to that defined under Sec. 73 (e). Sec. 6 of RA 6657 also provides that the sale, disposition, lease, management contract or transfer of possession of private lands executed by the original owner in violation of RA 6657 shall be null and void. The sale or disposition, however,

is not totally void. Part I (B) of DAR AO (1989) provides that the sale or disposition of agricultural land is valid to the extent that the total landholding of the transferee as a result of the said acquisition does not exceed the landholding ceiling. 3.

Illegal/Premature/Unauthorized Conversions

Illegal Conversion
Sec. 73 (c) of RA 6657 penalizes "The conversion by any landowner of his agricultural land into any nonagricultural use with intent to avoid the application of this Act to his landholdings and to dispossess his tenant farmers of the land tilled by them."

Elements:
a) b) The land is agricultural land; The offender is the landowner;

c) There are acts committed converting the use of the land into non-agricultural use; and d) i. ii. The intent is to: avoid the application of RA 6657; and to dispossess tenant farmers tilling the land.

DAR AO 1 (1999) provides a more expansive definition of illegal conversion. Sec. 2 (g) of DAR AO 1 (1999)defines illegal conversion as "the conversion by any landowner of his agricultural land into any nonagricultural use with intent to avoid the application of RA 6657 to his landholding and to dispossess his tenant farmers of the land tilled by them; or the change of the nature of lands outside urban centers and city limits either in whole or in part after the

effectivity of RA 6657, as provided in Sec. 73 (c) and (e) respectively, of the said Act." Thus, under the administrative rule, there are two (2) ways of committing illegal conversion.

Elements of the First Type:

a) Offender is the land owner;

b) He/she converts his/her agricultural land into any non-agricultural use without authority or DAR clearance; c) i. The intention of the conversion is to avoid the application of RA 6657; and

ii. to dispossess the farmers of the land tilled by them;

Elements of the Second Type:

a) Offender is the landowner or any other person; b) He/she changes the nature agricultural land, in whole or in part; of the

c) Land is located outside urban centers and city limits; and d) Act was committed after 15 June 1988.

Premature Conversion
Sec. 11 of RA 8435 penalizes ". . . the undertaking of any development activity, the results of which modify or alter the physical characteristics of the agricultural lands to render them suitable for non-agricultural purposes without an approved order of conversion from the DAR."

Elements:
a) b) c) land; The land is agricultural land; The offender may be any person; Actual development activity is undertaken on the

d) The development activity modifies or alters the physical characteristics of the land; e) The land development renders the land suitable for non-agricultural purposes; and f) There is no approved order of conversion from the DAR.

Unauthorized conversion
Unlike illegal and premature conversions, unauthorized conversion is not a criminal act but is merely administratively sanctioned. Sec. 2 (w) of DAR AO 1 (1999) defines unauthorized conversion as "the act of changing the current use of the land from agricultural (e.g. riceland) to another agricultural use (e.g. livestock) without an order of conversion from DAR, or changing the use of the land other than that allowed under the order of conversion issued by DAR." There are, thus, two (2) ways to commit unauthorized conversion.

Elements of the First Type:

a) Offender is any person, developer or any other person; i.e., landowner,

b) The person changes the current use of an agricultural land into another agricultural purpose; and c) The change of use was done without an order of conversion from DAR.

Elements of the Second Type:

a) Offender is any person, developer, or any other person; i.e., landowner,

b) The subject land is granted an order of conversion for its commitment to non-agricultural purposes; and c) The person commits the land to a purpose other than that allowed under the order of conversion. In addition to the foregoing, Sec. 35 of DAR AO 1 (1999) also provides for administrative sanctions against certain acts in connection with the grant of conversion application by landowners or their duly authorized representatives. These include the following: a) Misrepresentation or concealment material facts in conversion application; of

b) Non-compliance with the conditions set forth in the conversion order; and c) Non-compliance with disturbance compensation. the agreement on

Prohibited Acts under RA 6657

1.

and

Omissions

by

Beneficiaries

Sale, Transfer, Conveyance of Rights Acquired as a Beneficiary

Sec. 73 (f) of RA 6657 prohibits "The sale, transfer or conveyance by a beneficiary of the right to use or any other usufructuary right over the land he acquired by virtue of being a beneficiary, in order to circumvent the provisions of this Act."

Elements:
a) The beneficiary; offender is an agrarian reform

b) Offender sells, transfers or conveys the right to use or any other usufructuary right over his land; c) The subject land was acquired by him/her by virtue of being a beneficiary; and d) The act is motivated by the circumvent the provisions of R.A. 6657. design to

Relatedly, Part I (4) of DAR MC 19 (1996) provides that the "[s]ale, transfer, lease and other forms of conveyance by beneficiary of the rights to use or any other usufructuary right over the land acquired by virtue of being a beneficiary, in circumvention of the provisions of Sec. 73 of RA 6657, PD 27 and other agrarian law" is a prohibited act. However, if the lands has been acquired underPD 27/EO 228, ownership may be transferred upon full payment of amortization by the beneficiary.

Elements:
a) The beneficiary; offender is an agrarian reform

b) He/she sells, transfers or conveys the right to use or any other usufructuary right over his land without legal basis;

c) The subject land was acquired by him/her by virtue of being a beneficiary under RA 6657 or PD 27/EO 228; Provided that lands acquired under PD 27/EO 228 can be transferred upon full payment of amortizations. In the case of lands awarded under CARP, the land can be transferred ten (10) years after the registration of the CLOA; and d) The act is motivated by the design to circumvent the provisions of RA 6657, PD 27 and other agrarian laws.

Misuse or Diversion of Financial Aid and Support Services

2. Sec. 37 of RA 6657 provides that the "misuse or diversion of the financial and support services provided the beneficiary shall result in sanction against the beneficiary guilty thereof, including the forfeiture of the land transferred to him or lesser sanctions as may be provided by the PARC without prejudice to criminal prosecution." This is reflected in Item A, No. 1 of DAR MC 19 (1996).

Elements:
a) The beneficiary was granted financial aid and other support services; b) The beneficiary either: i. misuses services; or ii. diverts purposes. 3. the such financial aid or aid and support other

services

for

Misuse of the Land

Par. 4, Sec. 22 of RA 6657 provides that any beneficiary guilty of negligence or misuse of the land or any support extended to him shall forfeit his right to continue as such beneficiary. Misuse of the land is administratively sanctioned under DAR MC 19 (1996). Part III, Item (A) of DAR AO 2 (1994) defines misuse of the land as "any act causing substantial and unreasonable damage on the land, and causing the deterioration and depletion of the soil fertility and improvements thereon. It also includes the act of knowingly planting, growing, raising of any plant which is the source of a dangerous drug, as defined under PD 1683 (1980)." Under the definition, there are two ways of committing this offense.

Elements of the First Type:

a) Offender is a grantee of land awarded through CLOA or EP; b) Offender commits acts which cause substantial and unreasonable damage to the land; and c) Such act causes the deterioration and depletion of the soil fertility and improvements thereon.

Elements of the Second Type:

a) Offender is a grantee of land awarded through a CLOA or EP; and b) He knowingly plants, grows or raises any plant which is the source of dangerous drug as defined in PD 1683. 4.

Continuous Neglect or Abandonment of Awarded

Lands

Sec. 22 of RA 6657 provides that any beneficiary who is guilty of negligence of the land extended to him shall forfeit his right to continue as such beneficiary. Part I, A (5) of DAR MC 19 (1996) provides that "continuous neglect or abandonment of the awarded lands over a period of two (2) years as determined by the Secretary or his authorized representative" is subject to administrative sanctions. Part III, Item (B) of DAR AO 2 (1994) defines neglect or abandonment as the "willful failure of the ARB, together with his farm household, to cultivate, till, or develop his land to produce any crop, or to use the land for any specific economic purpose continuously for a period of two calendar years."

Elements:
a) The offender is an agrarian reform beneficiary;

b) The beneficiary willfully fails or refuses to cultivate, till or develop to produce any crop the land awarded him; and c) Such failure or refusal continue for a period of two (2) calendar years. 5.

Material Misrepresentation of Qualifications

The material misrepresentation of qualifications provided under Sec. 22 of RA 6657 and other agrarian reform laws is administratively sanctioned under Item A (3), Part I of DAR MC 19 (1996).

Elements:
a) The offender is a beneficiary;

b) Offender intentionally made false statements respecting a matter of fact in his application for

qualification as an ARB under RA 6657 or any other agrarian laws; and c) The misrepresented fact was material to the determination of his qualification to become a beneficiary.

Default and Failure Amortization to Landowner

6.

in

the

Payment

of

Part I, item A(1) of DAR MC 19 (1996) provides that "default in the obligation of the ARBs to pay the aggregate of three (3) consecutive amortizations to the landowner in the case of awarded lands under voluntary land transfer/direct payment scheme, except in cases of fortuitous events and force majeure" is administratively sanctioned. The administrative rule is based on Sec. 26, RA 6657which states that a beneficiary whose land has been foreclosed shall thereafter be permanently disqualified from becoming a beneficiary.

Elements:
a) Offender is an ARB;

b) The beneficiary acquired the land by virtue of Voluntary Land Transfer or Direct Payment Scheme; c) The beneficiary fails to pay the landowner amortization for three (3) consecutive months; and d) Failure is due to reasons other than force majeure or fortuitous events. 7.

Failure to Pay Amortizations to LBP

Similarly, the failure to pay amortizations to LBP is penalized under DAR MC 19 (1996) which states that "[f]ailure of the ARBs to pay at least three (3) annual

amortizations to the LBP in the case of awarded lands under the Compulsory Acquisition (CA) or Voluntary Offer to Sell (VOS), except in the case of fortuitous events and force majeure."

Elements:
a) The beneficiary is an awardee of a land acquired through the Compulsory Acquisition or Voluntary Offer to Sell; b) The beneficiary fails to pay the LBP at least three (3) annual amortization; and c) Failure is due to reasons other than force majeure or fortuitous events. 8.

Waiver of Rights to Awarded Lands

Part I, item A, no. 9 of MC 19 (1996) treats the waiver of rights to awarded lands by a beneficiary as an administrative offense.

Elements:
a) Offender is a beneficiary; and or impliedly

b) The beneficiary has expressly waived his rights over the land.

FB's Surrender of Landowner or Other Non ARBs.

9.

Awarded

Lands

to

The surrender by a beneficiary of his awarded lands to landowner or other non-ARBs is penalized under part I, item A (10) of MC 19 (1996).

Elements:
a) Offender is a beneficiary;

b) Offender surrenders land awarded him to the landowner or other non-beneficiaries; and c) Such surrender is without legal authority or clearance from DAR.

Prohibited Acts under RA 6657

1.

and

Omissions

by

Other

Persons

Forcible Entry and Unlawful Detainer

Sec. 73 (b) of RA 6657 provides that "The forcible entry or illegal detainer by persons who are not qualified beneficiaries under this Act to avail themselves of the rights and benefits of the Agrarian Reform Program" is a prohibited act that is criminally punishable.

Elements:
a) Offender is any person who is not qualified to become an agrarian reform beneficiaries; b) He/she deprives the owner, or legal representatives or any assigns of the said owner, the right of possession thereof either through the following acts: i. by entering the land of another by force, intimidation, threat, strategy, or stealth; or ii. unlawfully refusing to vacate the land after the right to hold possession thereof has expired; c) The intention of the acts is to avail themselves of the rights and benefits of the Agrarian Reform Program.

Obstruction Implementation
2.

and

Prevention

of

CARP

Sec. 73 (d) of RA 6657 penalized the "[w]illful prevention or obstruction by any association or entity of the implementation of the CARP."

Elements:
a) Offender may be a landowner, beneficiary or any other person, natural or juridical; and b) The person commits acts to prevent or obstructs the implementation of the CARP.

Prohibited Acts by Agricultural Lessees and Lessor under RA 3844

RA 3844 enumerates the criminal acts and omissions by agricultural lessees and lessors.

By Agricultural Lessor Unlawful Recording of Sale in the Registry of Property Subject to Right of Redemption
1. Sec. 13 of RA 3844 states that "[n]o deed of sale of agricultural land under cultivation by an agricultural lessee or lessees shall be recorded in the Registry of Property unless accompanied by an affidavit of the vendor that he has given the written notice required in Section eleven of this Chapter or that the land is not worked by an agricultural lessee." Failure to comply with this provision is criminally punishable under Sec. 167(1) of RA 3844.

Elements:
a) The offender is the landowner or agricultural lessor, or in case of juridical persons, the manager or person who has charge of the management or management of the property or in his default, the person acting in his stead;

b) He effects the recording of the sale of the land subject of an agricultural lease; and c) Such recording was effected without the necessary Affidavit by vendor that he has given prior written notice of the sale to the agricultural lessor as required by Sec. 7 of RA 3844. 2.

Unlawful Disposition of Lessee

Sec. 31(1) of RA 3844 provides that it shall be unlawful for the agricultural lessor to "dispossess the agricultural lessee of his landholding except upon authorization by the Court under Section thirty-six. Should the agricultural lessee be dispossessed of his landholding without authorization from the Court, the agricultural lessor shall be liable for damages suffered by the agricultural lessee in addition to the fine or imprisonment prescribed in this Code for unauthorized dispossession." Sec. 167(1) of RA 3844penalizes the commission by an agricultural lessor of the act defined under Sec. 31 of RA 3844.

Elements:
a) Offender is an agricultural lessor;

b) Offender dispossess the agricultural lessee of his landholding; and c) Court. 3. Dispossession is without authorization from the

Inducement to Execute or Enter into a Share Tenancy Contract

Sec. 167(2) of RA 3844 provides that "Any person, natural or juridical, who induces another, as tenant, to execute or enter into a share tenancy contract with himself or with another in violation of this Code shall be punished by

a fine not exceeding five thousand pesos with subsidiary imprisonment in accordance with the Revised Penal Code: Provided, That the execution of a share tenancy contract shall be considered prima facie evidence of such inducement as to the owner, civil law lessee, usufructuary or legal possessor. In case of juridical persons, the manager or the person who has charge of the management or administration of the property or, in his default, the person acting in his stead, shall be liable under this Section."

Elements:
a) Offender is any person, natural or juridical. In case of juridical persons, the manager or the person who has charge of the management or administration of the property, or in his default, the person acting in his stead shall be liable; and b) Offender induces another person, as tenant, to execute or enter into a share tenancy contract with himself or another in violation of RA 3844.

Making Untruthful Statements in Affidavit Required under Sec. 13, RA 3844

4. Sec. 167(2) of RA 3844 provides "Any person who executes an affidavit as required by Section thirteen of Chapter I, knowing the contents thereof to be false, shall be punished by a fine not exceeding one thousand pesos or imprisonment of not more than one year, or both, in the discretion of the court." Sec. 13 of RA 3844 requires that prior to the registration of the sale or transfer of land in the Registry of Property, the landowner must execute an affidavit that written notice of the sale or transfer was made to the agricultural lessor as required under Sec. 7 of RA 3844.

Elements:

a) Offender is the landowner, agricultural lessor or any person; and b) He/she knowingly makes untruthful statements on a material matter in an affidavit required for the registration of a sale of land subject to right of preemption as required under Sec. 13 of RA 3844.

Acts Violating Farmworker's Rights to SelfOrganization and to Engage in Other Concerted Activities
5. Sec. 167 (4) of RA 3844 penalizes "Any person who willfully violates the provisions of Sections forty and fortyone of this Code shall be punished by a fine of not less than one hundred pesos nor more than one thousand pesos or by imprisonment of not less than one month nor more than one year, or both such fine and imprisonment, in the discretion of the court. If any violation of Sections forty and forty-one of this Code is committed by a corporation, partnership or association, the manager or, in his default, the person acting as such when the violation took place shall be criminally responsible." Sec. 40 of RA 3844 recognizes the farmworkers' right to self-organization, and provides that "the farm workers shall have the right to self-organization and to form, join or assist farm workers' organizations of their own choosing for the purpose of collective bargaining through representatives of their own choosing: Provided, That this right shall be exercised in a manner as will not unduly interfere with the normal farm operations. Individuals employed as supervisors shall not be eligible for membership in farm workers' organizations under their supervision but may form separate organizations of their own." Sec. 41 of RA 3844 likewise recognizes the right of farmworkers to engage in concerted activities, to wit: "The farm workers shall also have the right to engage in concerted activities for the purpose of collective bargaining

and other mutual aid or protection. For the purpose of this and the preceding Section, it shall be the duty of the farm employer or manager to allow the farm workers, labor leaders, organizers, advisers and helpers complete freedom to enter and leave the farm, plantation or compound at the portion of same where said farm workers live or stay permanently or temporarily."

Elements:
a) Offender is the landowner, agricultural lessor or any person; b) Offender commits acts which impair or prevent the exercise of i. the right of farmworkers to organization under Sec. 40 of RA 3844; or self-

ii. the right to engage in concerted activities as defined under Sec. 41 of RA 3844.

Acts Violative of the Right of Farmworkers to a Minimum Wage

6. Sec. 167 (5) of RA 3844 provides "Any person who willfully violates the provisions of Section forty-two of this Code shall, upon conviction thereof, be subject to a fine of not more than two thousand pesos, or upon second conviction, to imprisonment of not more than one year or both such fine and imprisonment, in the discretion of the court. If any violation of the provisions of Section forty-two of this Code is committed by a corporation, partnership or association, the manager or, in his default, the person acting as such when the violation took place shall be criminally responsible." Sec. 42 of RA 3844 protects the farmworkers right to a minimum wage and provides that "[n]otwithstanding any

provision of law or contract to the contrary, farm workers in farm enterprises shall be entitled to at least P3.50 a day for eight hours' work: Provided, That this wage may, however, be increased by the Minimum Wage Board as provided for in Republic Act Numbered Six hundred and two."

Elements:
a) and Offender is a landowner or any other person;

b) Offender fails or refuses to pay the farmworker the minimum daily wage as set in Sec. 43, RA 3844 or determined by the Minimum Wage Board.

By Agricultural Lessees
1.

Cultivation of Another Farmland without Consent

of Lessor
Sec. 167 (1) of RA 3844 penalizes the commission by agricultural lessees of the prohibited acts under Sec. 27 of RA 3844. Sec. 27 (1) of RA 3844 provides that it shall be unlawful for an agricultural lessee "[t]o contract to work additional landholdings belonging to a different agricultural lessor or to acquire and personally cultivate an economic family-size farm, without the knowledge and consent of the agricultural lessor with whom he had first entered into household, if the first landholding is of sufficient size to make him and the members of his immediate farm household fully occupied in its cultivation."

Elements:
a) Offender is an agricultural lessee;

b) The land leased by him is of sufficient size to make him and the members of his immediate farm household fully occupied in its production; c) He contracts to work another landholdings belonging to a different agricultural lessor or acquires and personally cultivate an economic family-size farm; and d) The cultivation of the other without the consent of his first lessor. 2. landholding is

Unlawful Sublease of Leased Land by Lessor

Sec. 27 (b) of RA 3844 declares that it shall be unlawful for an agricultural lessee "[t]o employ a sub-lessee on his landholding: Provided, however, That in the case of illness or temporary incapacity, he may employ laborers whose services on his landholdings shall be on his account." This prohibition is reiterated in Item B(1), part VI of DAR AO 5 (1997).

Elements:
a) Offender is an agricultural lessee; employs as sublessee on his

b) That he landholdings; and

c) The reason for the sub-contracting is other than illness or temporary incapacity.

Penalties for Violation

The penalties for the prohibited acts and omissions which are criminal in nature are as follows:

Act

or

Omission Penalty

Prohibited Acts or Omissions not less than one (1) month to not under RA 6657 years or a fine of not less than one (1,000.00) and not more than fifteen

Imprisonment of more than three (3) thousand pesos

thousand pesos (P15,000.00), or both, at the discretion of the court. (Sec. 74, RA 6657) Premature Conversion two (2) to six (6) years, or a fine under RA 8435 hundred percent (100%) of the investment cost, or both, at the discretion court, and an accessory penalty of forfeiture land and any improvement thereof. (Sec. 11, RA 8435) Violation of Sec. 13, Sec. 27, one thousand pesos or and 31 (1) of RA 3844 exceeding one year or both in the court (RA 3844, Sec. 167 (1).) Inducement to Execute Fine not exceeding five thousand pesos with or Enter into a Share subsidiary imprisonment in accordance with the Tenancy Contract Revised Penal Code (Sec. 167 [2], RA 3844) (Sec. 167 [2], RA 3844) Fine not exceeding imprisonment not discretion of the of the of the Imprisonment of

equivalent to one government's

Making untruthful statements one thousand pesos or in affidavit required under not more than one year, or both, in Sec. 13, RA 3844 the Court (Sec. 167 (3), RA 3844) (Sec. 167 (3), RA 3844)

Fine not exceeding imprisonment of the discretion of

Acts Violating Farmworker's Fine of not less than one hundred pesos nor more than Rights to Self-organization one thousand pesos or by imprisonment of not less and to Engage in Other than one month nor more than one year, or both such Concerted Activities fine and imprisonment, in the discretion of the court (Sec. 167[4], RA 6657) (Sec. 167 [4], RA 6657). Acts Violative of the Right than two thousand pesos, or upon of Farmworkers to a to imprisonment of not more than Minimum Wage (Sec. such fine and imprisonment, in the 167[5], RA 3844) court (Sec. 167 [5], RA 3844). Fine of not more second conviction, one year or both discretion of the

Upon the other hand, the penalties for prohibited acts and omissions which are administrative in nature are as follows:

Acts or Omissions Administrative Sanction

Under MC 19 (1996) Cancellation of EPs/CLOAs and perpetual disqualification of Agrarian Reform Beneficiaries (see MC 19 s. 1996, Part I).

Under AO 1 (1999) withdrawal of the conversion; of the or representative;

1. Cancellation or authorization for the land use 2. applicant, Blacklisting developer,

3. Automatic disapproval of pending subsequent conversion applications that the offender may file with the DAR; 4. Issuance of cease and desist order (CDO); and/or 5. Forfeiture of cash bond in accordance with Sec. 16 hereof. (A.O. 1 s. 1999, Sec. 49)

Jurisdiction Over Violation of Agrarian Laws

The power and duty to hear and try cases involving the criminal acts enumerated under RA 6657, RA 8435 and RA 3844 and other relevant agrarian laws belongs to the Special Agrarian Courts. HcaATE With respect to administrative offenses, the DAR shall have jurisdiction over the same by virtue of its express primary jurisdiction to determine and adjudicate agrarian reform matters and exclusive original jurisdiction over all matters involving the implementation of agrarian reform.

ACKNOWLEDGMENT BARIE would like to thank the following offices for their valuable inputs: Legal Affairs Office, Bureau of Land Acquisition and Distribution, Special Concerns Office, Policy and Strategic Research Service, and the Land Use Conversion Committee. Likewise, BARIE would like to thank Mr. Gil R. Tuparan for writing portions of the initial draft.

FOREWORD The Department of Agrarian Reform is cognizant of the role that various DAR Frontliners, like the MAROs and ARPTs play in the implementation of the Comprehensive Agrarian Reform Program at the grassroots level. As frontliners, they are the first contact of the program's various clientele. It is from them that the agrarian reform beneficiaries, the landowners, and the general public get their first impressions of DAR as a social development agency. In the course of implementing the program, these field implementors are often faced with issues and problems due to varied understanding and interpretation of the CARP law and its implementing guidelines and issuances. To address this, BARIE, in coordination with other DAR units, produced in 1993 the first edition of the Handbook for CARP Implementors. This resource material which was distributed to all MAROs and other field personnel was developed to enhance the knowledge, attitude and commitment of DAR frontliners in implementing the program. Since last year, however, new implementing guidelines as well as amendments to the existing Administrative Orders were issued. This prompted BARIE to produce the Second Edition of the Handbook for DAR Frontliners to ensure that the resource material is well updated and responsive to the needs of the field implementors. The Handbook which is also presented in a question-and-answer format, contains an updated discussion of the various provisions of the program and its implementing mechanisms, procedures and guidelines. It is hoped that this Handbook will be a valuable reference tool in transforming our field personnel into

successful and multi-faceted implementors of the agrarian reform program. (SGD.) ERNESTO D. GARILAO

Secretary
HANDBOOK FOR CARP IMPLEMENTORS TABLE OF CONTENTS Chapter 1 : AGRARIAN REFORM CONCEPTS AND PRINCIPLES 1.1 1.2 Services 1.3 1.4 1.5 Tool? Chapter 2 : COMPREHENSIVE REFORM PROGRAM Chapter 3 3.1 3.2 Chapter 4 4.1 : CARP COVERAGE AGRARIAN Big Farms vs. Small Farms Public vs. Private Lands Agrarian Reform: Counter-Insurgency Meaning of Agrarian Reform Agrarian Reform Issues: Land Tenure Improvements vs. Support

CARP Scope Implementation Schedule : EXEMPTIONS AND EXCLUSIONS

Exclusions

4.1.1. Raising 4.2 4.3 4.4 Clearance Chapter 5 5.1 5.2

Poultry,

Livestock

and

Swine

Exemptions Procedures Governing Exemption of Lands Under Sec. 10, RA 6657 Procedures for Issuance of Exemption

Based on DOJ Opinion No. 44 : LAND ACQUISITION

Requisities in Land Acquisition Modes of Acquisition 5.2.1 5.2.2 Compulsory Acquisition Voluntary Offer to Sell Voluntary Land Transfer/Direct

5.2.3 Payment Scheme 5.3 5.4 5.5 5.6 5.7 5.8

Executive Order No. 407 As Amended Procedures in Land Acquisition Prioritization of Lands for Coverage Reconstitution of Title Untitled Private Properties Field Investigation : AGRARIAN REFORM

Chapter 6 BENEFICIARIES 6.1

Qualification of Beneficiaries

6.2 6.3 6.4

Order of Priority Farmworker Beneficiaries Screening of Beneficiaries

Chapter 7 : LANDOWNER'S RETENTION AND AWARD TO CHILDREN 7.1 7.2 7.3 of Retention 7.4 7.5 Retention Limit Land Ownership Ceiling Qualifications for the Exercise of the Right Award to Landowner's Children Selection of Retained Area

7.6 Procedures for the Exercise of the Right of Retention and Award to Qualified Children 7.7 When to Exercise the Right of Retention

7.8 Obligations of Landowners and Limits to the Disposition of the Retained Areas 7.9 7.10 7.11 Chapter 8 Tenants in Retained Areas Retention Under PD 27 Homestead Lands : LAND SURVEY AND

Chapter 9 : LAND VALUATION LANDOWNER'S COMPENSATION 9.1 Just Compensation

9.2 9.3 9.4

Land Valuation Factors New Land Valuation Formula Summary Administrative Proceedings

9.5 Concerned Parties' Involvement in the Land Valuation Process 9.6 9.7 9.8 9.9 9.10 Chapter 10 10.1 10.2 10.3 10.4 10.5 Chapter 11 11.1 11.2 11.3 11.4 : Modes of Compensation Land Bank Bonds PD 27 Lands EO 407 Lands Mt. Pinatubo-Affected Areas : LAND DISTRIBUTION

Basic Principles in Land Distribution Award Ceiling Land Distribution Process Individual vs. Collective Distribution Rights and Obligations of Beneficiaries PAYMENT BY BENEFICIARIES

Payment Under RA 6657 Payment in OLT Lands Payment Under VLT/DPS Payment in Lahar-Affected Areas

Chapter 12 12.1 12.2 Beneficiaries Chapter 13 13.1 13.2 13.3 13.4 13.5 13.6 13.7 Chapter 14 SHARING 14.1 14.2 14.3 14.4 Chapter 15

SUPPORT SERVICES

Support Services to Landowners Support : Services to Agrarian Reform

AGRICULTURAL LEASEHOLD

Laws and Issuances on Leasehold Tenancy Relationship Rights and Responsibilities of Lessee Rights and Responsibilities of Lessor Lease Rental Fixing the Lease Rental Other Related Laws and Issuances : PRODUCTION AND PROFIT

Coverage DAR's Authority Main Features Role of the MARO : COMMERCIAL FARM DEFERMENT Commercial Farms and

15.1 Meaning of Commercial Farm Deferment 15.2

Rationale for Deferment

15.3 15.4 15.5 Chapter 16 16.1 16.2 16.3 16.4

Requirements Deferment Period DAR's Role During Deferment Period : LAND USE CONVERSION

Definition DAR's Stand on Conversion DAR's Legal Mandate DAR's Role in Conversion Use Conversion

16.5 Mechanics of Land Application, Approval and Monitoring 16.6 Chapter 17

LGU's Authority to Reclassify : LAND TRANSACTION

17.1 Laws and Issuances Governing Agricultural Land Transaction 17.2 Development 17.3 17.4 17.5 17.6 17.7 Chapter 18 Land Transactions Involving Ago-Tourism Land Transactions After 15 June 1988 Right of Pre-emption Right of Redemption Valid Transactions Invalid Transactions : PUBLIC LANDS

18.1 18.2 18.3

Public Alienable and Disposable Lands Integrated Social Forestry Program Settlement Areas

18.4 Public Agricultural Lands Turned Over by the National Livelihood Support Fund 18.5 Lands of the Public Domain Covered by Cancelled or Expired Pasture Lease Agreements and Timber License Agreements Per EO 407 18.6 Lands of the Public Domain Covered by Cancelled or Expired Fishpond Lease Agreements Chapter 19 : LANDED ESTATES

Chapter 20 : BARANGAY AGRARIAN REFORM COMMITTEE (BARC) 20.1 20.2 20.3 20.4 20.5 20.6 Chapter 21 (DARAB) 21.1 Laws and Issuances on BARC Functions of the BARC BARC Composition BARC Officers Formation of BARC Mediation and Conciliation : DAR ADJUDICATION BOARD

DARAB Jurisdiction

HANDBOOK FOR CARP IMPLEMENTORS

CHAPTER 1 AGRARIAN PRINCIPLES 1.1 REFORM CONCEPTS AND

MEANING OF AGRARIAN REFORM

What is Agrarian Reform?

Section 3 of RA 6657 has defined agrarian reform as: "the redistribution of lands, regardless of crops or fruits produced, to farmers and regular farmworkers who are landless, irrespective of tenurial arrangement, to include the totality of factors and support services designed to lift the economic status of the beneficiaries, and all other arrangements alternative to the physical redistribution of lands, such as production or profit-sharing, labor administration and the distribution of shares of stock, which will allow beneficiaries to receive a just share of the fruits of the land they work." (Section 3, RA 6657) Basically, agrarian reform is land reform the transfer of control and ownership of agricultural land to the actual tillers plus a package of support services: economic and physical infrastructure support services (ECOPISS), (e.g., credit, extension, irrigation, roads and bridges, marketing facilities), and human resource and institutional development or social infrastructure building and strengthening (SIBS).

What is being "Reformed" in Agrarian Reform?

Agrarian reform seeks to correct numerous defects in the country's agrarian structure. Foremost among these is

the concentration of land ownership in only a few people, such that the huge majority of the population does not have access to land. According to the 1980 Census of Agriculture, farms less than three hectares in size predominate in the Philippines, representing nearly 70% of the 3.4 million total number of farms. However, they cover only 30% of the country's 9.7 million hectares total farm area. In contrast, farms with areas of more than 10 hectares are very few, constituting only 3.5% of the number of farms. Yet they cover 26% of the farm area.

So what's wrong with that?

The concentration of the ownership of lands in the hands of a very few means that the majority is deprived of the opportunity to use land as a basic production resource. The failure to access land results in unemployment, low incomes, low productivity, poor purchasing power, and sluggish rural economies.

A more equitable distribution of land ownership, on the other hand, promotes a more equitable distribution of income

which, in turn, promotes greater economic activity. More producers and income earners, require more services and goods which other sectors of the economy produce. The increase in domestic demand and production results in broadbased, sustainable economic growth. And that's only the economic side of it. With improved standards of living, greater people participation in the community's affairs is expected. This will lead to a more dynamic and genuine democracy.

AGRARIAN REFORM TENURE IMPROVEMENT SERVICES DELIVERY

1.2

ISSUES: LAND vs. SUPPORT

Land redistribution is so costly, why don't we just use the money for credit, extension, infrastructure, post harvest facilities, etc., for greater productivity?
Such a strategy would benefit those who own or control the land. It is not surprising, therefore, that more often than not, it is a strategy propounded by those who already own land. For the benefits of agricultural investments to seep down and reach the lower economic strata, inequitable land ownership structure will have to be dismantled first. Broadening the land ownership base makes agricultural development more quickly and easily felt by the majority.

AGRARIAN REFORM FARMS vs. SMALL FARMS

1.3

ISSUES: BIG

Aren't small farms less efficient and less productive? Instead of breaking up the lands, shouldn't we consolidate them into plantations to achieve economies of scale?
The argument that large farms are more efficient than small farms is usually invoked by those who own export and

cash crop plantations as an excuse to exclude their landholdings from agrarian reform. The issue can be answered by examining whether economies of scale do exist. A study made on coconut and other tree crops did not show any increasing yield per hectare as farm size increases. In the case of sugar, another study has shown that average production cost per hectare, in fact, tends to be higher for larger farms. (Adriano, Quisumbing, and Hayami, Toward an Alternative Land Reform Paradigm, 1990).

Furthermore, if breaking up the lands would not be economically viable, then this need not be done. Agrarian reform can be undertaken by breaking up the land ownership pattern but farming can be done collectively. 1.4 AGRARIAN REFORM ISSUES: PUBLIC vs. PRIVATE LANDS

Why don't we just distribute public and governmentowned lands? Why are we covering the private farms which are productive?

Productive private lands are covered under agrarian reform for various reasons. These include: a. Public and government-owned lands already have occupants and claimants. The sheer extent of landlessness makes coverage of private lands inevitable; b. One of the pillars of agrarian reform is the principle that the tiller of the land has the primacy of the right to own it; c. It is in productive private lands, particularly where the necessary investments have been made, where the beneficiary has greatest chances of success.

AGRARIAN INSURGENCY TOOL?

1.5

REFORM: COUNTER-

Will agrarian reform cure all of the country's ills?

No, although it is a step in the right direction. The country has too many problems. But attempts to solve them will not yield sustainable results unless the root cause is

addressed inequitable distribution of resources. Since the Philippines is basically an agricultural country, land is the most important resource. By addressing the problem of inequitable distribution of the land, agrarian reform is a major step towards resolving the country's problems.

Is agrarian reform an anti-insurgency tool?

No, agrarian reform is not being carried out to solve the insurgency problem. However, agrarian reform answers the clamor for social justice and the upliftment of the socioeconomic status of the landless. It provides a peaceful means for radical social change and liberation from poverty. CHAPTER 2 COMPREHENSIVE AGRARIAN REFORM PROGRAM

What is the constitutional mandate for agrarian reform?

Agrarian reform derives its mandate from basic principles enshrined in the Constitution. The Philippine Constitutions of 1935, 1973 and 1987 all attest to this. The 1935 Constitution mandated a policy of social justice to insure the well-being and economic security of the people. The 1973 Constitution provided that "The State shall

formulate and implement an agrarian reform program aimed at emancipating the tenant from the bondage of the soil."
The 1987 Constitution contains more specific provisions on agrarian reform. Article II, Declaration of Principles and State Policies, Section 21 "The State shall promote comprehensive rural development and agrarian reform." Article XII, National Economy and Patrimony, Section 21 "The State shall promote industrialization and full

employment based on sound agricultural development and agrarian reform, . . ."

Article XIII, Social Justice and Human Rights, Section 4 "The State shall, by law, undertake an agrarian

reform program founded on the right of farmers and regular farmworkers, who are landless, to own directly or collectively the lands they till or in the case of other farmworkers, to receive a just share of the fruits thereof ."
"The State shall encourage and undertake the just

distribution of all agricultural lands, subject to such priorities and reasonable retention limits as the Congress may prescribe, taking into account ecological, development or equity considerations, and subject to the payment of just compensation.
"In determining the retention limits, the State shall respect the right of small landowners. The State shall further provide incentives for voluntary landsharing."

Article XIII, Section 6 "The State shall apply the

principles of agrarian accordance with law."

reform,

whenever

applicable

in

What presidential issuances and legislations provide the legal mandate for the Comprehensive Agrarian Reform Program?
Various administrations, from the Commonwealth to the Philippine Republic have issued decrees and passed legislations on agrarian reform. Under the previous administration, Proclamation 131 and Executive Order No. 229, both dated 22 July were issued when then President Corazon C. Aquino exercised legislative powers. These instituted Comprehensive Agrarian Reform Program (CARP) provided the mechanism for its implementation. No. 1987 still the and

Republic Act No. 6657: An Act Instituting a Comprehensive Agrarian Reform Program to Promote Social Justice and Industrialization, Providing the Mechanisms for its Implementation and/or other Purposes,
was subsequently passed by Congress, signed into law on 10 June 1988 and became effective on 15 June 1988. This is now known as the Comprehensive Agrarian Reform Law (CARL) of 1988. (By tradition, the anniversary of CARP is commemorated on this date). CHAPTER 3 CARP COVERAGE 3.1

CARP SCOPE

What is the scope of CARP?

The ownership or control of about 10.3 million hectares 1 of agricultural land, representing about one-third of the total land area of the Philippines shall be transferred

over a ten-year beneficiaries.

period

to

an

estimated

3.9

million

What lands are covered by CARP?

The CARP covers, regardless of tenurial arrangement and commodity produced, all public and private lands devoted to or suitable for agriculture and not classified as mineral, forest, residential, commercial or industrial' land. The two criteria for coverage, therefore, suitability of the land for agriculture; and classification. are (1) (2) its

Specifically, the following lands are covered by CARP: a. all alienable and disposable lands of the public domain devoted to or suitable to agriculture; b. all lands of the public domain in excess of the specific limits as determined by Congress; c. all other lands owned by the government devoted to or suitable to agriculture; and

d. all private lands devoted to or suitable to agriculture regardless of the agricultural products raised or that can be raised therein. (Section 4 RA 6657) Other major issuances on CARP are:

Executive Order No. 228 dated 17 July 1987 declared full

land ownership to qualified farmer-beneficiaries covered byPresidential Decree No. 27 determined the value of remaining unvalued rice and corn lands subject to PD 27, and provided for the manner of payment by the farmerbeneficiaries and the mode of compensation to the landowners.

Executive Order No. 129-A dated 26 July 1987 provided

for the strengthening of the Department of Agrarian Reform as the lead agency responsible for the implementation of CARP. 3.2

IMPLEMENTATION SCHEDULE

When are these lands covered?

All lands within the scope of CARP have been covered by the program beginning 15 June 1988, the date of CARP's effectivity. However, in consideration of the capacity of the Government to implement the program, the acquisition and distribution of agricultural lands covered by the program have been prioritized as follows:

Phase I This started immediately upon effectivity of

the law and is programmed to be completed within four years (1988-1992) * * * rice and corn lands which are covered by PD 27; idle or abandoned; voluntarily offered; by government financial institutions

* foreclosed (GFIs);

* acquired by the Presidential Commission on Good Government (PCGG); and * owned by the Government

Phase II This also started in 1988 and is programmed

to be completed in four years (1988-1992). * all public agricultural lands which are to be opened for new development and resettlement; and

* private agricultural lands with areas above 50 hectares in so far as the excess over 50 hectares is concerned

Phase III-A This started on the fourth year and is

programmed completed within three years (1992-1995) * private agricultural lands with areas from 24 to 50 hectares, in so far as the excess over the retention limit.

Phase III-B This is programmed to start on the sixth

year and to be completed within four years (1994-1998) * private agricultural lands with areas above the retention limit up to 24 hectares Public lands and other lands owned by the government and government-owned or controlled corporations which are leased and operated by multinational corporations or associations were programmed for immediate acquisition and distribution right after the effectivity of the law for completion within three years (1988-1991). (Sections 6 and 8, RA 6657)

Does the order of priority mean that all areas under Phase II must first be acquired and distributed before those in Phase III can be covered?
Strictly speaking, no. Starting 15 June 1994, Phase IIIB lands can already be acquired and distributed even if not all Phase II lands have been covered. However, given DAR's backlog in covering even those private agricultural lands 50 hectares and above, and the backlog in voluntary offer to sell, for practical purposes, priority should be given to the completion of backlog in the earlier phases.

Given such phasing, how many hectares can now (1994) be acquired if a landowner's property has an area of?

a. has. b. has. c. has. *

40 has > 40 less 5 70 has > 70 less 5 20 has > 20 less 5

35 65 15

* if there is a backlog, unless voluntarily offered, it is advised that this land not be covered yet. Instead, give priority to the completion of the backlog. This example considers only the landowner's retention right but does not take into account the award to qualified children. The opinion of some that in the case of (a) in the example, only 16 hectares can be compulsorily acquired (40 less 24 has.) has been taken by DAR to have no legal basis. This has been clarified under Memorandum Circular No. 4, Series of 1993. CHAPTER 4 EXEMPTIONS AND EXCLUSIONS 4.1.

EXCLUSIONS What lands are not covered by CARP?

The following lands are not covered by CARP: a. those which are not suitable for agriculture, and those which are classified as mineral, forest, residential, commercial or industrial land; b. those which have been classified and approved as non-agricultural prior to 15 June 1988 as ruled underDepartment of Justice Opinion No. 44, Series of 1990;

c. those which are exempt pursuant to Sec. 10, RA 6657; d. those which are devoted to poultry, swine, or livestock raising as of June 15, 1988 pursuant to the Supreme Court ruling on Luz Farms vs. The Honorable Secretary of Agrarian Reform (G.R. No. 86889, 4 December 1990); and e. those which are retained by the landowner (not covered insofar as land acquisition and distribution but covered with respect to other provisions, particularly leasehold).

POULTRY, RAISING
4.1.1

LIVESTOCK

AND

SWINE

What was the basis of the Supreme Court in ruling that poultry, swine and livestock farms are not covered by CARP?
The Supreme Court checked the intent of the framers of the Constitution and determined that poultry, swine, and livestock farms are not included in the scope of the agrarian reform program constitutionally mandated to be implemented.

Are all agricultural lands devoted to livestock, poultry and swine raising now automatically excluded from CARP coverage?

No. To qualify for requirements must be met:

exclusion,

the

following

1. The land or portions thereof must have been exclusively, directly and actually used for livestock, poultry and swine raising as of 15 June 1988. 2. The farm devoted to the above purposes must satisfy the animal/land ratio, as well as animal/infrastructure ratio as provided for in Section III-B of Administrative Order No. 09, Series of 1993 entitled "Rules and Regulations Governing the Exclusion of Agricultural Lands Used for Livestock, Poultry and Swine Raising from the Coverage of CARP".

Can a landowner now convert his crop land to a poultry farm and then apply for exclusion from CARP?
No, as stated in AO 03-93, the land must already be devoted to livestock, poultry and swine raising as of 15 June 1988. Nevertheless, the landowner who wishes to convert his crop land for this purpose must apply for conversion, the processing of which shall be governed by AO Nos. 1 and 2, Series of 1990. Among other requirements, there should be: 1. the consent of agrarian reform beneficiaries and/or their waiver of rights; and, 2. certification from the Regional Director of the Department of Agriculture that the poultry, livestock or swine project is of greater economic value than the present agricultural use. Conversion of the crop land without the benefit of conversion approval will be construed as an intent to avoid application of RA 6657 and shall be considered as invalid and illegal. The land will be covered under CARP without prejudice to the filing of charges against the landowner.

Suppose a landowner has been granted exclusion from CARP for his landholding devoted to livestock raising but subsequently, he/she stopped its operations and went into crop production, can the land still be subject to CARP?
Yes, the area or portion no longer used for livestock raising purpose shall automatically revert to the category of agricultural land and shall be covered by CARP.

What are the procedures in applying for exclusion of a landholding devoted to livestock, poultry and swine raising?
1. Landowner files the application for exclusion with the DAR Provincial Agrarian Reform Office, together with the documentary requirements; 2. The PARO, with the assistance of the BARC, the MARO, the Municipal Livestock Inspector, and a livestock/poultry and swine specialist of the DA shall conduct a field investigation, and prepare report of findings and recommendations for submission to the Regional Director. 3. Regional Director undertakes final review and evaluation of the application and issues the Order of Exclusion or Denial. 4.2

EXEMPTIONS What lands are exempted from CARP coverage?

The following are exempted from the coverage of CARP: a. Lands actually, directly, and exclusively used and found to be necessary for parks, wildlife, forest reserves, reforestation, fish sanctuaries and breeding grounds, watersheds and mangroves, national defense, school sites and campuses including experimental farm

stations operated by public or private schools for educational purposes, seeds and seedlings research and pilot production centers, church sites and convents appurtenant thereto, mosque sites and Islamic centers appurtenant thereto, communal burial grounds and cemeteries, penal colonies and penal farms actually worked by the inmates, and government and private research and quarantine centers; and b. Lands with eighteen percent (18%) slope and over, except those already developed as of 15 June 1988. (Sec. 10, RA 6657)

What is the scope of the exemption that may be granted?

The exemption means that the subject parcel of land will not be acquired and distributed under the CARP for as long as the reasons for the exemption continue to exist. However, the other components of the program, e.g., leasehold and the Integrated Social Forestry Program may be implemented where applicable.

A state college claims that although part of its property is cultivated by farmers, that area cannot be covered under CARP because it is reserved for the future expansion of the campus. Is that parcel exempted?
The area reserved for future expansion appears not to be actually and directly used for a campus. Unfortunately, in the case of the Central Mindanao University vs. DARAB (CA-G.R. No. 19174 dated 23 August 1990), the Supreme Court ruled that the University has the prerogative to determine whether a particular part of the school property is necessary for educational purposes. Therefore, in this case, that parcel is exempted.

A landowner claims that his agricultural land is exempted because he has recently developed it into a pilot

production center for hybrid seeds. Is the landholding exempted?

No. The four conditions must have been all present as of 15 June 1988.

A landowner was granted exemption because his agricultural land was found to be a qualified private research center for corn breeding. Subsequently, he gave up his breeding operations and went into commercial production of feed grains. May the landholding be covered?
Yes. For the exemption to continue, the reason for which the exemption was granted must continue to exist.

A parcel of land cultivated by farmers is found to be within a forest reserve. May it be immediately covered by DAR under CARP?
No. Coverage while possible, will have to wait until Congress, taking into account ecological, developmental and equity considerations, shall have determined by law the specific limits of the public domain. Thereafter, a reclassification of the said areas as alienable and disposable land will also have to be done. (Sec. 4, RA 6657)

Why are lands with 18% slope and undeveloped exempt from CARP coverage?
The exemption is specifically mentioned in Section 10, RA 6657 and is based on the Forestry Code which

provides that such lands should not be disposed of and developed for agriculture because this type of land is highly susceptible to soil erosion. The principle is debated in the light of cultural practices which could make the preservation of the ecological balance in such areas feasible. However, until and unless the laws are changed, such lands are not covered by CARP.

Since lands 18% slope or over if developed are not exempt from CARP, can DAR subject these lands to acquisition and distribution?
Such lands can be allocated to qualified occupants but the manner of acquisition and distribution depends on the following: 1. If classified as forest land, they shall be allocated by the DENR under the Integrated Social Forestry Program; 2. If classified as alienable and disposable, they shall be allocated by DENR and DAR pursuant to the provisions of the Public Land Act and the Joint DAR-DENR AO No. 2, Series of 1988; and 3. If private agricultural land, then, they shall be acquired in accordance with the provisions of RA 6657.

What Administrative Orders govern the exemption of lands from CARP?

1. DAR Administrative Order No. 10, Series of 1994, "Amending AO No. 13, Series of 1990 entitled Rules and Procedures Governing Exemption of Lands from CARP Coverage under Section 10 of RA No. 6657, to Authorize all Regional Directors to Hear and Decide Applications for Exemption for All Land Sizes" 2. DAR Administrative Order No. 06, Series of 1994, "Guidelines for the Issuance of Exemption Clearances based on Sec. 3 (c) RA 6657 and the department of Justice (DOJ) Opinion No. 44 Series of 1990"

PROCEDURES GOVERNING EXEMPTION OF LANDS UNDER SEC. 10, RA 6657

4.3

What are the procedures followed in securing exemption of lands under Sec. 10 of RA 6657 from CARP coverage?
The person/s or representative/s owning, administering or managing the landholdings may file for exemption of the lands from CARP coverage at the Municipal Agrarian Reform Office.

1. The MARO shall prepare an Application for Land Exemption Folder (ALEF) which contains the following documents:

written application documents and other

* ownership muniments of title *

evidence to support application

* copy of proclamation, topographic map, sketch map, area development plan, affidavit, certification from government agency, etc. 2. MARO conducts investigation of the land with the assistance of the BARC and prepares report of findings and recommendations and forwards them together with the ALEF to the Provincial Agrarian Reform Officer. 3. The PARO reviews and evaluates the ALEF and prepares comments, findings and recommendations. If all documents are in order, forwards them to the Regional Director. 4. The RD reviews and evaluates the ALEF and the findings and recommendations of the PARO and the MARO. If documents are in order, issues an Order of Approval or Order of Denial. This applies to applications for exemption for all land sizes. 5. The RD forwards the Order to the PARO for distribution to the contending parties and counsel, if any, copy furnished the Office of the Secretary, Undersecretary for Field Operations, Legal Affairs Office and the Management Information Service within 15 days from the release of the Order. The Order becomes final 15 days from receipt of the same, unless an appeal is made to the DAR Secretary.

6. In case of denial of the application, DAR shall cause the acquisition and distribution of the property.

What is the recourse of a party who disagrees with the decision of the Regional Director?
Any party who disagrees with the RD's decision may file a written motion for reconsideration within 15 days from receipt of the Order. The RD shall then rule on the motion for reconsideration. Should the motion for reconsideration be deemed, the aggrieved party could appeal to the DAR Secretary within the balance of the 15 day period. The Secretary shall render a decision within 30 days after receipt of the appeal.

PROCEDURES FOR EXEMPTION CLEARANCE OPINION NO. 44

4.4

ISSUANCE OF BASED ON DOJ of

What are the procedures for the issuance exemption clearances based on DOJ Opinion No. 44?

1. The landowner or his duly authorized representative files the application for exemption with the Regional Office of the DAR where the land is located. The application should be accompanied by the following documents: a. duly notarized Special Power of Attorney, if the applicant is not the landowner himself; b. certified true copies of the list of the land which is the subject of the application; c. current tax declaration covering the property; d. location or vicinity map; e. certification from the Deputized Zoning Administration that the land has

been reclassified to residential, industrial or commercial use prior to 15 June 1988; f. certification from the HLRB that the pertinent zoning ordinance has been approved by the Board prior to 15 June 1988; g. certification from the National Irrigation Administration that the land is not covered by AO No. 20, Series of 1992, i.e., that the area is not irrigated, nor scheduled for irrigation rehabilitation nor irrigable with firm funding commitment, and h. proof of payment of disturbance compensation, if the area is presently being occupied by farmers, or waiver/undertaking by the occupants that they will vacate the area whenever required. 2. The Regional Office conducts joint investigation with the duly authorized representatives of the DAR provincial and municipal offices that have jurisdiction over the property, and a report prepared within thirty (30) days from the filing of completed application. The joint investigation report shall contain information on: a. presence of potential beneficiaries; of disturbance b. payment compensation; c.

initial activities related to coverage;

d. certification from the MARO on whether or not the land has been placed under PD 27 or whether a CLOA or EP has been issued over said property.

3. The investigation report is submitted to the Regional Director who prepared the Order for Denial or Grant of the Exemption Clearance not later than fifteen (15) days from the receipt of the report. IaEScC 4. The exemption folder, together with the draft order is forwarded to the Legal Affairs Office of the DAR Central Office which shall review the same and upon proper review forwards the folder to the Office of the Secretary not later than fifteen (15) days from receipt of the folder. 5. The Secretary signs the Order for Denial or Grant and a copy of the order is furnished to the Land Use Conversion Committee for purposes of monitoring and statistical information. CHAPTER 5 LAND ACQUISITION 5.1

REQUISITES IN LAND ACQUISITION What lands are acquired under CARP?

Only the private lands devoted to or suitable for agriculture, regardless of the agricultural products raised or can be raised therein, are subject of land acquisition. The lands of the public domain suitable for agriculture already belong to the State and are just distributed through either Free Patents for Alienable and Disposable (A&D) lands or Certificates of Land Ownership Awards (CLOAs) for resettlement sites. In addition, stewardship contracts are awarded for public lands covered by the Integrated Social Forestry Program (ISFP). It must be noted that the private agricultural lands include those owned by private entities and those owned or held by government agencies, corporations, and instrumentalities.

Specifically, the following lands may be acquired under CARP: a. b. rice and corn lands under PD 27/EO 228; idle or abandoned lands;

c. lands foreclosed by private and government financial institutions; d. e. f. g. private agricultural lands public lands suitable for agriculture; lands acquired by PCGG; lands used by multinational corporations

What are the requisites in land acquisition?

The following requirements must be met for land acquisition to be completed: a. That the land is privately owned and found suitable for agriculture; b. That there are beneficiaries willing to take over the ownership of the land and make it productive; c. That the landowner is paid just compensation; or a trust deposit is made in his/her name if the value is contested; and

d. That title to the land is transferred in the name of the Republic of the Philippines. However, full payment of just compensation and transfer of title to the Republic of the Philippines are not requisites in VLT/DPS. Moreover, under EO 407, the payment of just compensation to the government instrumentality as landowner may come even after land distribution. 5.2

MODES OF ACQUISITION of acquiring lands for

What are the modes distribution under CARP?

Private agricultural lands covered by CARP are acquired through any of the following modes: a. b. Compulsory Acquisition (CA); Voluntary Offer to Sell (VOS); Transfer/Direct (OLT)

c. Voluntary Land Payment Scheme (VLT/DPS);

d. Operation Land Transfer under PD 27 and EO 228; and

e. Executive Order No. 407, as amended by EO 448 and EO 506

What are the basic differences among these modes?

a. OLT is governed by PD 27 and EO 228 and has been in operation since 1972. It follows a different set of procedures, particularly in land valuation. b. Land acquisition under OLT and CA is done through the mandate of the law whether or not the landowner disagrees to part with his property. c. CA follows the schedule of CARP implementation based on the area of the landowner's landholdings. In contrast VOS may

be done even for lands not yet scheduled by law to be acquired. d. EO 407 as amended pertains only to government agencies as landowners in a propriety capacity, or to public A & D lands under their administration by virtue of presidential proclamation. e. VLT/DPS, on the other hand, is a voluntary arrangement entered into by a landowner and a qualified farmer-beneficiary to directly transfer the land to the beneficiary under terms and conditions mutually agreed by them but with payment terms not less favorable to the farmer than if it were the government purchasing the land and transferring it to the beneficiary. 5.2.1

COMPULSORY ACQUISITION orders on

What are the existing administrative compulsory acquisition of lands?

These Administrative Orders are: a. Administrative Order No. 11, Series of 1994 Revising the Rules and Regulations

Covering the Valuation of Lands Voluntarily Offered or Compulsorily Acquired as Embodied in Administrative Order No. 06, Series of 1992; b. Administrative Order No. 01, Series of 1993 An Order Amending Certain Provisions of Administrative Order No. 09, Series of 1990, entitled "Revised Rules Governing the Acquisition of Agricultural Lands subject to Voluntary Offer to Sell and Compulsory Acquisition Pursuant to RA 6657"

[This AO supersedes AO No. 12, Series of 1989, AO No. 09, Series of 1990, and AO No. 10, Series of 1991]
c. Administrative Order No. 12, Series of 1990 Policy Guidelines and Operating Procedures in the Identification and Acquisition of Idle and Abandoned Lands.

What lands are covered by compulsory acquisition?

Except in the case of tenanted rice and corn lands under PD 27, which are acquired following a different set of rules, compulsory acquisition (CA) is done for all private agricultural lands which become due for coverage following the phasing of implementation earlier discussed. However, CA is suspended in those cases where the landowners opt for other modes of compliance, e.g., voluntary land transfer or stock distribution option. CA is resumed once the negotiations in these other modes fail. Compulsory acquisition is also done in idle and abandoned lands regardless of their size and phasing, and in lands whose commercial farm deferment is revoked.

What are idle or abandoned lands?

Idle or abandoned lands refer to agricultural lands not cultivated, tilled or developed to produce any crop nor devoted to any specific economic purpose continuously for a period of three (3) years immediately prior to the

receipt of notice of acquisition by government as provided under RA 6657. They do not, however, include the following: a. those that have become permanently or regularly devoted to non-agricultural purposes; b. those that have become unproductive by reason of force majeure or any other fortuitous event, provided that prior to such event, such land was previously used for agricultural or other economic purpose. (Section 3,RA 6657)

Can the DAR compulsorily acquire a landholding whose ownership is under litigation or judicial proceedings?
Yes, if it is clear that no matter what the outcome of the litigation may be, the land is still covered under CARP. In such case, the DAR shall select the retained area and the compensation for the land shall be held in trust pending the resolution of the disputes. However, if one or both of the parties to the case are groups of individuals, the hectarage involved in the possible exercise of the right of retention should be considered in the acquisition of the land. However, in the case of PCGG/APT acquired assets whose ownership is contested in court, the DAR and the PCGG have an understanding that a proper motion will be filed in court to allow DAR to acquire such property, even pending litigation.

What if the person who is declared by the court as the lawful owner subsequently disagrees with the area chosen by DAR for retention? What if he has exercised retention in another property?
The CLOA could be amended by the DAR or the landowner filing a petition with the DARAB. However, if the landowner is no longer entitled to retention, then the

area previously set aside for retention may also be covered.

A couple owning only 30 hectares died in January 1988 leaving as heirs six children with ages ranging 2540. No partition of the property has been done and the children do not own other agricultural lands. How many hectares may be compulsorily acquired?
None. Even if the title is still in the name of couple, ownership automatically transferred to children upon their parent's death. The six children already the owners. Thus, at five hectare retention landowner, the entire 30 hectares may be retained. the the are per

AO-01, Series of 1989 allows the registration of a deed of extra-judicial partition of the property of a deceased who died prior to 15 June 1988. Note, however, that if the parents died after 15 June

1988, the land may be entirely acquired and distributed if the children are neither actual tillers or direct farm managers. If they are, they will each be entitled to an
award of three (3) hectares. Otherwise, they will only be entitled to the compensation for the land. But the land will be acquired and distributed under CARP. Moreover, the DAR and the ROD will no longer allow the partition of the property except in favor of the qualified farmerbeneficiaries. This is in line with the fact that as of 15

June 1988, by operation of the law, all lands in excess of the retention limit are already covered by CARP. If in the course of CARP coverage, the owner alleges that the land is exempted under Sec. 10, RA 6657, what should you do?
Exception under Section 10 of RA 6657 is not automatic. Under AO-13, Series of 1990, persons or representatives of persons owning, administering or managing lands believed to be actually, directly and exclusively used and are necessary for any of the purposes under Section 10 should file a written

application with DAR. This application should be approved by the Regional Director. The MARO should, therefore, check if an application has been filed and if the application has been duly approved. Otherwise, the MARO should treat the matter as a CARP protest and let the Regional Director rule on the matter. (AO-09, series of 1994).

If in the course of coverage, the owner alleges that the property is already reclassified as residential since 1986, what should you do?
The MARO should determine if the property is covered by DOJ Opinion No. 44 and whether an application for exemption has been filed by the landowner. He should also investigate the actual land use and whether the land is irrigated, irrigable or is programmed for irrigation. He should also check the zoning plan or municipal/city ordinance approved by the HLURB. Only if it is clear that the said landholding does not fall within any of the above, should the MARO proceed with the acquisition of the property.

If in the course of coverage, the owner alleges that about one year before the notice of acquisition, he has filed an application for conversion, what should you do?
The MARO should check the allegation, i.e., whether there really was an application for conversion filed a year ago. If there is none, conversion is not possible because the notice of acquisition has already been issued. If there is, the issue of conversion should first be resolved. 5.2.2

VOLUNTARY OFFER TO SELL (VOS)

What is the VOS scheme?

VOS is a scheme wherein landowners come forward and voluntarily offer their agricultural lands for coverage regardless of the phasing. The DAR encourages this mode because VOS generally ensures the cooperation of the landowners.

What are the existing policy guidelines governing VOS?

The implementing policy guidelines on VOS are: a. Administrative Order No. 11, Series of 1994 Revising the Rules and Regulations Covering the Valuation of Lands Voluntarily Offered or Compulsorily Acquired as Embodied in Administrative Order No. 06 Series of 1992; b. Administrative Order No. 01, Series of 1993 An Order Amending Certain Provisions of Administrative Order No. 09, Series of 1990 Entitled "Revised Rules Governing the Acquisition of Agricultural Lands Subject to Voluntary Offer to Sell and Compulsory Acquisition Pursuant to RA 6657";

[This AO supersedes AO No. 03, Series of 1989, AO No. 14-A and AO No. 19, Series of 1989, AO No. 09, Series of 1990, and AO No. 10, Series of 1991]

c. Administrative Order No. 05, Series of 1992 Clarificatory Guidelines and Amendments to AO No. 09, Series of 1990.

Where should the landowner file the application for VOS?

Application for VOS can be filed either at the Central Office, or at any field office of DAR. However, the receiving office should forward the application to the MARO of the municipality where the land is located.

What incentives are given to landowners who offer their lands under VOS?
The cash portion of the compensation to the landowner is increased by five percent (5%), while the LBP bond portion is correspondingly decreased by five percent. However, this incentive is not available to banks and other financial institutions. It should be noted that the total compensation is not increased, only the proportion of the cash component.

May an agricultural land which has been mortgaged also be voluntarily offered under CARP?
Yes. In this case, the MARO should secure a statement of account from the creditor and recommend the settlement of the obligation through payment in LBP bonds.

Can government financial institutions voluntarily offer foreclosed but redeemable properties which are not yet transferred to them?
No. The GFIs have to wait for the expiration of the redemption period.

Are landowners allowed to withdraw lands offered under the VOS scheme?
No. The exceptions are the instances provided in Administrative Order No. 05, Series of 1992, namely:

a. If the subject landholding is part of the landowner's retained area, provided the landowner has not yet received any payment; b. If the landowner wants to shift the mode of acquisition from VOS to VLT/DPS; c. If the offered land is to be covered in 1994 and the landowner wants to wait for the compulsory coverage under Phase III-B. If the Notice of Valuation has been served, however, the withdrawal may no longer be allowed. d. If the DAR determines the landholding to be more suitable for a town site, resettlement or institutional siteto address a calamity situation. It should be noted that this case is limited to calamity situations. Further, the approval of the withdrawal of the VOS does not automatically authorize the land use conversion of the land. The owner must still apply for conversion.

What are the instances in which the DAR may reject a VOS application?
The DAR may reject a voluntary offer to sell in the following instances: a. If the land is not suitable for agriculture, or has more than 18% slope and is underdeveloped; b. If there are no takers or beneficiaries of the land for valid reasons (e.g., peace and order situation) without prejudice to future coverage of the area under CARP; and c. If the only identified agrarian reform beneficiaries (ARBs) are the qualified children of the landowner.

VOLUNTARY LAND TRANSFER/DIRECT PAYMENT SCHEME (VLT/DPS)

5.2.3

What is the VLT/DPS mode?

VLT/DPS is a scheme wherein a landowner of an agricultural land covered by CARP and the qualified beneficiaries of such land agree to the direct transfer of the ownership of the land, as provided for under Sections 20 and 21 of RA 6657. The area to be transferred should not, however, be less than the area which the government through compulsory acquisition would otherwise acquire. Administrative Order No. 13, Series of 1991, embodies the rules and procedures governing VLT/DPS.

May a landowner unilaterally decide to distribute his land through the VLT/DPS scheme?
No. An agreement between the landowner and the qualified ARBs as approved by the DAR is necessary.

What is the basic requirement in VLT/DPS?

It is imperative that the ARBs give their informed consent to the landowner's VLT/DPS proposal. Specifically, this means that the ARBs should be made aware of their rights and options under the law, particularly, the terms and conditions of land transfer under the "regular" compulsory acquisition mode. Among others, the field implementor (Municipal Agrarian Reform Officer or Agrarian Reform Program Technologist MARO or SARPT/ARPT) must explain to the ARBs: (1) that the land will sooner or later be acquired under CA subject to the phasing; and (2) about how much they will have to pay under the CA mode. VLT/DPS is a scheme favorable to the Government for two reasons. First, Government does not have to pay for the land. Second, the agreement between the two parties facilitates land acquisition and distribution. The DAR, however, ought to ensure that the beneficiaries know what they are entering into and that terms and

conditions of the VLT/DPS are not disadvantageous to the ARBs.

Who are the qualified beneficiaries under VLT/DPS?

The qualified beneficiaries are the same as those who would be beneficiaries if the land were to be covered under compulsory acquisition or voluntary offer to sell. (See Sec. 22, RA 6657).

What is the prescribed period for the completion of VLT/DPS negotiations?

Negotiations for VLT/DPS between the landowner and the beneficiaries must be completed and the agreement arrived at must be submitted within one (1) year from the time the DAR receives the notice of application for VLT/DPS.

What if negotiations for VLT/DPS are not resolved after one year?
If VLT/DPS negotiations remain unresolved after one year, the land shall be covered under compulsory acquisition.

When should the transfer of possession and land ownership of the land be done?
The transfer of possession and ownership should be done immediately after the submitted VLT/DPS agreement is approved by the DAR. Certificates of Land Ownership Award (CLOA) with the proper annotations to protect the landowner shall be issued to the beneficiaries.

May an agricultural land mortgaged to a bank be the subject of a VLT/DPS?

No. Land titles with existing liens and encumbrances shall not be covered under the VLT/DPS scheme. This is a ruling made by DAR to simplify VLT/DPS transactions, particularly to facilitate the immediate transfer of title to the ARBs. 5.3

EXECUTIVE ORDER NO. 407 AS AMENDED

What is the significance of EO 407?

Executive Order No. 407 dated 14 June 1990, entitled "Accelerating

the Acquisition and Distribution of Agricultural Lands, Pasture Lands, Fishponds, AgroForestry Lands and Other Lands of the Public Domain Suitable for Agriculture" directs all government
instrumentalities, including government financial institutions (GFIs) and government-owned or controlled corporations (GOCCs) to immediately transfer to DAR all

their landholdings suitable for agriculture for immediate distribution to qualified beneficiaries under CARP.
EO 407 is a concrete act of the Government to divest itself of its agricultural landholdings as an example for private landowners to follow. Moreover, inasmuch as the landowners involved are also Government agencies, EO 407 has facilitated the acquisition by the DAR of thousands of hectares of agricultural lands for distribution under CARP.

What lands may be acquired for distribution pursuant to EO 407 as amended by EO 448 Series of 1991 and EO 506 Series of 1992?
EO 407 covers the following: * all agricultural lands owned or controlled by government departments, agencies or instrumentalities, including lands foreclosed by government financing institutions; * lands covered by cancelled or expired Timber License Agreements (TLAs) and Pasture Lease Agreements (PLAs) for redistribution by the DENR, in coordination with the DAR, to qualified ARBs identified by the DAR; and * lands covered by cancelled or expired Fishpond Lease Agreements (FLAs) for redistribution by the Department of Agriculture

(DA), in coordination with the DAR to qualified ARBs identified by the DAR. EO 448 included within the coverage of EO 407 all reservations or portions thereof, which are suitable for agriculture and are no longer needed for the purpose for which they were established. EO exclude: 506, * however, further amended EO 407 to

all existing and proposed national parks, game refuge, bird sanctuaries wildlife reserves, wilderness areas and other protected areas, including old growth or virgin forests and all forests above 1,000 meters elevation or above 50 percent slope until such time that they are segregated for agricultural purposes or retained under the National Integrated Protected Areas System (NIPAS) of DENR.
5.4

PROCEDURES IN LAND ACQUISITION What are the basic steps in land acquisition?

a. Identification and documentation of the landholdings, landowners and beneficiaries; b. Land survey; and completion of c. Review data/documents;

d.

Land valuation and compensation; and

e. Transfer of title from the landowner to the Republic of the Philippines.

What are the changes in procedures for acquisition contained in AO-01, Series of 1993?

land

a. The number of steps has been reduced by transferring from the DAR Regional Office to the Provincial Office the review and completion of documents before submission of the claim folder to the Land Bank of the Philippines. b. The conduct of the field investigation can proceed even if the LBP representative is unavailable. This was made possible by dividing the Field Investigation Report into two parts. Part I contains data on the landholding and its suitability to agriculture. Part II, on the other hand, provides data inputs for the determination of the land valuation. Part I can be accomplished even without the presence of the LBP representative although the data are subject to review by LBP. c. The conduct of public hearing was deleted. In lieu thereof, the Notice of Coverage, Field Investigation Report and the Notice of Land Acquisition and Valuation shall be posted for a period of one week on the bulletin boards of the barangay/municipal/provincial halls where the property is located. d. CARP forms reduced in number. were simplified and

e. The acquisition process has been facilitated by requiring the LBP to immediately open a trust account in the name of the landowner, whether the landowner accepts or

rejects the land valuation. Actual release, however, shall be effected only after the landowner's compliance of all the requirements.

What is the first step in land acquisition?

Land acquisition, regardless of the mode, begins with the identification of landowners, landholdings and beneficiaries covered by CARP. Under the Land Acquisition and Distribution Tracking System (LADTRACKS) and the CARP Scope Validation project, field offices have been tasked to prepare a master list or inventory of landholdings in their area of coverage. This inventory is derived from the LISTASAKA statements, as verified or complemented by the records of the Register of Deeds and Assessor's Offices, review of the municipal town plan and zoning ordinances, field surveys, interview and community consultations, and general knowledge of the land ownership pattern in the barangays or municipalities. With these basic tools, the landowners who own agricultural lands in excess of the retention limit may be easily determined and their lands classified according to the implementation phase or order of priority of CARP. 5.5

PRIORITIZATION OF LANDS FOR COVERAGE

What are the criteria for prioritizing the coverage of landholdings in the master list?
Quality land distribution cannot be overemphasized. More than just meeting the targets, land distribution should be done with the end in mind of uplifting the farmer beneficiaries' living condition. Priority should, therefore, be given to areas where success of beneficiaries development is paramount. The following should be the basic considerations in the prioritization of covered areas: a. Barangays covered by identified ARCs;

b. Level of organization of the farmers Consistent with the people-centered development thrust of the DAR, the higher the level of organization of farmers, the greater should be the priority. This will not only facilitate the land acquisition and distribution process but also hasten the development of viable agrarian reform communities in the area; c. Incidence of agrarian unrest The greater the incidence of unrest, the higher should be the priority to promote the resolution of the agrarian disputes. Utmost care should however, be made to ensure that the landholding is indeed covered by CARP; d. Number of farmers to be benefitted The higher the number, the greater should be the priority, again in line with people-centered development; e. Size of the landholding Inasmuch as nearly the same efforts will have to be expended for either big or small landholdings, it makes sense to put higher priority on the larger landholding; f. Presence of support factors Areas with cooperative landowners, supportive community leaders and local government executives, active BARCs and POs/NGOs, etc. should receive higher priority because it is in these areas where agrarian reform implementation will have greater chances of success; g. Presence of a title over the property Titled properties are easier to acquire because, as it is the norm under our Torren's Title System, the title is the strongest proof of the land ownership. Untitled properties require much

more difficult documentation to ensure that the land actually exists and that the current landowner is being addressed. Thus, all other considerations being equal, titled properties should receive higher priority. 5.6

RECONSTITUTION OF TITLE

What can be done in case the original title of the land got lost or was destroyed due to fire, flood or force majeure in the register of deeds?
In general, lost or destroyed original copies of certificates of title are reconstituted through judicial proceedingspursuant to Section 110 of the Property Registration Decree (PD No. 1529). The procedure is prescribed in Republic Act No. 26 and implemented in LRA Circular No. 35 dated 13 June 1983. However, RA 6732 as implemented by LRA Circular No. 13 dated 26 July 1989, allows for administrative reconstitutionwhen the original copies of the certificates of title in the Office of the Register of Deeds are destroyed due to fire, flood, or other force majeure as determined by the LRA administrator, where the destroyed records constitute at least ten percent (10%) of the total number of titles but in no case shall these be less than 500. Thus, administrative reconstitution is allowed in Batangas City, Malolos, Bulacan, and in the provinces of Eastern Samar, Camarines Sur, Isabela, and Oriental Mindoro where the Offices of the Register of Deeds were destroyed by fire. The law also covers administrative reconstitution of copies of original certificates of title destroyed by fire, flood or other force majeure which occurred fifteen years before its effectivity in 1989.

What if it is the owner's duplicate copy which is lost while the original is still on file?

Then a petition for the issuance of a new owner's duplicate copy shall be filed with the Regional Trial Court. (Sec. 109,PD 1529)

Who should file the petition for reconstitution of title?

LRA Circular No. 35, Series of 1983 provides that the landowner or an interested party should file a petition for reconstitution with the Clerk of Court of the Regional Trial Court having jurisdiction of said property, in case of judicial reconstitution; or with the Register of Deeds concerned, in the case of administrative reconstitution. However, in order not to delay acquisition and distribution, the DAR issued Memorandum Circular No. 05, Series of 1994 which provides that the duly authorized DAR lawyer can file the petition in the Regional Trial Court in case of judicial reconstitution, or with the Register of Deeds concerned in case of administrative reconstitution, provided that a Notice of Coverage has already been issued covering the property. However, the DAR shall endeavor to secure a written permission from the registered owner/s of lost or destroyed titles.

What are the procedures for judicial reconstitution?

1. The petition is filed with the Clerk of Court of the Regional Trial Court which has jurisdiction over the property. Such petition is accompanied by a plan and technical description of the subject land, and a certification from the ROD that the original copy of the title was burned, lost, mutilated, etc. Photocopies of the Notice of Coverage shall also be submitted if the DAR is the petitioner. 2. The Office of the Solicitor General, Office of the Prosecutor for the City or Province, DENR-LMB, LRA, and ROD concerned are furnished with copies of the petition.

3. Publication (twice) in the Official Gazette and posting in the bulletin boards of the respective municipality of the notice of initial hearing. Adjoining owners and interested parties are also furnished copies of the notice. 4. Processing in the Land Registration Authority. 5. Court proceedings and court decision. duplicate 6. Surrender of the owner's Certificate of Title to the ROD.

7. Reconstitution proper of a new Original and Owner's Duplicate Certificate of Title by the ROD.

What are reconstitution?

the

procedures

for

administrative

1. The petition accompanied by three (3) photocopies of the owner's authenticated duplicate certificate of title; latest tax declaration and Notice of Coverage (if DAR is the petitioner) and an affidavit regarding circumstances of the property are filed with the ROD concerned; 2. Publication and posting requirements; 3. Processing by the Reconstituting Officer designated by the LRA Administrator; 4. Issuance of Order to Reconstitute by the Reconstituting Officer; 5. Review by the LRA Administrator of the Order of Reconstitution and affirmation thereof, if proper; 6. Surrender of the Owner's or Co-Owner's duplicate Certificate of Title to the ROD; and

7. Issuance of reconstituted title and delivery of owner's or co-owner's duplicate Certificate of Title by the ROD concerned to the landowners or to DAR.

Who will shoulder the cost of the reconstitution proceedings?

Administrative reconstitution normally does not cost anything, except for incidental costs like photocopies. However, judicial reconstitution requires publication which could be substantial (around P1,500 at 1993 prices). If the petition was filed by DAR, then it shall shoulder this cost chargeable against CARP funds. Otherwise, it will have to be borne by the farmer-beneficiary or the cooperative or farmers association. 5.7

UNTITLED PRIVATE PROPERTIES

Can untitled private properties be placed under CARP?

DAR's petition on the issue of placing untitled or unregistered private agricultural lands under CARP is that if there is no adverse claimant over the subject landholding (e.g., there is no court case), then submission of documentary and/or testimonial evidence shall be conclusive proof of ownership. The landholding may be acquired under CARP and the landowner entitled to payment in accordance with pertinent laws and DAR rules and regulations as resolved under DOJ Opinion No. 176, Series of 1992.

What if there are two or more claimants and there is a pending court case, to whom shall payment be made?
If there are two or more claimants and there is a pending court case, coverage of the land under CARP should proceed and the processing of claim folder should continue without interruption. But payment of said property shall only be effected to the claimant who has been declared by the Court as the lawful owner.

What safeguards have been instituted to ensure that untitled and unregistered private agricultural lands being covered by the program are properly supported by adequate documents?
Under Administrative Order No. 01, Series of 1993, seven items are listed as documentary requirements for processing claim folders of untitled properties. These are: 1. Survey plan of the property duly approved by the Land Management Bureau, and if not available, a sketch plan certified to by said office, and technical description thereof; 2. Certified copy of the present Tax Declaration in the name of claimant with correct lot number/s and area per approved plan; 3. Instruments of acquisition covering the subject property, such as Deed of Sale, Donation, Transfer, etc. in favor of claimant and those of his/her predecessor/s interest; 4. Certification of the Assessor concerned showing the Tax Declaration issued, the declarant/s, the area covered, and the basis for the issuances and cancellations thereof pertaining to the property/ies from the first declaration up to the tax declaration issued in the name of the claimant; 5. Certification from the Clerk of Court concerned whether or not the property/ies identified in the plan is/are covered by land registration proceedings or civil case, and if the same is used as bond or bail in other court actions; 6. Certificates of the DENR-LMS stating the year the property/ies identified in the plan may already be considered as private

agricultural land, and the persons having the best claim of ownership thereof; and 7. Certification from the Office of the Register of Deeds and Assessor concerned to the effect that as per their records, the property/ies as appearing in the approved survey plan is/are free from all liens and encumbrances. 5.8

FIELD INVESTIGATION

How will the landowner know that his or her land is being covered by CARP?
A landowner who has been identified should be notified by the MARO that his or her landholding is now covered by issuing a Notice of Coverage personally delivered or sent by registered mail. In that Notice, the landowner is also informed of his or her right to select the retained area and of the field investigation which will be conducted on the landholding. A copy of the Notice shall also be posted for at least one week on the bulletin board of the municipal and barangay halls where the land is located.

After identifying and documenting the ownership of the land, what must be done next?
The suitability of the land covered under CARP should next be established. This is done primarily by undertaking the field investigation of the property to

ascertain its suitability, characteristics.

productivity,

and

tenurial

Who are involved in the field investigation?

Aside from the MARO or ARPT and the landowner concerned, representatives from the Department of Environment and Natural Resources (DENR), Department of Agriculture (DA) and Land Bank of the Philippines (LBP), as well as the BARC and prospective agrarian reform beneficiaries should be invited to participate in the conduct of the field investigation.

What if the invited representatives are not available?

The field investigation can proceed provided they were given due notice of the time and date of the investigation to be conducted, i.e., they were sent copies of Notice of Conduct of Field Investigation. If it is the LBP representative who is not available, the DAR field implementor(s), together with the other parties shall conduct the field investigation and accomplish Part I of the Field Investigation Report. Such report shall be forwarded to the LBP representative for validation.

What if there is a difference in the findings of the DAR and the LBP?
In the event that there is a difference or variance in the findings of the DAR and the LBP as to the propriety of coverings the land under CARP, whether in whole or in part, on the issue of suitability to agriculture, degree of development or slope, and on the issue affecting idle lands, the conflict shall be resolved by a composite team composed of DAR, DA, DENR, and LBP representatives which shall jointly conduct further investigation thereon. The team shall submit its written report of findings within five days from the conclusion of the inspection. Such findings shall be binding to both DAR and LBP pursuant to the Joint Memorandum Circular of the DAR, LBP, DENR, and DA dated 27 January 1992. If the issue involved is on the suitability to agriculture and its

development, the chairperson shall be the DA representative. If it is on the percentage slope, the DENR representative shall be the chairperson of the team.

Why must the BARC and prospective ARBs be involved in the field investigation?
It is important to involve not only the other concerned CARP implementing agencies but also the BARC and the prospective beneficiaries because the people from the locality have a wealth of information on the physical, agricultural and tenurial characteristics of the land. It is also wise to involve them from the beginning to generate their support and encourage their crucial participation in the development process. CHAPTER 6 AGRARIAN REFORM BENEFICIARIES 6.1

QUALIFICATIONS OF BENEFICIARIES

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What are the qualifications of an agrarian reform beneficiary?

To be an agrarian reform beneficiary, one must: a. be landless; b. be at least 15 years old or head of the family at the time the property was transferred

in the name of the Republic of the Philippines; and c. have the willingness, ability and aptitude to cultivate the land and make it as productive as possible. (Section 23, Republic Act No. 6657) Items (b) and (c) above are meant to ensure that the recipients of the land will judiciously use it and make it a productive agricultural land.

What is the definition of landless?

A landless person is defined by Section 25, RA 6657 as one who owns less than three (3) hectares of agricultural land. Section 7, RA 6657 also provides that an owner-tiller may still be a beneficiary of another land he or she does not own but is actually cultivating to the extent of the difference between the area of the land he/she owns and the award ceiling of three hectares. Thus, a tenant who owns one hectare of agricultural land may still qualify as a beneficiary for two hectares of land.

Who are disqualified from becoming beneficiaries?

a. Those who fail to meet the qualifications as provided for under Section 22 of RA 6657. b. Beneficiaries who have culpably sold, disposed or abandoned their lands. c. Beneficiaries whose lands have been foreclosed by the LBP or repossessed by the landowner (in the case of VLT/DPS) for nonpayment of an aggregate of three annual amortizations. d. Beneficiaries who have converted their land to non-agricultural use without prior approval by DAR. 6.2

ORDER OF PRIORITY

What is the order of priority among the possible beneficiaries?

Section 22 of RA 6657 provides that lands covered by CARP shall be distributed as much as possible to landless residents of the same barangay or, in the absence thereof, landless residents of the same municipality. The order of priority then starts with: a. Qualified children. The qualified children of the landowner are the first group entitled to be beneficiaries of the land. They are entitled to receive three hectares each. b. Tenants and Lessees. The next group is composed of the agricultural lessees and share tenants. These farmers are entitled to receive the area of their tillage but not to exceed three (3) hectares, he or she may be awarded an additional area representing the difference, subject to the availability of land. c. The order of priority then goes down as follows: * * * regular farmworkers; seasonal farmworkers; other farmworkers;

* actual tillers or occupants of public lands; * collectives or cooperatives of the beneficiaries; and * others directly working on the land.

Given such order of priority, must all farmers in a class be allocated three hectares each before anyone in the next class can be identified as also a beneficiary of the land? For example, all regular farmworkers must first

be allocated three hectares farmworker can be identified?

Strictly speaking, interpretation. that

before
would

any
be a

seasonal
correct

The CARP, however, seeks to help as many farmers as possible and make them beneficiaries of the program. Thus, a more liberal interpretation is often better, provided the economic viability of the award is not sacrificed. In this regard, a series of mediation conferences among the possible beneficiaries may be conducted to allow the participatory determination of how many beneficiaries there ought to be and what each beneficiary will receive. 6.3

FARMWORKER BENEFICIARIES Who is considered a farmworker? Farmworker is defined as a natural person who

renders service for value as an employee or laborer in an agricultural enterprise or farm regardless of whether his/her compensation is paid on a daily, weekly, monthly or "pakyaw" basis.

What are the different categories of farmworkers? Regular farmworker is a natural person who is
employed on a permanent enterprise or farm. basis by an agricultural

Seasonal farmworker is a natural person who is

employed on a recurrent, periodic or intermittent basis by

an agricultural enterprise or farm, whether as a permanent or a non-permanent laborer, such as "dumaan", "sacada" and the like.

Other farmworker is a farmworker who is neither a

regular nor a seasonal farmworker. Example is a farmworker who does several farm activities but is not paid for his/her labor.

Technical farmworker is a natural person employed

by an agricultural enterprise or farm, who is highly educated and trained and performs functions in scientific, engineering, medical, teaching and other fields, but who is not vested with managerial or supervisory functions (e.g., chemists, agronomists, veterinarians, soil analysts).

Managerial or Supervisory farmworker is a natural

person who is employed by an agricultural enterprise or farm vested with powers or prerogatives: (1) to lay down and execute management policies; (2) to hire, transfer, suspend, layoff, recall, discharge, assign or discipline employees; and/or (3) to effectively recommend such managerial actions.

Who among beneficiaries?

these

farmworkers

can

qualify

as

They are those found to be directly working on the land, whether as regular, seasonal or other farmworkers at the time the field implementors conduct actual investigation and documentation. However, other workers (such as technical farmworkers) who are directly employed by the agri-business enterprise or corporation, except those holding managerial or supervisory positions may be considered as beneficiaries provided they meet the basic qualifications in Section 22, RA 6657. Even a farmworkers who has ceased to work as a result of pending agrarian or labor dispute but is willing to be an awardee of the agricultural land may be considered a beneficiary provided he/she has filed an appeal for reinstatement and has not yet obtained a

substantially equivalent and regular farm employment. (AO-02, Series of 1993).

What if a farmworker who has already been identified as qualified beneficiary gets promoted to managerial or supervisory position prior to land transfer?
The farmworker may still qualify as awardee of the land provided he/she gives up the managerial or supervisory position. (AO-02, Series of 1993)

What is meant by an agrarian or labor dispute?

It refers to any controversy relating to tenurial arrangements, whether leasehold, tenancy, stewardship, or otherwise, over land devoted to agriculture, including disputes concerning farmworkers, associations or representation of persons in negotiation, fixing, maintaining, changing or seeking to arrange terms and conditions of such tenurial arrangements. It also includes controversy relating to compensation of lands acquired under RA 6657 and other terms and conditions of transfer of ownership from landowners to farmworkers, tenants and other ARBs, whether the disputants stand in proximate relation of farm operator and beneficiary, landowner and tenant, or lessor and lessee.

Can farmworkers who are husband and wife each receive three hectares?
Yes, they may be entitled to three hectares each provided that their vested rights to the land have been duly established, in which case, they shall be issued separate CLOAs. (AO-02, Series of 1993) 6.4

SCREENING OF BENEFICIARIES

Is it the landowner who selects the beneficiaries of his/her landholding?

No. The landowner does not have the right to select who the beneficiaries should be. Except in the case of

Voluntary Land Transfer or Direct Payment Scheme, land acquisition and distribution involves two separate transactions. First, the government buys the land from the landowner and then sells it to the farmer-beneficiaries. It

is not the landowner, therefore, who is selling the landholding to the farmer-beneficiaries. It is the Municipal Agrarian Reform Officer (or the Agrarian Reform Program Technologist), together with the BARC who screens the beneficiaries. Even in the case of VLT/DPS, the landowner cannot just select a beneficiary. The beneficiary must qualify and it is still the MARO and the BARC who will do the screening. What is the recourse of farmers who claim they have a priority over those who have been identified by the MARO as the beneficiaries of the land?
The farmers can file a protest with the MARO or the PARO who is currently processing the claim folder. Once a written protest is filed, the MARO or PARO shall comment on the said protest and submit the same to the Regional Director who shall rule on the protest. If the parties disagree with the RD's decision, they can file a written motion for reconsideration. If the motion is denied, the farmers can file an appeal to the DAR Secretary. (AO-09, Series of 1994)

What can be done in case the tenants or tillers refuse to be interviewed and identified as beneficiaries?
The MARO and the BARC should advise the potential ARBs about the consequences of their refusal. If they still refuse, the MARO and BARC should execute a certification to this effect and post it in conspicuous places for 30 days. Thereafter, new ARBs may be instituted. The MARO should, however, exercise great care under this situation. Refusal to be identified as beneficiaries can be due to several reasons, such as lack of assurance of support services which used to be

provided by the landowner, fear of the landowner especially if the farmers are unorganized. That is why, MAROs should not overlook the importance of social preparation activities prior to land distribution.

What can be done in case the occupants of an idle and abandoned agricultural land are found to have prematurely entered the landholding?
Premature entry is strongly discouraged. Should it happen, however, the first consideration should be whether the occupants are the qualified beneficiaries of the land, or some other persons have superior rights to receive the land. In the latter case, the occupants should be ejected from the land and disqualified to be beneficiaries thereof. The second consideration is whether or not the landowner consents or has no objections to the occupancy and under what terms and conditions. The landowner and the occupants may agree on a lease arrangement in the meantime that acquisition of the land under CARP has not been completed.

On the other hand, what can be done if no one is willing to be a beneficiary of the land?
The DAR cannot yet acquire the agricultural land if it has no takers. The DAR must distribute all lands it acquires and is not in the business of warehousing land. What can be done is note such lands with no takers and offer it to those who may later on be interested or those who could not be accommodated in the distribution of other areas.

What can be done if FBs have been erroneously identified but still their names have been entered and registered in the CLOAs?
If the CLOA is already registered with the ROD, then an appropriate exclusion proceeding could be filed with the DARAB. (AO-02, Series of 1994) CHAPTER 7

LANDOWNERS' CHILDREN 7.1

RETENTION

AND

AWARD

TO

RETENTION LIMIT

What is the retention right of landowners under the CARP?

No less than the Constitution grants landowners the right to retain a portion of their lands covered by agrarian reform. Under the CARP, this retention right is limited to a maximum of five hectares per landowner. The only exceptions are as follows: a. Landowners whose lands have been covered by PD 27 are allowed to keep the area they originally retained thereunder. Thus, if a landowner retained seven hectares under OLT, he/she is allowed under CARP to keep the said area. b. Original homestead grantees or their direct compulsory heirs who still own the original homestead as of 15 June 1988 are allowed to retain the same areas as long as they continue to cultivate the same homestead. Thus, a landowner may, for example, continue to keep his/her 12-hectare homestead. 7.2

LAND OWNERSHIP CEILING What is the land ownership ceiling?

The land ownership ceiling is likewise five hectares. A person who does not own agricultural land may not buy more than five hectares. A person who already owns two hectares of agricultural land may buy only up to three hectares more. This is in line with the State's objective of controlling and democratizing the ownership of land as a natural resource. 7.3

QUALIFICATIONS FOR THE EXERCISE OF THE RIGHT OF RETENTION

Who may apply for retention?

All owners of private agricultural lands with a total area of more than five hectares, except those who have already been granted full retention (7 hectares) under PD 27.

May a corporation also retain five hectares?

The law grants both natural and juridical persons the right of retention. Note that juridical persons include corporations, partnerships, cooperatives, or other bodies with separate legal personality. Note also that a corporation is a person separate and distinct from its stockholders and incorporators. Thus, a corporation may retain only five hectares and not five hectares for each incorporator. Yes.

Are co-owners allowed to retain five hectares only?

Persons owning an agricultural land under a coownership may retain five hectares each. This is because the co-owners remain as separate persons each entitled to retain five hectares. Thus, in the earlier case of a 30-hectare property owned by a couple who died before 15 June 1988, the six children were the co-owners of the land upon the effectivity of RA 6657. Even if the title has not been transferred to their names, the six children are entitled to retain the 30 hectares at five hectares each.

A married couple claims that as husband/wife they are entitled to five hectares each. Should the claim be granted?
It depends. The criterion is the property relations between the husband and wife. If the property relations are governed by the system of complete separation of property as evidenced by a valid ante nuptial marriage settlement

then the spouses are separate landowners and may, therefore, retain five hectares each from their respective properties. The spouses should submit evidence that they are entitled to retain more than five hectares. On the part of the DAR, it is important to note the date of the marriage. If the marriage was solemnized before 03 August 1988, then it is governed by the Civil Code. In the absence of an agreement for the separation of property, spouses who own only conjugal properties may retain a total of not more than five hectares from such properties. However, if either or both of them are landowners in their own respective rights (whether capital or paraphernal), they may retain not more than five hectares each from their respective landholdings. On the other hand, if the marriage was contracted on or after 03 August 1988, or under the New Family Code, a husband owning capital property and/or a wife owning paraphernal property may retain five hectares each, if they executed a judicial separation of properties prior to the marriage. In the absence of such contract/agreement, all properties, whether capital, paraphernal, and conjugal shall be considered to be held in absolute community, i.e., the ownership relationship is one. Therefore, only a total of five hectares may be retained. (AO-11, Series of 1990) In no case, however, shall the total retention of the couple exceed ten hectares. 7.4

AWARD TO LANDOWNERS' CHILDREN

Is the award to children part of the landowner's retention?

No. The landowner is entitled to retain only five hectares. Any award to the qualified children is a result of the children being qualified beneficiaries of the program.

Is the award to children automatic?

The law only grants the children a preferential right to be awarded the land of their parents. They must still qualify as beneficiaries. No.

What qualifications must the child of a landowner meet in order to qualify for a three-hectare award?
To qualify, the child of a landowner must be: a. At least fifteen years old as of 15 June 1988, the effectivity of RA 6657; and b. Actually tilling the land or directly managing the farm from 15 June 1988 up to the time of land acquisition.

What is the meaning of the phrase "directly managing the farm"?

"Directly managing" refers to the cultivation of the land through personal supervision under the system of labor administration. (DAR Memo Circular No. 04-1994) It should be interpreted along the lines of farm management as an actual major activity being performed by the landowner's child from which he or she derives income. Farm management should likewise be the child's primary occupation.

If the land is tenanted, can a landowner's child qualify for an award on the basis of a claim that he is directly managing the farm?
As of 15 June 1988, tenants on the land should have become lessees. As lessees, they have the obligation to pay the lease rental but they have the right to directly manage the land. The child cannot, therefore, claim that he is managing the land. Hence, he cannot qualify for an award.

What if the child meets the qualifications above but already owns ten hectares? Must he or she still be awarded three hectares?
As earlier said, the child is to be awarded land not because he or she is a child of the landowner but because he or she is a qualified beneficiary. (However, the preference comes from his or her being a child of the landowner.) Therefore, in addition to the qualifications above, the child must meet all other requirements to be a beneficiary. Not being landless, he or she does not qualify for an award.

If a landowner's child qualifies as preferred beneficiary, will Land Bank pay the landowner for the area to be awarded to the child? In turn, will the child amortize the property?
No, the rules on landowner's compensation and amortization by beneficiaries will not apply, except if the

child awardee is a tenant in his/her own right. In which case, the Land Bank will finance the acquisition. However, tenancy between the landowner and the child must have already been established prior to 15 June 1988. (Memo Circular No. 04, Series of 1994) 7.5

SELECTION OF RETAINED AREA

What are the criteria in the selection of the retained area? The area chosen for retention should be compact and contiguous. It should also be least prejudicial to the entire landholding and the majority of the farmers thereon. (Sec. 6, RA 6657 and AO 11, Series of 1990)

Can a landowner who owns properties in different locations choose separate areas totaling five hectares from among the said properties?
No. The law provides that the area to be retained should be compact and contiguous. 7.6

PROCEDURES FOR THE EXERCISE OF THE RIGHT OF RETENTION AND AWARD TO QUALIFIED CHILDREN

Where should the landowner file the application for retention and award to qualified children?
The landowner should file the application using DAR's Retention Form No. 1 in any DAR office, whether at the Central, Regional, Provincial or Municipal Office. If filed in an office other than the MARO where the landholding is located, the receiving office should forward the application to the MARO concerned.

What are the requirements in applying for retention or award to children?

The landowner should execute an affidavit as to the total area of his/her landholding. If applying for award to qualified children, the landowner should submit a list of his/her children who were at least fifteen (15) years old

as of 15 June 1988 and who have been actually cultivating or directly managing the farm.

What happens after the MARO application for retention or award?

receives

the

The MARO, with the assistance of the BARC shall conduct a field verification and investigation to: 1. determine total landholding in relation to the retention and award applied for; 2. in the case of homestead, to determine whether the original homestead grantee or the direct compulsory heirs still own and actually cultivate the homestead; 3. determine qualifications of applicants and their children applying retention and/or award; and the for

4. identify affected tenants and determine whether they opt to become lessees in the retained area or to become land transfer beneficiaries in another landholding. The MARO then prepares the Retention Folder containing the documentation of the field investigation and the findings and recommendations. The folder is then submitted to the PARO for review.

Who approves the application?

The Regional Director approves or disapproves the application after reviewing and evaluating the report and recommendations submitted by the Provincial Agrarian Reform Officer (PARO).

What happens after the Regional approved the application for retention?

Director

has

1. If the application for retention is approved, the Regional Director shall issue Certificate of Retention (Retention Form No. 3)

and forward this, together with the retention folder to the PARO. 2. The PARO, in coordination with the Land Management Bureau of the DENR, shall segregate the appropriate retained area. 3. The DENR shall furnish the DAR Regional Office four copies of the approved segregation plan and technical description. 4. On the basis of the owner's duplicate copy of the title, the approved segregation plan and technical description, the PARO shall request the Register of Deeds to prepare two separate titles all in the name of the landowner: a. for the landholding covered by compulsory acquisition, voluntary offer to sell or voluntary land transfer/direct payment scheme; and b. the landowner's retained area

What is the recourse of the landowner application for retention is disapproved?

whose

The landowner should make an appeal to the DAR Secretary within fifteen (15) days upon receipt of the decision. Otherwise, the decision by the Regional Director disapproving the application for retention becomes final. 7.7

WHEN RETENTION

TO

EXERCISE

THE

RIGHT

OF

When may the right of retention be exercised?

A landowner whose agricultural land is covered by CARP may exercise his or her right of retention anytime before the land is compulsorily acquired. If the land is already the subject of compulsory acquisition, the landowner must apply for retention within sixty (60) days from the date of receipt of the Notice of Coverage. If the landowner does not respond despite due

notice, he or she will be deemed to have waived the right to choose the retained area and the DAR shall be the one to choose. Note that the waiver is on the right to choose; the landowner still has the right to retain. If the land is voluntarily offered for sale, the landowner may exercise right of retention at the time of the voluntary offer.

When may qualified children apply for an award of not more than three hectares each?
The application must be filed within a period of thirty (30) days from date of receipt by the landowner of the Notice of Coverage or from the date of the Voluntary Offer to Sell. However, for those areas for which notices of coverage have already been sent to the landowners, qualified children have at least one (1) year to file an application reckoned from 31 March 1994 (date of effectivity of DAR Memo Circular No. 04, Series of 1994). In case of failure of the children to file their application within the specific period, the property shall be distributed to qualified beneficiaries pursuant to Section 22 of RA 6657. 7.8

OBLIGATIONS OF LANDOWNERS AND LIMITS TO THE DISPOSITION OF THE RETAINED AREAS

What is the obligation of the landowner with respect to his or her retained area?
The landowner has the obligation to cultivate the retained area directly or through labor administration in order to make it productive. This is in line with the CARP principle that land has a social function and land ownership has a social responsibility. (AO No. 11, Series of 1990)

What are the limits to the disposition of the retained area?

1. A landowner may sell the land even to one not qualified to be a beneficiary, provided that after the sale, the buyer will not own more than five hectares of agricultural land. 2. The landowner may not eject the tenants in the retained area. The retained area is not covered by the land acquisition components of CARP but may still be covered by the leasehold provisions. 3. The landowner may not convert the use of the land from agricultural to non-agricultural use without the approval of the DAR. 7.9

TENANTS IN RETAINED AREAS What options are available to a tenant in the retained

area?

The tenant may choose to remain in the retained area as a lessee, in which case, he or she waives the right to be awarded land under the CARP. The tenant may alternatively opt to be a beneficiary in other lands that may be available for distribution. The tenant must decide within one year from the time the landowner manifests his or her choice of the area for retention. (Sec. 6, RA 6657)

If the tenant chooses the first option, his or her security of tenure shall be respected and he or she may not be ejected from the land. 7.10 RETENTION UNDER PD 27

Who among the OLT landowners are not entitled to retain seven hectares?
1. Those who as of 21 October 1972 owned more than 24 hectares tenanted rice or corn lands; or 2. Those who as of the above date, owned less than 24 hectares of tenanted rice or corn lands but additionally owned the following: a. more than seven (7) hectares of other agricultural lands, whether tenanted or not, whether cultivated or not; or b. lands used commercial, industrial purposes. for or residential, other urban

In both cases, the landowner should derive adequate income to support his/her family. This was provided for under Letter of Instruction No. 474 whose constitutionality and validity was upheld as decided in the case of Zurbano vs. Estrella (137 SCRA 334). Guidelines were further clarified in MAR Memo Circular No. 18 dated 29 December 1981. 3. Those who filed their applications for retention after 27 August 1985 (the deadline set by AO-01, Series of 1985) and did not comply with the requirements. The above landowners shall only be entitled to a maximum of five hectares as retention area. (AO No. 04, Series of 1991)

Who among the OLT landowners are still entitled to the seven-hectare retention?
1. Landowners who complied with requirements of either LOI 41, 45 or 52. the

2. Those who filed their applications before the deadline set (27 August 1985), whether or not they complied with Letter of Instruction (LOI) Nos. 41, 45, and 52. 3. Those who filed their applications after the deadline but complied with the requirements of the LOI cited above. 4. Heirs of a deceased landowner who manifested while still alive the intention to exercise the right of retention prior to 23 August 1990 (the finality of the Supreme Court decision on the Association of Small Landowners vs. The Honorable Secretary of DAR). Heirs must show proof of the original landowner's intention. (AO No. 04, Series of 1991)

A landowner who retained seven hectares of rice land under PD 27 now wants to retain an additional five hectares of coconut land under RA 6657. Should the landowner's claim be granted?
No. The landowner may not retain a total of twelve (12) hectares. He/she may, however, voluntarily offer the seven-hectare rice land and apply for the retention of five hectares of coconut land. Following the decision on the Association of Small Landowners case, the landowner shall keep the seven hectares originally retained in PD 27 while the five-hectare coconut land shall be covered under CARP. Note also that if a landowner retained only two (2) hectares of rice land under PD 27, he/she may still retain three hectares under RA 6657.

When is landowner deemed to have waived his/her right of retention under PD 27?
As provided in DAR Administrative Order No. 04, Series of 1991, the performance of any of the following acts signifies waiver: 1. signing of the Landowner-Tenant Production Agreement and Farmer's Undertaking (LTPA-FU) covering the subject property; 2. entering into a direct payment scheme agreement as evidenced by a Deed of Transfer over the subject property; and 3. signing/submission of other documents indicating consent to have the subject property covered, such as the form-letter of the Land Bank on the disposition of the cash and bond portions of a land transfer claim for payment, the Deed of Assignment, Warranties and Undertaking executed in favor of the LBP. Other similar acts may likewise be construed as waiver. The above list is not exclusive. 7.11 HOMESTEAD LANDS

What is DAR's policy in the case of homestead lands?

Under Section 6, RA 6657, agricultural lands covered by Homestead Patents shall not be covered under CARP if the following conditions are present: 1. The original homestead grantee or his/her direct compulsory heirs still own the land on 15 June 1988; and 2. The original homestead grantee or his/her direct compulsory heirs cultivate the land as of 15 June 1988 and continue to cultivate the same.

In the absence of these conditions, the homestead land will not be exempted from OLT or CARP coverage. However, the grantee or the heirs can retain seven or five hectares, as the case may be The excess areas shall be covered by CARP. The Alita Case, notwithstanding, it is the mandate of the law that in all cases, the security of tenure of the farmers and farmworkers on the land shall be respected. CHAPTER 8 LAND SURVEY

What should be done in the case of titles/landholdings covered by CARP but with defective technical descriptions or no available survey records?
The Provincial Agrarian Reform Officers (PAROs) should turn over to their counterpart Provincial Environment and Natural Resources Officers (PENROs) of DENR, all titles/landholdings covered by CARP with defective technical descriptions or where no available survey records could be found. This is an agreement reached between the DAR and DENR last 23 July 1992.

PAROs should immediately conduct an inventory of these records. If in spite of previous exhaustive research conducted, the defect could not be remedied, then they should turnover the records (xerox copies of titles, survey plans, sketch plans, etc.). The PENROs are under instructions to check these records with the existing

records available at the Land Management Bureau, the National Archives, or the Land Registration Authority. If, however, after another exhaustive research, the correct technical description cannot be recovered, then a resurvey of the subject landholding will have to be executed as provided for in the Joint DAR-DENR Circular No. 06, Series of 1991.

What sort of defects are covered by this agreement?

The defects may fall under any of the following categories: 1. 2. Polygon does not close; Titled but title is not available; available but without technical

3. Title description;

4. Surveyed untitled private property but survey plan or technical description is not available; 5. Awarded to survey contractor but not submitted due to non-payment of contractor; 6. Surveyed by administration but not submitted in spite of request to submit the survey; and 7. CHAPTER 9 LAND VALUATION COMPENSATION AND LANDOWNERS' Other defects.

What is the basic requirement in the acquisition of private agricultural lands?

The Constitution itself provides landowners two basic rights the right to retention and the right to be paid just compensation. Payment of just compensation is required before a title can be transferred from the landowner to the Republic of the Philippines.

9.1 JUST COMPENSATION

What is just compensation?

In various Supreme Court rulings, just compensation in general has been defined as "fair market value". It is the price which a buyer will pay without coercion and a seller will accept without compulsion. There are those who argue that since agrarian reform is a social justice program, it is not correct to interpret just compensation as the price which the land will bring in the open market. If two contracting parties with unequal powers are allowed to determine and agree on the value of the land in the open market, the party with less power would tend to be on the losing end. For properties covered by CARP, however, just compensation cannot be an absolute amount disregarding particularities of productivity, distance to the market place, etc. Hence, land valuation is not an exact science but an exercise fraught with inexact estimates. This requires integrity, conscientiousness and prudence on the part of those responsible for determining its value. What is important ultimately is that the land value approximates as closely as possible, what is broadly considered by the community to be just. (AO 06, Series of 1992)

Does full payment mean payment in cash directly to the landowner?

No. Full payment need not all be in cash directly to the landowner. Payment can be partly in cash and partly

in bonds. Also for those cases where the landowner contests the valuation of the property, Section 16, RA 6657 and AO 01-93 provide that full payment of just compensation may be considered achieved upon the Land Bank's deposit of the value of the land in a trust account in the name of the landowner. Once this deposit is made, the title can be transferred in the name of the Republic of the Philippines. 9.2

LAND VALUATION FACTORS

What does the law provide as the factors to be considered in the valuation of lands under CARP?
Section 17, RA 6657 enumerates ten (10) factors to be considered in the determination of just compensation: a. b. c. d. e. f. g. cost of acquisition current value of like properties nature of the land actual use income sworn valuation by the landowner tax declaration made by government

h. assessment assessors

i. the social and economic benefits contributed by the farmers and farmworkers and by the government j. non-payment of taxes or loans secured from any government financing institution on the land. 9.3

NEW LAND VALUATION FORMULA

What Administrative Orders govern land valuation under CARP?

AO No. 11, Series of 1994, "Revising the Rules and

Regulations Covering the Valuation of Lands Voluntarily Offered or Compulsorily Acquired as Embodied in AO No. 06, Series of 1992"; and
AO No. 06, Series of 1992, "Rules and Regulations

Amending the Valuation of Lands Voluntarily Offered and Compulsorily Acquired as Provided for Under AO 17, Series of 1989 as Amended, Issued Pursuant to RA 6657".
AO 06-92 supersedes AO No. 05, Series of 1988; AO No. 06, Series of 1989, AO No. 17, Series of 1989, and AO No. 03, Series of 1991.

What can be considered as a major improvement in the latest Administrative Orders on land valuation?
By giving more weight on the net income from the land in the formula, AO No. 06-92 has substantially raised the land value. Furthermore, AO No. 11-94 has dropped the landowner's LISTASAKA declaration from the formula. These are expected to lessen landowners' rejection of the offered price and facilitate the acquisition of the land.

What is now the basic formula for the valuation of lands covered by VOS and CA?
The basic formulation for the valuation of lands covered by VOS and CA regardless of the date of offer or coverage of the claim is: LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1) where: LV = Land Value CNI = Capitalized Net Income CS = Comparable Sales MV = Market Value per Tax Declaration Capitalized Net Income refers to the difference between the gross sales (AGP x SP) and the cost of

operations (CO) capitalized at 12%. In equation form, this is expressed as: CNI = (AGP x SP) - CO __________________ 12 where: AGP = latest available 12 month's gross production immediately preceding the date of offer in case of VOS or date of notice of coverage in case of CA. SP = the average of the latest available 12-month's selling prices prior to the date of receipt of the claim folder by LBP for processing, such prices to be secured from the Department of Agriculture (DA) and other appropriate regulatory bodies or, in their absence, from the Bureau of Agricultural Statistics. If possible, SP data shall be gathered from the barangay or municipality where the property is located. In the absence thereof, SP may be secured within the province or region. CO = Cost of Operations When the cost of operations could not be obtained or verified, an assumed new income rate (NIR) of 20% shall be used. Landholdings planted to coconut which are productive at the time of offer/coverage shall continue to use the 70% NIR. This formula shall be used if all three factors are present, relevant and applicable. When the CS factor is not present and CNI and MV are applicable, the formula shall be: LV = (CNI x 0.9) + (MV x 0.1) When the CNI factor is not present, and CS and MV are applicable, the formula shall be: LV = (CS x 0.9) + (MV x 0.1)

When both the CS and CNI are not present and only MV is applicable, the formula shall be: LV = MV x 2 In no case shall the value of idle land using the above formula exceed the lowest value of a land within the same estate under consideration or within the same barangay or municipality (in that order) approved by LBP within one (1) year from receipt of claim folder. In case of VOS, however, the land value which will be adopted will be whichever is lower of the computed value using the formula and the landowner's offer. The LO's offer, however, shall be grossed up from the date of the offer up to the date of receipt of claim folder by LBP from DAR for processing. The date of receipt of claim folder by LBP from DAR shall mean the date when the claim folder is determined by LBP to be completed with all the required documents and valuation inputs duly verified and validated, and is ready for final computation/processing.

Why are there only three factors in the formula when the law states ten factors to be considered in determining just compensation?
Although the formula contains only three factors, a study of the formula would show that all ten factors are actually considered in its application.

Who is responsible for computing land values?

Executive Order No. 405 dated 14 June 1990 transferred the responsibility for land valuation from the DAR to the Land Bank of the Philippines.

9.4

SUMMARY PROCEEDINGS

ADMINISTRATIVE

Is the land valuation done by Land Bank final?

The final determination of just compensation is a judicial function. The Land Bank merely conducts administrative valuation which may be contested in the court of proper jurisdiction. (Magana vs. Paitan, G.R. No. 60269 dated 13 September 1990) If the landowner accepts the value offered by Government, then the administrative valuation is final and serves as the basis of the landowner's compensation. However, if the landowner rejects or does not respond to the Government's offer, the DAR itself will advise the DAR Adjudication Board, through the Provincial Adjudicator, to conduct summary administrative proceedings to determine the value of the land. The value determined in these proceedings are then re-offered to the landowner. The landowner may still reject or not respond to this offer and instead file a case before the Special Agrarian Courts. In the meantime that the landowner is contesting the valuation of the land or is not responding to the Government's offer, the Government may proceed to

distribute the property upon deposit in a trust account of the initial value offered.

Where will the summary administrative proceedings be conducted? Will a landowner residing in Mindanao be required to go to the central office?
Not necessarily. It would depend on the total amount of compensation in question. If the government's offer does not exceed two million pesos (P2,000,000), the proceedings shall be conducted by the Provincial Agrarian Reform Adjudicator concerned. If the compensation offered is more than two million pesos but does not exceed five million (P5,000,000) then the case will be handled by the Regional Agrarian Reform Adjudicator (RARAD). But if the amount in question exceeds five million pesos, then the proceedings shall be conducted by the DAR Adjudication Board (DARAB). (AO No. 08, Series of 1993)

Is the Adjudication Board's executory?

decision final and

Although the final determination of the value of the land is a judicial function, unless the landowner or any party-in-interest files a case with the Special Agrarian Court within fifteen (15) days from receipt of the decision, then the decision of the adjudicator/s becomes final and executory. 9.5

CONCERNED PARTIES' INVOLVEMENT IN THE LAND VALUATION PROCESS

Are landowners and agrarian reform beneficiaries involved in the process of valuation?
Yes. The process of land valuation must involve the agrarian reform beneficiaries, their organizations, the BARC, and the landowner concerned. Their involvement is ensured in various provisions of the law. Section 3, EO 129-A declares that . . . "partnership

between government and organization of farmers and

farmworkers in agrarian reform policy formulation, program implementation and evaluation shall be institutionalized. . . . "
Section 47, RA 6657 specifies that the BARC shall, among other things, "assist in initial determination of the value of the land". Section 18, RA 6657 further states that "The LBP

shall compensate the landowners in such amount as may be agreed upon by the landowner and the DAR and the LBE. . . "
9.6

MODES OF COMPENSATION How will landowners be compensated?

Under Voluntary Land Transfer, the landowner will be paid directly in cash or in kind by the farmerbeneficiary under terms mutually agreed upon by them subject to DAR approval. Under Compulsory Acquisition, the Land Bank of the Philippines shall compensate the landowner in the following mode: a. Cash payment which shall vary according to land size; b. LBP bonds financial instruments. or other government

Under Voluntary Offer to Sell, the landowner will be paid under the same mode as CA except that the cash portion is higher by five percent (5%).

What proportion of the total compensation is in cash?

Cash portion shall vary according to the size of the landholdings. The larger the landholding, the smaller the cash portion. The underlying principle is that small landowners are presumed to have greater need for cash to aid them in their bid to shift their capital from agriculture to industry.

Payment shall be under the following terms and conditions: a. bonds Lands above 50 has. 25% cash; 75%

b. Lands above 24-50 has. 30% cash; 70% bonds c. bonds Lands 24 has. & below 35% cash; 65%

Cash portion is increased by 5% for VOS.

Why not pay the landowners the full amount in cash?

The compensation package under CARP is already much improved compared to the compensation schemes of past land reform programs. This is so, precisely to make the program more acceptable to landowners and facilitate the shift of their capital from agriculture to industry. Full payment in cash is not feasible. This will tremendously increase the current funding requirements for CARP which the government can ill afford at present. Furthermore, this will infuse a large amount of money into the economy which could result in inflation. 9.7

LAND BANK BONDS What are the features of the new LBP-bonds?

Compared with previous LBP bonds, the present bonds are definitely more attractive. a. Past LBP bonds have a maturity of 25 years. This means, bond holders can only get the principal at the end of 25 years. On the other hand, the new LBP bonds mature in ten years, and one-tenth of the face value of the new bonds matures every year from the date of issue until the tenth year. b. The new LBP bonds also bear market rates of interest the same as those of 91-day

treasury bills. Old LBP bonds have a fixed six percent (6%) interest rate. c. Finally, these bonds have alternative uses. They may be used by the landowner, his successors in interest, or his assignees, for any of the following: * acquisition of land or other real properties of the government, including assets under the Asset Privatization Trust, and other assets foreclosed by government financial institutions; * acquisition of shares of stock of government owned or controlled corporations, or shares of stocks owned by the government in private corporations; * substitution for surety or bail bonds for the provisional release of accused persons, or for performance bonds; * security for loans with some government financial institutions, provided the proceeds are invested in an economic enterprise, preferably in a small-andmedium scale industry; * payment for various taxes and fees to government, up to a certain percentage of the outstanding balance of the financial instrument, and provided further that the PARC shall have determined the allowable percentage mentioned; * payment for tuition fees of the immediate family of the original landholder in government universities, colleges, trade schools, and other institutions; * and payment of bills in public hospitals;

* other uses as the PARC may allow from time to time. 9.8

PD 27 LANDS

Are PD 27 lands also covered by this valuation formula?

No, they are governed by Executive Order No. 228. Under this EO, the valuation formula under PD 27 is retained. Valuation shall be based on the Average Gross Production (AGP) determined by the Barangay Committee on Land Production (BCLP). Land value is computed using the following formula: Rice Lands LV = AGP x 2.5 x P35 * Corn Lands LV = AGP x 2.5 x P31 ** * government support price for one cavan of 50 kilos of palay on 21 October 1972 ** government support price for one cavan of 50 kilos of corn on 21 October 1972 Lease rentals paid to the landowner by the farmerbeneficiary after 21 October 1972 shall be considered as advance payment for the land and shall, therefore, be deducted from the cost.

Aren't PD 27 lands grossly undervalued since 1972 support prices are still being used?
The Presidential Agrarian Reform Council (PARC) has recognized this problem. Many of the landowners covered by PD 27 have not yet been paid. Had these landowners been paid at the time of the taking of their lands and the proceeds of the compensation deposited in a bank, the money would have earned the same interest rate compounded annually as authorized under the banking laws, rules and regulations. To address these problems, the PARC in its resolution dated 25 October 1994, approved the grant of an increment of six percent (6%) yearly interest

compounded annually based on the land value as determined under existing valuation formula, instead of revising the formula itself. Guidelines for this have been issued under Administrative Order No. 13, Series of 1994, "Rules and Regulations Governing the Grant of Increment

of Six Percent (6%) Yearly Interest Compounded Annually on Lands Covered by Presidential Decree No. 27 and Executive Order No. 228".
Under these guidelines, owners of OLT lands shall be compensated based on the following: (Computed land value using the original formula) x (1.06) n where n = number of years from date of tenancy up to effectivity date.

Who are the landowners qualified to compensation based on this increment formula?

receive

1. Landowners whose lands are actually tenanted as of 21 October 1972 or thereafter and covered by OLT; 2. Landowners who opted for Government financing through Land Bank of the Philippines as the mode of compensation; and 3. Landowners who have not yet been paid for the value of their land. In the case of landowners who were partially paid, the yearly interest of six percent (6%) compounded annually shall be applied to the unpaid balance.

What is the reckoning date in computing the interest?

For lands tenanted as of 21 October 1972 and covered under OLT, the date shall be reckoned from 21 October 1972 up to the date of effectivity of AO 13-94.

For lands tenanted after 21 October 1972 and covered under OLT, the date shall be reckoned from the date when the land was actually tenanted up to the effectivity date of AO 13-94.

What will happen to the claims of landowner-payees which were previously approved for payment by Land Bank?
The landowners difference. shall still be entitled to the

What happens to the 25-years LBP bonds under PD 27?

All outstanding LBP bonds that are retained by the original landowner-payee, or by his heir, shall be paid by the Bank to the extent of their matured portion. Onetwenty fifth (1/25) of their face value times the number of years from their date of issue to July 17, 1988 (date of EO 228) are deemed to have matured.

How can the original landowner-payee claim payment for the matured portion of his/her bond holding?
He/she should surrender the old LBP bonds to Land Bank which pays cash for the matured portion and convert the unmatured portion to 10-year LBP bonds.

Are outstanding old LBP bonds in the hands of bondholders other than the original landowner-payee entitled to the same right?
No. Old LBP bonds in the hands of bondholders other than the original landowner-payee are not entitled to the same right. 9.9

EO 407 LANDS What are EO 407 lands?

These refer to lands suitable to agriculture owned by all government instrumentalities, including but not limited to government agencies, government owned and controlled corporations or financial institutions which have been

ordered to be surrendered to the Department of Agrarian Reform under Executive Order No. 407 issued on 14 June 1990 by then President Corazon C. Aquino.

Will these lands be covered by the same valuation guidelines as the private lands covered under CARP?
No, separate valuation guidelines for properties covered by EO 407 have been issued applicable to claims of government financial institutions which have signed jointly with LBP a Memorandum of Agreement dated 28 August 1992. 9.10 MT. PINATUBO AFFECTED AREAS

Will landowners in lahar affected areas whose landholdings were originally subject of acquisition and distribution be compensated?
Joint DAR-LBP Administrative Order No. 03, Series of 1994 provided the policy guidelines governing the acquisition and distribution of agricultural lands affected by the Mt. Pinatubo eruptions.

Under this guideline, agricultural lands affected by Mt. Pinatubo eruptions have been classified into three based on the NEDA Region III Geographic Information System database. These are: Category I (actually affected)

These are agricultural lands actually covered with lahar and pyroclastic deposits, including those areas which have become silted, eroded or continuously flooded for an indefinite period of time. Category II (not yet affected) These are agricultural lands not falling under Category I but have the possibility of being actually affected. Category III (lands covered by ashfall) These are agricultural lands actually covered or affected by ashfall but which remain to be productive. As a general rule, lands under Category III shall be acquired and landowners compensated. Compensation of lands under Category I and II shall be effected under the following conditions: 1. Claims have been approved by LBP and: a. Landowner has executed a Deed of Assignment, Warranty and Undertaking on or before the issuance of the Joint DARLBP AO 03-94; or, b. Transfer Certificate of Title was already registered in the name of RP on or before the issuance of the same AO; or c. Partial effected. payment was already

2. Emancipation Patents/Certificates of Land Ownership Award have been registered on or before 12 June 1991 regardless of whether or not the claim folder is with the LBP. CHAPTER 10 LAND DISTRIBUTION 10.1 BASIC PRINCIPLES IN LAND DISTRIBUTION

What are the basic principles in land distribution?

Land distribution is governed by the following basic principles and policies: a. The CARP seeks to promote the establishment of owner-cultivatorship of economic-size farms as the basis of Philippine agriculture;

b. DAR's primary mandate is to distribute agricultural lands to as many tenants and farmworkers as possible. If the agricultural land is untenanted or does not have farmworkers, it is the responsibility of the DAR to locate qualified beneficiaries pursuant to Section 22 and Section 7 of RA 6657; c. In general, lands shall be distributed directly to the individual beneficiaries; d. The award of three hectares to the beneficiaries is in line with the objective of forming and maintaining economic-size family farms.

What Administrative Orders govern land distribution?

a. Administrative Order No. 10, Series of 1990 entitled, "Rules and Procedures in the

Distribution

of

Private

Agricultural

Lands

Agrarian Reform 6657"; and

Beneficiaries

under

RA

b. Administrative Order No. 02, Series of 1992 entitled, "Supplemental Guidelines on AO

No. 10, Series of 1990, and Other Issuances the Rights of Farmworkers". When does land acquisition end and when does land distribution begin?
The cut-off point in the land acquisition process is the transfer of title from the landowner to the Republic of the Philippines as evidenced by the Transfer Certificate of Title (TCT) issued by the ROD. Immediately upon receipt of the TCT, the DAR shall take possession of the land and proceed with land distribution.

May distribution occur before the end of acquisition?

Yes. The cut-off point above is for compulsory acquisition cases where landowner refuses to cooperate. Operationally, distribution can begin earlier, particularly if the landowner is cooperative and is willing to let the identified beneficiaries cultivate the land.

What proof beneficiaries?

a. lands;

of

land

ownership

is

given

to

Beneficiaries receive the following titles: Emancipation Patents (EPs) for OLT

b. Certificates of Land Ownership Award (CLOAs) for CA, VOS, and 407 lands, resettlement areas and landed estates; and c. Free Patents for public lands. Beneficiaries of the Integrated Social Forestry Program covering agro-forestry public lands whose ownership cannot be transferred, received Certificates of Stewardship Contract (CSCs) which are good for 25 years, renewable for another 25 years.

Is a Certificate of Land Transfer (CLT) an evidence of ownership of the land?

No. In the case of Magana vs. Paitan (G.R. No. 60269, 13 September 1990), it was held that the mere issuance of CLT does not vest in the farmer-grantee, ownership of the land described therein. It merely provides evidence of the government's recognition of the grantee as the part qualified to avail of the statutory requirements for acquisition under PD 27. Failure of the farmer-beneficiary to comply with the requirements will result in the cancellation of the said CLT. Thus, failure on the part of a farmer/grantee to pay lease/amortization payment to the landowner or agricultural lessor when they fall due for a period of two years shall be a ground for forfeiture of the CLT. 10.2 AWARD CEILING

How many hectares of land can an awardee get?

Individual beneficiaries may following maximum hectarages: each receive the

a. Three hectares under RA 6657 acquisition modes (CA, VOS, VLT/DPS, EO 407);

b. Three hectares for irrigated and five hectares for unirrigated rice and corn lands covered under the OLT program of PD 27; and c. Three hectares for awardees settlement areas and landed estates. in

Potential beneficiaries who own less than three hectares of agricultural land may still receive land under CARP but only to the extent of the difference between the award limit of three hectares and their present land ownership. For example: Award Ceiling 3.0 has. ARB owns 1.2 has. Total Area that may ARB 1.8 has. Total award Land

be

awarded after

to the

ownership 3.0 has.

In all cases, the aggregate award and the total land ownership of the ARB as a result of the award shall not exceed three hectares.

Suppose the area actually occupied by a tenant slightly exceeds the three hectare award ceiling and there is no other tenant in the landholding, how will the excess area be disposed?
Since there is no guideline governing the allocation of excess area over the allowable three-hectare ceiling under RA 6657, the pertinent provision of the Ministry of Agrarian Reform Administrative Order No. 03-85, Series of 1985 can be applied. This states that "The

economic family size farm to be transferred to a bonafide

farmer beneficiary pursuant to PD 27 shall include a tolerable limit of not more than ten percent (10%) or 3.3 hectares if irrigated and 5.5 hectares if unirrigated."
Hence, if the excess area is within the 10% tolerable limit (or 3.3 hectares under RA 6657), then the total aggregate area may be awarded to the qualified farmerbeneficiary. 10.3 LAND DISTRIBUTION PROCEDURES

What are the basic steps in the redistribution of lands under VOS, CA, and EO 407? MARO
a. Upon completion of land acquisition, the first activity done is the validation of the list of qualified ARBs. This is to ensure that those who were identified during the acquisition phase are still present and qualified to receive the land. b. Through a letter or through the CARP Beneficiary Certificate (CBC), the identified ARBs are formally notified that they have been qualified to receive the land. The notice also grants the ARBs the usufructuary rights and privileges and obliges them the duties and responsibilities over the land. c. The ARBs are consulted as to their preferred mode of distribution, i.e., individual, collective or co-ownership. Then, Land Distribution Folders are prepared based on the ARBs' preference and submitted to the PARO.

PARO
a. Reviews all documents and generates the Certificates of Land Ownership Awards (CLOAs).

b. If ARBs prefer individual parcels, then the PARO requests the DENR to conduct subdivision survey. c. Submits the CLOAs to the DAR Regional Office (DARRO) who causes them to be signed by the Secretary. d. Registers the CLOAs with the ROD and forwards them to the MARO for distribution. e. The ARBs are allowed to take possession of the land and use it for production. 10.4 INDIVIDUAL

VS.

COLLECTIVE

DISTRIBUTION Is individual distribution always required?

No. According to Section 25, RA 6657, the beneficiaries may opt for collective ownership, such as coownership or farmers cooperative or some other form of collective organization. However, the total area that may be awarded shall not exceed the total number of beneficiaries multiplied by three hectares, except in meritorious cases approved by the PARC. Thus, nine ARBs under a co-ownership may receive not more than 27 hectares. Further, in case it is not economically feasible and sound to divide the land as determined by the DAR, then it shall be owned collectively by the worker beneficiaries. Finally, to expedite land distribution, lands may be initially awarded collectively and later distributed individually after completion of the subdivision surveys. This arrangement may be done for any CARP able land whether private land or public land within proclaimed DAR settlement projects or public land turned over to the DAR by other government agencies and institutions pursuant to EO No. 407, as amended by EO 448.

How can the individual beneficiaries be assured of their share in the collectively held landholding?
DAR shall ensure that the name of the cooperative or the association and their individual members are properly annotated at the back of the collective CLOA to protect the farmer-member from possible summary and unjust separation by the cooperative or association, and that the fractional share of each ARB shall be specified opposite their names.

How will lands covered by collective CLOAs be subdivided?

Guidelines have been provided under AO No. 03, Series of 1993, "Rules and Procedures Governing the Issuance of Individual Titles to Co-Owners", should the ARBs decide to subdivide lands held collectively. If held on a co-ownership basis, lands covered by collective CLOA shall be subdivided in accordance with the actual occupancy of the ARBs, provided the share of each shall not exceed three hectares. For landholdings in the name of cooperative or farmers association, subdivision shall be based on the shares of each member under the same condition that this shall not exceed three hectares and provided that the subdivision is determined by DAR to be economically feasible. DAR may issue individual CLOAs in the name of the ARBs based on their request and the approved subdivision plan of the landholding and supported by a Deed of Partition executed by all co-owners named in the collective CLOA. Individual CLOAs generated by DAR under this subdivision shall be on Transfer Certificate of Title (TCT) CLOA forms to be registered with the ROD. However, if the ten-year period reckoned from the date of the issuance of the collective CLOA has already elapsed, issuance of individual certificates of title shall

already be subject to the procedures and requirements of the Land Registration Authority (LRA) pursuant to the Land Registration Decree (PD 1529).

What are the procedures for subdividing landholdings previously covered by collective CLOAs on co-ownership basis? PARO
a. Any of the co-owners shall submit to the PARO, through channel, a written request for the subdivision of the land. b. The PARO shall endorse the request for subdivision to the DARRO for bidding and award to private contractors or the DAR itself may instead execute the subdivision survey of the target landholdings.

DARRO
a. The DARRO shall bid and award the survey to private contractors or cause the conduct of the survey by DAR survey teams if available. b. The survey returns shall be submitted to the DENR for verification and approval. c. The approved subdivision plan shall be submitted to the PARO.

PARO
a. Prepare a Deed of Partition for the signature of all the co-owners, specifying the lot number and the exact parcel intended for the coowner concerned, based on the approved subdivision plan. The Deed of Partition shall be duly notarized. b. Retrieve the owner's duplicate certificate of title of the collective CLOA from the ARBs for cancellation by the ROD.

c. Generate individual TCT-CLOAs for each co-owner based on the approved subdivision plan and the duly notarized Deed of Partition. d. Transmit the CLOAs, the Deed of Partition, and approved subdivision plan to the Register of Deeds concerned for the registration. The owner's duplicate certificate of title of the collective CLOA shall be surrendered to the ROD for cancellation. e. Record the registered CLOAs transmit the same to the MARO redistribution to the individual co-owners. and for

How will this generation of CLOAs be treated in reporting accomplishment?

Landholdings covered by collective CLOAs already reported as accomplishment by the DAR field office concerned and subsequently subdivided and issued individual TCT-CLOAs to the owners shall be reported and monitored separately in the monthly reporting of the field offices. However, the area covered by collective CLOA should not be reported again as hectarage covered upon the issuance of the individual CLOAs. Such activities shall be included in the program of the field office concerned for proper funding. 10.5 RIGHTS

AND

OBLIGATIONS

OF

BENEFICIARIES What are the obligations of the beneficiary?

All ARBs shall exercise the diligence of a good father of the family in the use, cultivation, and maintenance of the land including the improvements thereon. Negligence, misuse, or unauthorized sale of the land, or any support extended to the ARB shall be a ground for the forfeiture of his or her rights as a beneficiary.

May CARP beneficiaries sell the land awarded to them?

Section 27, RA 6657 provides that lands awarded to the ARBs may not be sold, transferred or conveyed for a period of ten (10) years from the award. This may be seen as a means to encourage the ARBs to cultivate the land and make it productive over a long term. The exceptions to this rule are if the transfer is through: a. b. c. d. hereditary succession; to the Government; to the Land Bank; or to other qualified beneficiaries.

If the land has been transferred to the government or to LBP, the children of spouse of the ARB shall still have the right to repurchase the land within two years. Ownership of lands awarded under PD 27 or EO 228, however, may be transferred after full payment of amortization by the beneficiary. (Section 6, EO 228) But there are guidelines now being formulated which will determine where the ten-year prohibition period under Section 27 may be applicable, and will also provide for

additional safeguards to prevent abuse in the selling of PD 27 lands.

Does this mean that after ten years, under the CARP, the ARB may sell to anybody provided he or she has fully paid for the land and the buyer will not have more than five hectares after the transaction?
Yes, the ARB may sell the land provided that the total landholdings of the buyer after the purchase does not exceed five hectares.

What if the ARB no longer wants to farm?

The ARB has the option to transfer or convey the rights to the land to any of his or her qualified heirs or to any other beneficiary, even if the land has not yet been fully paid. The conditions are that the transfer has the prior approval of the DAR and that the transferee will personally cultivate the land.

What happens if the new ARBs fail to cultivate the land themselves?
Then the land shall be transferred to the LBP which shall give notice of availability of the land to the BARC. The BARC in turn, shall notify the Provincial Agrarian Reform Coordinating Committee (PARCCOM). Under such instances, the LBP shall reimburse the original ARB one lump sum for the amount of amortizations made including payments for the value of the improvements on the land. The new ARB will have to start amortizing anew.

Can an agrarian reform beneficiary subdivide in favor of his or her children the three hectares of land awarded under CARP?
Strictly speaking, no. The three hectares, as the identified economic-sized family farm, should be preserved as a single operating unit to promote the farm's economic viability.

Should the beneficiary die or be incapacitated, succession to the farmholding shall be governed by the pertinent provisions of the Civil Code, subject to the condition that the land shall not be fragmented. This means that the land shall be transferred to the spouse of the ARB or in the absence or incapacity of the spouse, to the eldest child who meets the qualifications to be a CARP beneficiary, particularly the requirement of willingness, aptitude and ability to cultivate the land and make it productive. The heir who succeeds on the land shall pay the other heirs their corresponding legal shares. In the absence of such children, e.g., if all the children are less than 15 years old, the land shall be transferred to the DAR which shall look for a new beneficiary on the land.

Aside from those already mentioned, what are the grounds for the cancellation of Emancipation Patents (EPs) or Certificates of Land Ownership Award (CLOA)?
Violations of agrarian laws, rules and regulations are grounds for the cancellation of registered EPs or CLOAs. These include but are not limited to the following: 1. Misuse or diversion of financial and support services extended to the ARB; (Section 37 of RA 6657). 2. Misuse of the land; (Section 22, RA 6657) This refers to any act causing substantial and unreasonable damage on the land, and causing the deterioration and depletion of the soil fertility and improvements thereon. It also includes the act of knowingly planting, growing, raising, or permitting the planting, growing, raising of any plant which is the source of a dangerous drug, as defined in PD No. 1683, as amended. (AO No. 02-94). 3. Material misrepresentation of the ARB's basic qualifications as provided under

Sec. 22 of RA 6657, PD 27 and other agrarian laws; 4. Illegal conversion by the ARB's; 5. Sale, transfer, lease or other forms of conveyance by a beneficiary of the right to use or any other usufructuary right over the land acquired by virtue of being a beneficiary in order to circumvent the provisions of the different agrarian laws. (Lands awarded under PD 27/EO 228, however, may be transferred after full payment of amortization). 6. Default in the obligation to pay an aggregate of three (3) consecutive amortizations in case of VLT/DPS, except in cases of fortuitous events and force majeure; 7. Failure of the ARBs to pay for at least three (3) annual amortizations to the LBP, except in cases of fortuitous events and force majeure; 8. Neglect or abandonment of the awarded land continuously for a period of two (2) calendar years as determined by the Secretary or his authorized representative (Section 22, RA 6657); 9. The land is found to be exempted/excluded from PD 27/EO 228 or CARP coverage or to be part of the landowner's retained area as determined by the Secretary or his authorized representative; 10. Other grounds that will circumvent laws related to the implementation of the agrarian reform program (seeAO No. 02, Series of 1994).

Who can order the cancellation of a registered EP/CLOA?

The Provincial or Regional Adjudicator which has jurisdiction over the property may order the cancellation of a registered EP/CLOA in accordance with the DARAB Rules and Regulations. Aside from cancellation, the PARAD/RARAD may decide to include other sanctions for violations of agrarian laws such as forfeiture of amortization, ejectment of ARB, reallocation of the land to qualified beneficiary, perpetual disqualification to become an ARB.

What will happen to a tenant who became a beneficiary under PD 27 but whose EP is now being cancelled on the ground that the area awarded is part of the landowner's retained area?
The farmer will revert to being an agricultural lessee. He/she, however, will have security of tenure and cannot be ejected from the land. Amortization payments will be credited as lease rentals and excess payments shall be reimbursed.

Who has the authority to correct an error in the CLOA such as the omission of the name of the spouse, typing error in the name of the beneficiary or in the technical description of the property?
It is still the PARAD or the RARAD having jurisdiction over the property who can order the correction of the title. CHAPTER 11 PAYMENT BY BENEFICIARIES 11.1 PAYMENT UNDER RA 6657

Must the landowner first agree to the land valuation before the beneficiaries can receive the land?
No. Learning from the lessons in the previous agrarian reform programs the CARP now separates acquisition from distribution. These are now two separate transactions. The former is a transaction between the

government and the landowner, while the latter is a transaction between the government and the agrarian reform beneficiaries. The landowner may still be contesting the land valuation but title to the land may already be transferred first to the Republic of the Philippines then to the beneficiaries.

Will the beneficiaries have to pay the government the same amount that government paid to the landowner?
No. DAR Administrative Order No. 6, Series of 1993 entitled, "Revised Implementing Guidelines and

Procedures Governing Payment of Land Amortization by Agrarian Reform Beneficiaries" provides the operating
guidelines for Section 12 of EO 229 and Section 26 of RA 6657. This AO revised DAR Administrative Order No. 3, Series of 1992 entitled, "Implementing Guidelines

and Procedures Governing Payment of Land Amortization by Farmer-Beneficiaries Pursuant to Section 26 of RA 6657".

Under AO No. 06-93, lands awarded pursuant to EO 229, RA 6657 and lands acquired under EO 407 shall be repaid by the ARBs to Land Bank in 30 annual amortizations at six percent (6%) interest per annum based

on the cost of the land and permanent improvements. These are the regular annual amortizations. However, to make payments affordable, amortization shall be reduced to: * 2.5% of AGP for the first three years; * 5.0% of AGP on the fourth and fifth year; and to * 10.0% of AGP from the sixth to the thirtieth year if this amortization ceiling is lower than the regular amortization. Simulation: Annual Gross Production (AGP) established during land valuation (AO-0692): P15,000.00 Cost of VOS/CA: Capital years: Awarded Factor land covered P22,706.38 of 6% for 0.07265 P 22,706.38 by 30 x

Recovery

Annual Regular 0.07265 = 1st .025 4th .050 6th .100 3rd = 5th = 30th =

Amortization: P1,849.57 Year Year Year

Annual Amortization Ceiling: : P15,000 P375.00 : P15,000 P750.00 : P1,500.00 P15,000 x x x

Compare annual regular amortization (P1,849) with the schedule of amortization ceiling shown earlier. Since the ceiling is lower than the annual regular amortization, the ARB will pay based only on the ceiling. The difference represents the government's subsidy.

What is the "assistance" to farmers?

Assistance to farmers refers to: a. the difference between the regular annual amortization (based on the amount paid or approved for payment to the landowner) and the affordable amount during the first five years after the award of the land to the ARBs; and b. the difference between the regular amortization and ten percent (10%) of the AGP during the 6th to the 30th year whenever such 10% of AGP is lower than the regular amortization. After making payments for 30 years, the beneficiary stops paying. The difference between what the Government paid to the landowner and what it was able to collect from the ARB is the Government subsidy or the assistance to farmers. It may be noted that aside from the difference in the total amounts, there is also a huge difference in the present value of the total amount including market rate of interest that the Government will pay the landowner and what it will receive from the ARB annually for 30 years.

Will the average gross production have to be computed annually?

No. In the case of already productive lands, the AGP shall be computed once, during the valuation process, based on the peso value of the annual yield/produce per hectare of the land awarded to farmer-beneficiaries as established jointly by the DAR and the LBP which is reflected in the valuation portion of the Claims Valuation and Processing Form. If only for this reason, it is imperative to involve the BARC and the beneficiaries as early as possible to inform them about the data gathered on the AGP of the land and get their comments and reactions.

How about in newly cultivated lands?

In the case of newly cultivated lands without established AGP, the terms of repayment shall be as follows: 1. For lands planted to either perennial or short term (seasonal) crops, the initial annual repayments by the ARBs shall be equivalent to 2.5% based on the cost of the land or 2.5% of the imputed AGP, whichever is lower, until such time that the AGP has been established or determined. Imputed AGP shall be determined using industry data obtained from government/private entities in the barangay. In the absence thereof, AGP for the municipality, province or region in that order, shall be considered. 2. For idle and abandoned lands, initial annual repayments shall be equivalent to 2.5% based on the cost of the land until such time that the AGP has been established/determined. In both cases, the average of the first three (3) years production shall be the basis in establishing the permanent AGP. The first three (3) years amortization and all subsequent amortizations shall be adjusted and based on the permanent AGP established.

What if the ARB later on increases his or her production?

The computed annual payments will not change. The benefits of increased production should all go to the beneficiary's pocket as his or her incentive.

What if a typhoon or other natural calamity reduces the beneficiary's production?

The LBP shall formulate guidelines to assist ARBs affected by natural calamity or force majeure which may include, among others, suspension of payment, deferment of payment or restructuring of account.

What if the courts grant the landowner a higher valuation?

Under AO No. 06-92, this will hardly have an effect on the amount to be paid by the beneficiaries in view of the assistance to farmers. The government's subsidy will increase but the ARBs' amortization will not change.

When will the ARB start paying the amortization?

The ARB shall start paying one year after the land has been awarded to him/her, i.e., the date of registration of the CLOA.

What happens if the ARB defaults in his or her payments?

Although the land has been titled in the name of the beneficiary, the Land Bank has a lien by way of mortgage on the land. This mortgage may be foreclosed by the LBP if the ARB does not pay a total of three annual amortizations, except where the cause of such failure to pay is brought about by natural calamity or force majeure.

Should LBP foreclose on any awarded land, it shall advise DAR of such proceedings and the DAR shall subsequently award the land to other qualified beneficiaries. A beneficiary whose land has been foreclosed shall thereafter be permanently disqualified from being a recipient of land under CARP. 11.2 PAYMENT IN OLT LANDS

Will beneficiaries of OLT lands pay under the same amortization scheme?
No. Payment by OLT beneficiaries is governed by Section 6 of EO 228. This section provides that the beneficiaries shall pay for the total cost of the land including six percent (6%) interest per annum with a two percent (2%) interest rebate for prompt payments. Payment shall be made by the farmer-beneficiary or his heirs to the Land Bank over a period of 20 years in 20 equal annual amortizations, where: Annual Amortization = Land Value x 0.087185 * * Capital Recovery Factor at 6% per annum for 20 years

How about in lands already valued and financed by LBP for which beneficiaries have started amortizing? Under PD 27, the period of repayment is 15 years.
LBP shall extend the period of payment to twenty years.

How will the grant of increment of six percent (6%) yearly interest compounded annually on OLT lands affect the amortization payment by OLT beneficiaries?
Although this grant effectively raises compensation to owners of OLT lands, agrarian reform beneficiaries will not be affected. They shall continue to amortize the land on the basis of the original land value.

PD 27 provides that lease rental payments made by the farmer-beneficiary to the landowner after 21 October

1972 shall be considered as advance payment for the land. What documents are required to serve as evidence of payment?
Allegations of lease rental payment on the sole basis of affidavits ("pagpapatotoo") executed by the farmerbeneficiaries concerned shall not be sufficient. DAR Memorandum Circular No. 11, Series of 1994 provides that such affidavits must be supported by additional evidence. The Memo Circular states that the FB's affidavit must be confirmed by the landowner and that there should be other corroborative evidence to substantiate the allegation that payment of lease rental had been paid to the landowner (e.g., affidavit of BARC members/farmers).

What are the procedures for determining sufficiency of lease rental payments as advance amortization and consequently, the issuance of certificate of full payment to the farmer-beneficiary?
1. MARO shall serve a copy of the FB's affidavit to the landowner through either: * * personal delivery registered mail with return card

In either case, there should be proof of service. 2. Simultaneous to the delivery of the affidavit to the landowner, the MARO shall also post the affidavit for fifteen (15) days in the barangay hall, and other conspicuous places where the property is situated. 3. MARO shall verify from the records whether or not lease rentals paid by the FB are sufficient to cover the land value. The MARO shall likewise validate the veracity of the landowner's objection if any and submit a report and recommendation to the PARO within tendays from the date service is completed.

4. PARO issues Certificate of Full Payment if it is found that rentals paid sufficiently cover the cost of the land and furnishes photocopies to landowner and FB not later than ten (10) days from receipt of the MARO's report. 5. Landowner may file an appeal to the Regional Director within ten (10) days from receipt of the photocopy. In turn, the RD decides within ten (10) days from receipt of the appeal. The RD's decision is final in so far as the DAR is concerned. 6. The ROD registers the Emancipation Patent (EP) on the basis of the PARO's Certificates of Full Payment and the RD's Order (in case of appeal). 11.3 PAYMENT UNDER VLT/DPS

Is there also a ceiling on payments under VLT/DPS?

Yes, in effect there is a ceiling since the law provides that although the terms and conditions of the VLT/DPS shall be mutually agreed upon by the landowner and the ARB, these should not be less favorable to the ARB than those that would prevail if it were the government acquiring the land from the landowner and selling it to the beneficiary.

Can lands transferred under VLT/DPS be repossessed if the agrarian reform beneficiary defaults in his/her payment?
Yes. The VLT/DPS agreement shall contain sanctions for non-compliance by either party and such shall be duly recorded and its implementation monitored by the DAR. Should the beneficiary, for reason other than those brought about by force majeure or fortuitous events default in his/her obligations for three (3) consecutive

installments to pay the land amortization, he/she shall be replaced as beneficiary and be permanently disqualified from being a beneficiary under CARP. DAR shall cancel the CLOA which had been issued and transfer the land to either: a. Qualified heir of the beneficiary who shall assume the balance of the value of the land; or b. In the absence of a qualified heir, a new qualified beneficiary who, as a condition for such transfer, is willing to abide by the terms of the existing VLT/DPS agreement and who will pay for the entire value of the land.

What will happen to the payments made by the previous beneficiary who has defaulted?
In case of (b) above, the landowner shall refund the previous beneficiary in one lump sum or on installment basis for the amounts already paid and for the improvements made by the latter, less the computed lease rental for the duration of the previous beneficiary's use of the land and other charges provided by law. 11.4 PAYMENT IN LAHAR AFFECTED AREAS

Are the farmer-beneficiaries in lands affected by the Mt. Pinatubo eruptions required to continue paying their amortization?
The Joint DAR-LBP Administrative Order No. 03, Series of 1994 provides the policy guidelines and procedures to be followed under this situation. Payment of amortization shall be deferred if subject landholding falls under Category I actually affected areas (see Page 78 ) until such time that the land becomes productive again, without prejudice to the farmer's voluntary payment of amortization. The farmer, however, should first notify the Land Bank in writing of his/her

intention of deferring payment and this must be approved by Land Bank. If the landholding falls either under Category II not yet affected or Category III lands covered by ashfall, the farmer shall continue to pay the amortization.

Will payment also be deferred if the land is under Category I but acquisition was through voluntary land transfer or direct payment scheme?
Yes, but instead of notifying the Land Bank, the farmer-beneficiary concerned shall notify the landowner in writing with the assistance of DAR of his/her intention to defer payment. CHAPTER 12 SUPPORT SERVICES 12.1 SUPPORT SERVICES TO LANDOWNERS

What support services shall be provided to the affected landowners?

The support services provided to landowners are: a. investment information, counseling assistance; financial and

b. facilities, programs and arrangements for exchange and marketing of LBP bonds; and c. other services intended to assist landowners in productively utilizing the proceeds of the sales of the land for rural industrialization.

What specific investment incentives are offered to landowners?

If they invest in rural industries, they will be entitled to incentives granted to a registered enterprise engaged in a pioneer or preferred area of investment as provided for in the Omnibus Investment Code of 1987, or to other

incentives which may be provided by PARC, LBP, or other government financial institution. If the landowners invest the proceeds in a Board of Investment (BOI) registered company or in any agribusiness or agri-industrial enterprise in the region, the LBP shall redeem the LBP bonds up to thirty percent (30%) of their face value. (Section 38, RA 6657)

What specific action has been done by DAR to facilitate assistance to landowners?
Special Order No. 172, Series of 1993 mandated the creation of a Landowner's Desk in every DAR provincial office. This desk will be handled by one full-time staff with the position of at least a Supervising Agrarian Reform Program (SUARPO). This LO's Desk shall handle exclusively and specifically landowners' problems, issues and concerns. The LO's Desk Officer shall have the following responsibilities: 1. Answer landowners' queries and receive complaints and other concerns brought by the landowners to the attention of DAR; 2. DAR Refer these concerns to appropriate units or to the LBP-Land Valuation

Office, or resolution;

other

government action

agencies taken on

for the

3. Monitor referrals; and

the

4. Assist landowners in close coordination with LBP, with investment requirements, especially in recycling land transfer payments back to the countryside. 12.2

SUPPORT SERVICES TO AGRARIAN REFORM BENEFICIARIES

What are the support services provided to the agrarian reform beneficiaries?
Appropriate support services should be provided to the ARBs. These services include:

a.

land surveys and titling;

b. liberalized terms on credit facilities and production loans; c. d. education and extension services, institutional development;

e. marketing and management assistance and support to cooperatives and farmers organizations; and

f. CHAPTER 13

infrastructures

AGRICULTURAL LEASEHOLD 13.1

LAWS AND ISSUANCES ON LEASEHOLD

What are the laws governing leasehold relationship between landowners and lessees?
Various laws have been passed governing leasehold tenancy. A review of such laws would reveal a progression from one of election and limited operation to one of compulsion and comprehensive application.

Act to Govern the Relations Between Landholders and Tenants of Agricultural lands.) (Leasehold and Share
a. RA 1199 Tenancy) 30 August 1954. Under this law, the tenant was given the right to choose a leasehold tenancy arrangement.

(An

Act known as Agricultural Land Reform Code Instituting Land Reform in the Philippines, including the Abolition of Tenancy and the Channeling of Capital Into Industry, 08 August 1963. This law
b. RA declared agricultural share tenancy to be contrary to public policy and was, thereby, abolished.

3844 An

Act Amending RA 3844, otherwise Known as the Agricultural

c. RA

6389 An

Land Reform Code, and for Other Purposes, 10

September 1971. This provided for the automatic conversion of agricultural share tenancy to agricultural leasehold but with Section 35 of RA 3844 retained. This section allowed the exemption of certain landholdings from leasehold fishponds, salt beds and lands principally planted to citrus, coconut, cacao, coffee and other similar permanent trees. d. RA 6657 (Section 12) mandated the DAR to determine and fix immediately the lease rentals in accordance with Section 34 of RA 3844, but expressly repealed Section 35 of RA 3844. This, therefore, abolished the exemptions and made all tenanted agricultural lands subject to leasehold.

What are the significant changes in the laws?

implications

of

these

The significant implications are as follows: a. abolition of share tenancy and conversion to agricultural leasehold now covers all agricultural lands without exception; b. leasehold is no longer just an option, it exists by operation of the law; and c. leasehold can be a preliminary step to land ownership. All share crop tenants were therefore, automatically converted into agricultural lessees as of 15 June 1988 whether or not a leasehold agreement has been executed.

WHAT ADMINISTRATIVE ORDER LEASEHOLD IMPLEMENTATION?

COVERS

DAR Administrative Order No. 05, Series of 1993, "Rules and Procedures Governing Agricultural Leasehold

and the Determination of Lease Rental for Tenanted Lands".

This AO supersedes the following AOs: AO No. 04, Series of 1989, "Rules and

Procedures Governing Agricultural Leasehold and the Determination of Lease Rental for Tenanted Lands";
AO No. 09, Series of 1991, "Rules and

Procedures on Leasehold Tenanted Coconut Lands; and Procedures on Leasehold Tenanted Sugarcane Lands"

Operations

in

AO No. 04, Series of 1992, "Rules and

Operations

on

Why is there a need to institute leasehold in the retained areas of landowners?

The DAR should institute leasehold to protect and improve the tenurial and economic status of tenant-tillers in agricultural lands within the retained areas and in areas not yet covered. Leasehold would improve the hold of the tenant on the land because the lessee shall have physical possession and enjoyment, as well as management of the land. Furthermore, with the fixing of the lease rental, the lessee would get more for his or her labor and other inputs. 13.2 TENANCY RELATIONSHIP

What are the conditions set for a tenancy relationship to exist?

All the following conditions must be present for tenancy relationship to exist: a. That the parties are the landholder and the tenant; b. That the subject is agricultural land; c. That there is consent by the landowner for tenant to work on the land, given either orally or in writing, expressly or impliedly;

d. That production;

the

purpose

is

agricultural

e. That there is personal cultivation or with the help of the immediate farm household; and f. That there is compensation in terms of payment of a fixed amount in money and/or produce

What is meant by personal cultivation?

There is personal cultivation if the tenant cultivates the land himself/herself or with the aid of the immediate farm household. Immediate farm household refers to the members of the family of the lessee and other persons who are dependent upon him/her for support and who usually help him/her in the activities.

Why should there be leasehold even in coconut lands or other permanent crops when there is practically no "cultivation" involved?
Cultivation has been defined in separate court rulings as: "not limited to the plowing and harrowing of

the land, but also husbanding of the ground to forward the products of the earth by general industry, the taking care of the land and fruits growing thereon, fencing of certain areas, and the clearing thereof by gathering dried leaves and cuffing of grasses. In coconut lands, cultivation includes the clearing of the landholding, the gather of coconuts, their piling, husking and handling, as well as the processing thereof into copra, although at times with the aid of hired laborers" (Coconut Cooperative
Marketing Association, Inc. vs. Court of Appeals, Nos. L-4681-83, August 19, 1988, 164 SCRA 568; Wenceslao Hernandez vs. Hon.

Intermediate Appellate Court et al, G.R. No. 74323, September 21, 1990, 189 SCRA 758). Clearly, there is cultivation involved in coconut lands.

Does a tenancy relationship exist in cases where squatters are allowed by the landowner to cultivate the land for free?
No, agricultural tenancy does not exist in this case since there is no expressed or implied agreement to undertake the cultivation of the land belonging to the landholder. No agreement exists in terms of share in harvest or payment in a fixed amount. It is, however possible for the parties to subsequently enter into a leasehold relationship.

When shall a tenancy relationship cease to exist?

The agricultural leasehold relation is extinguished by any of the following: a. abandonment of the landholding without the knowledge of the agricultural lessor; b. by the lessor 3844); voluntary surrender of the landholding tenant-lessee after giving notice to the three months in advance (Sec. 8, RA or

c. absence of an heir to succeed the lessee in the event of his/her death or permanent incapacity. (RA 3844, as amended, Sec. 7 and 8) The leasehold relation is likewise extinguished when the lessee's dispossession of the land is authorized by the DAR Adjudication Board or by the proper court in a judgment that is final and executory, for violations of the leasehold agreement or pertinent provisions of agrarian laws on leasehold.

On what grounds may dispossessed of his/her tillage?

tenant-lessee

be

An agricultural lessee may be dispossessed his/her tillage on the following grounds:

of

a. He/she failed to substantially comply with the terms and conditions of the leasehold contract or with laws governing leasehold relations, unless the failure is caused by a fortuitous event or force majeure; b. He/she planted crops or used the land for a purpose other than what had been previously agreed upon.AO No. 05-93, however, now allows the lessee to intercrop or plant secondary crops after the rental has been fixed, provided he/she shoulders the expenses; c. He/she failed to adopt proven farm practices necessary to conserve the land, improve its fertility, and increase its productivity (with due consideration of his/her financial capacity and the credit facilities available to him/her); d. His/her fault or negligence resulted in the substantial damage, destruction, or unreasonable deterioration of the land or any permanent improvement thereon; e. He/she does not pay the lease rental when it falls due except when such non-payment is due to crop failure to the extent of 75 percent as a result of a fortuitous event; or He/she employed a sublessee. (Section 36, RA 3844, as amended) f. The dispossession shall be by a final and executory judgment.

What if a lessee employed hired labor but religiously pays the lease rental to the landowner?

The lessee can only employ hired labor if he/she is temporarily incapacitated and has no immediate family household who will do the cultivation.

Is the agricultural leasehold relation extinguished by the death or permanent incapacity of any of the parties?
No. In case the tenant-lessee dies or is permanently incapacitated, the leasehold relation shall continue between the agricultural lessor and the member of the lessee's immediate farm household who can personally cultivate the land. Such person shall be chosen by the lessor within one month from such death or permanent incapacity from among the following: a. the surviving spouse; direct descendant by or b. the eldest consanguinity; or

c. the next eldest descendent descendants in the order of their age.

If the death or personal incapacity of the lessee occurs during the agricultural year, the choice by the lessor shall be done at the end of that agricultural year. If the lessor fails to exercise his choice within the prescribed period, the above mentioned order of priority shall be followed. In case of death or permanent incapacity of the lessor, the leasehold relation shall bind his/her legal heirs.

What is the effect of transfer of legal ownership of the land?

Leasehold is not extinguished with the transfer of legal ownership of the land from one landowner to another. Section 10 of RA 3844, as amended, provides that the purchaser or transferee shall be subrogated to the rights and substituted to the obligations of the agricultural lessor. 13.3 RIGHTS

AND

RESPONSIBILITIES

OF

LESSEE

What are the rights of the lessee?

a. To have possession enjoyment of the land; and peaceful

b. To manage and work on the land in a manner and method of cultivation and harvest which conform to proven farm practices; c. To mechanize all or any phase of his farm work; d. To deal with millers and processors and attend to the issuance of quedans and warehouse receipts of the produce due him/her; e. To continue in the exclusive possession and enjoyment of any homelot the lessee may have occupied upon the effectivity of RA 3844; f. To be indemnified for the costs and expenses incurred in the cultivation and for other expenses incidental to the improvement of the crop in case the lessee surrenders, abandons or is ejected from the landholding; g. To have the right of pre-emption and redemption; and h. To be paid disturbance compensation in case the conversion of the farmholding has been approved.

What are the duties and responsibilities of the lessee?

The lessee shall at all times perform the following pursuant to Section 26 of RA 3844, as amended:

a. Cultivate and take care of the farm, growing crops, and other improvements on the land and perform all the work therein in accordance with proven farm practices; b. Inform the lessor within a reasonable time of any trespass committed by third persons on the farm, without prejudice to his/her direct action against the trespasser; c. Take reasonable care of the work animals and farm implements delivered to him/her by the lessor and see to it that they are not used for purposes other than those intended, or used by another without the knowledge and consent of the lessor; If any of such work animals or farm implements get lost or damaged due to the lessee's negligence, he/she shall pay the lessor the equivalent value of the work animals or farm implements at the time of the loss or damage; d. Keep the farm and growing crops attended to during the work season. In case of unjustified abandonment or neglect of his/her farm, any or all of the expected produce may, upon order of the appropriate body or court, be forfeited in favor of the lessor to the extent of the damage caused thereby; and

e. To pay the lease rental to the lessor when it falls due. Under RA 3844, as amended, the lessee has also the responsibility to notify the lessor at least three days before the date of harvesting, or whenever applicable, the date of threshing. As decided in a Supreme Court ruling, however, this is no longer required from the lessee.

Is there a limit in the area a lessee under CARP may cultivate?

No. Since RA 6657 only speaks of the three (3) hectare limit with respect to the award that may be given to the ARB, this ceiling does not apply under the leasehold system. The tenant, however, must render personal cultivation on the entire area leased.

Can a lessee be a tenant in a separate landholding?

Section 27 of RA 3844 includes as one of the prohibited acts of an agricultural lessee, entering into a contract to work additional landholdings belonging to a different agricultural lessor to acquire and personally cultivate an economic family size farm without the knowledge and consent of the lessor with whom he/she had first entered into leasehold, if the first landholding is of sufficient size to make him/her and the members of the immediate farm household fully occupied in its cultivation. Based on this provision, it is still possible for a lessee to be a tenant in another landholding. The prohibition applies if the land presently cultivated is already of sufficient size to fully occupy the lessee or his/her immediate household in the cultivation. Even if the size is already sufficient, cultivation of other landholdings is still possible if there is consent of the original lessor.

What is meant by "economic family size" farm?

RA 3844 has defined economic family size farm as an area of farm land that permits efficient use of labor and capital resources of the farm family and will produce an income sufficient to provide a modest standard of living to meet a farm family's need for food, clothing, shelter and education with possible allowance for payment of yearly installments on the land, and reasonable reserves to absorb yearly fluctuations in income.

Is the lessee compelled to pay additional rent for the secondary crops raised by his/her after the execution of the contract?
No, after the rental has been fixed, such rental shall serve as payment for the use of the land. The lessee may diversify and/or plant secondary crops without paying additional rent, provided that all expenses are shouldered by him/her.

What are the specific rights of the lessees in sugarcane lands which should be part of the leasehold agreement?
The lessees in sugar cane lands shall have rights which can be exercised by them personally or through a duly registered cooperative or farmers' association of which they are members. These are to:

1. enter into a contract with the sugar central or millers for the milling of sugar cane grown on the leased property; 2. be issued a warehouse receipt (quedan) or molasses storage certificate by the sugar central for the manufactured sugar, molasses and other by-products. 3. have free access to the sugar central's factory, facilities and laboratory for purposes of checking and/or verifying records and procedures; 4. be furnished a weekly statement of cane and sugar account showing, among other things, the tonnage of the delivered cane and analysis of the crusher juice; 5. be given thirty (30) days notice in writing before the sugar and other by products are sold through public auction; and 6. be provided with the standard tonnage allocation by the miller/sugar central.

What if the sugar central/miller refuses to recognize the rights of the lessee?
In cases of such refusal by the sugar/miller, then the lessee with the assistance of DAR and/or the cooperative of which he/she is a member of, should file a petition with the DARAB.

What if the land under lease is subject of an approved land use conversion applications?
The lessee may be dispossessed of his/her tillage if such land is subject of an approved land use conversion application, provided the lessee is given a disturbance compensation equivalent to five (5) times the average of the gross harvests on his/her land during the last five (5) preceding calendar years, and such other benefits he/she is entitled to as provided for by law.

13.4 RIGHTS

AND

RESPONSIBILITIES

OF

LESSOR What are the rights of the lessor?

Section 29 of RA 3844 provides that it shall be the right of the lessor to: a. Inspect and observe the extent of compliance with the terms and conditions of the leasehold contract; b. Propose a change in the use of the landholding to other agricultural purposes, or in the kind of crops planted; c. Require the lessee, taking into consideration his/her financial capacity and the credit facilities available to him/her, to adopt proven farm practices necessary to the conservation of the land, improvement of the fertility and increase in productivity; and d. Mortgage expected rentals.

What are the duties and responsibilities of a lessor?

The lessor shall, at all times, keep the agricultural lessee in peaceful possession and cultivation of his/her landholding. In addition, he/she shall keep intact useful improvements existing on the landholding at the start of the leasehold relationship such as irrigation and drainage systems and marketing allotments, which in the case of sugar quotas shall refer both to domestic and export quotas, provisions of existing laws to the contrary notwithstanding.

What are the prohibition on the lessor?

a. To dispossess the lessee of his/her landholding except upon authorization by the Court under Section 36,RA 3844; b. To require the lessee to assume, directly or indirectly, the payment of the taxes or part thereof levied by the government on the landholding; c. To require the lessee to assume, directly or indirectly any rent or obligation of the lessor to a third party; d. To deal with millers or processors without written authorization of the lessee in cases where the crop has to be sold in processed form before payment of the lease rental; e. To discourage, directly or indirectly, the formation, maintenance or growth of unions or organizations of lessees in his/her landholding; f. For coconut lands, indiscriminate cutting of coconut trees will be deemed a prima facie evidence to dispossess the tenant of his/her landholding unless there is written consent of the lessee and there is certification by the Philippine Coconut Authority (PCA), copy

of the findings and recommendations of which shall be furnished to affected tenants or lessees, or a resolution from the Municipal Board allowing the cutting for valid reasons. (AO-05, Series of 1993 and AO 16, Series of 1989)

Is indiscriminate cutting of coconut trees prohibited only in tenanted coconut lands?

No, even in lands cultivated by farmworkers.

Should the landowner execute two (2) separate leasehold contracts with the same lessee, one for the principal crop and the other for the secondary crop?
No. As a general rule, the landowner and lessee shall only execute one contract for their leasehold relation. The execution of two contracts is no longer necessary since the lease rental shall cover the whole farmholding cultivated by the lessee. Hence, secondary crops shall form part of the leasehold contract. There are, however, certain qualifications: the secondary crop must have already been planted as of 15 June 1988 and the area covered is more than half a hectare.

What if there are two or more tenants?

If there are two or more tenants on the same lot, each producing a different crop, they may decide to have a joint leasehold agreements, whichever is feasible.

What are the liabilities of a lessor if he/she ejects his/her tenant-lessee without the court's authorization?
A lessor shall be liable for: a. fine or imprisonment; b. damages suffered by the agricultural lessee in addition to the fine or imprisonment for unauthorized dispossession;

c. payment of attorney's fees incurred by the lessee; and d. the reinstatement of the lessee.

Can the lessor order the lessee to change crops?

No. Section 29 of RA 3844 provides that the lessor may propose a change in the use of the landholding to other agricultural purposes, or in the kind of crops to be planted. The change, however, shall be agreed upon by both the landowner and the lessee. In case of disagreement, the matter shall be settled by the Provincial Agrarian Reform Adjudicator (PARAD) or in his/her absence, the Regional Agrarian Reform Adjudicator (RARAD) according to the best interest of the parties concerned. 13.5 LEASE RENTAL

How much lease rental should the lessees pay?

The lease rental to be paid by all agricultural lessees shall not be more than the equivalent of twenty-five percent (25%) of the average normal harvest during the three (3) agricultural years immediately preceding the following dates: * 10 September 1971 the date of effectivity of RA 6389 for tenanted rice and corn lands; * date the tenant opted to enter into leasehold agreement or as of 15 June 1988, whichever is sooner, for tenanted sugar lands; or * date of leasehold agreement by the parties concerned or 15 June 1988, whichever is sooner, for all other agricultural lands after deducting the amount used for seeds and the cost of harvesting, threshing, loading, hauling and processing whichever is applicable. For example, in coconut, the deductible items would depend on the final product. If the final product is green

nuts, then there is no cost of processing included. If the final product is copra, then the deductible items would include cost of harvesting, loading and hauling, and the cost of husking, splitting, scooping and drying.

Can fertilizer be included in the list of allowable deductions for any particular crop?
No, only those enumerated under Section 34 of RA 3844 as cited above can be included as a deductible item. However, DAR shall study the effect of the use of fertilizer and other related expenses as a cost of production and its impact on the rental structure. This shall be taken into account in the periodic review and adjustment of the rental structure.

How do you compute for the lease rental of newly cultivated land?
In the case of newly cultivated land or land cultivated for a period less than three years the initial rental shall be based on the harvest of the first agricultural year, if such harvest is normal, or on the average harvest during the preceding agricultural years. If there had been no normal harvest, then the estimated normal harvest when the land was actually cultivated shall be used. cCAaHD Once the three normal harvest have been established, the final rental shall be based on the average normal harvest of these three preceding agricultural years.

Why is the lessor given only 25% while the lessee retains 75% of the net produce from the land?
These percentages were provided for under RA 3844 on the premise that the lessee largely contributes to the production of crops or fruits; while the lessor's only contribution is the land.

What is the normal harvest?

The normal harvest is the usual or regular produce obtained from the land when it is not affected by any fortuitous event or force majeure such as typhoon, flood, drought, earthquake, volcanic eruption, and the like.

What is an agricultural year?

This is the period of time required for raising a particular agricultural product, including land preparation, sowing, planting and harvest of crops, and whenever applicable, threshing of said crops. In case of crops yielding more than one harvest from one planting (e.g., sugar cane), the agricultural year shall be the period from the preparation of the land to the first harvest and thereafter from harvest to harvest. For sugar cane, ratooning (from thrash burning to harvesting) shall likewise be considered as one agricultural year. An agricultural year, therefore, may be shorter or longer than a calendar year. (AO 05-93).

If there is already an existing leasehold agreement, is there a need to negotiate another one?
No, the existing leasehold agreement will be respected provided that the agreed lease rental does not exceed the maximum rental allowed by law. Furthermore, this agreement shall be subject to the periodic review of the MARO for purposes of determining compliance.

Can the landowner demand for an increase in the agreed or fixed rental on the ground that there is an increase in yield or production?
The landowner can only demand for an increase in the fixed or agreed lease rental if he/she introduced capital improvements on the farm. In such a case, the rental shall be increased proportionately to the resulting increase in production due to said improvements. The cost of capital improvement, including the interest thereon, will be determined, and the number of years shall be fixed within which the increase in rental shall be paid.

What is capital improvement?

Capital improvement refers to any permanent and tangible improvement on the land that will result to increased productivity. If done with the consent of the lessee, then the lease rental shall be increased proportionately.

What will happen if there is a decrease in production as a result of large scale replanting in coconut lands? Can the lease rental be reduced?
Yes, if the lessor initiates large scale replanting and the normal coconut production is affected, a new lease rental may be computed proportionate to the decrease in production.

What happens to the lease rental should the tenantlessee suffer crop failure due to a fortuitous event or force majeure?
The lessee may defer payment of the lease rental due for the agricultural year affected by a fortuitous event or force majeure causing crop failure to the extent of 75 percent. The lease rental shall be paid on a staggered basis subject to the agreement of both parties. Normally, such rental is paid in installments every harvest time beginning the next agricultural year and to continue until the lessee is fully paid.

13.6 FIXING THE LEASE RENTAL

What is the role of the MARO in the implementation of agricultural leasehold?

With the assistance of the Barangay Agrarian Reform Committee (BARC) and the POs/NGOs present in the area, the MARO shall: 1. Identify all landholdings still under share tenancy and list the landowner and sharetenants thereon; 2. Together with the PARO, undertake massive information dissemination on leasehold; 3. Prioritize areas for leasehold implementation taking into account presence of strong people's organizations and/or voluntary application by any lessor or lessee; 4. Require submission by parties concerned of documents on production data, normal harvest, and cost of deductible items during the three immediately preceding agricultural years. If these are not available, gather production data released by the proper government agency; 5. Conduct mediation conference (with the assistance of the Barangay Council, if there is no BARC) between the landowner and the lessee for the purpose of fixing the lease rental. If any party fails to attend the conference despite notice, mail notice at the last known address of the parties and post two successive notices at seven days apart at the municipal, barangay halls and the place where the land is located. The MARO shall proceed with the computation of the lease rental. The second notice should be posted at least ten days prior to the scheduled conference;

6. In case of disagreement, accomplish the prescribed leasehold form in five copies in the language or dialect known to the lessees, explain the contents and have it signed or thumb marked by the parties or duly authorized representative before two witnesses; 7. Register the Leasehold Agreement with the Municipal Treasurer and furnish each party a copy of the registered agreement. The PARO, on the other hand, will have the leasehold agreement annotated at the back of the Transfer Certificate of Title on file with the Register of Deeds.

What if there is no agreement reached during the mediation conference?

If no agreement is reached despite the mediation conferences, the MARO shall fix the provisional lease rental and prepare the Leasehold Documentation Folder. Copies of the Order for Provisional Lease Rental shall be sent to the landowner, lessee and the PARO. The Leasehold Documentation Folder shall then be transmitted to the PARAD. The PARAD shall review the provisional lease rental within 30 days from the receipt of the documentation folder and issue the order of lease rental. Pending the review of the provisional lease rental, the PARAD upon motion of the landowner shall order the lessee to deposit the provisional lease rental with the nearest LBP Office in a trust account in the name of the landowner, if the payment is in cash, or in a designated bonded warehouse if the payment is in kind and give a written notice to the MARO and the landowner.

What if either or both the parties concerned disagree with the order of lease rental made by the PARAD?

Any party who disagrees with the Order of Lease Rental issued by the PARAD may bring the matter to the DARAB within 15 days from receipt thereof. Otherwise, the Order shall become final and executory. 3.7

OTHER RELATED LAWS AND ISSUANCES

1. Presidential Decree (PD) No. 152, promulgated on 31 March 1973, prohibited the employment or use of share-tenants in complying with the requirements of the law regarding entry, occupation, improvement and cultivation of public lands. 2. PD No. 583, promulgated on 10 November 1974, prescribed penalty for the unlawful ejectment, exclusion, removal or ouster of tenant farmers from their landholdings. 3. PD No. 816 promulgated on 21 October 1975, penalized any agricultural lessee of rice and corn lands under PD 27 who deliberately refuses or continues to refuse to pay rentals or amortization payments when they are due and remain unpaid within a period of two years. 4. PD No. 1425, promulgated on 10 June 1978, strengthened the prohibition against the practice of share tenancy and provided penalties thereof. Under this Decree, any tenant who refuses to enter into leasehold contract may be prosecuted before the Court of Agrarian Relations. 5. PD No. 1040 promulgated on 21 October 1976, prohibited and penalized the contracting of share-tenants in all agricultural lands covered by PD 27.

CHAPTER 14 PRODUCTION AND PROFIT SHARING 14.1 COVERAGE

What is production and profit sharing?

This is a mandate under Section 16 of EO 229 and Sections 13 and 32 of RA 6657 which requires individuals or entities owning or operating under lease or management contract, agricultural lands to execute production and profit sharing plan with their farmworkers or farmworkers' organization, pending final distribution of the land or implementation of the stock distribution scheme.

What are the existing Administrative governing production and profit sharing?

Orders

a. Administrative Order No. 08, Series of 1988, "Guidelines and Procedures Implementing Production and Profit Sharing Under RA 6657" b. Administrative Order No. 09, Series of 1988, "Guidelines and Procedures Implementing Production Sharing Under EO 229" It will be observed that EO 229 mandated only production sharing while RA 6657 included profit sharing on top of the production sharing.

Who are required to execute production and profit sharing plan?

The following employers are required to execute Production and Profit Sharing Plan with their farmworkers if their annual gross sales exceed Five Million Pesos (P5M):

a. Any enterprise owning or operating agricultural lands under lease, management contract, production venture or other similar arrangement; b. Multinational Corporations engaged in agricultural activities; and c. Commercial farms devoted to aquaculture including salt beds, fishponds and prawn ponds, fruit farms, orchards, vegetable and cut flower farms, and cacao, coffee and rubber plantation.

Why are these employers required to execute production and profit sharing plan with their farmworkers?
Section 2 of RA 6657 declared that agrarian reform program is founded on the right of the farmers and regular farmworkers, who are landless, to own directly or collectively the lands they till, or in the case of other farmworkers, to receive a just share of the fruits thereof. This mandated production and profit sharing plan is in pursuit of this avowed principle of agrarian reform. While awaiting for final land or stock distribution until the end of the deferment period in the case of commercial farms, or full control of the land in the case of lease back arrangements, farmworkers can realize an improvement in their farm income.

Who are the employees covered?

All farmworkers of covered employers, regardless of duration, who are directly working on the land of the corporation or other entities, whether classified as regular, seasonal, technical or other farmworkers are covered in the mandated Production and Profit Sharing Plan. They should not, however, own more than three (3) hectares of agricultural land. 14.2 DAR's AUTHORITY

What is the power given to the DAR in the implementation of production and profit sharing plan under the CARP?

The DAR through its Secretary representatives has the following powers:

or

authorized

1. To order and administer compliance with the Production Sharing provisions of EO 229 and Production/Profit Sharing provisions of RA 6657; 2. To require covered employers to submit report on the distributed production/profit shares; 3. To compel the production of books and documents of covered employers; 4. To compel answers to questions needing clarifications to shed light on problems encountered in the implementation; 5. To issue subpoena; and 6. To enforce its writs through sheriffs or other duly deputized officers. 14.3 MAIN FEATURES

What are the main features of the mandated plan?

EO 229
Under EO 229 and its implementing guideline, AO No. 09, Series of 1988, covered employers who realize a gross sales in excess of five million pesos per annum, shall prepare and execute a Production Sharing Plan whereby at least 2.5 percent of the gross sales from the production/cultivation of the agricultural lands are distributed as compensation to their farmworkers over and above the compensation they currently receive. The employers are not, however, compelled to pay more than one hundred percent of the regular annual compensation of the farmworkers. Regular annual compensation includes all cash remunerations or earnings regularly paid to an employee by an employer for services rendered within a year, such as salaries, wages, 13th month pay, bonus, allowances, commissions and paid leaves, and other income of similar nature, whether mandated by law or provided by collective bargaining agreement or established company practices, but excludes payment arising from the Production and Profit Sharing provided under EO 229and RA 6657. The Plan should cover the period from 29 August 1987 (date of effectivity of EO 229) and 14 June 1988 (date prior to the effectivity of RA 6657). Fifty percent (50%) of the Production Share should have been paid not later than 12 February 1989 and the balance on or before 2 April 1989.

RA 6657
They are required to pay the following Production and Profit Shares to be given over and above the compensation currently received by their farmworkers, which shall be distributed based on the following schedules:

Amount of Production Share:

Three percent (3.0%) of Annual Gross Sales from 15 June 1988, until final land or corporate stock transfer to the farmworker-beneficiaries is effected, provided that the employer is not obligated to pay more than one hundred percent (100%) of the regular annual compensation of the farmworker-beneficiaries. * Fifty percent (50%) of the estimated Production Share (based on unaudited financial statements) shall be distributed within sixty (60) days at the end of the accounting year, with the balance (based on audited financial statement) payable not more than sixty (60) days thereafter.

Amount of Profit Share:

Ten Percent (10%) of net profit after tax, provided that in cases where the retention right is allowed, the amount to be distributed shall be reduced by an amount equivalent to the proportion of the retained area to the total land area. * Fifty (50%) of estimated Profit Share (based on unaudited financial statements) shall be distributed within 90 days at the end of the accounting year, with the balance based on audited financial statements payable not more than 60 days thereafter. For lands to be turned over to the farmworkerbeneficiaries, a transitory period whose length shall be determined by DAR, shall be established. During this period, farmworkers will be trained to manage the enterprise. The managerial and supervisory group in place during this transitory period shall receive at least one percent (1%) of the gross sales of the entity based on the agreement concluded by the farmworker-beneficiaries and this group, subject to the approval of DAR.

What is the effect on existing production/profit sharing granted by employer prior to the promulgation of EO 229 andRA 6657?

It shall be credited as compliance with the mandated production and profit sharing plan. Provided, however, that where the benefit under the existing Production and Profit Sharing Plan is less than the applicable amount required in Administrative Order Nos. 08 and 09, Series of 1988, the employer shall pay the difference.

What is the DAR's policy on undistributed and unclaimed production and profit sharing?
All undistributed or unclaimed Production and Profit Shares shall be deposited by the employer with the nearest Land Bank of the Philippines branch in the name of the Secretary of Agrarian Reform for payment to the workers to whom they are due. The employer shall immediately report such deposits to the nearest DAR Office and sends notices to the farmworker-beneficiaries. If the money remains undistributed or unclaimed after two years from the date of deposit, the same shall be considered forfeited and shall be turned over to the Agrarian Reform Fund pursuant to Administrative Order, No. 08, Series of 1988.

Who are required to submit a report distributed production and profit sharing?

on

the

All covered employers are required to submit a report on the Production and Profit Shares distributed, including the special payrolls, under oath signed by the employer or his duly authorized representative, not later than 30 days after completion of the distribution of the workers' shares. 14.4 ROLE OF THE MARO

Can the MARO compel covered employers to execute production and profit sharing plan?
Yes, as long as they realize gross sales in excess of five million pesos and a net profit after the tax.

In case a covered employer who was granted a deferment refuse to execute a production and profit sharing plan, what sanction can the MARO enforce?
A report should immediately be submitted by the MARO to the PARO. Non-compliance with the provisions on production and profit sharing is a violation covered by the provisions on Prohibited Acts and Omissions, and Penalties (Sections 73 and 74 of RA 6657, respectively). Violation of the provisions on production and profit sharing is punishable by imprisonment of not less than one month to not more than three years or a fine of not less than one thousand pesos (P1,000.00) and not more than fifteen thousand pesos (P15,000.00), or both, at the discretion of the court. The MARO may also initiate the cancellation of the Order of Deferment issued by the DAR Regional Director and subject his land to compulsory acquisition.

What should the MARO do in case of disputes arising from production and profit sharing?
The MARO, together with the BARC should mediate and conciliate. They should convince both parties to settle the dispute voluntarily. In case there is no success in settling the dispute, this shall be forwarded to the PARO and if still unsolved, it shall be submitted to the PARAD for adjudication. CHAPTER 15 COMMERCIAL FARM DEFERMENT 15.1

MEANING OF COMMERCIAL FARMS AND COMMERCIAL FARM DEFERMENT What are commercial farms?

Commercial farms are private agricultural lands over five hectares in size devoted to commercial aqua culture including salt beds, fishponds and prawn ponds fruit farms, orchards, vegetable and cut flower farms, and cacao, coffee, and rubber plantations. It should be noted that the definition is limited to these commodities produced. Thus, other farms although commercial in nature are not covered by the definition. Further, Section 11, RA 6657 actually includes in the list lands devoted to commercial livestock, poultry and swine raising. The Supreme Court decision in Luz Farms vs. the Secretary of Agrarian Reform (128 SCRA 568), however, has removed these farms from the coverage of CARP.

What is commercial farm deferment?

Section 11, RA 6657 as implemented by AO 1688 provides that the acquisition and distribution of qualified commercial farms shall be deferred for ten (10) years from 15 June 1988. In case of new farms, the ten year deferment period shall begin from the first year of commercial production and operation, as determined by DAR. 15.2 RATIONALE FOR DEFERMENT

Why is coverage of these farms deferred?

The CARP provides for the deferment of the coverage of the farms mentioned earlier, to allow them to

recover their investments and insulate them from possible disruptions in operations and productivity during land acquisition and distribution. The commercial farm deferment provision of RA 6657, which runs counter to the general rule of immediate land transfer, particularly of large estates, reflects the numerous compromises that had to be forged by the legislators in the crafting of the law. 15.3 REQUIREMENTS

Is the deferment automatic?

No. The farm should already be planted to commercial crops or devoted to commercial farming operations before 15 June 1988. It should likewise be applied for deferment with the DAR, which shall approve the application based on whether or not the farm meets the requirements enumerated in Annex A of AO 16-88. These criteria are on the density of planting (number of plants or trees per hectare) and infrastructure and facilities of the farm.

When is the deadline for filing of applications for commercial farm deferment?
The extended deadline for applying deferment was 02 May 1989. Deadline for application was originally set on 20 March 1989 but was extended. A total of 4,620 commercial farms applied as of November 30, 1994. The applications of 1,546 farms have been approved, covering 54,837 hectares. The rest are still being evaluated and processed. 15.4 DEFERMENT PERIOD

When is the start of the ten-year deferment period?

For farms already in commercial production as of 15 June 1988, the deferment period began as of that date. For farms already established before 15 June 1988 but were not yet in commercial production as of that date,

the deferment starts from the first year of commercial production and operations, or at the end of the gestation period provided inAO 16-88 based on the crop planted or commodity produced. This is to give the landowner the chance to recover and profit from his or her investments.

How about for farms with one crop of varying ages?

For farms divided into two or more area planted to a crop, the deferment period of each area has to be determined, following the same rules above. Thus, deferment of those areas which were already in commercial production as of the effectivity of RA 6657 began as of 15 June 1988. Deferment of those areas not yet in commercial production as of 15 June 1988 began or will begin at the end of the gestation period of the crop. On the other hand, for farms with commercial crops intercropped with other commercial crops, the start of the deferment is based on the status of the main crop.

What is the gestation period?

The gestation period is the period beginning from the time the crop or commodity is first planted or raised until the time the crop bears fruit or the produce are harvested. The end of the gestation period is the start of commercial production. The gestation periods listed in Annex A of AO 1688 were recommended by the Department of Agriculture.

15.5 DAR's ROLE DURING DEFERMENT PERIOD

Is a farm granted deferment completely out of CARP coverage for ten years?
No, for two basic reasons: First, the deferment may be lifted and the farm subjected to immediate redistribution of the DAR determines that the purposes for which the deferment is granted no longer exist. The reason for deferment must be continuously present for the farm to be continuously deferred. Thus, a deferred vegetable farm may be compulsorily acquired if the landowner decides to devote the area to sugar cane production, instead. The other reason is that a farm granted commercial farm deferment is required to pay production and profit shares (PPS), if it realizes gross sales exceeding five million pesos. This is to allow the farmworkers to receive a just share of the fruits of the farm during the deferment. The production and profit shares shall be paid upon the start of the deferment period.

What shall the DAR do during the deferment period?

Aside from monitoring the farm as to compliance with the CFD and PPS regulations, the DAR shall undertake the necessary steps towards the acquisition and distribution of the property. These include valuation of the land, and, more importantly, facilitating the organization of the farmers by partner NGOs/POs in the area. Organizing the farmers during the deferment period will smoothen the transfer of land ownership and prevent disruption of operation.

May a landowner with an approved commercial farm deferment application change his or her commercial crop?
Yes, provided the total deferment period reckoned from the date of first approval is not extended.

What happens if a farm which has been granted commercial farm deferment suffers from a calamity or

force majeure? If the crops were destroyed, will the farm be immediately covered under compulsory acquisition?
In cases where the crop planted or commodity raised in the area is destroyed by force majeure and the farm owner wants to replenish the crop or commodity, the DAR may continue to grant the deferment provided the following conditions are present: a. The landowner can immediately resume commercial operations; b. The employment of the beneficiaries is not affected; and workers or

c. The ten-year deferment period is not extended.

Who will monitor compliance by landowner with the rules and regulations on commercial farm deferment?
The DAR Regional Office shall maintain records of the landowner's operations to monitor compliance with the rules and regulations on deferment. It is also the Regional Director who signs the Order of Deferment. For these purposes, the landowner shall make available to DAR the farm's premises for ocular inspection, the personnel for interview and the records for examination during normal business hours. CHAPTER 16 LAND USE CONVERSION 16.1 DEFINITION

WHAT IS LAND USE CONVERSION?

Conversion the act of changing the current use of a piece of land into some other use. Specifically for the DAR, land use conversion refers to the change from agricultural to non-agricultural land use (residential, commercial, industrial, etc.). From a more technical perspective, conversion is defined as the act of authorizing the change of the current use of a piece of land into some other use. 16.2 DAR's STAND ON CONVERSION

Is the DAR against land use conversion?

No. The DAR recognizes that land use conversion is necessary, even inevitable in the country's march to progress. Many agricultural lands will have to be given up in favor of industrial estates, commercial centers, residential subdivisions, etc. Moreover, CARP is not the only program of Government. Other important programs on tourism, housing, and industrialization, among others, are being pursued and these all require land. What the DAR is against is indiscriminate and wasteful land use conversion. What the DAR wants is to direct land use conversion such that the productive agricultural lands are preserved for agriculture and the other programs are implemented in the marginal agricultural areas. It should be noted that agriculture can be carried out only in certain types of land. Thus, prime agricultural lands should rightfully be considered a finite natural

resource, further depletion of which would threaten national food security. In contrast, housing and industrialization, for example, require land merely for space and may therefore be implemented in lands marginal for agriculture. When conversion of agricultural lands coincides with the objectives of the Comprehensive Agrarian Reform Law to promote social justice, industrialization, and the optimum use of land as a national resource for public welfare, it shall be pursued in a speedy and judicial manner. 16.3 DAR's LEGAL MANDATE

What is the DAR's legal mandate in land use conversion?

Executive Order No. 129-A, Section 4 mandates the DAR to "approve or disapprove the conversion,

restructuring or readjustment of agricultural lands into non-agricultural uses".

Section 5 of the same EO authorizes the DAR to "have

exclusive authority to approve or disapprove conversion of agricultural land for residential, commercial, industrial, and other land uses as may be provided for by law".
Section 65 of RA 6657 likewise empowers the DAR to authorize under certain conditions, the reclassification or conversion and the disposition of lands awarded to agrarian reform beneficiaries. Finally, Section 4 of Memorandum Circular No. 54, Series of 1993 of the Office of the President, provides that "action on application for land use conversion on

individual landholdings shall remain as the responsibility of the DAR, which shall utilize as its primary reference, documents on the comprehensive land use plans and accompanying ordinances passed upon and approved by the local government units concerned, together with the

National Land Use 6657 and EO-129-A."

Policy,

pursuant

to RA

No.

What is the Department of Justice Opinion No. 44 and how does this affect DAR's authority to approve or disapprove conversions?
Under the Department of Justice Opinion No. 44, Series of 1990, a parcel of land is considered nonagricultural and, therefore, beyond the coverage of CARP if it has been classified as residential, commercial, or industrial in the City or Municipality Land Use Plan or Zoning Ordinance approved by the Housing and Land Use Regulatory Board (HLURB) before 15 June 1988, the date of effectivity of CARL. Under this Opinion, a parcel of land which is planted to coconut cannot be covered by CARP if it has been reclassified into the town's industrial zone prior to 15 June 1988.

If a parcel of land is covered by this DOJ opinion, must its landowner still file an application for conversion with the DAR?
No. All lands falling under this category, i.e., those lands already classified as commercial, industrial or residential before 15 June 1988 no longer need any conversion clearance. What the landowner or his duly authorized representative needs is an exemption clearance from the DAR. Application for such clearance should be filed with the Regional Office of the DAR where the land is located. (The procedures and requirements are detailed in AO No. 06, Series of 1994).

What policy guidelines govern land use conversion?

To operationalize the provisions of various laws, the Department of Agrarian Reform has issued several policy guidelines to regulate land use conversion. The latest, Administrative Order No. 12, Series of 1994, "Consolidated and Revised Rules and Procedures

Governing Conversion of Agricultural Lands to NonAgricultural Uses", now consolidates and revises all
existing implementing guidelines issued by the DAR, taking into consideration other Presidential Issuances and national policies related to land use conversion. Thus, AO No. 12-94 repeals AO Nos. 8 and 15, Series of 1990 and 1988, General Order No. 01, Series of 1989, AO Nos. 15, 16, and 18, Series of 1989, AO No. 07, Series of 1992 and amends AO Nos. 1 and 2, Series of 1990. The provisions of this latest Administrative Order, shall however, be applicable only to all application filed on or after its date of effectivity on 10 November 1994. All other applications filed previous to this AO shall be governed by the pertinent administrative orders or issuances in force at the time of the filing of the applications, and shall be processed accordingly. On the other hand, conversion for selected Regional Agro-Industrial Centers, Tourism Development Area and sites for socialized housing shall be processed under Joint NEDA-DAR Memorandum Circular No. 01, Series of 1993 issued pursuant to Executive Order No. 124, Series of 1993 of the Office of the President. 16.4 DAR's ROLE IN CONVERSION

Operationally, what is the DAR's role in land use conversion?

Aside from being the final approving authority, the DAR basically performs the following functions: a. Evaluate the documents submitted for completeness and veracity; b. Determines whether or not the subject land is covered by CARP; c. Determines whether or not the application should be approved based on the criteria set for land use conversion; d. Ensures that the potential agrarian reform beneficiaries are consulted on the proposed land use conversion and are properly given their disturbance compensation and other benefits; e. Monitors approved application compliance with the requirements; for

f. Together with the DOJ, monitors illegal conversions and recommends and files criminal cases against landowners and developers who undertake illegal conversions. 16.5

MECHANICS OF LAND USE CONVERSION: APPLICATION, APPROVAL, MONITORING Who may apply for land use conversion?
The following may apply for conversion: a. Owners of private agricultural lands or other persons duly authorized by the landowner; b. Farmer beneficiaries of the Agrarian Reform Program after the lapse of five (5) years from award, reckoned from the date of registration of their landholdings, and who have fully paid their obligations and are qualified, or persons duly authorized by them.

c. Government agencies, including government-owned or controlled corporations.

When may an application for conversion be granted?

Conversion situation: may be allowed under the following

1. If at the time of the application, the lands are reclassified as commercial, industrial and residential in the new or revised town plans promulgated by the Local Government Unit (LGU) and approved by the HLRB or by the Sangguniang Panlalawigan (SP) after 15 June 1988, in accordance with Section 20 of RA 7160 (The New Government Code), as implemented by Malacaang Memorandum Circular No. 54, Executive Order No. 72, Series of 1993. 2. If at the time of the application, the land still falls within the agricultural zones but: a. the land has ceased to economically feasible and sound agricultural purposes, as certified by Regional Director of the Department Agriculture (DA); or be for the of

b. the locality has become highly urbanized and the land will have a greater economic value for residential, commercial or industrial purposes, as certified by the local government unit. 3. If the city/municipality does not have a comprehensive development plan and zoning ordinance duly approved by HLRB/SP but the dominant use of the area surrounding the land subject of the application for conversion is no longer agricultural, or if the proposed land use is similar to; or compatible with the dominant

use of the surrounding areas as determined by the DAR. In all cases, conversion shall be allowed only if the DENR issues a certification that the conversion is ecologically sound.

May conversion be granted for lands covered by a notice of acquisition?

No. No application for conversion shall be given due course if the subject land has been covered by any of the following: a. Notice of Acquisition under compulsory acquisition or voluntary offer to sell; b. Application for stock distribution duly received by DAR; or c. Perfected VLT/DPS agreement between the landowner and the beneficiaries.

What other lands are non-negotiable for conversion?

Pursuant to Administrative Order No. 20, Series of 1992 (Interim Guidelines on Agricultural Land Use Conversion andMemo Circular No. 54, Series of 1993 both of the Office of the President, the following are nonnegotiable for conversion. 1. All irrigated lands available to support rice production. where water is and other crop

2. All irrigated lands where water is not available for rice and other crop production but within areas programmed for irrigation facility rehabilitation by the Department of Agriculture (DA) and the National Irrigation Administration (NIA). 3. All irrigable lands already covered by irrigation projects with firm funding

commitments at the time of the application for land use conversion or reclassification.

May conversion be granted for lands with qualified beneficiaries?

Yes. However, for the application for conversion to be approved, the beneficiaries must first be paid a disturbance compensation which should not be less than five (5) times the average of the annual gross value of the harvest on their actual landholdings during the last five (5) preceding calendar years. In addition to ensuring that the ARBs are properly paid the disturbance compensation, the DAR shall exert all efforts to see to it that free homelots and assured employment for displaced beneficiaries are provided by the applicant/developer.

Are farmworkers compensation?

also

entitled

to

disturbance

Yes. The DAR rules in AO 01-90 that payment of disturbance compensation is not limited to tenant who will be displaced but also includes farmworkers.

What shall the DAR do in case the ARBs are asking for a disturbance compensation above the level prescribed by law?
The DAR's principal responsibility in such case is to explain the provisions of the law to the farmers. The DAR may try to persuade the parties, particularly the

landowner, to a compromise but any increase beyond the legal requirement is at the discretion of the landowner.

May conversion be granted for any proposed project?

No. To prevent circumvention of coverage under the CARP, conversion shall be granted only upon evidence that the project to be established therein is viable and beneficial to the community affected.

How fast should the project be implemented?

Again to prevent circumvention of CARP, the land development phase of the project should be completed within one year from the issuance of the Order of Conversion where the area is five hectares or less. Should the area exceed five hectares, an additional year shall be allowed for every five hectares or a fraction thereof but in no case shall the completion of development extend beyond five years from the issuance of the Order of Conversion. Thus, a twelve (12) hectare area may be developed within three years, but a 50-hectare landholding should be developed within five (5) years.

May the DAR cancel or withdraw its approval for land use conversion?
Yes. The DAR may cancel or withdraw authorization for land use conversion, based on the following grounds: a. Misrepresentation or concealment of material facts in the application, e.g. capacity of the developer to undertake the project; b. Failure to implement and complete the land development of the area within the specified time; and c. Any other violation of the rules and regulations which are material to the grant of the conversion order.

What will happen to the lands covered by disapproved petitions for conversion or cancelled or withdrawn conversion order?
Lands covered by a petition for conversion which had been disapproved or those covered by a conversion order which had been cancelled or withdrawn shall be placed under CARP compulsory coverage, in accordance with the schedule of implementation prescribed in Section 7 of RA 6657 and be distributed to all qualified beneficiaries.

Where should the application for conversion be filed and what are the procedures to be followed?
Under the new guidelines, while forms can be obtained from any of the field offices, filing should be done at the Regional Office with the DAR Regional Center for Land Use Policy, Planning and Implementation (RCLUPPI). The application should contain the documentary requirements enumerated in Section 7 of AO-12, Series of 1994. Application with incomplete documents will not be acted upon and the applicant will be informed accordingly. There are also new procedures to be followed which clearly distinguish the role of various offices.

Regional Policy, Planning (RCLUPPI):

1.

The

Center and

for Land Use Implementation

* receives the application and reviews the required documents for completeness and compliance with all the requisites; * sends Notice of Land Use Conversion to the DAR Municipal Office (DARMO) for posting; * conducts field investigation and dialogues with affected parties and validates information in the documents;

* prepares recommendations;

findings

and

* prepares land use conversion folder for every application attaching all the required documents submitted by the applicant and endorse it to the Center for Land Use Policy, Planning and Implementation (CLUPPI) through the Regional Director, except: applications for conversion involving five (5) hectares or less of land that are within the non-agricultural zone per Land Use Plan approved by the HLRB/Sangguniang Bayan which shall be submitted to the Regional Director. Subsequent applications by the same landowners or his representative, however, on a portion of the same shall be forwarded to CLUPPI for resolution. 2.

DAR Regional Director

* Approves or disapproves applications covering lands within the nonagricultural zones with areas of five (5) hectares or less on an aggregate or project basis; * Forwards applications already acted upon to the RCLUPPI for proper disposition; * Submits monthly report on approved or disapproved applications, including pending applications to the CLUPPI, copy furnished the DARPO and DARMO.

Center for Land Use Policy, Planning and Implementation (CLUPPI)

3.

* reviews and evaluates all land use conversion folders received from RCLUPPI; * whenever necessary, conducts field investigation on the area and holds dialogues with government officials and entities, accredited NGOs and affected farmers and farmworkers with the assistance of the MARO; * for lands fifty (50) hectares or less, prepares the draft order recommending approval or denial and forwards the same to the Undersecretary for Policy and Planning who shall act on it within 45 working days from the date of receipt of folder from the RCLUPPI; * for areas above 50 hectares, prepares fact sheet and accomplishes the findings and recommendations and forwards these to the PARC Land Use Technical Committee (PLUTC) for further review within ten (10) days from receipt of the folder from RCLUPPI; * submits quarterly report on the status of all applications to the Secretary, through the Undersecretary for PPO, copy furnished the PARC Secretariat.

Undersecretary Planning:
4.

for

Policies

and

* reviews and approves or disapproves application for conversion of lands not exceeding fifty (50) hectares within five (5) working days from receipt of the folder from CLUPPI;

* forwards CLUPPI. 5.

the

signed

Order

to

PARC Land Use Technical Committee (PLUTC):

* reviews completeness and consistency of all folders received from CLUPPI, requires submission of additional documents or information and conducts field investigation (if necessary); * recommends approval or disapproval of applications for conversion of lands above fifty (50) hectares and forwards the same to the Secretary for his consideration. 6.

DAR Secretary:
* approves or disapproves land use conversion applications involving above 50 hectares within five (5) working days from receipt of folder; and * forwards CLUPPI. the signed order to

What is the recourse of an applicant or any aggrieved party who does not agree with the Regional Director's decision?
A motion for reconsideration of the decision of the Regional Director can be filed within fifteen (15) days from receipt of the order or decision. DCIEac Running of the period is suspended once the motion is filed. If the motion is denied, the aggrieved party can still make an appeal to the DAR Secretary. An appeal to the Secretary shall be made in the form of a memorandum and upon payment of P500.00 as appeal fee. On the other hand, appeal from the decision of the Undersecretary shall be made to the Secretary, and from

the Secretary to the Office of the President or the Court of Appeals, as the case may be. The mode of appeal/motion for reconsiderations, and the appeal fee, from the Undersecretary to the Office of the Secretary shall be the same as that of the Regional Director to the Office of the Secretary.

Are there mechanisms installed to ensure that the terms and conditions of the approved conversion are complied with?
Yes, there will be monitoring of compliance. The RCLUPPI shall monitor compliance by the applicant/developer based on the terms and conditions stipulated under AO No. 12-94, including the required posting of the approved order in a conspicuous place of the project area. The AO provides that failure to post such notice in the project area shall be a ground for the suspension of the development of the area and for possible cancellation of the conversion order. The RCLUPPI shall submit monthly reports to the Undersecretary for Policy and Planning through the CLUPPI of all land use conversion transactions, copy furnished the DARPO and the DARMO. In turn, the CLUPPI shall evaluate the reports submitted by the RCLUPPI and render quarterly reports on the status of all land use conversion to the Secretary, copy furnished the PARC Secretariat. 16.6 LGU's AUTHORITY TO RECLASSIFY

Does RA 7160, otherwise known as the Local Government Code of 1991 give the cities and municipalities the authority to convert agricultural lands to nonagricultural uses?
No, what the Code provides is the authority of cities and municipalities to reclassify lands into uses within their jurisdiction subject to certain limitations and conditions.

How does reclassification differ from land use conversion? the act of specifying how agricultural lands shall be utilized for non-agricultural
uses such as residential, industrial, commercial, as embodied in the land use plan. It also includes the reversion of non-agricultural lands to agricultural use. On the other hand, land use conversion is the actual change of agricultural land to non-agricultural uses. Although reclassification and conversion are similar in that they both determine whether a parcel of land should be used for agricultural or other purposes, they are different in approach reclassification is done through the town planning process taking into account the needs of the inhabitants for space for housing, industrial, commercial and other non-agricultural uses, while conversion goes through the DAR's evaluation process which takes into account the tenants and farmworkers, if any, on the landholding, the ascertainment of disturbance compensation, and on who will pay said disturbance compensation. Furthermore, although land reclassification can be indicative of which agricultural areas can be converted to non-agricultural uses, it does not involve an actual change in land use. Reclassification is

What agencies are involved in land reclassification?

Land reclassification is a power exercised by municipal or city governments through the town planning process, subject to review and approval by the Provincial Sanggunian through the Provincial Land Use Council (PLUC). DAR's participation is in the issuance of a certification that lands for reclassification are either not distributed, not covered by a Notice of Coverage, or not voluntarily offered for coverage under CARP.

What does the Local Government Code provide with respect to land reclassification?

Section 20 of RA 7160 and Malacaang Memo Circular No. 54 dated 08 June 1993 prescribing the guidelines governing Section 20, state that a city or municipality may, through an ordinance passed by the Sanggunian after conducting public hearings, authorize the reclassification of agricultural lands and provide for the manner of their utilization or disposition in the following case: a. when the land ceases to be economically feasible and sound for agriculture as certified by the DA; or b. where the land shall have substantially greater economic value for residential, commercial, or industrial purposes. The reclassification shall be based on the following percentage of the total agricultural land area at the time of the approval of the Code: o for highly urbanized and independent component cities 15% o for component cities and first to third class municipalities 10% o for municipalities fourth to sixth class 5%

In addition, the following types of agricultural lands shall not be covered by the said reclassification: a. agricultural lands distributed to agrarian reform beneficiaries subject to Section 65 of RA 6657; b. agricultural lands already issued a notice of coverage or voluntarily offered for coverage under CARP; c. agricultural lands identified under Malacaang AO No. 20-92 and MC 54 as nonnegotiable for conversion:

1. All irrigated lands where water is available to support rice and other crop production; 2. All irrigated lands where water is not available for rice and other crop production but within areas programmed for irrigation facility rehabilitation by the Department of Agriculture (DA) and the National Irrigation Administration (NIA). 3. All irrigable lands already covered by irrigation projects with firm funding commitments at the time of the application for land use conversion or reclassification.

Is the percentage ceiling on the land area which the LGUs can reclassify absolute?
No, the President may, when public interest so requires and upon recommendation of the National Economic and Development Authority (NEDA) authorize a city or municipality to reclassify lands in excess of the limits as cited above.

What are the requirements and procedures for reclassification?

a. The city or municipal development council shall recommend to the Sangguniang Panglunsod or Sangguniang Bayan, as the case may be, the reclassification of agricultural lands within its jurisdiction. b. Before enacting the ordinance reclassifying agricultural lands, the Sanggunian concerned must first secure the following certificates: 1. Certification from DA indicating the total area of existing agricultural lands in the city or municipality, that such lands are not classified as non-negotiable for

conversion or reclassification; and that the land has ceased to be economically feasible and sound for agricultural purposes. 2. Certification from DAR indicating that such lands are not distributed, or not covered by a notice of coverage or not voluntarily offered for coverage under CARP. c. The application shall be submitted to the HLRB which upon receipt shall conduct initial review to determine if: 1. the city or municipality has an existing comprehensive land use plan reviewed and approved in accordance with Executive Order No. 72 (1993); and 2. the proposed reclassification complies with the limitations prescribed under Section 1 of Memo Circular No. 54. d. The Sanggunian hearings for the purpose. shall conduct public

e. Upon receipt of the required certification from the government agencies, the Sanggunian concerned may now enact an ordinance authorizing the reclassification of agricultural lands and providing for the manner of their utilization or disposition.

After the enactment of the ordinance reclassifying the land, does this mean the agricultural land can now be converted for non-agricultural uses?
No. Approval of applications for land use conversions remains the responsibility of DAR. Hence, individual landholders of the affected areas should still file an application for conversion. DAR shall utilize as its primary reference in deciding on the application, the comprehensive land use plans, and the ordinance passed

upon and approved by the Sanggunian, together with the National Land Use Policy. CHAPTER 17 LAND TRANSACTION

LAWS AND ISSUANCES GOVERNING AGRICULTURAL LAND TRANSACTIONS

17.1

What are the laws governing land transaction?

17.1.1 RA 6657 contains several specific provisions on land transactions. They are the following: a. Section 6 provides that upon effectivity of the law, any sale, disposition, lease, management contract or transfer of possession of private lands executed by the original landowner in violation of the Comprehensive Agrarian Reform Law (CARL) shall be null and void. However, those transactions executed prior to the enactment of the law shall be valid if registered with the Register of Deeds within a period of three (3) months after the effectivity of the law, or on 13 September 1988; b. Section 70 allows the sale or disposition of agricultural lands retained by a landowner provided that the total landholding, including the land being acquired by the buyer/transferee shall not exceed the landholding ceiling of five (5) hectares, subject, however, to the right of pre-emption and/or redemption of tenant/lessee under Sections 11 and 12 of RA 3844, as amended

c. Section 73 prohibits the sales, transfer, conveyance or change of the nature of lands outside of urban centers and city limits either in whole or in part after the effectivity of RA 6657; The same section also prohibits the sale, transfer or conveyance by a beneficiary of the right to use or any other usufructuary right over the land he/she acquired by virtue of being a beneficiary, in order to circumvent the provisions of CARL; d. Section 27 of RA 6657 further provides that the lands acquired by beneficiaries may not be sold, transferred or conveyed except through hereditary succession or to the government or to other qualified beneficiaries for a period of ten 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; and e. Presidential Decree No. 27 originally prohibited the transfer of title to land acquired pursuant to this Decree except by hereditary succession or to the government in accordance with the provisions of PD 27, the Code of

Agrarian Reform and other existing laws and regulations. However, Section 6 of Executive Order No. 228 now allows the transfer of ownership of lands acquired by farmer-beneficiaries after full payment of amortization.

What are the relevant AOs on land transaction?

a. Administrative Order No. 01, Series of 1989 entitled "Rules and Procedures Governing Land Transactions" provided the implementing guidelines for RA 6657's provisions on land transaction. b. Administrative Order No. 04, Series of 1994 entitled "Guidelines on the Development of

Agro-Tourism Areas in Accordance with the Tourism Master Plan".

Under this new AO, DAR allows in meritorious cases, the lease or joint venture arrangement of lands acquired by agrarian reform beneficiaries under CARP for agro-tourism development purposes. This is in line with the general objective of agrarian reform in terms of uplifting the quality of life of the ARBs. Guidelines and safeguards should, however, be adhered to strictly.

LAND TRANSACTIONS AGRO-TOURISM DEVELOPMENT

17.2

INVOLVING

What are the conditions which must be present to allow lease or joint venture arrangements for agrotourism development involving lands distributed under CARP?
The following conditions must be present: 1. The area has been identified by government as priority development area under the Medium Term Philippine Development Plan, or certified by the Department of Tourism as a priority area for tourism development;

2. The dominant use of the area should still be agricultural such that the area to be developed for tourism shall be less than 50% of the total area subject to CARP. Irrigated or irrigable lands are further ineligible for these purposes; 3. The agricultural area of the project shall be continuously maintained by the ARBs who shall supply the tourism project with agricultural products; 4. The ARBs or their direct descendants shall be given preference in employment in the tourism project; 5. All improvements related to tourism shall accrue to the ARBs or their association at the expiry of the lease period; 6. Profit-sharing and other benefits may be negotiated by DAR in behalf of the ARBs, depending on the exigencies of the situation; 7. The lease agreement shall specify the time frame for development of the subject property but not to exceed five (5) years reckoned from the date of approval of the lease or joint venture agreement; 8. The agreements shall contain provisions for the violations of the agreements, including cancellations, penalties/sanctions and the like within the ten-year period pursuant to Section 27 of RA 6657. (AO 04, Series of 1994).

What kind of arrangements can be entered into by the ARBs if the above conditions are fulfilled?
1. Direct lease to the investor/developer under RA 7652;

2. Lease to a responsible government entity, who in turn may sublease the property to the investor/developer; 3. Lease back to the former landowner, who in turn will develop the area for tourism purposes; or 4. Joint venture agreement whereby ARB's lease rights shall be exchanged for shares of stocks, provided the ARBs shall organize into a farmers cooperative. 17.3

LAND TRANSACTIONS AFTER 15 JUNE 1988

A vendee bought a parcel of agricultural land consisting of fifty (50) hectares prior to 15 June 1988. However, the deed of sale was not registered within the three-month period as provided for in Section 6 of RA 6657. The vendee now wants to have the transaction registered and is willing to have the land covered by CARP. Should the ROD register the transaction?
Yes, the transaction should be registered even if beyond the prescribed period. Anyway, the vendee is willing to have it covered under CARP. To disallow registration and rescind the contract will result in a legal nightmare to the prejudice of the vendee/transferee. DAR can give clearance for the registration. (DOJ Opinion No. 41, Series of 1992).

Can agricultural lands be mortgaged to guarantee any loan obligation secured to develop or to improve such lands?
Yes, there are lands that may be the subject of mortgage, lien or encumbrance. These are the following: a. Lands not yet acquired by DAR in accordance with the schedule of acquisition mentioned in Section 7 ofRA 6657. b. Those lands chosen by the landowners as their retention areas; and

c. Lands already awarded/allocated to the agrarian reform beneficiaries.

Can banks and other financial institutions acquire title to agricultural lands subject of a mortgage right or interest?
Banks and other financial institutions allowed by law to hold mortgage right or security interest in agricultural lands may acquire title to those mortgaged properties, regardless of areas, subject to existing laws on compulsory transfer of foreclosed assets and acquisition as prescribed under Section 16 of RA 6657.

Can government financing institutions and government-owned or controlled corporations sell or dispose their lands which are suitable for agriculture directly to private individuals?
No. Executive Order No. 360, Series of 1989 enjoins them to grant the DAR the right of first refusal in the sale or disposition of their lands which are suitable for agriculture. This was further amended by EO 407 which mandates all government instrumentalities to

surrender to the DAR all landholdings suitable for agriculture including all pertinent documents in their
custody. In certain instances, they may avail of the VLT mode of transferring ownership of agricultural lands to qualified beneficiaries subject to the review and approval of DAR. 17.4

RIGHT OF PRE-EMPTION What is the right of pre-emption?

Under Section 11 of RA 3844, in case the landowner/lessor decides to sell his tenanted/leased land, he/she must first offer to sell the landholding to the tenant or lessee thereof who has the preferential right to buy the same under reasonable terms and conditions imposed therein.

If the land has two or more agricultural tenants or lessees in the same landholding, how will they exercise their right of pre-emption?
Section 11 of RA 3844 provides that if there are two or more agricultural tenants or lessees, each shall be entitled to said preferential right only to the extent of the area actually cultivated by him/her.

What is the prescribed period imposed by law in the exercise of the right of pre-emption?
The right of pre-emption may be exercised within one hundred eighty (180) days from notice in writing, which shall be served by the owner to all tenants or lessees affected. 17.5

RIGHT OF REDEMPTION What is the right of redemption?

Under Section 12 of RA 3844, in case the landholding is sold to a third person without the knowledge of the tenant or agricultural lessee, the latter shall have the right to repurchase said landholding at a reasonable price and consideration.

If there are two or more tenants or agricultural lessees in the same landholding, how will they exercise their right of redemption?
If there are two or more tenants or agricultural lessees in the same landholding, each shall be entitled to said right of redemption only to the extent of the area actually cultivated by him/her.

What is the prescriptive period imposed by law in order to avail of the right of redemption?
The right of redemption may be availed of within one hundred eighty (180) days from notice in writing which shall be served by the buyer on all tenants/lessees affected and the DAR upon the registration of the sale,

and shall have priority over any other right of legal redemption. 17.6

VALID TRANSACTIONS What are the valid transactions under the CARP?
The following transactions are valid: a. Those executed by the original landowner in favor of a qualified beneficiary from among those certified by DAR; b. Those in favor of the government, DAR or the LBP; c. Those covering lands retained by the landowner under Section 6 of RA 6657, executed in favor of the transferee whose total landholdings inclusive of the land to be acquired do not exceed five hectares, subject, however, to the right of pre-emption and/or redemption of tenant/lessee under Sections 11 and 12 of RA 3844, as amended; d. Those executed by ARBs covering lands acquired under any agrarian law in favor of the government, DAR, LBP or other qualified beneficiaries certified by DAR; and e. Those executed after ten (10) years from the issuance and registration of the Emancipation Patent (EP) or Certificate of Land Ownership Award (CLOA).

17.7

INVALID TRANSACTIONS What are the invalid transactions under CARP?

The following transactions are not valid: a. Sale, disposition, lease, management contract or transfer of possession of private lands executed by the original landowner prior to 15 June 1988, which are not registered on or

before 13 September 1988, or those executed after 15 June 1988 covering an area in excess of the five (5) hectare retention limit in violation of RA 6657; b. Those covering lands acquired by the beneficiary under RA 6657 and executed within ten (10) years from the issuance and registration of the Emancipation Patent (EP) or Certificate of Land Ownership Award (CLOA) except through hereditary succession, to the DAR, LBP or to other qualified beneficiaries; c. Those executed in favor of a person or persons not qualified to acquire land under Section 22 of RA 6657; d. Sale, transfer, conveyance or change of nature of land outside of urban centers and city limits either in whole or in part after 15 June 1988, except as provided for under the rules on land conversion; and e. Sales, transfer or conveyance by an ARB of the right to use or any other usufructuary right over the land he acquired by virtue of being a beneficiary in order to circumvent the law.

What are the transactions that may be registered with the Register of Deeds without clearance from the DAR?
The following are the transactions that can registered without clearance from the DAR: be

a. Deed of extra-judicial partition of the property of a deceased who died before 15 June 1988; b. Deed of partition of property owned in common by co-owners prior to 15 June 1988;

c. Subdivision of title without change of ownership; and d. Deed of Real Estate Mortgage executed by the original landowner or beneficiary. CHAPTER 18 PUBLIC LANDS 18.1

PUBLIC LANDS

ALIENABLE

AND

DISPOSABLE

How are public alienable and disposable lands to be distributed?

In general, all alienable and disposable public lands suitable to agriculture shall be distributed by the DENR to qualified citizens of the Philippines. Agrarian reform beneficiaries may be considered by the DENR provided that they are certified by DAR and DENR as still qualified to acquire public lands pursuant to the Joint DAR-DENR Administrative Order No. 07, Series of 1991. Areas subject to adverse claims by persons other than the applicant-tillers cannot be distributed until such claims are settled.

Who are the qualified applicants?

The following are generally qualified to apply for patents to public lands which are suitable to agricultural purposes and who satisfy additional existing requirements as prescribed by the Public Land Law (CA 141, as amended): 1. 2. a Filipino citizen; occupant-tiller of the land;

3. does not own other landholdings, the aggregate area of which does not exceed the limits allowed for the particular type of public land application; 4. is not an illegal entrant/occupant

What are the procedures followed in the distribution of public A & D lands to qualified applicants?
1. Filing of public land application shall be done at the Community Environment and Natural Resources Office (CENRO) having jurisdiction over the subject land. (Note: only lands covered

by approved surveys may be the subject of a public land application).

2. Processing of the application, including verification of qualifications and compliance with all the requirements of residence, cultivation, payment of required fees, etc., are done at the CENRO and the Provincial Environment and Natural Resources Office (PENRO) levels. 3. Signing of the land patent by the PENRO (up to five hectares for homestead and free patents), and by the Regional Environment Director (RED) (up to ten hectares) and by the DENR Secretary, if in excess of ten hectares. 18.2

INTEGRATED SOCIAL FORESTRY PROGRAM

Are forest lands suitable for agro-forestry also covered by CARP?

Yes, but only under the non-land transfer component of CARP called the "Integrated Social Forestry Program (ISFP)". Forest lands suitable for agro-forestry may be allocated to forest occupants under the principle of stewardship. They cannot be distributed for titling to agrarian reform beneficiaries in order to protect the forest.

ISFP involves the issuance of long-term tenurial agreements through Certificates of Stewardship Contracts or Community Forest Stewardship Agreements effective for twenty (25) years renewable for another 25 years and the provision of technical, social, material and other support services to individual forest occupants and forest communities. With these support services, the DENR hopes to reforest denuded lands to improve the socio-economic conditions of the occupants.

What is the maximum land size which can be availed of by qualified applicants under ISFP?
Seven (7) hectares shall be the maximum size of land that can be availed of under ISFP. 18.3

SETTLEMENT AREAS

Do the guidelines for public A & D lands suitable to agriculture apply to DAR settlement areas?
No. All DAR Settlement Projects covered by a Presidential Proclamation issued before the effectivity of RA 6657 are deemed to have been classified as alienable and disposable under the powers of the Chief Executive to classify lands of the public domain and by virtue of the expressed provisions in the proclamation authorizing the DAR to dispose of the lands described in such proclamation.

What rules govern the manner and mode of disposition and titling of lots in the DAR settlement projects?
a. Administrative Order No. 09, Series of 1989 entitled "Rules and Procedures Governing

Titling and Distribution Settlement Projects"; and

of

Lots

in

DAR

b. Administrative Order No. 01, Series of 1992 entitled "Revised Rules and Procedures

Governing the Disposition of Homelots and Other Lots in Barangay Sites and Residential, Commercial and Industrial Lots in Town Sites Within DAR Settlement Projects and Similar Other Areas Under DAR Jurisdiction". How much should the ARBs pay for lands distributed in DAR settlement areas?
None. All lots (agricultural or non-agricultural) shall be distributed free of cost. No survey fees or other costs relative to the distribution of the land shall be charged to the beneficiary.

What are the functions of the MARO under these procedures?

1. Conduct a physical perform the following: inventory and

a. Review and evaluate the list of allocatees and conduct lot verification to determine whether the ARB allocatees still occupy and till the lots covered by the Certificates of Allocation; b. Require the occupant/tiller to accomplish the Farmer Beneficiary Application Form (SP Form No. 01); 2. Evaluate application forms and recommend appropriate action. Recommendation shall be based on the following guides:

For applicant with Certificate of Allocation (CA): a. If applicant is living and is the actual cultivator/occupants: Issue CLOA b. If deceased but the heirs are actual cultivators/occupants: Issue CLOA to

qualified heirs
c. If not an actual cultivator: Cancel

CA and Issue beneficiary

d.

CLOA

to

qualified

If occupying the wrong lot: Issue

CLOA for lot actually occupied and cancel CA for the corresponding lot
e. If absentee CA holder: Consider

land covered by CA abandoned and apply procedures for cancellation of allocation

actual If applicant has no CA but is a qualified occupant/transferee: Issue CLOA for

not more than three hectares of his/her own choice and preference. Area in excess shall be distributed with preference to his/her qualified children.
3. Consolidate SP Form No. 1 and prepare Summary FB Data Sheet (SP Form No. 02) for those applicants recommended for issuance of CLOA. This shall constitute the Land Distribution Folder. 4. Endorse the LDF to PARO for review and CLOA preparation. 5. Prepare a summary list of vacant and unallocated lots and lots with certificates of allocation recommended for cancellation.

What are the grounds for cancellation of allocation?

1. Absence of the settler/allocatee from the settlement for more than six (6) months without written permission of the DAR; 2. Transfer of rights by transferor without written consent and approval of the DAR Regional Director concerned; 3. Voluntary rights in writing; renunciation or waiver of

4. Failure to cultivate the lot for a period of more than six (6) consecutive months from the date of allocation of said lot; and 5. Death of settler/allocatee if he/she has no qualified heir.

What is the award ceiling for qualified beneficiaries?

The award ceiling shall not be more than three hectares. However, qualified beneficiaries who have occupied and cultivated the land and established their vested rights prior to 15 June 1988, in accordance with the Public Land Law and other existing laws, shall be awarded the legal limits allowed by said laws.

Who are the qualified beneficiaries?

1. 2. landless; Filipino citizen;

3. Actual occupant/tiller who is at least 18 years of age or head of the family at the time of filing of application; and 4. Has the willingness, ability and aptitude to cultivate and make the land productive. Preferential assistance shall be given to: 1. Qualified women agricultural labor force; members of the

2. War veterans and veterans of military campaign;

3. 4. 5.

Retirees of AFP and INP; Returnees/surrenderees; and Graduates of agricultural school

What other types of lots can be distributed in the settlement areas?

Homelot refers to a parcel of land which is intended

for farm residence in a barangay site.

Residential Lot refers to a parcel of land which is

intended for residence in a town site.

Town Site Lot refers to a parcel of land in the town

site of a settlement which is intended residential, commercial, or industrial use. either for

Industrial Lot refers to a parcel of land in the town

site intended as a site for processing of products and for other industrial purposes.

Who are qualified applicants for these lands?

1. Filipino citizen; 2. At least 15 years of age or head of the family at the time of filing of application; and

3. Applicant or his/her spouse is not the owner-awardee or allocatee of another homelot, residential, commercial or industrial lot.

What is the award ceiling for such types of lands within settlement areas?
A qualified applicant is entitled to acquire only one homelot or one residential/commercial or industrial lot with an area not more than one thousand (1,000) square meters. However, an awardee or allocatee of a homelot or residential lot may still be allowed to acquire one commercial or industrial lot following the provisions of AO No. 01, Series of 1992.

What are the modes of disposition of homelots and other types of lots?
1. Homelots and residential, commercial and industrial lots shall be disposed of by direct sale to qualified actual occupants. If the occupant is not qualified, the lot may be sold to the qualified members of the family. If there is none, then the lot shall be considered vacant and shall be disposed of. 2. Vacant homelots in barangay sites shall be disposed of through public raffle to qualified applicants. 3. Vacant residential, commercial and industrial lots shall be disposed of through public bidding, to the highest qualified bidder. However, no bid should be less than the appraised value of the lot. 4. Lots allotted to or intended for public use, whether within barangay sites or town sites shall be turned over by the DAR to the particular government entity or agency concerned.

5. An allocatee occupying the lot allocated or awarded to him/her before the effectivity of said AO 01-92shall be issued a CLOA upon payment of the cost of the land. 6. An allocatee or awardee occupying a different lot allocated or awarded to him/her before effectivity of the above mentioned AO shall be awarded the correct lot and issued a CLOA upon full payment the lot. 7. Awards/allocations of absentee beneficiaries shall be cancelled and the lot shall be awarded and titled to the actual occupants.

How much is the cost of these lots?

For homelots, the cost should not be less than three pesos (P3.00) per square meter; for residential, ten pesos (P10) per square meter; and fifteen pesos (P15) for industrial and commercial lots allocated or awarded prior to AO No. 01-92.

18.4

PUBLIC AGRICULTURAL LANDS TURNED OVER BY THE NATIONAL LIVELIHOOD AND SUPPORT FUND

What rules govern public agricultural lands turned over by the National Livelihood and Support Fund

(NSLF) to the Department of Agrarian Reform for distribution under CARP?

These are governed by Memorandum Circular No. 07, Series of 1993 entitled "Implementing Guidelines on the

Distribution and Titling of the Public Agricultural Lands Turned Over by the National Livelihood and Support Fund to the Department of Agrarian Reform for Distribution Under the CARP Pursuant to EO 407, Series of 1990, as Amended by EO 448, Series of 1991 and as Clarified under Memorandum Order No. 107 of the President of the Philippines dated 23 March 1993"
Under MO 107, the DAR and the DENR were directed to jointly determine which areas were classified as alienable and disposable agricultural lands previous to the effectivity of Proclamation No. 2282 for disposition by the DAR through the issuance of CLOAs to qualified beneficiaries. DaScHC Who are the qualified beneficiaries? 1. In general, the farmer-tiller or actual occupant shall be given preference in the distribution of the lands occupied by him/her provided that the area will not exceed three hectares per farmer-beneficiary. Areas in excess, if any, may be distributed to the qualified children or relatives of the ARB designated by him/her. 2. Farmers organization may also be issued collective CLOAs, the total hectarage covered, however, shall not exceed the number of coowners or members of the farmers organization multiplied by three, except in meritorious cases approved by the PARC. 3. Cultural communities or indigenous tribal groups located within the A & D areas with no adverse claims shall be issued collective CLOA in the name of the community or the tribe

concerned, represented by the acknowledged leader. In case the total hectarage will exceed the three hectare award ceiling per member, the approval of the PARC shall be secured.

What portions shall not be covered?

1. Lands with adverse claims until the adverse claims are resolved administratively or judicially. 2. Parcels or lots already titled, except when their area exceeds the five hectare retention limit, in which case they shall be covered following the schedule of priorities. 3. Parcels or lots covered by public land applications filed with the DENR or the DA. The applicant concerned shall be allowed to pursue the application with the DENR. Applicants who wish to instead acquire their lots through CARP may be allowed to do so provided that they present proof that they have already requested the DENR to cancel or reject their applications and that they possess all the qualifications of an ARB. 4. Lands which have been proclaimed as reservations in favor of other government agencies or instrumentalities. Portions which are not being used for the purpose of the reservation or not needed by the agency or instrumentality concerned may be acquired under separate negotiations initiated by the DAR. 5. Poblacions, town sites, barangay sites, and similar sites actually used for residential or non-agricultural purposes. Their titling shall be pursued under other government programs under the responsibility of other government agencies.

6. All lands utilized as government sites in addition to those lands specified in Section 10 of RA 6657 (on exemptions). 7. Lands intended for or devoted to public use such as highways, roads, railroads, foreshores, public right of way and other similar uses, as well as lands under bodies of water such as rivers, creeks, lakes, bays, natural springs, irrigation canals, reservoirs, and similar areas under water. 8. Lands where the actual occupant or claimant may already be entitled to a free patent under RA 6940(continuous occupation and cultivation by himself or through his predecessors-in-interest for at least thirty (30) years prior to 16 April 1990, among other requirements). The claimant may be allowed to perfect his/her rights through the DENR. However, occupants or claimants who prefer to become ARBs instead shall be included in the CARP if qualified. 9. All lands that are unclassified or classified as Timberland or Forest Land, National Parks or Mineral Lands, even if occupied and fully cultivated. Instead, the occupants shall be referred to the DENR for possible inclusion in the ISFP program.

Will these lands be paid for by the beneficiaries?

No, except for the payment of the proportionate cadastral survey costs as determined by the DENR. If such survey cost is not paid by the ARB at the time of the CLOA issuance, this shall be annotated as a lien on the title.

LANDS OF THE PUBLIC DOMAIN COVERED BY CANCELLED OR EXPIRED PASTURE LEASE AGREEMENTS (PLAs) AND
18.5

TIMBER LICENSE PER EO 407

AGREEMENTS

(TLAs)

What rules govern the CARP coverage of lands of the public domain covered by expired PLAs and TLAs?
Joint DAR-DENR Administrative Order No. 02, Series of 1992 provided the rules and procedures on the disposition of lands of the public domain covered by cancelled or expired Pasture Lease Agreements (PLAs) and Timber License Agreements (TLAs), following the provisions of Executive Order No. 407 dated 14 June 1990.

Are these lands acquired by the DAR?

No, under the Joint Administrative Order, the role of the DAR in lands covered by expired or cancelled PLAs and TLAs is to screen and identify the ARBs. It is the DENR which, in coordination with DAR, distributes the land under the ISF program.

How will these lands be allocated to ARBs?

These shall be distributed by the DENR in collaboration with the DAR, either individually or collectively to ARBs who are duly verified and screened by the DAR.

What are the procedures in the distribution of lands covered by the expired and cancelled PLAs and TLAs? What are the roles of the DAR and DENR?
1. DENR Secretary identifies and declares that certain expired/cancelled leases are available for CARP. 2. DAR verifies if the actual occupantscultivators within the subject area have been registered as prospective and qualified beneficiaries pursuant to DAR Administrative Order No. 10, Series of 1989. If not, it conducts an inventory of the occupants/cultivators. 3. If there are registered prospective and qualified beneficiaries, the DAR reviews the register and in coordination with DENR, verifies who among them are actual occupants and prioritizes the allocation giving preference to actual occupants/cultivators; 4. The DENR conducts a survey of the parcels allocated to applicant/beneficiaries; 5. The applicant, assisted by DAR files the application for Certificate of Stewardship (CS) in the prescribed form, together with the certification of the Municipal Agrarian Reform Officer (MARO) at the DENR/CENRO Office concerned where the area applied for is located; and 6. The CENRO issues Certificate of Stewardship (CS) for areas up to three (3) hectares.

Are lands under cancelled or expired PLAs and TLAs subjected to titling under CARP?
No, public lands classified as forest lands are inalienable and are distributed only for stewardship and

not for titling through the DENR-Forest Management Sector (FMS).

What proof of award to agrarian reform beneficiaries will be issued under expired and cancelled PLAs and TLAs covered by the public domain?
The DENR issues the Certificate of Stewardship Contract (CSC) after a Stewardship Agreement is signed between the beneficiary and the DENR.

Can ARBs acquire title to lands under cancelled or expired PLAs and TLAs?
No. Under the law, these types of lands are inalienable or non-registrable and therefore cannot be titled to the agrarian reform beneficiaries. They are however, covered by a long term twenty-five (25) year lease contract which is renewable for another 25 years.

Can the DENR through the Forest Management Sector (FMS) refuse to allocate portions of cancelled or expired PLAs and TLAs which are unoccupied and uncultivated to DAR's selected ARBs?
Yes. The DENR, through the FMS may refuse to allocate, because RA 6657, Section 7, provides that only pastures and agricultural leases already cultivated and planted to crops shall be covered. This is consistent with the inalienable nature of forest lands.

Can occupant-cultivators within expired or cancelled PLAs and TLAs that are under the ISF program who are not registered as potential ARBs be displaced, ejected or removed?
No. Under the law, actual occupant-tillers are given preferential rights in the distribution of lands of the public domain. They shall not be displaced or removed from the land they till as long as they are directly working and making their land productive. Qualified occupant-cultivators of public lands, though unregistered, shall be given priority in the distribution thereof.

In case conflict arises between the rules of DAR and the DENR on the allocation and disposition of ISF lands, which rules will be followed?
The DENR Forest Management Bureau rules will be followed. However, DAR's rules on the screening and selection of ARBs shall be followed.

LANDS OF THE PUBLIC DOMAIN COVERED BY CANCELLED OR EXPIRED FISHPOND LEASE AGREEMENTS (FLAs) PER EO 407
18.6

What rules govern the allocation of cancelled or expired Fishpond Lease Agreement (FLAs)?
Executive Order No. 407 as amended by EO 448 and as implemented by a Joint DAR-DA AO No. 05, Series of 1991govern the acquisition of cancelled or expired Fishpond Lease Agreement for distribution to agrarian reform beneficiaries, either individually or collectively; and Presidential Decree No. 704 (Fisheries Decree of 1975).

What are the main roles of the DAR and DA in the allocation of cancelled or expired FLAs?
The DAR is responsible for the screening and identification of the ARBs. The DA verifies and identifies through BFAR, fishpond areas covered by FLAs which

are already expired or subject to cancellation. The DA also subsequently processes the applications of ARBs identified by the DAR and issues the fishpond lease agreements.

What is the order of priority in the determination of ARBs on lands covered by cancelled or expired FLAs?
The ARBs are chosen according to the following order of priority specified in Section 22 of RA 6657: 1. 2. 3. 4. 5. agricultural lessees and share-tenants; regular farmworkers; seasonal farmworkers; other farmworkers; actual tiller or occupant of public lands;

6. collective or cooperative of the above beneficiaries; and 7. others directly working on the land.

Why is the allocation of cancelled or expired FLAs being done by DA-BFAR and not by DAR?
Section 3 of EO 407 specifically provided that the DA and the DENR, in coordination with the DAR shall redistribute and award fishponds, pasture lands and other lands of the public domain suitable for agriculture, subject of cancelled or amended lease agreements, to qualified agrarian reform beneficiaries identified by the DAR pursuant to Sections 18 and 22 of RA 6657.

Are lands under expired subjected to titling under CARP?

or

cancelled

FLAs

Public lands suitable to agriculture are not subject to titling after 9 November 1972 per Sections 23 and 24 of PD No. 704 because they are disposable only through lease by the DA-BFAR after that date. CHAPTER 19

LANDED ESTATES

What are landed estates?

Landed Estates are former haciendas or landholdings of private individuals or corporations which have been acquired by the Government under different laws, for redistribution and resale to deserving tenants and landless farmers.

What improvements have been made in the procedures for distribution and/or titling of lots, in agricultural landed estates?
Administrative Order No. 03, Series of 1990, entitled "Revised Rules and Procedures Governing

Distribution and/or Titling of Lots in Landed Estates Administered by DAR" was issued to revise the tedious
process which has resulted in unnecessary delay in the distribution and titling of landed estates to qualified beneficiaries. Under this AO, a CLOA shall immediately be issued to the qualified beneficiary, including those with Deeds of Sale still pending with the DAR, provided that all outstanding accounts of an awardee shall be annotated at the back of the CLOA and duly registered with the ROD. Outstanding accounts include amortization payments for the land, farm implements and machineries, if these are not covered by separate contracts, other loan assistance and accrued interests on overdue amortization payments and unpaid rentals from 01 January 1988.

What are the terms of payment for the account balances annotated at the back of the CLOA?
Beneficiaries/allocatees whose amortization payments and unpaid rentals do not exceed one thousand pesos (P1,000) have three (3) years starting from the registration of titles to pay their balances. Those whose obligations exceed one thousand pesos (P1,000) have five (5) years to pay such obligations.

What will happen if the beneficiaries/allocatees fail to pay such balances?

Failure to pay the obligations annotated at the back of the CLOA shall lead to the forfeiture of the lots in favor of the government for distribution to other qualified beneficiaries/allocatees.

What are the functions of the MARO under these revised procedures?
1. Conduct a physical perform the following: inventory and

a. Identify areas with approved, incomplete, erroneous and without subdivision surveys. Recommend to the PARO, the completion/correction of subdivision surveys within a period not to exceed one year from the issuance of AO No. 03, Series of 1990 (date of effectivity 22 June 1990); b. Review and evaluate the list of allocatees/awardees and conduct lot verification to determine whether said awardees/allocatees are still occupying and tilling the lots. Prepare a master list of occupants/claimants with corresponding lot numbers, to be posted simultaneously for a period of 15 days at the barangay hall, MARO Office and the Municipal Building;

c. Assist all actual occupants/tillers who have not been issued either an Order of Award (OA), Deed of Sale or Certificate of Land Transfer (CLT) in accomplishing the FB Application Form; d. Undertake the computation of all the obligations to be paid by the beneficiary. 2. Evaluate Application Forms and recommend appropriate action. Recommendation shall be based on the following guide: For applicant with OA/CLT: a. If applicant is living and is the actual cultivator/occupant: Issue CLOA; b. If deceased but the heirs are actual cultivators/occupants: Issue CLOA to the

estate of the deceased or to one of the qualified heirs upon the agreement of the others;
c. If not actual cultivator/occupant and employs tenants prior to full payment of the cost of the land:Cancel OA/CLT and

issue CLOA to cultivator/occupant;

d.

qualified

actual

If permanently incapacitated: Issue

CLOA provided that cultivator/occupant has immediate members of the farm household who could assist him in farming;
e. If applicant mortgaged or sold his/her right and left the area: Cancel

OA/CLT and issue CLOA to qualified actual occupant/tiller;

f. If occupying the wrong lot: Issue

CLOA for lot actually occupied and cancel OA/CLT ;

g.

If absentee OA/CLT holder: Cancel

OA/CLT and issue CLOA to qualified actual occupant/tiller.

If actual occupant has no OA/CLT: a. and has no other supporting documents: Issue CLOA provided occupant

is qualified and there is no adverse claimant to the subject lot;

b. with transfer document (waiver of rights of previous awardee): Issue CLOA if

with DAR approval; and if without DAR approval, still, issue CLOA provided occupant is qualified and there is no adverse claimant;
3. Prepare Land Distribution Folder for Landed Estates for applicants recommended for issuance of CLOA. 4. Endorse the LDF to PARO for review and approval as a basis for CLOA preparation. 5. Prepare a list of vacant and unawarded lots and lots with awards recommended for cancellation. 6. Post the list of vacant and unallocated lots and lots with awards recommended for cancellation for 15 days at the MARO office and other conspicuous places within the landed estate. 7. Identify and prioritize the list of farmer-beneficiaries in close coordination with the BARC for consideration in the distribution of available lots. 8. Prepare separate Land Folders for new beneficiaries; and Distribution

9. Endorse LDF to PARO for review and consolidation.

What are the grounds for cancellation of orders of award?

1. Absence of the awardee from the landed estate for more than six (6) months without doing any effort to make the land productive; 2. Willful transfer of rights and is no longer occupying the lot; 3. Voluntary renunciation rights in writing; IHcTDA or waiver of

4. Failure to cultivate the lot for a period of six (6) consecutive months from the date subject lot was awarded; and 5. Death of awardee if he/she has qualified heir. (A.O. No. 3, Series of 1990) no

What is the award ceiling for qualified beneficiaries?

The award ceiling shall not be more than three hectares. However, qualified beneficiaries who have occupied and cultivated the land and established their vested rights prior to 15 June 1988 in accordance with then existing laws shall be awarded the legal limits allowed by said laws. In the case of homelots, the award ceiling shall be 1,000 square meters.

Who are the qualified beneficiaries?

1. 2. Landless; Filipino citizen;

3. Actual occupant/tiller who is at least 15 years of age or head of the family at the time of filing of applicant; and 4. Has the willingness, ability and aptitude to cultivate and make the land productive.

CHAPTER 20 BARANGAY (BARC) 20.1 AGRARIAN REFORM COMMITTEE

LAWS AND ISSUANCES ON BARC What is BARC ?

BARC or Barangay Agrarian Reform Committee is a CARP implementing unit at the barangay level. Its organization was first mandated by Executive Order No. 229 in 1987 and in 1988 by RA 6657. Through the organization of the BARCs, the implementation of the CARP will become truly community based where people at all levels participate in decision making because they are in a better position to know and understand the realities in the community.

What are the laws governing the organization of BARC ?

Section 19 of EO 229 which enumerated composition and functions of the BARC; and the

Sections 46 and 47 of RA 6657 which further defined BARC functions in addition to those provided in EO 229.

What guidelines provide the procedures for the formation, organization and strengthening of the BARCs?

Administrative Order No. 14, Series of 1990 entitled, "Revised

Implementing Guidelines in the Formation, Organization and Operation of the Barangay Agrarian Reform Committee".
This Administrative Order amended AO 05-89 to provide detailed set of implementing rules for the formation, organization, and operationalization of the BARC. 20.2

FUNCTIONS OF THE BARC What are the functions of the BARC ?

The BARC is intended to facilitate the land transfer program in the community. It also provides a convenient forum for resolving agrarian issues, and allows the local farmer organizations the opportunity to propose policies and coordinate the efficient delivery of support services. Under EO 229, the BARC is tasked to perform the following functions: 1. Participate and give support to the implementation of programs on agrarian reform; 2. Mediate, conciliate or arbitrate agrarian conflicts and issues that are brought to it for resolution; and 3. Perform such other functions that the Presidential Agrarian Reform Council (PARC), its Executive Committee, or the DAR Secretary may delegate from time to time. In addition, RA functions as: 6657 further delineated these

1. Assist in the identification of qualified beneficiaries and landowners within the barangay; 2. Attest to the accuracy of the initial parcellary mapping of the beneficiary's tillage,

3. Assist in the initial determination of the value of the land; 4. Coordinate the services to beneficiaries; delivery of support in

5. Assist qualified beneficiaries obtaining credit from lending institutions;

6. Assist the DAR representative in the preparation of periodic reports on CARP implementation for submission to the DAR. 20.3 BARC COMPOSITION

Who compose the BARC ?

AO No. 14-90 revised the composition of the BARC, following the rule of proportionate sectoral representation based on the land-to-the-tiller principle. Hence, sectors are defined on the basis of one's access or lack of access to the land. The BARC is now composed of 13 members who are representatives of sectors and organizations, as well as government agencies. Membership is divided into two groups: seven regular voting members and six ex-officio non-voting members.

Regular Voting Members

1. farmer beneficiaries 2. non-beneficiary farmworkers and farmworker (4) farmers (1) and and other

3. agricultural cooperatives farmer organizations (1) 4. landowners (1)

It should be noted that the voting members are all residents of the barangay. This residency requirement ensures that agrarian reform implementation will indeed be community based. Regular activities of the BARC can

be better ensured when majority of its members are residents of the community.

Ex-Officio Non-Voting Members:

5. municipal or provincial government organizations (1) 6. barangay council (1) 7. Land Philippines (1) Bank of the based non-

8. Department of Agriculture official assigned in the area (1) 9. Department of Environment and Natural Resources official assigned in the area (1) 10. DAR Technologist assigned area (1) Agrarian Reform in Program the

What is meant by "proportionate" sectoral representation and why should this principle be followed in the composition of the BARC ?
Proportionate sectoral representation means bigger sectors shall have bigger representation. This ensures democratic participation of the intended beneficiaries of the CARP and wider participation of farmers in planning, organization and management of agrarian reform activities.

Who comprise beneficiaries sector?

the

farmer

and

farmworker

This sector is composed of the following:

landless workers; share tenants; agricultural lessees, beneficiaries; and amortizing owners. including ISF

Who compose the farmworkers sector?

non-beneficiary

farmer

and

The non-beneficiary farmers and farmworkers sector is composed of the small owner-cultivators who own and till not more than five (5) hectares of agricultural lands, either by personal cultivation or with the help of the immediate household.

Since membership in the BARC is based on sectoral representation, i.e., land tenure classification, what sector shall be represented by a farmer leader who is a leaseholder and farmworker at the same time, or a farmer-beneficiary who is also a member of a farmer organization?
A farmer with mixed tenure shall represent a sector where he/she primarily derives his/her regular income. This consideration is based on the experience that one cannot compel any individual or a group into action if he/they are not directly affected by the issues or problems being raised. 20.4 BARC OFFICERS

Who are the BARC officers and how are they elected?
There are three elected positions in the BARC. These are the Chairperson, Vice Chairperson, and an Assistant Secretary (The BARC Secretary is automatically the DAR ARPT). These three officers are elected by the sectoral representatives the regular voting members. Hence, all BARC officers are residents of the barangay.

The thirteen-member BARC shall form different committees based on need and priority activities. They shall select the committee heads deemed as appropriate.

Can a barangay chairperson be an officer of the BARC even if he is not a beneficiary of the CARP?
Yes. A barangay chairperson may be elected as regular officer (with voting power) of the BARC if he/she represents any of the four sectors composing the BARC (e.g., ARBs, non-ARBs, farmer organization or cooperative, or landowners), provided, however that he is not appointed ex-officio member representing the barangay council.

What is the length of tenure of BARC member official?

The elected BARC representatives will serve a maximum of two (2) years while the BARC officers will serve at the pleasure of the committee.

When can a BARC member/official be terminated?

A BARC member may be removed by a simple majority vote or upon serving a maximum period of two years.

Who replaces a terminated BARC member?

A BARC member who is unable to complete his/her term of office for some reasons is replaced by an

alternate member who will serve the remaining tenure of the original member. 20.5 FORMATION OF BARC

Should BARCs be organized in all the barangays nationwide?

No. They should be organized where they are needed. The MARO/ARPT together with partner POs/NGOs should jointly identify and prioritize where BARCs should be organized and/or strengthened. The BARC Manual established the following criteria: 1. High farmers discontent and desire for agrarian reform; 2. Wide hectarage covered by CARP; 3. Large number of actual and potential beneficiaries; and 4. Willingness of the ARBs in the community to organize/strengthen the BARC. These criteria are very similar to the criteria set for ARC selection. Given the ARC development thrust of the Department, priority should therefore be given to ARC areas.

When should BARCs be organized?

BARCs are organized or should be reorganized if the community is fully aware of and feels the need for it. BARCs are formed out of the people's willingness to address agrarian reform issues and problems. Its formation cannot be forced, otherwise, the spirit of volunteerism will not be present. If its formation is forced, the people will perceive it as a burden and members will expect DAR to financially support them as compensation for their work.

Should a BARC be organized even if there are no farmer organizations, associations or cooperatives in the barangay?
Initial efforts of DAR and partner NGOs should be focused on encouraging the organization of ARBs instead of the formation of a BARC.

What are the processes involved in the organization of the BARC ?

There are four stages in the organization of the BARC. These are: 1. Pre-Organization Stage. This is the process by which the MARO prepares the sectors concerned in the organization of BARC. He/she performs the following functions: a. coordinates with the FOs and/or NGOs; b. briefs the FOs and/or NGOs about BARC; c. identifies the areas where the BARC will be organized in coordination with the FOs/NGOs; and d. identifies together with the FO/NGO the respective responsibilities of each sector.

In areas where there is no existing FO/NGO, the MARO takes a more active role in the formation of base groups. 2. BARC Organization. When the sectors are fully aware of the need to organize BARC, the MARO, together with the FOs and/or NGOs, convene the representatives of the sectors concerned to discuss with them the CARL, the functions of the BARC, the schedule of the first meeting and the schedule of election of officers. After discussing the intent of the committee, the election of the BARC officers and the planning workshop are conducted. 3. BARC Operation and Management. After the BARC is formally organized, the committee prepares plans and mechanisms for the performance of its duties. 4. Alliance Building. The BARC coordinates with other entities within and outside the community for its identified needs. Simultaneously, it establishes a network to sustain itself as a people's organization. 20.6 MEDIATION AND CONCILIATION

Is BARC a quasi-judicial body?

No, the BARC is only mandated to mediate and conciliate agrarian disputes at the barangay level. Mediation and conciliation refers to the process whereby the contending parties are persuaded by the BARC to settle their disputes amicably. The BARC does not render a decision. (See page 48)

What does settlement of disputes at the lowest possible level mean?

The capability of the BARC and the community must be harnessed to resolve local agrarian conflicts at the barangay level and avoid as much as possible passing this

responsibility to outside entities or to higher levels. This will promote the speedy and cost-free administration of justice; alleviate the congestion of court and DARAB dockets, and develop a sense of commitment among landowner and farmer-beneficiaries to comply with their agreements, thus ensuring the successful implementation of CARP.

As the first structure for conflict management, at what levels will agrarian disputes be resolved?
Agrarian conflicts settlement could be done at the following levels: 1. BARC chairperson authorized representative; 2. 3. BARC panel; and BARC en banc. or his/her duly

Who decides on the mechanism to be followed in the settlement of disputes?

The BARC Chairman after evaluating the case may decide at which level settlement will be initiated.

Who shall compose mediators/conciliators/arbitrators?

the

panel

of

The panel shall be composed of three (3) BARC members designated by the BARC Chairperson.

Who selects the members mediators/conciliators/arbitrators?

of

the

panel

of

Members of the panel of mediators/conciliators/arbitrators are designated by the BARC chairperson upon recommendation of other members.

What happens if a member of the panel fails to attend the mediation/conciliation conference?

The presence of two members in any panel constitutes a quorum to do business. The chairperson may also replace any member who is absent or incapacitated.

What are the procedures to be followed in the settlement of disputes by the BARC ?
Administrative Order No. 08, Series of 1994 spelled out the procedures for the settlement of agrarian disputes. 1. A written or verbal complaint shall be lodged with the BARC. Written complaints shall be in Mediation and Conciliation M/C Form 1 while verbal complaint shall be reduced in writing by the BARC Chairperson or Secretary. 2. The BARC Chairperson interviews the complainant regarding vital information. 3. The BARC Chairperson issues a Notice of Meeting to both the complainant and defendant. 4. The BARC en banc, panel or the Chairperson then endeavors to have the contending parties agree to an amicable settlement. All agreements are written down and signed by the contending parties.

How long will the BARC resolve disputes lodged with them?
The BARC shall endeavor to mediate, conciliate and settle agrarian disputes lodged before it within thirty (30) days from the time it takes cognizance of the dispute.

What will happen if the BARC fails to resolve agrarian disputes within thirty days?
If the BARC fails to settle the dispute within thirty days, it shall issue a certification that the dispute has not been settled, together with a copy of the proceedings and furnish a copy to the concerned parties within seven (7)

days after the expiration of the 30 day period. This certification must be attested by the BARC Chairperson and endorsed by the MARO to the PARAD or to the PARO for appropriate action.

Is the MARO allowed to resolve disputes or problems presented before him/her without the presence of the BARC chairman and members?
Yes. The MARO can immediately resolve disputes or problems presented before him/her even in the absence of the BARC Chairperson and its members. Although the BARC would be the ideal forum for the resolution of disputes and problems, this must not limit or prevent the MARO from performing his/her duties. Delays in the resolution of cases may result in further complications.

Does the BARC have any jurisdiction over criminal offenses under RA 6657?
No. Only the Special Agrarian Court (a branch of the Regional Trial Court) has the original and exclusive jurisdiction of all criminal offenses under RA 6657 (including petitions for determination of just compensation for landowners). CHAPTER 21 DAR ADJUDICATION BOARD 21.1 DARAB JURISDICTION

What is the jurisdiction of the DARAB?

The DARAB has primary and exclusive jurisdiction, both original and appellate, to determine and adjudicate all agrarian disputes involving the implementation of the CARP under RA 6657, EO Nos. 228, 229, and 129-A, RA 3844 as amended by RA 6389, PD 27 and other agrarian laws and their implementing rules and regulations. Specifically, such jurisdiction shall include but not limited to cases involving the following:

1. Cases involving the rights and obligations of persons engaged in the management, cultivation and use of all agricultural lands covered by the CARP and other agrarian laws; 2. Cases involving the valuation of land and preliminary determination and payment of just compensation, fixing and collection of lease rentals, disturbance compensation, amortization payments and similar disputes concerning the functions of the Land Bank of the Philippines (LBP); 3. Cases involving the annulment or cancellation of lease contracts or deeds of sale or their amendments involving lands under the administration and disposition of the DAR or LBP; 4. Cases arising from, or connected with membership or representation in compact farms, farmers' cooperatives and other registered farmers' associations or organizations, related to lands covered by the CARP and other agrarian laws; 5. Cases involving the sale, alienation, mortgage, foreclosure, pre-emption and redemption of agricultural lands under the coverage of the CARP or other agrarian laws;

6. Cases involving the issuance, correction and cancellation of Certificates of Landownership Award (CLOAs) and Emancipation Patents (EPs) which are registered with the Land Registration Authority; 7. Cases previously falling under the original and exclusive jurisdiction of the defunct Court of Agrarian Relations under Section 12 of Presidential Decree No. 946, except subparagraph (2) thereof and Presidential Decree No. 815; and 8. Such other agrarian cases, disputes, matters or concerns referred to it by the DAR Secretary. However, matters involving strictly the administrative implementation of the CARP and agrarian laws and regulations, shall be the exclusive prerogative of and cognizable by the DAR Secretary.

Is the rule that the DARAB cannot take cognizance of any agrarian dispute unless there is a certification of the BARC where the land is located that the dispute has not been successfully settled absolute?
No. Rule III of the DARAB Revised Rules of Procedure allows the DARAB to take cognizance of an agrarian dispute even without the BARC certification if: 1. The dispute does not fall under any of the exceptions enumerated; 2. The required certification cannot be complied with for valid reasons like the nonexistence or non-organization of the BARC or the impossibility of convening it. The PARO shall conduct mediation and conciliation proceedings and issue a certification to that effect;

3. It involves resolving and disposing of preliminary incidents related to the case, such as motion for the issuance of status quo orders, temporary restraining orders, preliminary injunctions and such similar motions necessitating immediate action. However, the lack of the required certification cannot be made a ground for the dismissal of the action. Every opportunity will be given the complainant to secure the certification.

What are the exceptions referred to in No. 1 above?

BARC certification shall not be required in the following cases: 1. Where the issue involves the valuation of land to determine just compensation for its acquisition; 2. Where one party is a public or private corporation, partnership, association or juridical person, or a public officer or employee and the dispute relates to the performance of his official functions; 3. Where the matter at issue involves merely the administrative implementation of agrarian reform law, rule, guideline, or policy; and 4. Such other cases where the Secretary of Agrarian Reform may determine that the matter at issue is beyond the pale of mediation, conciliation or compromise.