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CARL (R.A. 6657, as amended) and Related Laws

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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 of the Comprehensive Agrarian Reform Program

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 of RA 3844 (1963), Presidential Decree No. 27 (1972)
and PD 266 (1973), EO 228 (1987) and EO 229 (1987) and other laws not inconsistent
with it shall have suppletory 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 share-crop 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
229including 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 of CARL do not become forest land
under Sec. 3 (c) ofRA 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, while the rest are secondary classifications.
     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
inNatalia 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 ofRA 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 Bureau-DENR
 and DAR pursuant to the provisions of CA 141 and
theJoint 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
by RA 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
6657and 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, as RA 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 stated that homesteads are exempt from agrarian
reform.

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
fromPD 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                                    Lands
Covered                                                                       
                      Schedule

      I             •     Rice and corn lands under

Presidential                      1988-1992
                              Decree No. 27;
                        •     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 agro-
                              forest, 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          •     Landholdings above twenty-four

(24)                      1998-1992
                              hectares up to fifty hectares;
and

      III-B           •     Private agricultural lands with

areas above the       1994-1998
                              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 non-agricultural 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) amended EO 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 by DAR
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 under PD 27 after 15 June 1988:
a)         Those landowners who complied with the
requirement of either LOI 41, 45 or 52;
b)         Those who filed their applications before the
deadline set (27 August 1985 as provided by AO. 1 [1985])
whether or not they have complied with LOI Nos. 41, 45 or 52;
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 tenant-farmers 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 acts which
constitute estoppel by laches; and
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
ofCA 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 6657 mandates 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 toEO
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 6940on
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)         One must have paid the real estate tax
thereon; and
d)         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 in RA 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 DAR-DENR 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 self-determination 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 lands throughout the country subject to leasehold.
     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
27who 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)         The parties are the landholder and the
tenant;
b)         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, a de jure tenant. This is so because unless a person has established his status as
a de juretenant, 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 employer-employee
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 employer-employee
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 Cuaño
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 ½-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
tenure of the law (Spouses Tiongson vs. Court of Appeals, 130
SCRA 482)."
     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 tenant-lessee 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 ofBernardo 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, G.R. No. L-10594, May 29, 1957) (at 1456).
    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 the right of pre-emption and
redemption; 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
ofRA 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
abona 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 tonnage
allocation by the miller/sugar central.
     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 expected rentals (Rep. Act No.
3844 [1963], sec. 29):
     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 lessor is prohibited to perform any of the
following acts:
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
constitutesactual, 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 petitioners-spouses
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 tenant-lessee 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)         The surviving spouse;
 b)         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 names of all tenants and farmworkers
therein;
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 6657 which does not provide for such effects. In
theAssociation 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 farmer-beneficiary. 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. Roño,
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 under PD
27and 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 farmer-beneficiaries 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 lien-
holder/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 creditor-mortgagee 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 lien-holder 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 of RA 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
ofPD 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 Vinzons-Magana 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 family-size 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. . . .
    The Pagtalunan doctrine 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. 474and 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 factored in the discussion of the case. Why
then was EO No. 228 not considered in the subsequent case of Vinzons-Magana when it
was already in effect then? The ponente instead referred to the pre-Locsin case
of Pagtalunan 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. 02-1998).
     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. Peñaflor 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. Peñaflor 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. Peñaflor 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. 6657 are 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. One-third 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:
"Section 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"
Similarly, the Revised Rules of Court of the Philippines, in
Section 13, Rule 14 provides:
"Section 13.   Service upon private domestic corporation or
partnership. — If the 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."
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
theRules 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 Vinzons-Magana 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 —
Sec. 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.
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 equivalent for 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)         cost of acquisition;
 b)         current value of like properties;
c)         nature of land;
d)         actual use;
e)         income;
f)         sworn valuation by the landowner;
g)         tax declaration;
h)         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                  Capitalized
Net Income : P24,900
Market Value : P10,000       Comparable Sales : P
5,000

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 fruit-bearing 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 = ———————————
                                   0.1
2

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 =    Valuation Input x Regional
Consumer
                              Price Index
(RCPI) 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
                                             o
f Receipt of CF by LBP from DAR
RCPI Adjustment Factor =   
—————————————————
                                             R
CPI for the Month Issued as of the Date/
                                              E
ffectivity/Registration 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 the determination of just
compensation; and
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 by RA
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.
     "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"
(Association of Small 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
Courts qua 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 farmer-beneficiary 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
ofPD 27 or 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
ofAssociation 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 as the excess
hectarage is concerned = 25% cash
b)         above 24 hectares and up to 50 hectares =
30% cash
c)         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)         Tax credits; or
c)         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 government-
owned 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
ofGonzales 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.
            TheLBP 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
farmer-beneficiaries 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 27 landowners 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, who qualify under
Section 6 of R.A. 6657;
(b)       Agricultural lessees and share tenants;
(c)       Regular farmworkers;
(d)       Seasonal farmworkers;
(e)       Other farmworkers;
(f)        Actual tillers or occupants of public lands;
(g)       Collectives or cooperatives of the above
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 meet the qualifications
prescribed under Section 22;
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 non-
agricultural 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)       Illegal conversion of the land by the
beneficiary;
(h)       Waiver of rights to awarded lands;
 (i)        Beneficiary's surrender of awarded land to
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
     In 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.
     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
ofAdministrative 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)         Dismissal for cause by final judgment;
 d)         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 1998provides 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 qualified to become beneficiaries under CARP
     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 Provincial Agrarian Reform Officer, as
Chairman;
(2)       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. In Franklin 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)
ofR.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 co-
ownership, 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 co-owners 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 owner-cultivatorship 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 ofR.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.
6657 requires 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 or individually. Qualified
beneficiaries shall be awarded a maximum of three (3) hectares or a minimum of one (1)
hectare each in case the land is not sufficient to accommodate them.
     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 28 DAR 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 or operating under lease or management contract
     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 farmworker-
beneficiaries;
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 under R.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 Vinzons-Magana 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
thatP.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. TheVinzons- Magana 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 member-beneficiaries 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;
(b)        When a member has continuously
failed to comply with his obligations;
 (c)        When a member has acted in
violation of the by-laws and the rules of
the cooperative; and
(d)        For any act or omission injurious or
prejudicial to the interest or the welfare
of the cooperative.
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 even without complete payment of
amortizations
     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 who sold or transferred right to awarded
land
    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 or P.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 engaged in
agricultural activities; and
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 farmworker-
beneficiaries.
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 farmer-transferees 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. Peñaflor 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; non-
government 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 of the right of retention by the
landowner;
f)         Application for exemption under Section 10
of RA 6657 as implemented byDAR 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 non-
agricultural uses including protests or opposition thereto;
l)         Right of the ARBs to homelots;
m)       Disposition of excess area of the FBs
landholdings;
n)         Transfer, surrender or abandonment by the
FBs of his farmholding and its disposition;
o)        Increase of awarded area awarded by the
farmer-beneficiary;
p)         Conflict of claims in landed estates and
settlements; and
 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 of Coverage/Application for
Exemption or Exclusion
     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
4)        To any of the following depending on the
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 129-A (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. 129-A [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
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).
     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 of farmer and farmworker
beneficiaries;
b)         Representative/s of farmer and farmworker
non-beneficiaries;
c)         Representative/s of agricultural cooperatives;
d)         Representative/s of other farmer
organizations;
e)         Representative/s of the Barangay Council;
f)         Representative/s of non-government
organizations (NGOs);
g)         Representative/s of Landowners;
h)         DA Official assigned to the area;
i)         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 Original and Appellate Jurisdiction of DARAB
     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 sub-
paragraph (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).
     In 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:
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 sub-paragraph (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 of RA 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)         delegated just compensation cases;
e)         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 determine just
compensation for landowners;
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 determined by the Secretary as
beyond the ambit mediation/conciliation or
compromise.
2)        The required certification cannot be complied
with for valid reasons like the non-existence 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 (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 non-agricultural 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 under AO 20
(1992), as non-negotiable for conversion.
    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 non-traditional 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 non-agricultural 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 179-181; 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 45-46;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 non-
agricultural uses prior to 15 June 1988 (DAR Adm. O. No. 1
[1999], sec. 3 (d) and DOJ 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 by irrigation
projects with firm funding commitment;
b)         Agro-industrial croplands, or lands presently
planted to industrial crops that support the economic
viability of existing agricultural infrastructure and agro-
based enterprises;
 c)         Highlands or areas located in elevations of
500 meters or above and have the potential for growing
semi-temperate 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, agro-processing 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 for ECOZONE
projects pursuant to RA 7916.
     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 low-cost 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 the
availability of irrigation to nearby farmlands;
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 non-agricultural 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 8435warrant 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 non-agricultural 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 fide residents 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 area applied for is non-negotiable for
conversion;
 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)         Misrepresentation or concealment of material
facts;
d)         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 a notice of conversion in a
conspicuous place;
c)         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 non-agricultural 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 of Conversion Order
     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;
d)         Non-compliance with the agreement on
disturbance compensation;
e)         Conversion to use other than that authorized
in the conversion order; and/or
f)         Any other violation of relevant rules and
regulations of DAR.
     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 non-
compliance 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.
 1.         Ownership and Possession of Land Beyond
Allowable Limits
     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 farmer-beneficiaries."
       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;
2)        Prohibited Sale, Transfer, Conveyance or
Change in the Nature of the Land
     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)         The offender is any person;
b)         The person either effects the
i.          sale, transfer or conveyance of the
land; or
 ii.         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 non-agricultural 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)         The land is agricultural land;
b)         The offender is the landowner;
c)         There are acts committed converting the use
of the land into non-agricultural use; and
d)         The intent is to:
 i.          avoid the application of RA 6657; and
ii.         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 non-
agricultural 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)         The intention of the conversion is to
i.          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 of the
agricultural land, in whole or in part;
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)         The land is agricultural land;
b)         The offender may be any person;
c)         Actual development activity is undertaken on
the land;
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, i.e., landowner,
developer or any other person;
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, i.e., landowner,
developer, or any other person;
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 of
material facts in conversion application;
b)         Non-compliance with the conditions set
forth in the conversion order; and
c)         Non-compliance with the agreement on
disturbance compensation.
Prohibited Acts and Omissions by Beneficiaries under RA 6657
     1.         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 offender is an agrarian reform
beneficiary;
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 design to
circumvent the provisions of R.A. 6657.
     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 under PD 27/EO 228,
ownership may be transferred upon full payment of amortization by the beneficiary.
       Elements:
a)         The offender is an agrarian reform
beneficiary;
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.
     2.         Misuse or Diversion of Financial Aid and
Support Services
      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 the financial aid and support
services; or
ii.         diverts such aid or services for other
purposes.
     3.         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.
     6.         Default and Failure in the Payment of
Amortization to Landowner
     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 6657 which 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
b)         The beneficiary has expressly or impliedly
waived his rights over the land.
     9.         FB's Surrender of Awarded Lands to
Landowner or Other Non ARBs.
     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 and Omissions by Other Persons under RA 6657
     1.         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.
     2.         Obstruction and Prevention of CARP
Implementation
    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
1.         Unlawful Recording of Sale in the Registry of
Property Subject to Right of Redemption
     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
3844 penalizes 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)         Dispossession is without authorization from
the Court.
     3.         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.
     4.         Making Untruthful Statements in Affidavit
Required under Sec. 13,  RA 3844
     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 pre-
emption as required under Sec. 13 of RA 3844.
     5.         Acts Violating Farmworker's Rights to Self-
Organization and to Engage in Other Concerted Activities
   Sec. 167 (4) of RA 3844 penalizes "Any person who willfully violates the provisions of
Sections forty and forty-one 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 self-
organization under Sec. 40 of RA 3844; or
ii.         the right to engage in concerted
activities as defined under Sec. 41 of RA 3844.
     6.         Acts Violative of the Right of Farmworkers to a
Minimum Wage
     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)         Offender is a landowner or any other person;
and
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 landholding is
without the consent of his first lessor.
     2.         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;
b)         That he employs as sublessee on his
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           Imprisonment of not less than one (1) month to not
under RA 6657                                more than three (3) years or a fine of not less than one
                                                      thousand pesos (1,000.00) and not more than fifteen
                                                      thousand pesos (P15,000.00), or both, at the discretion
                                                      of the court. (Sec. 74, RA 6657)

Premature Conversion                     Imprisonment of two (2) to six (6) years, or a fine

under RA 8435                                equivalent to one hundred percent (100%) of the
                                                      government's investment cost, or both, at the
                                                      discretion of the court, and an accessory penalty of
                                                      forfeiture of the land and any improvement thereof.
                                                      (Sec. 11, RA 8435)

Violation of Sec. 13, Sec. 27,            Fine not exceeding one thousand pesos or
and 31 (1) of RA 3844                     imprisonment not exceeding one year or both in the
                                                      discretion of 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)

Making untruthful statements           Fine not exceeding one thousand pesos or

in affidavit required under                imprisonment of not more than one year, or both, in
Sec. 13, RA 3844                            the discretion of the Court (Sec. 167 (3), RA 3844)
(Sec. 167 (3), RA 3844)

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               Fine of not more than two thousand pesos, or upon
of Farmworkers to a                        second conviction, to imprisonment of not more than
Minimum Wage (Sec.                      one year or both such fine and imprisonment, in the
167[5], RA 3844)                            discretion of the court (Sec. 167 [5], RA 3844).
     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)                       1.      Cancellation or withdrawal of the
authorization for the land use conversion;                                                               
                                                      2.      Blacklisting of the applicant, developer,
orrepresentative;                                                               
                                                      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
underRA 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.
 
 
 
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