u Le Department of Agrarian Reform - Cooperative Development Authority JOINT DAR-CDA ADMINISTRATIVE ORDER No_ OG Series of 2008 Subject: REVISED RULES AND REGULATIONS ON ARB MEMBERSHIP STATUS AND VALUATION AND/OR TRANSFER OF PAID-UP SHARE CAPITAL IN AGRARIAN REFOM PLANTATION-BASED COOPERATIVES ARTICLE| PRELIMINARY PROVISIONS Section 1. Prefatory Statement. Pursuant to Article 2 of Republic Act (R.A.) No. 6038, otherwise known as the "Cooperative Code of the Philippines”, Sections 8 and 29 of R.A. No. 6657, otherwise known as the “Comprehensive Agrarian Reform Law (CARL) of 1988", Sec. 11 of RA. No. 6657, as amended by Sec. 3 of R.A. No. 7881, otherwise known as "An Act Amending Certain Provisions of R.A. No. 6657 entitled, '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 Department of Agrarian Reform (DAR), Cooperative Development Authority (CDA) and Department of Agriculture (DA) issued Joint Administrative Order (A.0.) No. 2, Series of 1997 titled, "Rules and Regulations Governing Membership Issues and Concems of Farmworkers and Employee Beneficiaries in Agrarian Reform Plantation-Based Cooperatives’. Paragraph 2 of Section 27 of R.A. No. 6687 provides that, “If the land has not yet been fully paid by the beneficiary, the rights to the land may be transferred or conveyed, with prior approval of the DAR to any heir of the beneficiary or to any other beneficiary who, as a condition for such transfer or conveyance, shall cultivate the land himself. xxx" Section 29 of R.A. No. 6657 states that *x x x In general, lands shall be distributed to the individual worker-beneficiaries. In case it is not economically feasible and sound to divide the land, then it shall be owned collectively by the worker-beneficiaries who shall form a ‘workers’ cooperative or association which shall deal with the corporation or business association.” Further, Article 90 of R.A. No, 6938 provides that "Landholdings ike plantations, estates or haciendas acquired by the State for the benefit of the workers in accordance with the Comprehensive Agrarian Reform Program shall be owned collectively bby the workers-beneficiaries who shall form a cooperative at their option.” Considering the peculiarities and dynamic conditions of _plantation-based cooperatives particularly as regards membership of agrarian reform beneficiaries (ARBs) in plantation-based cooperatives and their multiple but distinct personalities as program beneficiaries, cooperative members and employees/farmworkers, these rules and regulations are hereby promulgated to address the valvation of ARB-members’ land share capital and transferabiityAvithdrawa! of membership share vis-a-vis the status and qualification of ARBs under the Comprehensive Agrarian Reform Program (CARP). Sec. 2. Coverage. This Administrative Order (A.0.) covers ARB membership status, valuation and transfer of membership shares in case of termination/withdrawal of members from the cooperative in agrarian reform plantation-based cooperatives covered by collective Certificate of Land Ownership Award (CLOA).a Y ‘Sec. 3. Definition of Terms. As used in this Order, the following terms are defined as follows: a) b) 9 a 9) hy ky Abandonment is any willful or deliberate failure by an ARB to personally til or contribute to the productivity of the land for a continuing period of two (2) years with no intent or prospect of returning to work in the plantation within the same poriod, Provided that such inability to work in the plantation is not caused by unavailability of jobs for the ARB. Agrarian Reform Plantation-Based Cooperative refers to a special cooperative ‘composed exclusively of ARBs awarded with collective CLOA. Agribusiness Venture Arrangement (AVA) refers to the entrepreneurial collaboration between ARBs and investors to implement an agribusiness venture involving lands distributed under CARP. The AVA includes the following schemes: Joint venture agreement (JVA); production/contract growing/growership/marketing contract; lease agreement; management contract; service contract; and build~ operate-transfer (BOT), Authorized Share Capital is the amount of capitalization of the cooperative as provided for under its Articles of Cooperation. Books of Accounts refer to the set of books where business transactions are recorded and classified. Book Value per Share is the amount of one share capital which is arrived at by dividing the total members’ equity over the total number of paid-up share capital (cash and land share capital) at a given period. Collective CLOA is a single instrument of title issued to a group of qualified ARBs aggrupated as farmers’ cooperative or some other forms of farmers’ collective organization, e.g., co-ownership and farmers’ cooperative or association. Gross Income represents the total income of the cooperative from all its business operations. Gainful Employment refers to any type of job or employment where one derives his/her principal source of income. Land refers to, for accounting purposes, the amount paid or approved for payment to the landowner (LO) for a specific parcel of the land and permanent crops including land improvements thereon, such as, but not limited to, irrigation canals, dikes and water impounding areas, acquired and awarded to ARBs. This will be recorded as fixed assets to form part of the plant, property and equipment. The land may be appraised by an independent accredited appraiser and recordedicarried in the books at appraisedifair value, at the option of the cooperative. Land Amortization refers to the annual payment of the ARBs through their cooperative for the agricultural land awarded to them. itis determined by the Land Bank of the Philippines (LBP) pursuant to Item V of DAR A.O. No. 02, Series of 1998 or the amount of amortization agreed upon by the LO and the ARB as approved by DAR in case of Voluntary Land Transfer or Direct Payment Scheme (VLT/DPS) pursuant to Secs. 20 and 21 of R.A. No, 6657 and related guidm) °) ») 9) 8) y u) yw XL u Members Equity is the residual ownership of members over the assets of a cooperative in excess of the liabilities, capital from extemal sources, statutory reserves and other necessary funds as may be provided for in the Articles of Cooperation and By-Laws of the cooperative. It includes the total paid-up share capital for land amortization and cash payments, undivided net surplus of the cooperative when an interim financial statement has been prepared or the net surplus which has not been allocated for distribution, and donated capital grants or subsidy if such amount is to be distributed to members. Net Surplus is the excess of gross income, including other income, over expenses for one accounting period. Paid-Up Share Capital is the portion of the authorized share capital for land and cash share capital which have been actually subscribed and paid by the members. Land Share Capital as basis of recording includes the total amount paid for land amortization which is credited to the Land Share Capital of each member. The payment for land amortization is equally allocated to the land share capital of bona fide members and must be reflected in the individual subsidiary ledgers. Cash Share Capital represents the total amount paid in cash by the ARB member in accordance with the cooperative's Articles of Cooperation. Par Value refers to a value assigned to each share capital whether common:or Preferred, which should not be less than 21,00. Permanent Total incapacitated ARB is a natural person who has suffered Permanent psychological and/or physical condition thal renders himvher unfit to perform his/her assigned task or job, or to continue employment in the cooperative or with the investor company that has an existing AVA with the cooperative/association as certified by a government physician. Potential ARBs in Plantations are natural persons qualified as beneficiaries of the CARP pursuant to the order of priorities provided under Sec. 22 of R.A. No. 6657. Qualified ARB Successor is a natural person who has legal claim on the subject CARP-awarded land by virtue of hereditary succession, or designation, or nomination of histher predecessor in the case of plantation-based cooperatives pursuant to Sections 22 and 27 of R.A. No. 6657. ‘Statement of Financial Condition (Balance Sheet) shows assets, liabilties, and equity account of a business entity as of a given date. Assets and liabilities are further classified as current or non-current. Non-current assets include property, plant and equipment, intangible assets, investments and financial assets (excluding investments under the equity method, trade and other receivables and cash, and cash equivatents) while non-current liabilities include long term debt, long term provisions and other liabilities that will be settled after the current operating cycle or will not require the use of current assets. Statement of Operations (Surplus or Income Statement) presents revenues, costs and expenses, gains and losses and net surplus or net loss. The items presented are recognized in the books using accrual basis of accounting. The 3