Section 20. Reclassification of Lands.

(a) A city or municipality may, through an ordinance passed by the sanggunian after
conducting public hearings for the purpose, authorize the reclassification of agricultural
lands and provide for the manner of their utilization or disposition in the following cases:
(1) when the land ceases to be economically feasible and sound for agricultural purposes as
determined by the Department of Agriculture or (2) where the land shall have substantially
greater economic value for residential, commercial, or industrial purposes, as determined
by the sanggunian concerned: Provided, That such reclassification shall be limited to the
following percentage of the total agricultural land area at the time of the passage of the
ordinance:

(1) For highly urbanized and independent component cities, fifteen percent (15%);

(2) For component cities and first to the third class municipalities, ten percent (10%); and

(3) For fourth to sixth class municipalities, five percent (5%): Provided, further, That
agricultural lands distributed to agrarian reform beneficiaries pursuant to Republic Act
Numbered Sixty-six hundred fifty-seven (R.A. No. 6657). otherwise known as "The
Comprehensive Agrarian Reform Law", 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.

(b) The President may, when public interest so requires and upon recommendation of the
National Economic and Development Authority, authorize a city or municipality to
reclassify lands in excess of the limits set in the next preceding paragraph.

(c) The local government units shall, in conformity with existing laws, continue to prepare
their respective comprehensive land use plans enacted through zoning ordinances which
shall be the primary and dominant bases for the future use of land resources: Provided.
That the requirements for food production, human settlements, and industrial expansion
shall be taken into consideration in the preparation of such plans.

(d) Where approval by a national agency is required for reclassification, such approval
shall not be unreasonably withheld. Failure to act on a proper and complete application for
reclassification within three (3) months from receipt of the same shall be deemed as
approval thereof.

(e) Nothing in this Section shall be construed as repealing, amending, or modifying in any
manner the provisions of R.A. No. 6657.
“SEC. 2. Declaration of Principles and Policies. — It is the policy of the State to pursue a
Comprehensive Agrarian Reform Program (CARP). The welfare of the landless farmers and
farmworkers will receive the highest consideration to promote social justice and to move
the nation toward sound rural development and industrialization, and the establishment of
owner cultivatorship of economic-size farms as the basis of Philippine agriculture.

“The State shall promote industrialization and full employment based on sound agricultural
development and agrarian reform, through industries that make full and efficient use of
human and natural resources, and which are competitive in both domestic and foreign
markets: Provided, That the conversion of agricultural lands into industrial, commercial or
residential lands shall take into account, tillers’ rights and national food security. Further,
the State shall protect Filipino enterprises against unfair foreign competition and trade
practices.

“The State recognizes that there is not enough agricultural land to be divided and
distributed to each farmer and regular farmworker so that each one can own his/her
economic-size family farm. This being the case, a meaningful agrarian reform program to
uplift the lives and economic status of the farmer and his/her children can only be achieved
through simultaneous industrialization aimed at developing a self-reliant and independent
national economy effectively controlled by Filipinos.

“To this end, the State may, in the interest of national welfare or defense, establish and
operate vital industries.

“A more equitable distribution and ownership of land, with due regard to the rights of
landowners to just compensation, retention rights under Section 6 of Republic Act No.
6657, as amended, and to the ecological needs of the nation, shall be undertaken to provide
farmers and farmworkers with the opportunity to enhance their dignity and improve the
quality of their lives through greater productivity of agricultural lands.

“The agrarian reform program is 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 the
priorities and retention limits set forth in this Act, taking into account ecological,
developmental, and equity considerations, and subject to the payment of just
compensation. The State shall respect the right of small landowners, and shall provide
incentive for voluntary land-sharing.

“As much as practicable, the implementation of the program shall be community-based to

assure, among others, that the farmers shall have greater control of farmgate prices, and
easier access to credit.
“The State shall recognize the right of farmers, farmworkers and landowners, as well as
cooperatives and other independent farmers’ organizations, to participate in the planning,
organization, and management of the program, and shall provide support to agriculture
through appropriate technology and research, and adequate financial, production,
marketing and other support services.

“The State shall recognize and enforce, consistent with existing laws, the rights of rural
women to own and control land, taking into consideration the substantive equality
between men and women as qualified beneficiaries, to receive a just share of the fruits
thereof, and to be represented in advisory or appropriate decision-making bodies. These
rights shall be independent of their male relatives and of their civil status.

“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 the 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.

“The State may resettle landless farmers and farmworkers in its own agricultural estates,
which shall be distributed to them in the manner provided by law.

“By means of appropriate incentives, the State shall encourage the formation and
maintenance of economic-size family farms to be constituted by individual beneficiaries
and small landowners.

“The State shall protect the rights of subsistence fishermen, especially of local communities,
to the preferential use of communal marine and fishing resources, both inland and offshore.
It shall provide support to such fishermen through appropriate technology and research,
adequate financial, production and marketing assistance and other services. The State shall
also protect, develop and conserve such resources. The protection shall extend to offshore
fishing grounds of subsistence fishermen against foreign intrusion. Fishworkers shall
receive a just share from their labor in the utilization of marine and fishing resources.

“The State shall be guided by the principles that land has a social function and land
ownership has a social responsibility. Owners of agricultural land have the obligation to
cultivate directly or through labor administration the lands they own and thereby make the
land productive.

“The State shall provide incentives to landowners to invest the proceeds of the agrarian
reform program to promote industrialization, employment and privatization of public
sector enterprises. Financial instruments used as payment for lands shall contain features
that shall enhance negotiability and acceptability in the marketplace.
“The State may lease undeveloped lands of the public domain to qualified entities for the
development of capital-intensive farms, and traditional and pioneering crops especially
those for exports subject to the prior rights of the beneficiaries under this Act.”

SECTION 2. Section 3 of Republic Act No. 6657, as amended, is hereby further amended
to read as follows:

“SEC. 3. Definitions. — For the purpose of this Act, unless the context indicates otherwise:

“xxx xxx xxx

“(f) Farmer refers to a natural person whose primary livelihood is cultivation of land or the
production of agricultural crops, livestock and/or fisheries either by himself/herself, or
primarily with the assistance of his/her immediate farm household, whether the land is
owned by him/her, or by another person under a leasehold or share tenancy agreement or
arrangement with the owner thereof.

“xxx xxx xxx

“(l) Rural women refer to women who are engaged directly or indirectly in farming and/or
fishing as their source of livelihood, whether paid or unpaid, regular or seasonal, or in food
preparation, managing the household, caring for the children, and other similar activities.”

MEMORANDUM CIRCULAR NO. 54

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

WHEREAS, RA 7160, otherwise known as the Local Government Code of 1991 (LGC),
provides that cities and municipalities may reclassify agricultural lands into non-
agricultural uses within their respective jurisdictions, subject to the limitations and other
conditions prescribed under Section 20 of the LGC;

WHEREAS, the implementing Rules and Regulations (IRR) of the LGC provides that cities
and municipalities shall continue to prepare their respective comprehensive land use
plans, enacted through zoning ordinances, subject to applicable laws and rules and
regulations;

WHEREAS, the IRR also prescribes that such plans shall serve as the primary and dominant
bases for future use of land resources and reclassification of agricultural lands;
WHEREAS, the IRR further provides that the requirements for food production, human
settlements, ecological balance, and industrial expansion shall be considered in the
preparation of comprehensive land use plans;

WHEREAS, EO 129-A, s. of 1987, mandates the Department of Agrarian Reform (DAR) to

approve or disapprove the conversion, restructuring or readjustment of agricultural lands
into non-agricultural uses;

WHEREAS, the said EO has also vested in DAR exclusive authority to approve or disapprove
conversion of agricultural lands for residential, commercial, industrial, and other land uses;

WHEREAS, Section 65 of RA 6657, otherwise known as the Comprehensive Agrarian

Reform Law of 1988 (CARL), likewise empowers DAR to authorize, under certain
conditions, the reclassification or conversion of lands awarded to agrarian reform
beneficiaries;

WHEREAS, pursuant to the pertinent provisions of EO 129-A (1987), EO 229 (1987), and
RA 6657, DAR issued various rules and regulations governing the conversion or
reclassification of agricultural lands into non-agricultural uses;

WHEREAS, there is a need to harmonize the provisions of Section 20 of the LGC with those
of EO 129-A (1987), EO 229 (1987), RA 6657, and other national policy issuances and other
pertinent laws to ensure a more rational and holistic approach to land use, taking into
account the objectives of the CARL and the decentralized framework of local governance;

NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Philippines, by virtue of the powers
vested in me by law, upon the recommendation of the Oversight Committee created under
Sec. 533 of the LGC, do hereby order and direct:

SECTION 1. Scope and limitations. – (a) Cities and municipalities with comprehensive
land use plans reviewed and approved in accordance with EO 72 (1993), may authorize the
reclassification of agricultural lands into non-agricultural uses and provide for the manner
of their utilization or disposition, subject to the limitations and other conditions prescribed
in this Order.

(b) Agricultural lands may be reclassified in the following cases:

(1) when the land ceases to be economically feasible and sound for agricultural purposes as
determined by the Department of Agriculture (DA), in accordance with the standards and
guidelines prescribed for the purpose; or

(2) where the land shall have substantially greater economic value for residential,
commercial, or industrial purposes as determined by the sanggunian concerned, the
city/municipality concerned should notify the DA, HLRB, DTI, DOT and other concerned
agencies on the proposed reclassification of agricultural lands furnishing them copies of the
report of the local development council including the draft ordinance on the matter for
their comments, proposals and recommendations within seven (7) days upon receipt.

(c) However, such reclassification shall be limited to a maximum of the percentage of the
total agricultural land of a city or municipality at the time of the passage of the ordinance as
follows:

(1) For highly urbanized and independent component cities, fifteen percent (15%);

For component cities and first to third class municipalities, ten percent (10%); and

For fourth to sixth class municipalities, five percent (5%).

(d) In addition, the following types of agricultural lands shall not be covered by the said
reclassification:

(1) Agricultural lands distributed to agrarian reform beneficiaries subject to Section 65 of

RA 6657;

(2) Agricultural lands already issued a notice of coverage or voluntarily offered for
coverage under CARP.

(3) Agricultural lands identified under AO 20, s. of 1992, as non-negotiable for conversion
as follows:

(i) All irrigated lands where water is available to support rice and other crop production;

All irrigated lands where water is not available for rice and other crop production but
within areas programmed for irrigation facility rehabilitation by DA and National Irrigation
Administration (NIA); and

All irrigable lands already covered by irrigation projects with firm funding commitments at
the time of the application for land conversion or reclassification.

(e) The President may, when public interest so requires and upon recommendation of the
National Economic Development Authority (NEDA), authorize a city or municipality to
reclassify lands in excess of the limits set in paragraph (d) hereof. For this purpose, NEDA
is hereby directed to issue the implementing guidelines governing the authority of cities
and municipalities to reclassify lands in excess of the limits prescribed herein.

SEC. 2. Requirements and procedures for reclassification. – (a) The city or municipal
development council (CDC/MDC) shall recommend to the sangguniang panlungsod or
sangguniang bayan, as the case may be, the reclassification of agricultural lands within its
jurisdiction based on the requirements of local development.
(b) Prior to the enactment of an ordinance reclassifying agricultural lands as provided
under Sec. 1 hereof, the sanggunian concerned must first secure the following certificates
from the concerned national government agencies (NGAs):

(1) A certification from DA indicating –

(i) the total area of existing agricultural lands in the LGU concerned;

(ii) that such lands are not classified as non-negotiable for conversion or reclassification
under AO 20 (1992); and

(iii) that the land ceases to be economically feasible and sound for agricultural purposes in
the case of Sec. 1 (b-1).

(2) A certification from DAR indicating that such lands are not distributed or not covered
by a notice of coverage or not voluntarily offered for coverage under CARP.

(c) The HLRB shall serve as the coordinating agency for the issuance of the certificates as
required under the preceding paragraph. All applications for reclassification shall,
therefore, be submitted by the concerned LGUs to the HLRB, upon receipt of such
application, the HLRB conduct initial review to determine if:

(1) the city or municipality concerned has an existing comprehensive land use plan
reviewed and approved in accordance with EO 72 (1993); and

(2) the proposed reclassification complies with the limitations prescribed in SECTION 1 (d)
hereof.

Upon determination that the above conditions have been satisfied, the HLRB shall then
consult with the concerned agencies on the required certifications. The HLRB shall inform
the concerned agencies, city or municipality of the result of their review and consultation. If
the land being reclassified is in excess of the limit, the application shall be submitted to
NEDA.

Failure of the HLRB and the NGAs to act on a proper and complete application within three
months from receipt of the same shall be deemed as approved thereof.

(d) Reclassification of agricultural lands may be authorized through an ordinance enacted

by the sangguniang panlungsod or sangguniang bayan, as the case may be, after conducting
public hearings for the purpose. Such ordinance shall be enacted and approved in
accordance with Articles 107 and 108 of the IRR of the LGC;

(e) Provisions of Sec. 1 (b-2) hereof to the contrary notwithstanding, the sanggunian
concerned shall seek the advice of DA prior to the enactment of an ordinance reclassifying
agricultural lands. If the DA has failed to act on such request within thirty (30) days from
receipt thereof, the same shall be deemed to have been complied with. Should the land
subject to reclassification is found to be still economically feasible for agriculture, the DA
shall recommend to the LGU concerned alternative areas for development purposes.

(f) Upon issuance of the certifications enumerated in Section 2 (b) hereof, the sanggunian
concerned may now enact an ordinance authorizing the reclassification of agricultural
lands and providing for the manner their utilization or disposition. Such ordinance shall
likewise update the comprehensive land use plans of the LGU concerned.

SEC. 3. Review of ordinances reclassifying agricultural lands. – All ordinances

authorizing the reclassification of agricultural lands shall be subject to the review and
approval by the province in the case of component city or municipality, or by HLRB in the
case of a highly urbanized or independent component city in accordance with EO 72
(1993).

SEC. 4. Use of the comprehensive land use plans and ordinances as primary reference
documents in land use conversions. – Pursuant to RA 6657 and EO 129-A, actions on
applications for land use conversions on individual landholdings shall remain as the
responsibility of DAR, which shall utilize as its primary reference documents the
comprehensive land use plans and accompanying ordinance passed upon and approved by
the LGUs concerned, together with the National Land Use Policy.

SEC. 5. Monitoring and evaluation of land reclassification by LGUs concerned. – Within

six (6) months from the issuance of this Order, the HLRB shall design, in coordination with
DA, DAR, Department of the Interior and Local Government (DILG), NEDA, League of
Provinces, League of Cities and League of Municipalities, and install a monitoring and
evaluation system for the reclassification of agricultural lands authorized by cities and
municipalities.

The HLRB shall submit semestral reports to the Office of the President. A copy thereof shall
be furnished the DA, DAR, DILG, NEDA, League of Provinces, League of Cities, and League of
Municipalities.

SEC. 6. Transitory provision. – Provisions of Secs. 1 (a) and 2 (b) to the contrary
notwithstanding, cities and municipalities with land use plans approved not earlier than 01
January 1989, may authorize the reclassification of agricultural lands in accordance with
the limitations and conditions prescribed in this Order. However, when the LGU has not
reclassified up to the said limitations, further reclassification may be exercised only within
five years from the approval of the plan. Thereafter, all reclassifications shall require
approval from the President pursuant to Sec. 1 (e) of this Circular.

SEC. 7. Effectivity. -.This Circular shall take effect immediately.

DONE in the City of Manila, this 8th day of June, in the year of Our Lord, nineteen hundred
and ninety-three.