HANDBOOK FOR CARP IMPLEMENTORS

TABLE OF CONTENTS

Chapter 1         :       AGRARIAN REFORM CONCEPTS AND PRINCIPLES

            1.1       Meaning of Agrarian Reform

            1.2       Agrarian Reform Issues:
                        Land Tenure Improvements vs. Support Services
            1.3       Big Farms vs. Small Farms
            1.4       Public vs. Private Lands
            1.5       Agrarian Reform: Counter-Insurgency Tool?

Chapter 2         :       COMPREHENSIVE AGRARIAN REFORM PROGRAM

Chapter 3         :       CARP COVERAGE

            3.1       CARP Scope
            3.2       Implementation Schedule

Chapter 4         :       EXEMPTIONS AND EXCLUSIONS

            4.1       Exclusions
                        4.1.1.        Poultry, Livestock and Swine Raising
            4.2       Exemptions
            4.3       Procedures Governing Exemption of Lands
                        Under Sec. 10, RA 6657
            4.4       Procedures for Issuance of Exemption Clearance
                        Based on DOJ Opinion No. 44

Chapter 5         :       LAND ACQUISITION

            5.1       Requisities in Land Acquisition

            5.2       Modes of Acquisition
                        5.2.1         Compulsory Acquisition
                        5.2.2         Voluntary Offer to Sell
                        5.2.3         Voluntary Land Transfer/Direct Payment Scheme
            5.3       Executive Order No. 407 As Amended

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            5.4       Procedures in Land Acquisition
            5.5       Prioritization of Lands for Coverage
            5.6       Reconstitution of Title
            5.7       Untitled Private Properties
            5.8       Field Investigation

Chapter 6         :       AGRARIAN REFORM BENEFICIARIES

            6.1       Qualification of Beneficiaries
            6.2       Order of Priority
            6.3       Farmworker Beneficiaries
            6.4       Screening of Beneficiaries

Chapter 7         :       LANDOWNER'S RETENTION AND AWARD TO CHILDREN

            7.1       Retention Limit
            7.2       Land Ownership Ceiling
            7.3       Qualifications for the Exercise of the Right of Retention
            7.4       Award to Landowner's Children
            7.5       Selection of Retained Area
            7.6       Procedures for the Exercise of the Right of Retention and Award to
Qualified Children
            7.7       When to Exercise the Right of Retention
            7.8       Obligations of Landowners and Limits to the Disposition of the Retained
Areas
            7.9       Tenants in Retained Areas
            7.10     Retention Under PD 27
            7.11     Homestead Lands

Chapter 8         :       LAND SURVEY

Chapter 9         :       LAND VALUATION AND LANDOWNER'S COMPENSATION

            9.1       Just Compensation
            9.2       Land Valuation Factors
            9.3       New Land Valuation Formula
            9.4       Summary Administrative Proceedings
            9.5       Concerned Parties' Involvement in the Land Valuation Process

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            9.6       Modes of Compensation
            9.7       Land Bank Bonds
            9.8       PD 27 Lands
            9.9       EO 407 Lands
            9.10     Mt. Pinatubo-Affected Areas

Chapter 10       :       LAND DISTRIBUTION

            10.1     Basic Principles in Land Distribution

            10.2     Award Ceiling
            10.3     Land Distribution Process
            10.4     Individual vs. Collective Distribution
            10.5     Rights and Obligations of Beneficiaries

Chapter 11       :       PAYMENT BY BENEFICIARIES

            11.1     Payment Under RA 6657

            11.2     Payment in OLT Lands
            11.3     Payment Under VLT/DPS
            11.4     Payment in Lahar-Affected Areas

Chapter 12       :       SUPPORT SERVICES

            12.1     Support Services to Landowners

            12.2     Support Services to Agrarian Reform Beneficiaries

Chapter 13       :       AGRICULTURAL LEASEHOLD

            13.1     Laws and Issuances on Leasehold

            13.2     Tenancy Relationship
            13.3     Rights and Responsibilities of Lessee
            13.4     Rights and Responsibilities of Lessor
            13.5     Lease Rental
            13.6     Fixing the Lease Rental
            13.7     Other Related Laws and Issuances

Chapter 14       :       PRODUCTION AND PROFIT SHARING

            14.1     Coverage
            14.2     DAR's Authority

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            14.3     Main Features
            14.4     Role of the MARO

Chapter 15       :       COMMERCIAL FARM DEFERMENT

            15.1     Meaning of Commercial Farms and Commercial Farm Deferment

            15.2     Rationale for Deferment
            15.3     Requirements
            15.4     Deferment Period
            15.5     DAR's Role During Deferment Period

Chapter 16       :       LAND USE CONVERSION

            16.1     Definition
            16.2     DAR's Stand on Conversion
            16.3     DAR's Legal Mandate
            16.4     DAR's Role in Conversion
            16.5     Mechanics of Land Use Conversion Application, Approval
and Monitoring
            16.6     LGU's Authority to Reclassify

Chapter 17       :       LAND TRANSACTION

            17.1     Laws and Issuances Governing Agricultural Land Transaction

            17.2     Land Transactions Involving Ago-Tourism Development
            17.3     Land Transactions After 15 June 1988
            17.4     Right of Pre-emption
            17.5     Right of Redemption
            17.6     Valid Transactions
            17.7     Invalid Transactions

Chapter 18       :       PUBLIC LANDS

            18.1     Public Alienable and Disposable Lands

            18.2     Integrated Social Forestry Program
            18.3     Settlement Areas
            18.4     Public Agricultural Lands Turned Over by the National Livelihood
Support Fund

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            18.5     Lands of the Public Domain Covered by Cancelled or Expired Pasture
Lease Agreements and Timber License Agreements Per EO 407
            18.6     Lands of the Public Domain Covered by Cancelled or Expired Fishpond
Lease Agreements

Chapter 19       :       LANDED ESTATES

Chapter 20       :       BARANGAY AGRARIAN REFORM COMMITTEE (BARC)

            20.1     Laws and Issuances on BARC

            20.2     Functions of the BARC
            20.3     BARC Composition
            20.4     BARC Officers
            20.5     Formation of BARC
            20.6     Mediation and Conciliation

Chapter 21       :       DAR ADJUDICATION BOARD (DARAB)

            21.1     DARAB Jurisdiction
 
HANDBOOK FOR CARP IMPLEMENTORS
CHAPTER 1
AGRARIAN REFORM CONCEPTS AND PRINCIPLES
1.1       MEANING OF AGRARIAN REFORM
      What is Agrarian Reform?
     Section 3 of RA 6657 has defined agrarian reform as:

"the redistribution of lands, regardless of crops or fruits

produced, to farmers and regular farmworkers who are
landless, irrespective of tenurial arrangement,
to include the totality of factors and support services
designed to lift the economic status of the beneficiaries,
and all other arrangements alternative to the physical
redistribution of lands, such as production or profit-
sharing, labor administration and the distribution of shares
of stock, which will allow beneficiaries to receive a just
share of the fruits of the land they work." (Section 3, RA
6657)

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     Basically, agrarian reform is land reform — the transfer of control and
ownership of agricultural land to the actual tillers — plus a package of support
services: economic and physical infrastructure support services (ECOPISS),
(e.g., credit, extension, irrigation, roads and bridges, marketing facilities), and
human resource and institutional development or social infrastructure building
and strengthening (SIBS).
    What is being "Reformed" in Agrarian Reform?
    Agrarian reform seeks to correct numerous defects in the country's agrarian
structure. Foremost among these is the concentration of land ownership in only a
few people, such that the huge majority of the population does not have access
to land.
    According to the 1980 Census of Agriculture, farms less than three hectares in
size predominate in the Philippines, representing nearly 70% of the 3.4 million
total number of farms. However, they cover only 30% of the country's 9.7 million
hectares total farm area. In contrast, farms with areas of more than 10 hectares
are very few, constituting only 3.5% of the number of farms. Yet they cover 26%
of the farm area.
    So what's wrong with that?
     The concentration of the ownership of lands in the hands of a very few means
that the majority is deprived of the opportunity to use land as a basic production
resource. The failure to access land results in unemployment, low incomes, low
productivity, poor purchasing power, and sluggish rural economies.

     A more equitable distribution of land ownership, on the other hand, promotes
a more equitable distribution of income which, in turn, promotes greater
economic activity. More producers and income earners, require more services
and goods which other sectors of the economy produce. The increase in
domestic demand and production results in broadbased, sustainable economic
growth. And that's only the economic side of it.
     With improved standards of living, greater people participation in the
community's affairs is expected. This will lead to a more dynamic and genuine
democracy.
1.2       AGRARIAN REFORM ISSUES: LAND TENURE
IMPROVEMENT vs. SUPPORT SERVICES DELIVERY
     Land redistribution is so costly, why don't we just use the money for credit,
extension, infrastructure, post harvest facilities, etc., for greater productivity?

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     Such a strategy would benefit those who own or control the land. It is not
surprising, therefore, that more often than not, it is a strategy propounded by
those who already own land.
     For the benefits of agricultural investments to seep down and reach the lower
economic strata, inequitable land ownership structure will have to be dismantled
first. Broadening the land ownership base makes agricultural development more
quickly and easily felt by the majority.
1.3       AGRARIAN REFORM ISSUES: BIG FARMS vs. SMALL
FARMS
     Aren't small farms less efficient and less productive? Instead of breaking up
the lands, shouldn't we consolidate them into plantations to achieve economies
of scale?
     The argument that large farms are more efficient than small farms is usually
invoked by those who own export and cash crop plantations as an excuse to
exclude their landholdings from agrarian reform. The issue can be answered by
examining whether economies of scale do exist. A study made on coconut and
other tree crops did not show any increasing yield per hectare as farm size
increases. In the case of sugar, another study has shown that average
production cost per hectare, in fact, tends to be higher for larger farms. (Adriano,
Quisumbing, and Hayami, Toward an Alternative Land Reform Paradigm, 1990).

     Furthermore, if breaking up the lands would not be economically viable, then
this need not be done. Agrarian reform can be undertaken by breaking up the
land ownership pattern but farming can be done collectively.
1.4       AGRARIAN REFORM ISSUES: PUBLIC vs. PRIVATE
LANDS
      Why don't we just distribute public and government-owned lands? Why are
we covering the private farms which are productive?
     Productive private lands are covered under agrarian reform for various
reasons. These include:
a.         Public and government-owned lands already have occupants
and claimants. The sheer extent of landlessness makes coverage of
private lands inevitable;
b.         One of the pillars of agrarian reform is the principle that the tiller
of the land has the primacy of the right to own it;
c.         It is in productive private lands, particularly where the necessary
investments have been made, where the beneficiary has greatest
chances of success.

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 1.5       AGRARIAN REFORM: COUNTER-INSURGENCY TOOL?
      Will agrarian reform cure all of the country's ills?

     No, although it is a step in the right direction. The country has too many
problems. But attempts to solve them will not yield sustainable results unless the
root cause is addressed — inequitable distribution of resources. Since the
Philippines is basically an agricultural country, land is the most important
resource. By addressing the problem of inequitable distribution of the land,
agrarian reform is a major step towards resolving the country's problems.
     Is agrarian reform an anti-insurgency tool?
      No, agrarian reform is not being carried out to solve the insurgency problem.
However, agrarian reform answers the clamor for social justice and the upliftment
of the socio-economic status of the landless. It provides a peaceful means for
radical social change and liberation from poverty.
CHAPTER 2
COMPREHENSIVE AGRARIAN REFORM PROGRAM
     What is the constitutional mandate for agrarian reform?
     Agrarian reform derives its mandate from basic principles enshrined in the
Constitution. The Philippine Constitutions of 1935, 1973 and 1987 all attest to
this.
     The 1935 Constitution mandated a policy of social justice to insure the well-
being and economic security of the people.
     The 1973 Constitution provided that "The State shall formulate and implement
an agrarian reform program aimed at emancipating the tenant from the bondage
of the soil."
     The 1987 Constitution contains more specific provisions on agrarian reform.
     Article II, Declaration of Principles and State Policies, Section 21 — "The
State shall promote comprehensive rural development and agrarian reform."
     Article XII, National Economy and Patrimony, Section 21 — "The State shall
promote industrialization and full employment based on sound agricultural
development and agrarian reform, . . ."

     Article XIII, Social Justice and Human Rights, Section 4 — "The State shall,
by law, undertake an agrarian reform program founded on the right of farmers
and regular farmworkers, who are landless, to own directly or collectively the

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lands they till or in the case of other farmworkers, to receive a just share of the
fruits thereof ."
     "The State shall encourage and undertake the just distribution of all
agricultural lands, subject to such priorities and reasonable retention limits as the
Congress may prescribe, taking into account ecological, development or equity
considerations, and subject to the payment of just compensation.
     "In determining the retention limits, the State shall respect the right of small
landowners. The State shall further provide incentives for voluntary landsharing."
     Article XIII, Section 6 — "The State shall apply the principles of agrarian
reform, whenever applicable in accordance with law."
What presidential issuances and legislations provide the legal
mandate for the Comprehensive Agrarian Reform Program?
Various administrations, from the Commonwealth to the Philippine Republic have
issued decrees and passed legislations on agrarian reform.
     Under the previous administration, Proclamation No. 131 and Executive Order
No. 229, both dated 22 July 1987 were issued when then President Corazon C.
Aquino still exercised legislative powers. These instituted the Comprehensive
Agrarian Reform Program (CARP) and provided the mechanism for its
implementation.
    Republic Act No. 6657: An Act Instituting a Comprehensive Agrarian Reform
Program to Promote Social Justice and Industrialization, Providing the
Mechanisms for its Implementation and/or other Purposes, was subsequently
passed by Congress, signed into law on 10 June 1988 and became effective on
15 June 1988. This is now known as the Comprehensive Agrarian Reform Law
(CARL) of 1988. (By tradition, the anniversary of CARP is commemorated on this
date).
CHAPTER 3
CARP COVERAGE
3.1       CARP SCOPE
     What is the scope of CARP?
      The ownership or control of about 10.3 million hectares   of agricultural land,
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representing about one-third of the total land area of the Philippines shall be
transferred over a ten-year period to an estimated 3.9 million beneficiaries.

     What lands are covered by CARP?

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     The CARP covers, regardless of tenurial arrangement and commodity
produced, all public and private lands devoted to or suitable for agriculture and
not classified as mineral, forest, residential, commercial or industrial' land.
     The two criteria for coverage, therefore, are (1) suitability of the land for
agriculture; and (2) its classification.
     Specifically, the following lands are covered by CARP:
a.         all alienable and disposable lands of the public domain devoted
to or suitable to agriculture;
b.         all lands of the public domain in excess of the specific limits as
determined by Congress;
c.         all other lands owned by the government devoted to or suitable
to agriculture; and
d.         all private lands devoted to or suitable to agriculture regardless
of the agricultural products raised or that can be raised therein. (Section
4 RA 6657)
     Other major issuances on CARP are:
     Executive Order No. 228 dated 17 July 1987 declared full land ownership to
qualified farmer-beneficiaries covered by Presidential Decree No. 27 determined
the value of remaining unvalued rice and corn lands subject to PD 27, and
provided for the manner of payment by the farmer-beneficiaries and the mode of
compensation to the landowners.
     Executive Order No. 129-A dated 26 July 1987 provided for the
strengthening of the Department of Agrarian Reform as the lead agency
responsible for the implementation of CARP.
3.2       IMPLEMENTATION SCHEDULE
     When are these lands covered?
     All lands within the scope of CARP have been covered by the program
beginning 15 June 1988, the date of CARP's effectivity.
     However, in consideration of the capacity of the Government to implement the
program, the acquisition and distribution of agricultural lands covered by the
program have been prioritized as follows:

     Phase I — This started immediately upon effectivity of the law and is
programmed to be completed within four years (1988-1992)

*          rice and corn lands which are covered by PD 27;

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*          idle or abandoned;
*          voluntarily offered;
*          foreclosed by government financial institutions (GFIs);
*          acquired by the Presidential Commission on Good Government (PCGG);
and
*          owned by the Government
     Phase II — This also started in 1988 and is programmed to be completed in
four years (1988-1992).

*          all public agricultural lands which are to be opened for new development
and resettlement; and
*          private agricultural lands with areas above 50 hectares in so far as the
excess over 50 hectares is concerned
     Phase III-A — This started on the fourth year and is programmed completed
within three years (1992-1995)
*          private agricultural lands with areas from 24 to 50 hectares, in so
far as the excess over the retention limit.
     Phase III-B — This is programmed to start on the sixth year and to be
completed within four years (1994-1998)
*          private agricultural lands with areas above the retention limit up
to 24 hectares
     Public lands and other lands owned by the government and government-
owned or controlled corporations which are leased and operated by multinational
corporations or associations were programmed for immediate acquisition and
distribution right after the effectivity of the law for completion within three years
(1988-1991). (Sections 6 and 8, RA 6657)
     Does the order of priority mean that all areas under Phase II must first be
acquired and distributed before those in Phase III can be covered?
     Strictly speaking, no. Starting 15 June 1994, Phase III-B lands can already be
acquired and distributed even if not all Phase II lands have been covered.
However, given DAR's backlog in covering even those private agricultural lands
50 hectares and above, and the backlog in voluntary offer to sell, for practical
purposes, priority should be given to the completion of backlog in the earlier
phases.
     Given such phasing, how many hectares can now (1994) be acquired if a
landowner's property has an area of?

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 a.         40 has > 40 less 5                                       35 has.
b.         70 has > 70 less 5                                       65 has.
c.         20 has > 20 less 5                                       15 has. *

     *          if there is a backlog, unless voluntarily offered, it is advised that this
land not be covered yet. Instead, give priority to the completion of the backlog.
     This example considers only the landowner's retention right but does not take
into account the award to qualified children.
     The opinion of some that in the case of (a) in the example, only 16 hectares
can be compulsorily acquired (40 less 24 has.) has been taken by DAR to have
no legal basis. This has been clarified under Memorandum Circular No. 4, Series
of 1993.
CHAPTER 4
EXEMPTIONS AND EXCLUSIONS
4.1.   EXCLUSIONS
What lands are not covered by CARP?
The following lands are not covered by CARP:
a.         those which are not suitable for agriculture, and
those which are classified as mineral, forest, residential,
commercial or industrial land;
b.         those which have been classified and approved as
non-agricultural prior to 15 June 1988 as ruled
under Department of Justice Opinion No. 44, Series of 1990;
c.         those which are exempt pursuant to Sec. 10, RA
6657;
d.         those which are devoted to poultry, swine, or
livestock raising as of June 15, 1988 pursuant to the
Supreme Court ruling on Luz Farms vs. The Honorable
Secretary of Agrarian Reform (G.R. No. 86889, 4 December
1990); and
e.         those which are retained by the landowner (not
covered insofar as land acquisition and distribution but
covered with respect to other provisions, particularly
leasehold).
4.1.1   POULTRY, LIVESTOCK AND SWINE RAISING
What was the basis of the Supreme Court in ruling that poultry,
swine and livestock farms are not covered by CARP?

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 The Supreme Court checked the intent of the framers of the
Constitution and determined that poultry, swine, and livestock farms are
not included in the scope of the agrarian reform program constitutionally
mandated to be implemented.

Are all agricultural lands devoted to livestock, poultry and swine

raising now automatically excluded from CARP coverage?
No. To qualify for exclusion, the following requirements must be
met:
1.         The land or portions thereof must have been
exclusively, directly and actually used for livestock, poultry
and swine raising as of 15 June 1988.
2.         The farm devoted to the above purposes must
satisfy the animal/land ratio, as well as animal/infrastructure
ratio as provided for in Section III-B of Administrative Order
No. 09, Series of 1993 entitled "Rules and Regulations
Governing the Exclusion of Agricultural Lands Used for
Livestock, Poultry and Swine Raising from the Coverage of
CARP".
Can a landowner now convert his crop land to a poultry farm and
then apply for exclusion from CARP?
No, as stated in AO 03-93, the land must already be devoted to
livestock, poultry and swine raising as of 15 June 1988. Nevertheless,
the landowner who wishes to convert his crop land for this purpose must
apply for conversion, the processing of which shall be governed by AO
Nos. 1 and 2, Series of 1990. Among other requirements, there should
be:
1.         the consent of agrarian reform beneficiaries and/or
their waiver of rights; and,
2.         certification from the Regional Director of the
Department of Agriculture that the poultry, livestock or swine
project is of greater economic value than the present
agricultural use.
Conversion of the crop land without the benefit of conversion
approval will be construed as an intent to avoid application of RA
6657 and shall be considered as invalid and illegal. The land will be
covered under CARP without prejudice to the filing of charges against
the landowner.

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 Suppose a landowner has been granted exclusion from CARP for
his landholding devoted to livestock raising but subsequently, he/she
stopped its operations and went into crop production, can the land still
be subject to CARP?
Yes, the area or portion no longer used for livestock raising
purpose shall automatically revert to the category of agricultural land and
shall be covered by CARP.
What are the procedures in applying for exclusion of a landholding
devoted to livestock, poultry and swine raising?
1.         Landowner files the application for exclusion with the
DAR Provincial Agrarian Reform Office, together with the
documentary requirements;
2.         The PARO, with the assistance of the BARC, the
MARO, the Municipal Livestock Inspector, and a
livestock/poultry and swine specialist of the DA shall
conduct a field investigation, and prepare report of findings
and recommendations for submission to the Regional
Director.
3.         Regional Director undertakes final review and
evaluation of the application and issues the Order of
Exclusion or Denial.
4.2       EXEMPTIONS
What lands are exempted from CARP coverage?
The following are exempted from the coverage of CARP:
a.         Lands actually, directly, and exclusively used and
found to be necessary for parks, wildlife, forest reserves,
reforestation, fish sanctuaries and breeding grounds,
watersheds and mangroves, national defense, school sites
and campuses including experimental farm stations
operated by public or private schools for educational
purposes, seeds and seedlings research and pilot
production centers, church sites and convents appurtenant
thereto, mosque sites and Islamic centers appurtenant
thereto, communal burial grounds and cemeteries, penal
colonies and penal farms actually worked by the inmates,
and government and private research and quarantine
centers; and

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 b.         Lands with eighteen percent (18%) slope and over,
except those already developed as of 15 June 1988. (Sec.
10, RA 6657)
What is the scope of the exemption that may be granted?
The exemption means that the subject parcel of land will not be
acquired and distributed under the CARP for as long as the reasons for
the exemption continue to exist. However, the other components of the
program, e.g., leasehold and the Integrated Social Forestry Program
may be implemented where applicable.
A state college claims that although part of its property is
cultivated by farmers, that area cannot be covered under CARP because
it is reserved for the future expansion of the campus. Is that parcel
exempted?
The area reserved for future expansion appears not to be actually
and directly used for a campus. Unfortunately, in the case of the Central
Mindanao University vs. DARAB (CA-G.R. No. 19174 dated 23 August
1990), the Supreme Court ruled that the University has the prerogative to
determine whether a particular part of the school property is necessary
for educational purposes. Therefore, in this case, that parcel is
exempted.
A landowner claims that his agricultural land is exempted because
he has recently developed it into a pilot production center for hybrid
seeds. Is the landholding exempted?
No. The four conditions must have been all present as of 15 June
1988.

A landowner was granted exemption because his agricultural land

was found to be a qualified private research center for corn breeding.
Subsequently, he gave up his breeding operations and went into
commercial production of feed grains. May the landholding be covered?
Yes. For the exemption to continue, the reason for which the
exemption was granted must continue to exist.
A parcel of land cultivated by farmers is found to be within a forest
reserve. May it be immediately covered by DAR under CARP?
No. Coverage while possible, will have to wait until Congress,
taking into account ecological, developmental and equity considerations,
shall have determined by law the specific limits of the public domain.
Thereafter, a reclassification of the said areas as alienable and
disposable land will also have to be done. (Sec. 4, RA 6657)
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 Why are lands with 18% slope and undeveloped exempt from
CARP coverage?
The exemption is specifically mentioned in Section 10, RA
6657 and is based on the Forestry Code which provides that such lands
should not be disposed of and developed for agriculture because this
type of land is highly susceptible to soil erosion. The principle is debated
in the light of cultural practices which could make the preservation of the
ecological balance in such areas feasible. However, until and unless the
laws are changed, such lands are not covered by CARP.

Since lands 18% slope or over if developed are not exempt from
CARP, can DAR subject these lands to acquisition and distribution?
Such lands can be allocated to qualified occupants but the manner
of acquisition and distribution depends on the following:
1.         If classified as forest land, they shall be allocated by
the DENR under the Integrated Social Forestry Program;
2.         If classified as alienable and disposable, they shall
be allocated by DENR and DAR pursuant to the provisions
of the Public Land Act and the Joint DAR-DENR AO No. 2,
Series of 1988; and
3.         If private agricultural land, then, they shall be
acquired in accordance with the provisions of RA 6657.
What Administrative Orders govern the exemption of lands from
CARP?
1.         DAR Administrative Order No. 10, Series of 1994,
"Amending AO No. 13, Series of 1990 entitled Rules and
Procedures Governing Exemption of Lands from CARP
Coverage under Section 10 of RA No. 6657, to Authorize all
Regional Directors to Hear and Decide Applications for
Exemption for All Land Sizes"
2.         DAR Administrative Order No. 06, Series of 1994,
"Guidelines for the Issuance of Exemption Clearances
based on Sec. 3 (c) RA 6657 and the department of Justice
(DOJ) Opinion No. 44 Series of 1990"
      4.3       PROCEDURES GOVERNING EXEMPTION OF LANDS
UNDER SEC. 10, RA 6657
What are the procedures followed in securing exemption of lands
under Sec. 10 of RA 6657 from CARP coverage?

16
 The person/s or representative/s owning, administering or
managing the landholdings may file for exemption of the lands from
CARP coverage at the Municipal Agrarian Reform Office.

1.         The MARO shall prepare an Application for Land

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

17
 What is the recourse of a party who disagrees with the decision of
the Regional Director?
Any party who disagrees with the RD's decision may file a written
motion for reconsideration within 15 days from receipt of the Order. The
RD shall then rule on the motion for reconsideration. Should the motion
for reconsideration be deemed, the aggrieved party could appeal to the
DAR Secretary within the balance of the 15 day period. The Secretary
shall render a decision within 30 days after receipt of the appeal.
     4.4       PROCEDURES FOR ISSUANCE OF EXEMPTION
CLEARANCE BASED ON DOJ OPINION NO. 44
What are the procedures for the issuance of exemption clearances
based on DOJ Opinion No. 44?
1.         The landowner or his duly authorized representative
files the application for exemption with the Regional Office of
the DAR where the land is located. The application should
be accompanied by the following documents:
a.         duly notarized Special Power of Attorney, if
the applicant is not the landowner himself;
b.         certified true copies of the list of the land
which is the subject of the application;
c.         current tax declaration covering the property;
d.         location or vicinity map;
e.         certification from the Deputized Zoning
Administration that the land has been reclassified to
residential, industrial or commercial use prior to 15
June 1988;
f.          certification from the HLRB that the pertinent
zoning ordinance has been approved by the Board
prior to 15 June 1988;
g.         certification from the National Irrigation
Administration that the land is not covered by AO No.
20, Series of 1992, i.e., that the area is not irrigated,
nor scheduled for irrigation rehabilitation nor irrigable
with firm funding commitment, and
h.         proof of payment of disturbance
compensation, if the area is presently being occupied
by farmers, or waiver/undertaking by the occupants
that they will vacate the area whenever required.

18
 2.         The Regional Office conducts joint investigation with
the duly authorized representatives of the DAR provincial
and municipal offices that have jurisdiction over the
property, and a report prepared within thirty (30) days from
the filing of completed application.
The joint investigation report shall contain information
on:
a.         presence of potential beneficiaries;
b.         payment of disturbance compensation;
c.         initial activities related to coverage;
d.         certification from the MARO on whether or not
the land has been placed under PD 27 or whether a
CLOA or EP has been issued over said property.
3.         The investigation report is submitted to the Regional
Director who prepared the Order for Denial or Grant of the
Exemption Clearance not later than fifteen (15) days from
the receipt of the report.   IaEScC

4.         The exemption folder, together with the draft order is

forwarded to the Legal Affairs Office of the DAR Central
Office which shall review the same and upon proper review
forwards the folder to the Office of the Secretary not later
than fifteen (15) days from receipt of the folder.
5.         The Secretary signs the Order for Denial or Grant
and a copy of the order is furnished to the Land Use
Conversion Committee for purposes of monitoring and
statistical information.
CHAPTER 5
LAND ACQUISITION
5.1       REQUISITES IN LAND ACQUISITION
What lands are acquired under CARP?
Only the private lands devoted to or suitable for agriculture,
regardless of the agricultural products raised or can be raised therein,
are subject of land acquisition. The lands of the public domain suitable
for agriculture already belong to the State and are just distributed
through either Free Patents for Alienable and Disposable (A&D) lands or
Certificates of Land Ownership Awards (CLOAs) for resettlement sites.
In addition, stewardship contracts are awarded for public lands covered
by the Integrated Social Forestry Program (ISFP).
19
 It must be noted that the private agricultural lands include those
owned by private entities and those owned or held by government
agencies, corporations, and instrumentalities.
Specifically, the following lands may be acquired under CARP:
a.      rice and corn lands under PD 27/EO 228;
b.      idle or abandoned lands;
c.      lands foreclosed by private and government financial
institutions;
d.      private agricultural lands
e.      public lands suitable for agriculture;
f.       lands acquired by PCGG;
g.      lands used by multinational corporations

What are the requisites in land acquisition?

The following requirements must be met for land acquisition to be
completed:
a.         That the land is privately owned and found suitable
for agriculture;
b.         That there are beneficiaries willing to take over the
ownership of the land and make it productive;
c.         That the landowner is paid just compensation; or a
trust deposit is made in his/her name if the value is
contested; and
d.         That title to the land is transferred in the name of the
Republic of the Philippines.
However, full payment of just compensation and transfer of title to
the Republic of the Philippines are not requisites in VLT/DPS. Moreover,
under EO 407, the payment of just compensation to the government
instrumentality as landowner may come even after land distribution.
5.2       MODES OF ACQUISITION
What are the modes of acquiring lands for distribution under
CARP?
Private agricultural lands covered by CARP are acquired through
any of the following modes:
a.         Compulsory Acquisition (CA);

20
 b.         Voluntary Offer to Sell (VOS);
c.         Voluntary Land Transfer/Direct Payment Scheme
(VLT/DPS);
d.         Operation Land Transfer (OLT) under PD 27 and EO
228; and
e.         Executive Order No. 407, as amended by EO
448 and EO 506
What are the basic differences among these modes?
a.         OLT is governed by PD 27 and EO 228 and has
been in operation since 1972. It follows a different set of
procedures, particularly in land valuation.
b.         Land acquisition under OLT and CA is done through
the mandate of the law whether or not the landowner
disagrees to part with his property.
c.         CA follows the schedule of CARP implementation
based on the area of the landowner's landholdings. In
contrast VOS may be done even for lands not yet scheduled
by law to be acquired.
d.         EO 407 as amended pertains only to government
agencies as landowners in a propriety capacity, or to public
A & D lands under their administration by virtue of
presidential proclamation.
e.         VLT/DPS, on the other hand, is a voluntary
arrangement entered into by a landowner and a qualified
farmer-beneficiary to directly transfer the land to the
beneficiary under terms and conditions mutually agreed by
them but with payment terms not less favorable to the
farmer than if it were the government purchasing the land
and transferring it to the beneficiary.
5.2.1   COMPULSORY ACQUISITION
What are the existing administrative orders on compulsory
acquisition of lands?

These Administrative Orders are:

a.         Administrative Order No. 11, Series of 1994 —
Revising the Rules and Regulations Covering the Valuation

21
 of Lands Voluntarily Offered or Compulsorily Acquired as
Embodied in Administrative Order No. 06, Series of 1992;
b.         Administrative Order No. 01, Series of 1993 — An
Order Amending Certain Provisions of Administrative Order
No. 09, Series of 1990, entitled "Revised Rules Governing
the Acquisition of Agricultural Lands subject to Voluntary
Offer to Sell and Compulsory Acquisition Pursuant to RA
6657"
[This AO supersedes AO No. 12, Series of 1989, AO No.
09, Series of 1990, and AO No. 10, Series of 1991]
c.         Administrative Order No. 12, Series of 1990 —
Policy Guidelines and Operating Procedures in the
Identification and Acquisition of Idle and Abandoned Lands.
What lands are covered by compulsory acquisition?
Except in the case of tenanted rice and corn lands under PD 27,
which are acquired following a different set of rules, compulsory
acquisition (CA) is done for all private agricultural lands which become
due for coverage following the phasing of implementation earlier
discussed. However, CA is suspended in those cases where the
landowners opt for other modes of compliance, e.g., voluntary land
transfer or stock distribution option. CA is resumed once the negotiations
in these other modes fail.
Compulsory acquisition is also done in idle and abandoned lands
regardless of their size and phasing, and in lands whose commercial
farm deferment is revoked.
What are idle or abandoned lands?
Idle or abandoned lands refer to agricultural lands not cultivated,
tilled or developed to produce any crop nor devoted to any specific
economic purpose continuously for a period of three (3) years
immediately prior to the receipt of notice of acquisition by government as
provided under RA 6657. They do not, however, include the following:
a.         those that have become permanently or regularly
devoted to non-agricultural purposes;
b.         those that have become unproductive by reason of
force majeure or any other fortuitous event, provided that
prior to such event, such land was previously used for
agricultural or other economic purpose. (Section 3, RA
6657)

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 Can the DAR compulsorily acquire a landholding whose
ownership is under litigation or judicial proceedings?
Yes, if it is clear that no matter what the outcome of the litigation
may be, the land is still covered under CARP. In such case, the DAR
shall select the retained area and the compensation for the land shall be
held in trust pending the resolution of the disputes.
However, if one or both of the parties to the case are groups of
individuals, the hectarage involved in the possible exercise of the right of
retention should be considered in the acquisition of the land.
However, in the case of PCGG/APT acquired assets whose
ownership is contested in court, the DAR and the PCGG have an
understanding that a proper motion will be filed in court to allow DAR to
acquire such property, even pending litigation.
What if the person who is declared by the court as the lawful
owner subsequently disagrees with the area chosen by DAR for
retention? What if he has exercised retention in another property?
The CLOA could be amended by the DAR or the landowner filing a
petition with the DARAB. However, if the landowner is no longer entitled
to retention, then the area previously set aside for retention may also be
covered.
A couple owning only 30 hectares died in January 1988 leaving as
heirs six children with ages ranging 25-40. No partition of the property
has been done and the children do not own other agricultural lands. How
many hectares may be compulsorily acquired?
None. Even if the title is still in the name of the couple, ownership
automatically transferred to the children upon their parent's death. The
six children are already the owners. Thus, at five hectare retention per
landowner, the entire 30 hectares may be retained.
AO-01, Series of 1989 allows the registration of a deed of extra-
judicial partition of the property of a deceased who died prior to 15 June
1988.
Note, however, that if the parents died after 15 June 1988, the
land may be entirely acquired and distributed if the children are neither
actual tillers or direct farm managers. If they are, they will each be
entitled to an award of three (3) hectares. Otherwise, they will only be
entitled to the compensation for the land. But the land will be acquired
and distributed under CARP. Moreover, the DAR and the ROD will no
longer allow the partition of the property except in favor of the qualified
farmer-beneficiaries. This is in line with the fact that as of 15 June 1988,

23
by operation of the law, all lands in excess of the retention limit are
already covered by CARP.
If in the course of CARP coverage, the owner alleges that the land
is exempted under Sec. 10, RA 6657, what should you do?
Exception under Section 10 of RA 6657 is not automatic.
Under AO-13, Series of 1990, persons or representatives of persons
owning, administering or managing lands believed to be actually, directly
and exclusively used and are necessary for any of the purposes under
Section 10 should file a written application with DAR. This application
should be approved by the Regional Director.
The MARO should, therefore, check if an application has been
filed and if the application has been duly approved. Otherwise, the
MARO should treat the matter as a CARP protest and let the Regional
Director rule on the matter. (AO-09, series of 1994).
If in the course of coverage, the owner alleges that the property is
already reclassified as residential since 1986, what should you do?
The MARO should determine if the property is covered by DOJ
Opinion No. 44 and whether an application for exemption has been filed
by the landowner. He should also investigate the actual land use and
whether the land is irrigated, irrigable or is programmed for irrigation. He
should also check the zoning plan or municipal/city ordinance approved
by the HLURB. Only if it is clear that the said landholding does not fall
within any of the above, should the MARO proceed with the acquisition
of the property.
If in the course of coverage, the owner alleges that about one year
before the notice of acquisition, he has filed an application for
conversion, what should you do?
The MARO should check the allegation, i.e., whether there really
was an application for conversion filed a year ago. If there is none,
conversion is not possible because the notice of acquisition has already
been issued. If there is, the issue of conversion should first be resolved.
5.2.2   VOLUNTARY OFFER TO SELL (VOS)
What is the VOS scheme?
VOS is a scheme wherein landowners come forward and
voluntarily offer their agricultural lands for coverage regardless of the
phasing. The DAR encourages this mode because VOS generally
ensures the cooperation of the landowners.

24
  
What are the existing policy guidelines governing VOS?
The implementing policy guidelines on VOS are:
a.         Administrative Order No. 11, Series of 1994 —
Revising the Rules and Regulations Covering the Valuation
of Lands Voluntarily Offered or Compulsorily Acquired as
Embodied in Administrative Order No. 06 Series of 1992;
b.         Administrative Order No. 01, Series of 1993 — An
Order Amending Certain Provisions of Administrative Order
No. 09, Series of 1990 Entitled "Revised Rules Governing
the Acquisition of Agricultural Lands Subject to Voluntary
Offer to Sell and Compulsory Acquisition Pursuant to RA
6657";
[This AO supersedes AO No. 03, Series of 1989, AO No.
14-A and AO No. 19, Series of 1989, AO No. 09, Series of
1990, and AO No. 10, Series of 1991]
c.        Administrative Order No. 05, Series of 1992 —
Clarificatory Guidelines and Amendments to AO No. 09,
Series of 1990.
Where should the landowner file the application for VOS?
Application for VOS can be filed either at the Central Office, or at
any field office of DAR. However, the receiving office should forward the
application to the MARO of the municipality where the land is located.
What incentives are given to landowners who offer their lands
under VOS?
The cash portion of the compensation to the landowner is
increased by five percent (5%), while the LBP bond portion is
correspondingly decreased by five percent. However, this incentive is not
available to banks and other financial institutions.
It should be noted that the total compensation is not increased,
only the proportion of the cash component.
May an agricultural land which has been mortgaged also be
voluntarily offered under CARP?
Yes. In this case, the MARO should secure a statement of account
from the creditor and recommend the settlement of the obligation through
payment in LBP bonds.

25
 Can government financial institutions voluntarily offer foreclosed
but redeemable properties which are not yet transferred to them?
No. The GFIs have to wait for the expiration of the redemption
period.
Are landowners allowed to withdraw lands offered under the VOS
scheme?
No. The exceptions are the instances provided in Administrative
Order No. 05, Series of 1992, namely:
a.         If the subject landholding is part of the landowner's
retained area, provided the landowner has not yet received
any payment;
b.         If the landowner wants to shift the mode of
acquisition from VOS to VLT/DPS;
c.         If the offered land is to be covered in 1994 and the
landowner wants to wait for the compulsory coverage under
Phase III-B. If the Notice of Valuation has been served,
however, the withdrawal may no longer be allowed.
d.         If the DAR determines the landholding to be more
suitable for a town site, resettlement or institutional site to
address a calamity situation. It should be noted that this
case is limited to calamity situations. Further, the approval of
the withdrawal of the VOS does not automatically authorize
the land use conversion of the land. The owner must still
apply for conversion.
What are the instances in which the DAR may reject a VOS
application?
The DAR may reject a voluntary offer to sell in the following
instances:
a.         If the land is not suitable for agriculture, or has more
than 18% slope and is underdeveloped;
b.         If there are no takers or beneficiaries of the land for
valid reasons (e.g., peace and order situation) without
prejudice to future coverage of the area under CARP; and
c.         If the only identified agrarian reform beneficiaries
(ARBs) are the qualified children of the landowner.
5.2.3   VOLUNTARY LAND TRANSFER/DIRECT PAYMENT
SCHEME (VLT/DPS)

26
 What is the VLT/DPS mode?
VLT/DPS is a scheme wherein a landowner of an agricultural land
covered by CARP and the qualified beneficiaries of such land agree to
the direct transfer of the ownership of the land, as provided for under
Sections 20 and 21 of RA 6657. The area to be transferred should not,
however, be less than the area which the government through
compulsory acquisition would otherwise acquire. Administrative Order
No. 13, Series of 1991, embodies the rules and procedures governing
VLT/DPS.
 
May a landowner unilaterally decide to distribute his land through
the VLT/DPS scheme?
No. An agreement between the landowner and the qualified ARBs
as approved by the DAR is necessary.
What is the basic requirement in VLT/DPS?
It is imperative that the ARBs give their informed consent to the
landowner's VLT/DPS proposal. Specifically, this means that the ARBs
should be made aware of their rights and options under the law,
particularly, the terms and conditions of land transfer under the "regular"
compulsory acquisition mode.
Among others, the field implementor (Municipal Agrarian Reform
Officer or Agrarian Reform Program Technologist — MARO or
SARPT/ARPT) must explain to the ARBs: (1) that the land will sooner or
later be acquired under CA subject to the phasing; and (2) about how
much they will have to pay under the CA mode.
VLT/DPS is a scheme favorable to the Government for two
reasons. First, Government does not have to pay for the land. Second,
the agreement between the two parties facilitates land acquisition and
distribution. The DAR, however, ought to ensure that the beneficiaries
know what they are entering into and that terms and conditions of the
VLT/DPS are not disadvantageous to the ARBs.
Who are the qualified beneficiaries under VLT/DPS?
The qualified beneficiaries are the same as those who would be
beneficiaries if the land were to be covered under compulsory acquisition
or voluntary offer to sell. (See Sec. 22, RA 6657).
What is the prescribed period for the completion of VLT/DPS
negotiations?

27
 Negotiations for VLT/DPS between the landowner and the
beneficiaries must be completed and the agreement arrived at must be
submitted within one (1) year from the time the DAR receives the notice
of application for VLT/DPS.
What if negotiations for VLT/DPS are not resolved after one year?
If VLT/DPS negotiations remain unresolved after one year, the
land shall be covered under compulsory acquisition.
When should the transfer of possession and land ownership of the
land be done?
The transfer of possession and ownership should be done
immediately after the submitted VLT/DPS agreement is approved by the
DAR. Certificates of Land Ownership Award (CLOA) with the proper
annotations to protect the landowner shall be issued to the beneficiaries.
May an agricultural land mortgaged to a bank be the subject of a
VLT/DPS?
No. Land titles with existing liens and encumbrances shall not be
covered under the VLT/DPS scheme. This is a ruling made by DAR to
simplify VLT/DPS transactions, particularly to facilitate the immediate
transfer of title to the ARBs.
5.3    EXECUTIVE ORDER NO. 407 AS AMENDED
What is the significance of EO 407?
Executive Order No. 407 dated 14 June 1990, entitled
"Accelerating the Acquisition and Distribution of Agricultural Lands,
Pasture Lands, Fishponds, Agro-Forestry Lands and Other Lands of the
Public Domain Suitable for Agriculture" directs all government
instrumentalities, including government financial institutions (GFIs) and
government-owned or controlled corporations (GOCCs) to immediately
transfer to DAR all their landholdings suitable for agriculture for
immediate distribution to qualified beneficiaries under CARP.
EO 407 is a concrete act of the Government to divest itself of its
agricultural landholdings as an example for private landowners to follow.
Moreover, inasmuch as the landowners involved are also Government
agencies, EO 407 has facilitated the acquisition by the DAR of
thousands of hectares of agricultural lands for distribution under CARP.
What lands may be acquired for distribution pursuant to EO
407 as amended by EO 448 Series of 1991 and EO 506 Series of
1992?
EO 407 covers the following:

28
 *          all agricultural lands owned or controlled by
government departments, agencies or instrumentalities,
including lands foreclosed by government financing
institutions;
*          lands covered by cancelled or expired Timber
License Agreements (TLAs) and Pasture Lease Agreements
(PLAs) for redistribution by the DENR, in coordination with
the DAR, to qualified ARBs identified by the DAR; and
*          lands covered by cancelled or expired Fishpond
Lease Agreements (FLAs) for redistribution by the
Department of Agriculture (DA), in coordination with the
DAR to qualified ARBs identified by the DAR.
EO 448 included within the coverage of EO 407 all reservations or
portions thereof, which are suitable for agriculture and are no longer
needed for the purpose for which they were established.
EO 506, however, further amended EO 407 to exclude:
*          all existing and proposed national parks, game
refuge, bird sanctuaries wildlife reserves, wilderness areas
and other protected areas, including old growth or virgin
forests and all forests above 1,000 meters elevation or
above 50 percent slope until such time that they are
segregated for agricultural purposes or retained under the
National Integrated Protected Areas System (NIPAS) of
DENR.
5.4    PROCEDURES IN LAND ACQUISITION
What are the basic steps in land acquisition?

a.         Identification and documentation of the landholdings,

landowners and beneficiaries;
b.         Land survey;
c.         Review and completion of data/documents;
d.         Land valuation and compensation; and
e.         Transfer of title from the landowner to the Republic
of the Philippines.
What are the changes in procedures for land acquisition contained
in AO-01, Series of 1993?

29
 a.         The number of steps has been reduced by
transferring from the DAR Regional Office to the Provincial
Office the review and completion of documents before
submission of the claim folder to the Land Bank of the
Philippines.
b.         The conduct of the field investigation can proceed
even if the LBP representative is unavailable. This was
made possible by dividing the Field Investigation Report into
two parts. Part I contains data on the landholding and its
suitability to agriculture. Part II, on the other hand, provides
data inputs for the determination of the land valuation. Part I
can be accomplished even without the presence of the LBP
representative although the data are subject to review by
LBP.
c.         The conduct of public hearing was deleted. In lieu
thereof, the Notice of Coverage, Field Investigation Report
and the Notice of Land Acquisition and Valuation shall be
posted for a period of one week on the bulletin boards of the
barangay/municipal/provincial halls where the property is
located.
d.         CARP forms were simplified and reduced in number.
e.         The acquisition process has been facilitated by
requiring the LBP to immediately open a trust account in the
name of the landowner, whether the landowner accepts or
rejects the land valuation. Actual release, however, shall be
effected only after the landowner's compliance of all the
requirements.
What is the first step in land acquisition?
Land acquisition, regardless of the mode, begins with the
identification of landowners, landholdings and beneficiaries covered by
CARP.
Under the Land Acquisition and Distribution Tracking System
(LADTRACKS) and the CARP Scope Validation project, field offices
have been tasked to prepare a master list or inventory of landholdings in
their area of coverage. This inventory is derived from the LISTASAKA
statements, as verified or complemented by the records of the Register
of Deeds and Assessor's Offices, review of the municipal town plan and
zoning ordinances, field surveys, interview and community consultations,
and general knowledge of the land ownership pattern in the barangays or
municipalities.

30
 With these basic tools, the landowners who own agricultural lands
in excess of the retention limit may be easily determined and their lands
classified according to the implementation phase or order of priority of
CARP.
5.5    PRIORITIZATION OF LANDS FOR COVERAGE
What are the criteria for prioritizing the coverage of landholdings in
the master list?
Quality land distribution cannot be overemphasized. More than just
meeting the targets, land distribution should be done with the end in
mind of uplifting the farmer beneficiaries' living condition. Priority should,
therefore, be given to areas where success of beneficiaries development
is paramount. The following should be the basic considerations in the
prioritization of covered areas:
a.         Barangays covered by identified ARCs;
b.         Level of organization of the farmers — Consistent
with the people-centered development thrust of the DAR,
the higher the level of organization of farmers, the greater
should be the priority. This will not only facilitate the land
acquisition and distribution process but also hasten the
development of viable agrarian reform communities in the
area;
c.         Incidence of agrarian unrest — The greater the
incidence of unrest, the higher should be the priority to
promote the resolution of the agrarian disputes. Utmost care
should however, be made to ensure that the landholding is
indeed covered by CARP;
d.         Number of farmers to be benefitted — The higher
the number, the greater should be the priority, again in line
with people-centered development;
e.         Size of the landholding — Inasmuch as nearly the
same efforts will have to be expended for either big or small
landholdings, it makes sense to put higher priority on the
larger landholding;
f.          Presence of support factors — Areas with
cooperative landowners, supportive community leaders and
local government executives, active BARCs and
POs/NGOs, etc. should receive higher priority because it is
in these areas where agrarian reform implementation will
have greater chances of success;

31
 g.         Presence of a title over the property — Titled
properties are easier to acquire because, as it is the norm
under our Torren's Title System, the title is the strongest
proof of the land ownership. Untitled properties require
much more difficult documentation to ensure that the land
actually exists and that the current landowner is being
addressed. Thus, all other considerations being equal, titled
properties should receive higher priority.
5.6    RECONSTITUTION OF TITLE
What can be done in case the original title of the land got lost or
was destroyed due to fire, flood or force majeure in the register of
deeds?
In general, lost or destroyed original copies of certificates of title
are reconstituted through judicial proceedings pursuant to Section 110 of
the Property Registration Decree (PD No. 1529). The procedure is
prescribed in Republic Act No. 26 and implemented in LRA Circular No.
35 dated 13 June 1983.
However, RA 6732 as implemented by LRA Circular No. 13 dated
26 July 1989, allows for administrative reconstitution when the original
copies of the certificates of title in the Office of the Register of Deeds are
destroyed due to fire, flood, or other force majeure as determined by the
LRA administrator, where the destroyed records constitute at least ten
percent (10%) of the total number of titles but in no case shall these be
less than 500. Thus, administrative reconstitution is allowed in Batangas
City, Malolos, Bulacan, and in the provinces of Eastern Samar,
Camarines Sur, Isabela, and Oriental Mindoro where the Offices of the
Register of Deeds were destroyed by fire.
The law also covers administrative reconstitution of copies of
original certificates of title destroyed by fire, flood or other force majeure
which occurred fifteen years before its effectivity in 1989.
What if it is the owner's duplicate copy which is lost while the
original is still on file?
Then a petition for the issuance of a new owner's duplicate copy
shall be filed with the Regional Trial Court. (Sec. 109, PD 1529)
Who should file the petition for reconstitution of title?
LRA Circular No. 35, Series of 1983 provides that the landowner
or an interested party should file a petition for reconstitution with the
Clerk of Court of the Regional Trial Court having jurisdiction of said

32
property, in case of judicial reconstitution; or with the Register of Deeds
concerned, in the case of administrative reconstitution.
However, in order not to delay acquisition and distribution, the
DAR issued Memorandum Circular No. 05, Series of 1994 which
provides that the duly authorized DAR lawyer can file the petition in the
Regional Trial Court in case of judicial reconstitution, or with the Register
of Deeds concerned in case of administrative reconstitution, provided
that a Notice of Coverage has already been issued covering the
property. However, the DAR shall endeavor to secure a written
permission from the registered owner/s of lost or destroyed titles.
What are the procedures for judicial reconstitution?
1.         The petition is filed with the Clerk of Court of the
Regional Trial Court which has jurisdiction over the property.
Such petition is accompanied by a plan and technical
description of the subject land, and a certification from the
ROD that the original copy of the title was burned, lost,
mutilated, etc. Photocopies of the Notice of Coverage shall
also be submitted if the DAR is the petitioner.
2.         The Office of the Solicitor General, Office of the
Prosecutor for the City or Province, DENR-LMB, LRA, and
ROD concerned are furnished with copies of the petition.
3.         Publication (twice) in the Official Gazette and posting
in the bulletin boards of the respective municipality of the
notice of initial hearing. Adjoining owners and interested
parties are also furnished copies of the notice.
4.         Processing in the Land Registration Authority.
5.         Court proceedings and court decision.
6.         Surrender of the owner's duplicate Certificate of Title
to the ROD.
7.         Reconstitution proper of a new Original and Owner's
Duplicate Certificate of Title by the ROD.
What are the procedures for administrative reconstitution?
1.         The petition accompanied by three (3) photocopies
of the owner's authenticated duplicate certificate of title;
latest tax declaration and Notice of Coverage (if DAR is the
petitioner) and an affidavit regarding circumstances of the
property are filed with the ROD concerned;
2.         Publication and posting requirements;

33
 3.         Processing by the Reconstituting Officer designated
by the LRA Administrator;
4.         Issuance of Order to Reconstitute by the
Reconstituting Officer;
5.         Review by the LRA Administrator of the Order of
Reconstitution and affirmation thereof, if proper;
6.         Surrender of the Owner's or Co-Owner's duplicate
Certificate of Title to the ROD; and
7.         Issuance of reconstituted title and delivery of owner's
or co-owner's duplicate Certificate of Title by the ROD
concerned to the landowners or to DAR.
Who will shoulder the cost of the reconstitution proceedings?
Administrative reconstitution normally does not cost anything,
except for incidental costs like photocopies. However, judicial
reconstitution requires publication which could be substantial (around
P1,500 at 1993 prices). If the petition was filed by DAR, then it shall
shoulder this cost chargeable against CARP funds. Otherwise, it will
have to be borne by the farmer-beneficiary or the cooperative or farmers
association.
5.7    UNTITLED PRIVATE PROPERTIES
Can untitled private properties be placed under CARP?
DAR's petition on the issue of placing untitled or unregistered
private agricultural lands under CARP is that if there is no adverse
claimant over the subject landholding (e.g., there is no court case), then
submission of documentary and/or testimonial evidence shall be
conclusive proof of ownership. The landholding may be acquired under
CARP and the landowner entitled to payment in accordance with
pertinent laws and DAR rules and regulations as resolved under DOJ
Opinion No. 176, Series of 1992.
What if there are two or more claimants and there is a pending
court case, to whom shall payment be made?
If there are two or more claimants and there is a pending court
case, coverage of the land under CARP should proceed and the
processing of claim folder should continue without interruption. But
payment of said property shall only be effected to the claimant who has
been declared by the Court as the lawful owner.

34
 What safeguards have been instituted to ensure that untitled and
unregistered private agricultural lands being covered by the program are
properly supported by adequate documents?
Under Administrative Order No. 01, Series of 1993, seven items
are listed as documentary requirements for processing claim folders of
untitled properties. These are:
1.         Survey plan of the property duly approved by the
Land Management Bureau, and if not available, a sketch
plan certified to by said office, and technical description
thereof;
2.         Certified copy of the present Tax Declaration in the
name of claimant with correct lot number/s and area per
approved plan;
3.         Instruments of acquisition covering the subject
property, such as Deed of Sale, Donation, Transfer, etc. in
favor of claimant and those of his/her predecessor/s interest;
4.         Certification of the Assessor concerned showing the
Tax Declaration issued, the declarant/s, the area covered,
and the basis for the issuances and cancellations thereof
pertaining to the property/ies from the first declaration up to
the tax declaration issued in the name of the claimant;
5.         Certification from the Clerk of Court concerned
whether or not the property/ies identified in the plan is/are
covered by land registration proceedings or civil case, and if
the same is used as bond or bail in other court actions;
6.         Certificates of the DENR-LMS stating the year the
property/ies identified in the plan may already be considered
as private agricultural land, and the persons having the best
claim of ownership thereof; and
7.         Certification from the Office of the Register of Deeds
and Assessor concerned to the effect that as per their
records, the property/ies as appearing in the approved
survey plan is/are free from all liens and encumbrances.
5.8    FIELD INVESTIGATION

How will the landowner know that his or her land is being covered
by CARP?

35
 A landowner who has been identified should be notified by the
MARO that his or her landholding is now covered by issuing a Notice of
Coverage personally delivered or sent by registered mail. In that Notice,
the landowner is also informed of his or her right to select the retained
area and of the field investigation which will be conducted on the
landholding.
A copy of the Notice shall also be posted for at least one week on
the bulletin board of the municipal and barangay halls where the land is
located.
After identifying and documenting the ownership of the land, what
must be done next?
The suitability of the land covered under CARP should next be
established. This is done primarily by undertaking the field investigation
of the property to ascertain its suitability, productivity, and tenurial
characteristics.
Who are involved in the field investigation?
Aside from the MARO or ARPT and the landowner concerned,
representatives from the Department of Environment and Natural
Resources (DENR), Department of Agriculture (DA) and Land Bank of
the Philippines (LBP), as well as the BARC and prospective agrarian
reform beneficiaries should be invited to participate in the conduct of the
field investigation.
What if the invited representatives are not available?
The field investigation can proceed provided they were given due
notice of the time and date of the investigation to be conducted, i.e., they
were sent copies of Notice of Conduct of Field Investigation. If it is the
LBP representative who is not available, the DAR field implementor(s),
together with the other parties shall conduct the field investigation and
accomplish Part I of the Field Investigation Report. Such report shall be
forwarded to the LBP representative for validation.
What if there is a difference in the findings of the DAR and the
LBP?
In the event that there is a difference or variance in the findings of
the DAR and the LBP as to the propriety of coverings the land under
CARP, whether in whole or in part, on the issue of suitability to
agriculture, degree of development or slope, and on the issue affecting
idle lands, the conflict shall be resolved by a composite team composed
of DAR, DA, DENR, and LBP representatives which shall jointly conduct
further investigation thereon. The team shall submit its written report of

36
findings within five days from the conclusion of the inspection. Such
findings shall be binding to both DAR and LBP pursuant to the Joint
Memorandum Circular of the DAR, LBP, DENR, and DA dated 27
January 1992. If the issue involved is on the suitability to agriculture and
its development, the chairperson shall be the DA representative. If it is
on the percentage slope, the DENR representative shall be the
chairperson of the team.
Why must the BARC and prospective ARBs be involved in the
field investigation?
It is important to involve not only the other concerned CARP
implementing agencies but also the BARC and the prospective
beneficiaries because the people from the locality have a wealth of
information on the physical, agricultural and tenurial characteristics of the
land. It is also wise to involve them from the beginning to generate their
support and encourage their crucial participation in the development
process.
CHAPTER 6
AGRARIAN REFORM BENEFICIARIES
6.1    QUALIFICATIONS OF BENEFICIARIES

What are the qualifications of an agrarian reform beneficiary?

To be an agrarian reform beneficiary, one must:
a.         be landless;
b.         be at least 15 years old or head of the family at the
time the property was transferred in the name of the
Republic of the Philippines; and
c.         have the willingness, ability and aptitude to cultivate
the land and make it as productive as possible. (Section
23, Republic Act No. 6657)
Items (b) and (c) above are meant to ensure that the recipients of
the land will judiciously use it and make it a productive agricultural land.
What is the definition of landless?
A landless person is defined by Section 25, RA 6657 as one who
owns less than three (3) hectares of agricultural land. Section 7, RA
6657 also provides that an owner-tiller may still be a beneficiary of
another land he or she does not own but is actually cultivating to the

37
extent of the difference between the area of the land he/she owns and
the award ceiling of three hectares.
Thus, a tenant who owns one hectare of agricultural land may still
qualify as a beneficiary for two hectares of land.
Who are disqualified from becoming beneficiaries?
a.         Those who fail to meet the qualifications as provided
for under Section 22 of RA 6657.
b.         Beneficiaries who have culpably sold, disposed or
abandoned their lands.
c.         Beneficiaries whose lands have been foreclosed by
the LBP or repossessed by the landowner (in the case of
VLT/DPS) for non-payment of an aggregate of three annual
amortizations.
d.         Beneficiaries who have converted their land to non-
agricultural use without prior approval by DAR.
6.2    ORDER OF PRIORITY
What is the order of priority among the possible beneficiaries?
Section 22 of RA 6657 provides that lands covered by CARP shall
be distributed as much as possible to landless residents of the same
barangay or, in the absence thereof, landless residents of the same
municipality.
The order of priority then starts with:
a.         Qualified children. The qualified children of the
landowner are the first group entitled to be beneficiaries of
the land. They are entitled to receive three hectares each.
b.         Tenants and Lessees. The next group is composed
of the agricultural lessees and share tenants. These farmers
are entitled to receive the area of their tillage but not to
exceed three (3) hectares, he or she may be awarded an
additional area representing the difference, subject to the
availability of land.
c.         The order of priority then goes down as follows:
*          regular farmworkers;
*          seasonal farmworkers;
*          other farmworkers;
*          actual tillers or occupants of public lands;

38
 *          collectives or cooperatives of the beneficiaries;
and
*          others directly working on the land.
Given such order of priority, must all farmers in a class be
allocated three hectares each before anyone in the next class can be
identified as also a beneficiary of the land? For example, all regular
farmworkers must first be allocated three hectares before any seasonal
farmworker can be identified?
Strictly speaking, that would be a correct interpretation.
The CARP, however, seeks to help as many farmers as possible
and make them beneficiaries of the program. Thus, a more liberal
interpretation is often better, provided the economic viability of the award
is not sacrificed. In this regard, a series of mediation conferences among
the possible beneficiaries may be conducted to allow the participatory
determination of how many beneficiaries there ought to be and what
each beneficiary will receive.
6.3    FARMWORKER BENEFICIARIES
Who is considered a farmworker?
Farmworker is defined as a natural person who renders service for
value as an employee or laborer in an agricultural enterprise or farm
regardless of whether his/her compensation is paid on a daily, weekly,
monthly or "pakyaw" basis.

What are the different categories of farmworkers?

Regular farmworker is a natural person who is employed on a
permanent basis by an agricultural enterprise or farm.
Seasonal farmworker is a natural person who is employed on a
recurrent, periodic or intermittent basis by an agricultural enterprise or
farm, whether as a permanent or a non-permanent laborer, such as
"dumaan", "sacada" and the like.
Other farmworker is a farmworker who is neither a regular nor a
seasonal farmworker. Example is a farmworker who does several farm
activities but is not paid for his/her labor.
Technical farmworker is a natural person employed by an
agricultural enterprise or farm, who is highly educated and trained and
performs functions in scientific, engineering, medical, teaching and other
fields, but who is not vested with managerial or supervisory functions
(e.g., chemists, agronomists, veterinarians, soil analysts).

39
 Managerial or Supervisory farmworker is a natural person who is
employed by an agricultural enterprise or farm vested with powers or
prerogatives: (1) to lay down and execute management policies; (2) to
hire, transfer, suspend, layoff, recall, discharge, assign or discipline
employees; and/or (3) to effectively recommend such managerial
actions.
Who among these farmworkers can qualify as beneficiaries?
They are those found to be directly working on the land, whether
as regular, seasonal or other farmworkers at the time the field
implementors conduct actual investigation and documentation. However,
other workers (such as technical farmworkers) who are directly employed
by the agri-business enterprise or corporation, except those holding
managerial or supervisory positions may be considered as beneficiaries
provided they meet the basic qualifications in Section 22, RA 6657.
Even a farmworkers who has ceased to work as a result of
pending agrarian or labor dispute but is willing to be an awardee of the
agricultural land may be considered a beneficiary provided he/she has
filed an appeal for reinstatement and has not yet obtained a substantially
equivalent and regular farm employment. (AO-02, Series of 1993).
What if a farmworker who has already been identified as qualified
beneficiary gets promoted to managerial or supervisory position prior to
land transfer?
The farmworker may still qualify as awardee of the land provided
he/she gives up the managerial or supervisory position. (AO-02, Series
of 1993)
What is meant by an agrarian or labor dispute?
It refers to any controversy relating to tenurial arrangements,
whether leasehold, tenancy, stewardship, or otherwise, over land
devoted to agriculture, including disputes concerning farmworkers,
associations or representation of persons in negotiation, fixing,
maintaining, changing or seeking to arrange terms and conditions of
such tenurial arrangements.
It also includes controversy relating to compensation of lands
acquired under RA 6657 and other terms and conditions of transfer of
ownership from landowners to farmworkers, tenants and other ARBs,
whether the disputants stand in proximate relation of farm operator and
beneficiary, landowner and tenant, or lessor and lessee.
Can farmworkers who are husband and wife each receive three
hectares?

40
 Yes, they may be entitled to three hectares each provided that
their vested rights to the land have been duly established, in which case,
they shall be issued separate CLOAs. (AO-02, Series of 1993)
6.4    SCREENING OF BENEFICIARIES
Is it the landowner who selects the beneficiaries of his/her
landholding?
No. The landowner does not have the right to select who the
beneficiaries should be. Except in the case of Voluntary Land Transfer or
Direct Payment Scheme, land acquisition and distribution involves two
separate transactions. First, the government buys the land from the
landowner and then sells it to the farmer-beneficiaries. It is not the
landowner, therefore, who is selling the landholding to the farmer-
beneficiaries.
It is the Municipal Agrarian Reform Officer (or the Agrarian Reform
Program Technologist), together with the BARC who screens the
beneficiaries.
Even in the case of VLT/DPS, the landowner cannot just select a
beneficiary. The beneficiary must qualify and it is still the MARO and the
BARC who will do the screening.
What is the recourse of farmers who claim they have a priority
over those who have been identified by the MARO as the beneficiaries
of the land?
The farmers can file a protest with the MARO or the PARO who is
currently processing the claim folder. Once a written protest is filed, the
MARO or PARO shall comment on the said protest and submit the same
to the Regional Director who shall rule on the protest. If the parties
disagree with the RD's decision, they can file a written motion for
reconsideration. If the motion is denied, the farmers can file an appeal to
the DAR Secretary. (AO-09, Series of 1994)
What can be done in case the tenants or tillers refuse to be
interviewed and identified as beneficiaries?
The MARO and the BARC should advise the potential ARBs about
the consequences of their refusal. If they still refuse, the MARO and
BARC should execute a certification to this effect and post it in
conspicuous places for 30 days. Thereafter, new ARBs may be
instituted. The MARO should, however, exercise great care under this
situation. Refusal to be identified as beneficiaries can be due to several
reasons, such as lack of assurance of support services which used to be
provided by the landowner, fear of the landowner especially if the

41
farmers are unorganized. That is why, MAROs should not overlook the
importance of social preparation activities prior to land distribution.
What can be done in case the occupants of an idle and
abandoned agricultural land are found to have prematurely entered the
landholding?
Premature entry is strongly discouraged. Should it happen,
however, the first consideration should be whether the occupants are the
qualified beneficiaries of the land, or some other persons have superior
rights to receive the land. In the latter case, the occupants should be
ejected from the land and disqualified to be beneficiaries thereof.
The second consideration is whether or not the landowner
consents or has no objections to the occupancy and under what terms
and conditions. The landowner and the occupants may agree on a lease
arrangement in the meantime that acquisition of the land under CARP
has not been completed.
On the other hand, what can be done if no one is willing to be a
beneficiary of the land?
The DAR cannot yet acquire the agricultural land if it has no
takers. The DAR must distribute all lands it acquires and is not in the
business of warehousing land. What can be done is note such lands with
no takers and offer it to those who may later on be interested or those
who could not be accommodated in the distribution of other areas.
What can be done if FBs have been erroneously identified but still
their names have been entered and registered in the CLOAs?
If the CLOA is already registered with the ROD, then an
appropriate exclusion proceeding could be filed with the DARAB. (AO-
02, Series of 1994)
CHAPTER 7
LANDOWNERS' RETENTION AND AWARD TO CHILDREN
7.1    RETENTION LIMIT
What is the retention right of landowners under the CARP?
No less than the Constitution grants landowners the right to retain
a portion of their lands covered by agrarian reform. Under the CARP, this
retention right is limited to a maximum of five hectares per landowner.
The only exceptions are as follows:
a.         Landowners whose lands have been covered by PD
27 are allowed to keep the area they originally retained
thereunder. Thus, if a landowner retained seven hectares
42
 under OLT, he/she is allowed under CARP to keep the said
area.
b.         Original homestead grantees or their direct
compulsory heirs who still own the original homestead as of
15 June 1988 are allowed to retain the same areas as long
as they continue to cultivate the same homestead. Thus, a
landowner may, for example, continue to keep his/her 12-
hectare homestead.
7.2    LAND OWNERSHIP CEILING
What is the land ownership ceiling?
The land ownership ceiling is likewise five hectares. A person who
does not own agricultural land may not buy more than five hectares. A
person who already owns two hectares of agricultural land may buy only
up to three hectares more. This is in line with the State's objective of
controlling and democratizing the ownership of land as a natural
resource.
7.3       QUALIFICATIONS FOR THE EXERCISE OF THE RIGHT OF
RETENTION
Who may apply for retention?
All owners of private agricultural lands with a total area of more
than five hectares, except those who have already been granted full
retention (7 hectares) under PD 27.
May a corporation also retain five hectares?
Yes. The law grants both natural and juridical persons the right of
retention. Note that juridical persons include corporations, partnerships,
cooperatives, or other bodies with separate legal personality.
Note also that a corporation is a person separate and distinct from
its stockholders and incorporators. Thus, a corporation may retain only
five hectares and not five hectares for each incorporator.
Are co-owners allowed to retain five hectares only?
Persons owning an agricultural land under a co-ownership may
retain five hectares each. This is because the co-owners remain as
separate persons each entitled to retain five hectares.
Thus, in the earlier case of a 30-hectare property owned by a
couple who died before 15 June 1988, the six children were the co-
owners of the land upon the effectivity of RA 6657. Even if the title has
not been transferred to their names, the six children are entitled to retain
the 30 hectares at five hectares each.
43
 A married couple claims that as husband/wife they are entitled to
five hectares each. Should the claim be granted?
It depends.
The criterion is the property relations between the husband and
wife. If the property relations are governed by the system of complete
separation of property — as evidenced by a valid ante nuptial marriage
settlement — then the spouses are separate landowners and may,
therefore, retain five hectares each from their respective properties.
The spouses should submit evidence that they are entitled to
retain more than five hectares. On the part of the DAR, it is important to
note the date of the marriage. If the marriage was solemnized before 03
August 1988, then it is governed by the Civil Code. In the absence of an
agreement for the separation of property, spouses who own only
conjugal properties may retain a total of not more than five hectares from
such properties. However, if either or both of them are landowners in
their own respective rights (whether capital or paraphernal), they may
retain not more than five hectares each from their respective
landholdings.
On the other hand, if the marriage was contracted on or after 03
August 1988, or under the New Family Code, a husband owning capital
property and/or a wife owning paraphernal property may retain five
hectares each, if they executed a judicial separation of properties prior to
the marriage. In the absence of such contract/agreement, all properties,
whether capital, paraphernal, and conjugal shall be considered to be
held in absolute community, i.e., the ownership relationship is one.
Therefore, only a total of five hectares may be retained. (AO-11, Series
of 1990)
In no case, however, shall the total retention of the couple exceed
ten hectares.
7.4    AWARD TO LANDOWNERS' CHILDREN
Is the award to children part of the landowner's retention?
No. The landowner is entitled to retain only five hectares. Any
award to the qualified children is a result of the children being qualified
beneficiaries of the program.

Is the award to children automatic?

No. The law only grants the children a preferential right to be
awarded the land of their parents. They must still qualify as beneficiaries.

44
 What qualifications must the child of a landowner meet in order to
qualify for a three-hectare award?
To qualify, the child of a landowner must be:
a.         At least fifteen years old as of 15 June 1988, the
effectivity of RA 6657; and
b.         Actually tilling the land or directly managing the farm
from 15 June 1988 up to the time of land acquisition.
What is the meaning of the phrase "directly managing the farm"?
"Directly managing" refers to the cultivation of the land through
personal supervision under the system of labor administration. (DAR
Memo Circular No. 04-1994) It should be interpreted along the lines of
farm management as an actual major activity being performed by the
landowner's child from which he or she derives income. Farm
management should likewise be the child's primary occupation.

If the land is tenanted, can a landowner's child qualify for an award

on the basis of a claim that he is directly managing the farm?
As of 15 June 1988, tenants on the land should have become
lessees. As lessees, they have the obligation to pay the lease rental but
they have the right to directly manage the land. The child cannot,
therefore, claim that he is managing the land. Hence, he cannot qualify
for an award.
What if the child meets the qualifications above but already owns
ten hectares? Must he or she still be awarded three hectares?
As earlier said, the child is to be awarded land not because he or
she is a child of the landowner but because he or she is a qualified
beneficiary. (However, the preference comes from his or her being a
child of the landowner.) Therefore, in addition to the qualifications above,
the child must meet all other requirements to be a beneficiary. Not being
landless, he or she does not qualify for an award.
If a landowner's child qualifies as preferred beneficiary, will Land
Bank pay the landowner for the area to be awarded to the child? In turn,
will the child amortize the property?
No, the rules on landowner's compensation and amortization by
beneficiaries will not apply, except if the child awardee is a tenant in
his/her own right. In which case, the Land Bank will finance the
acquisition. However, tenancy between the landowner and the child must

45
have already been established prior to 15 June 1988. (Memo Circular
No. 04, Series of 1994)
7.5    SELECTION OF RETAINED AREA
What are the criteria in the selection of the retained area?
The area chosen for retention should be compact and contiguous.
It should also be least prejudicial to the entire landholding and the
majority of the farmers thereon. (Sec. 6, RA 6657 and AO 11, Series of
1990)
Can a landowner who owns properties in different locations
choose separate areas totaling five hectares from among the said
properties?
No. The law provides that the area to be retained should be
compact and contiguous.
7.6       PROCEDURES FOR THE EXERCISE OF THE RIGHT OF
RETENTION AND AWARD TO QUALIFIED CHILDREN
Where should the landowner file the application for retention and
award to qualified children?
The landowner should file the application using DAR's Retention
Form No. 1 in any DAR office, whether at the Central, Regional,
Provincial or Municipal Office. If filed in an office other than the MARO
where the landholding is located, the receiving office should forward the
application to the MARO concerned.
What are the requirements in applying for retention or award to
children?
The landowner should execute an affidavit as to the total area of
his/her landholding. If applying for award to qualified children, the
landowner should submit a list of his/her children who were at least
fifteen (15) years old as of 15 June 1988 and who have been actually
cultivating or directly managing the farm.
What happens after the MARO receives the application for
retention or award?
The MARO, with the assistance of the BARC shall conduct a field
verification and investigation to:
1.         determine total landholding in relation to the
retention and award applied for;

46
 2.         in the case of homestead, to determine whether the
original homestead grantee or the direct compulsory heirs
still own and actually cultivate the homestead;
3.         determine qualifications of the applicants and their
children applying for retention and/or award; and
4.         identify affected tenants and determine whether they
opt to become lessees in the retained area or to become
land transfer beneficiaries in another landholding.
The MARO then prepares the Retention Folder containing the
documentation of the field investigation and the findings and
recommendations. The folder is then submitted to the PARO for review.
Who approves the application?
The Regional Director approves or disapproves the application
after reviewing and evaluating the report and recommendations
submitted by the Provincial Agrarian Reform Officer (PARO).
What happens after the Regional Director has approved the
application for retention?
1.         If the application for retention is approved, the
Regional Director shall issue Certificate of Retention
(Retention Form No. 3) and forward this, together with the
retention folder to the PARO.
2.         The PARO, in coordination with the Land
Management Bureau of the DENR, shall segregate the
appropriate retained area.
3.         The DENR shall furnish the DAR Regional Office
four copies of the approved segregation plan and technical
description.
4.         On the basis of the owner's duplicate copy of the
title, the approved segregation plan and technical
description, the PARO shall request the Register of Deeds
to prepare two separate titles all in the name of the
landowner:
a.         for the landholding covered by compulsory
acquisition, voluntary offer to sell or voluntary land
transfer/direct payment scheme; and
b.         the landowner's retained area
What is the recourse of the landowner whose application for
retention is disapproved?
47
 The landowner should make an appeal to the DAR Secretary
within fifteen (15) days upon receipt of the decision. Otherwise, the
decision by the Regional Director disapproving the application for
retention becomes final.
7.7    WHEN TO EXERCISE THE RIGHT OF RETENTION
When may the right of retention be exercised?
A landowner whose agricultural land is covered by CARP may
exercise his or her right of retention anytime before the land is
compulsorily acquired.
If the land is already the subject of compulsory acquisition, the
landowner must apply for retention within sixty (60) days from the date of
receipt of the Notice of Coverage. If the landowner does not respond
despite due notice, he or she will be deemed to have waived the right to
choose the retained area and the DAR shall be the one to choose.
Note that the waiver is on the right to choose; the landowner still
has the right to retain.
If the land is voluntarily offered for sale, the landowner may
exercise right of retention at the time of the voluntary offer.
When may qualified children apply for an award of not more than
three hectares each?
The application must be filed within a period of thirty (30) days
from date of receipt by the landowner of the Notice of Coverage or from
the date of the Voluntary Offer to Sell.
However, for those areas for which notices of coverage have
already been sent to the landowners, qualified children have at least one
(1) year to file an application reckoned from 31 March 1994 (date of
effectivity of DAR Memo Circular No. 04, Series of 1994). In case of
failure of the children to file their application within the specific period, the
property shall be distributed to qualified beneficiaries pursuant to Section
22 of RA 6657.
7.8       OBLIGATIONS OF LANDOWNERS AND LIMITS TO THE
DISPOSITION OF THE RETAINED AREAS
What is the obligation of the landowner with respect to his or her
retained area?
The landowner has the obligation to cultivate the retained area
directly or through labor administration in order to make it productive.
This is in line with the CARP principle that land has a social function and
land ownership has a social responsibility. (AO No. 11, Series of 1990)

48
 What are the limits to the disposition of the retained area?
1.         A landowner may sell the land even to one not
qualified to be a beneficiary, provided that after the sale, the
buyer will not own more than five hectares of agricultural
land.
2.         The landowner may not eject the tenants in the
retained area. The retained area is not covered by the land
acquisition components of CARP but may still be covered by
the leasehold provisions.
3.         The landowner may not convert the use of the land
from agricultural to non-agricultural use without the approval
of the DAR.
7.9    TENANTS IN RETAINED AREAS
What options are available to a tenant in the retained area?

The tenant may choose to remain in the retained area as a lessee,

in which case, he or she waives the right to be awarded land under the
CARP. The tenant may alternatively opt to be a beneficiary in other lands
that may be available for distribution. The tenant must decide within one
year from the time the landowner manifests his or her choice of the area
for retention. (Sec. 6, RA 6657)
If the tenant chooses the first option, his or her security of tenure
shall be respected and he or she may not be ejected from the land.
7.10 RETENTION UNDER PD 27
Who among the OLT landowners are not entitled to retain seven
hectares?
1.         Those who as of 21 October 1972 owned more than
24 hectares tenanted rice or corn lands; or
2.         Those who as of the above date, owned less than 24
hectares of tenanted rice or corn lands but additionally
owned the following:
a.         more than seven (7) hectares of other
agricultural lands, whether tenanted or not, whether
cultivated or not; or
b.         lands used for residential, commercial,
industrial or other urban purposes.

49
             In
both cases, the landowner should derive
adequate income to support his/her family. This was
provided for under Letter of Instruction No. 474 whose
constitutionality and validity was upheld as decided in
the case of Zurbano vs. Estrella (137 SCRA 334).
Guidelines were further clarified in MAR Memo
Circular No. 18 dated 29 December 1981.
3.         Those who filed their applications for retention after
27 August 1985 (the deadline set by AO-01, Series of 1985)
and did not comply with the requirements.
The above landowners shall only be entitled to a maximum of five
hectares as retention area. (AO No. 04, Series of 1991)
Who among the OLT landowners are still entitled to the seven-
hectare retention?
1.         Landowners who complied with the requirements of
either LOI 41, 45 or 52.
2.         Those who filed their applications before the
deadline set (27 August 1985), whether or not they complied
with Letter of Instruction (LOI) Nos. 41, 45, and 52.
3.         Those who filed their applications after the deadline
but complied with the requirements of the LOI cited above.
4.         Heirs of a deceased landowner who manifested
while still alive the intention to exercise the right of retention
prior to 23 August 1990 (the finality of the Supreme Court
decision on the Association of Small Landowners vs. The
Honorable Secretary of DAR). Heirs must show proof of the
original landowner's intention. (AO No. 04, Series of 1991)
A landowner who retained seven hectares of rice land under PD
27 now wants to retain an additional five hectares of coconut land
under RA 6657. Should the landowner's claim be granted?
No. The landowner may not retain a total of twelve (12) hectares.
He/she may, however, voluntarily offer the seven-hectare rice land and
apply for the retention of five hectares of coconut land. Following the
decision on the Association of Small Landowners case, the landowner
shall keep the seven hectares originally retained in PD 27 while the five-
hectare coconut land shall be covered under CARP.
Note also that if a landowner retained only two (2) hectares of rice
land under PD 27, he/she may still retain three hectares under RA 6657.

50
 When is landowner deemed to have waived his/her right of
retention under PD 27?
As provided in DAR Administrative Order No. 04, Series of 1991,
the performance of any of the following acts signifies waiver:
1.         signing of the Landowner-Tenant Production
Agreement and Farmer's Undertaking (LTPA-FU) covering
the subject property;
2.         entering into a direct payment scheme agreement as
evidenced by a Deed of Transfer over the subject property;
and
3.         signing/submission of other documents indicating
consent to have the subject property covered, such as the
form-letter of the Land Bank on the disposition of the cash
and bond portions of a land transfer claim for payment, the
Deed of Assignment, Warranties and Undertaking executed
in favor of the LBP.
Other similar acts may likewise be construed as waiver. The above
list is not exclusive.
7.11 HOMESTEAD LANDS
What is DAR's policy in the case of homestead lands?
Under Section 6, RA 6657, agricultural lands covered by
Homestead Patents shall not be covered under CARP if the following
conditions are present:
1.         The original homestead grantee or his/her direct
compulsory heirs still own the land on 15 June 1988; and
2.         The original homestead grantee or his/her direct
compulsory heirs cultivate the land as of 15 June 1988 and
continue to cultivate the same.
In the absence of these conditions, the homestead land will not be
exempted from OLT or CARP coverage. However, the grantee or the
heirs can retain seven or five hectares, as the case may be The excess
areas shall be covered by CARP. The Alita Case, notwithstanding, it is
the mandate of the law that in all cases, the security of tenure of the
farmers and farmworkers on the land shall be respected.
CHAPTER 8
LAND SURVEY

51
 What should be done in the case of titles/landholdings covered by
CARP but with defective technical descriptions or no available survey
records?
The Provincial Agrarian Reform Officers (PAROs) should turn over
to their counterpart Provincial Environment and Natural Resources
Officers (PENROs) of DENR, all titles/landholdings covered by CARP
with defective technical descriptions or where no available survey
records could be found. This is an agreement reached between the DAR
and DENR last 23 July 1992.

PAROs should immediately conduct an inventory of these records.

If in spite of previous exhaustive research conducted, the defect could
not be remedied, then they should turnover the records (xerox copies of
titles, survey plans, sketch plans, etc.). The PENROs are under
instructions to check these records with the existing records available at
the Land Management Bureau, the National Archives, or the Land
Registration Authority.
If, however, after another exhaustive research, the correct
technical description cannot be recovered, then a resurvey of the subject
landholding will have to be executed as provided for in the Joint DAR-
DENR Circular No. 06, Series of 1991.
What sort of defects are covered by this agreement?
The defects may fall under any of the following categories:
1.         Polygon does not close;
2.         Titled but title is not available;
3.         Title available but without technical description;
4.         Surveyed untitled private property but survey plan or
technical description is not available;
5.         Awarded to survey contractor but not submitted due
to non-payment of contractor;
6.         Surveyed by administration but not submitted in spite
of request to submit the survey; and
7.         Other defects.
CHAPTER 9
LAND VALUATION AND LANDOWNERS' COMPENSATION
What is the basic requirement in the acquisition of private
agricultural lands?
52
 The Constitution itself provides landowners two basic rights — the
right to retention and the right to be paid just compensation. Payment of
just compensation is required before a title can be transferred from the
landowner to the Republic of the Philippines.

9.1  JUST COMPENSATION
What is just compensation?
In various Supreme Court rulings, just compensation in general
has been defined as "fair market value". It is the price which a buyer will
pay without coercion and a seller will accept without compulsion.
There are those who argue that since agrarian reform is a social
justice program, it is not correct to interpret just compensation as the
price which the land will bring in the open market. If two contracting
parties with unequal powers are allowed to determine and agree on the
value of the land in the open market, the party with less power would
tend to be on the losing end.
For properties covered by CARP, however, just compensation
cannot be an absolute amount disregarding particularities of productivity,
distance to the market place, etc. Hence, land valuation is not an exact
science but an exercise fraught with inexact estimates. This requires
integrity, conscientiousness and prudence on the part of those
responsible for determining its value. What is important ultimately is that
the land value approximates as closely as possible, what is broadly
considered by the community to be just. (AO 06, Series of 1992)
Does full payment mean payment in cash directly to the
landowner?
No. Full payment need not all be in cash directly to the landowner.
Payment can be partly in cash and partly in bonds. Also for those cases
where the landowner contests the valuation of the property, Section
16, RA 6657 and AO 01-93 provide that full payment of just
compensation may be considered achieved upon the Land Bank's
deposit of the value of the land in a trust account in the name of the
landowner. Once this deposit is made, the title can be transferred in the
name of the Republic of the Philippines.
9.2    LAND VALUATION FACTORS
What does the law provide as the factors to be considered in the
valuation of lands under CARP?
Section 17, RA 6657 enumerates ten (10) factors to be considered
in the determination of just compensation:
53
 a.         cost of acquisition
b.         current value of like properties
c.         nature of the land
d.         actual use
e.         income
f.          sworn valuation by the landowner
g.         tax declaration
h.         assessment made by government assessors
i.          the social and economic benefits contributed by the
farmers and farmworkers and by the government
j.          non-payment of taxes or loans secured from any
government financing institution on the land.
9.3    NEW LAND VALUATION FORMULA
What Administrative Orders govern land valuation under CARP?
AO No. 11, Series of 1994, "Revising the Rules and Regulations
Covering the Valuation of Lands Voluntarily Offered or Compulsorily
Acquired as Embodied in AO No. 06, Series of 1992"; and
AO No. 06, Series of 1992, "Rules and Regulations Amending the
Valuation of Lands Voluntarily Offered and Compulsorily Acquired as
Provided for Under AO 17, Series of 1989 as Amended, Issued Pursuant
to RA 6657".
AO 06-92 supersedes AO No. 05, Series of 1988; AO No. 06,
Series of 1989, AO No. 17, Series of 1989, and AO No. 03, Series of
1991.
What can be considered as a major improvement in the latest
Administrative Orders on land valuation?
By giving more weight on the net income from the land in the
formula, AO No. 06-92 has substantially raised the land value.
Furthermore, AO No. 11-94 has dropped the landowner's LISTASAKA
declaration from the formula. These are expected to lessen landowners'
rejection of the offered price and facilitate the acquisition of the land.
What is now the basic formula for the valuation of lands covered
by VOS and CA?
The basic formulation for the valuation of lands covered by VOS
and CA regardless of the date of offer or coverage of the claim is:

54
 LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)
where:
LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration
Capitalized Net Income refers to the difference between the gross
sales (AGP x SP) and the cost of operations (CO) capitalized at 12%. In
equation form, this is expressed as:
CNI = (AGP x SP) - CO
__________________
12
where:
AGP = latest available 12 month's gross production immediately
preceding the date of offer in case of VOS or date of notice of coverage
in case of CA.
SP = the average of the latest available 12-month's selling prices
prior to the date of receipt of the claim folder by LBP for processing, such
prices to be secured from the Department of Agriculture (DA) and other
appropriate regulatory bodies or, in their absence, from the Bureau of
Agricultural Statistics. If possible, SP data shall be gathered from the
barangay or municipality where the property is located. In the absence
thereof, SP may be secured within the province or region.
CO = Cost of Operations
When the cost of operations could not be obtained or verified, an
assumed new income rate (NIR) of 20% shall be used. Landholdings
planted to coconut which are productive at the time of offer/coverage
shall continue to use the 70% NIR.
This formula shall be used if all three factors are present, relevant
and applicable.
When the CS factor is not present and CNI and MV are applicable,
the formula shall be:
LV = (CNI x 0.9) + (MV x 0.1)
When the CNI factor is not present, and CS and MV are
applicable, the formula shall be:
LV = (CS x 0.9) + (MV x 0.1)

55
 When both the CS and CNI are not present and only MV is
applicable, the formula shall be:
LV = MV x 2
In no case shall the value of idle land using the above formula
exceed the lowest value of a land within the same estate under
consideration or within the same barangay or municipality (in that order)
approved by LBP within one (1) year from receipt of claim folder.
In case of VOS, however, the land value which will be adopted will
be whichever is lower of the computed value using the formula and the
landowner's offer. The LO's offer, however, shall be grossed up from the
date of the offer up to the date of receipt of claim folder by LBP from
DAR for processing.
The date of receipt of claim folder by LBP from DAR shall mean
the date when the claim folder is determined by LBP to be completed
with all the required documents and valuation inputs duly verified and
validated, and is ready for final computation/processing.
Why are there only three factors in the formula when the law
states ten factors to be considered in determining just compensation?
Although the formula contains only three factors, a study of the
formula would show that all ten factors are actually considered in its
application.
Who is responsible for computing land values?
Executive Order No. 405 dated 14 June 1990 transferred the
responsibility for land valuation from the DAR to the Land Bank of the
Philippines.

9.4    SUMMARY ADMINISTRATIVE PROCEEDINGS

Is the land valuation done by Land Bank final?
The final determination of just compensation is a judicial function.
The Land Bank merely conducts administrative valuation which may be
contested in the court of proper jurisdiction. (Magana vs. Paitan, G.R.
No. 60269 dated 13 September 1990)
If the landowner accepts the value offered by Government, then
the administrative valuation is final and serves as the basis of the
landowner's compensation. However, if the landowner rejects or does
not respond to the Government's offer, the DAR itself will advise the
DAR Adjudication Board, through the Provincial Adjudicator, to conduct
summary administrative proceedings to determine the value of the land.

56
The value determined in these proceedings are then re-offered to the
landowner. The landowner may still reject or not respond to this offer and
instead file a case before the Special Agrarian Courts.
In the meantime that the landowner is contesting the valuation of
the land or is not responding to the Government's offer, the Government
may proceed to distribute the property upon deposit in a trust account of
the initial value offered.
Where will the summary administrative proceedings be
conducted? Will a landowner residing in Mindanao be required to go to
the central office?
Not necessarily. It would depend on the total amount of
compensation in question. If the government's offer does not exceed two
million pesos (P2,000,000), the proceedings shall be conducted by the
Provincial Agrarian Reform Adjudicator concerned. If the compensation
offered is more than two million pesos but does not exceed five million
(P5,000,000) then the case will be handled by the Regional Agrarian
Reform Adjudicator (RARAD). But if the amount in question exceeds five
million pesos, then the proceedings shall be conducted by the DAR
Adjudication Board (DARAB). (AO No. 08, Series of 1993)
Is the Adjudication Board's decision final and executory?
Although the final determination of the value of the land is a
judicial function, unless the landowner or any party-in-interest files a
case with the Special Agrarian Court within fifteen (15) days from receipt
of the decision, then the decision of the adjudicator/s becomes final and
executory.
9.5       CONCERNED PARTIES' INVOLVEMENT IN THE LAND
VALUATION PROCESS
Are landowners and agrarian reform beneficiaries involved in the
process of valuation?
Yes. The process of land valuation must involve the agrarian
reform beneficiaries, their organizations, the BARC, and the landowner
concerned. Their involvement is ensured in various provisions of the law.
Section 3, EO 129-A declares that . . . "partnership between
government and organization of farmers and farmworkers in agrarian
reform policy formulation, program implementation and evaluation shall
be institutionalized. . . . "
Section 47, RA 6657 specifies that the BARC shall, among other
things, "assist in initial determination of the value of the land".

57
 Section 18, RA 6657 further states that "The LBP shall
compensate the landowners in such amount as may be agreed upon by
the landowner and the DAR and the LBE. . . "
9.6    MODES OF COMPENSATION
How will landowners be compensated?
Under Voluntary Land Transfer, the landowner will be paid directly
in cash or in kind by the farmer-beneficiary under terms mutually agreed
upon by them subject to DAR approval.
Under Compulsory Acquisition, the Land Bank of the Philippines
shall compensate the landowner in the following mode:
a.         Cash payment which shall vary according to land
size;
b.         LBP bonds or other government financial
instruments.
Under Voluntary Offer to Sell, the landowner will be paid under the
same mode as CA except that the cash portion is higher by five percent
(5%).
What proportion of the total compensation is in cash?
Cash portion shall vary according to the size of the landholdings.
The larger the landholding, the smaller the cash portion. The underlying
principle is that small landowners are presumed to have greater need for
cash to aid them in their bid to shift their capital from agriculture to
industry.
Payment shall be under the following terms and conditions:
a.         Lands above 50 has. — 25% cash; 75% bonds
b.         Lands above 24-50 has. — 30% cash; 70% bonds
c.         Lands 24 has. & below — 35% cash; 65% bonds
Cash portion is increased by 5% for VOS.
Why not pay the landowners the full amount in cash?
The compensation package under CARP is already much
improved compared to the compensation schemes of past land reform
programs. This is so, precisely to make the program more acceptable to
landowners and facilitate the shift of their capital from agriculture to
industry.
Full payment in cash is not feasible. This will tremendously
increase the current funding requirements for CARP which the

58
government can ill afford at present. Furthermore, this will infuse a large
amount of money into the economy which could result in inflation.
9.7    LAND BANK BONDS
What are the features of the new LBP-bonds?
Compared with previous LBP bonds, the present bonds are
definitely more attractive.
a.         Past LBP bonds have a maturity of 25 years. This
means, bond holders can only get the principal at the end of
25 years. On the other hand, the new LBP bonds mature in
ten years, and one-tenth of the face value of the new bonds
matures every year from the date of issue until the tenth
year.
b.         The new LBP bonds also bear market rates of
interest the same as those of 91-day treasury bills. Old LBP
bonds have a fixed six percent (6%) interest rate.
c.         Finally, these bonds have alternative uses. They
may be used by the landowner, his successors in interest, or
his assignees, for any of the following:
*          acquisition of land or other real properties of
the government, including assets under the Asset
Privatization Trust, and other assets foreclosed by
government financial institutions;
*          acquisition of shares of stock of government
owned or controlled corporations, or shares of stocks
owned by the government in private corporations;
*          substitution for surety or bail bonds for the
provisional release of accused persons, or for
performance bonds;
*          security for loans with some government
financial institutions, provided the proceeds are
invested in an economic enterprise, preferably in a
small-and-medium scale industry;
*          payment for various taxes and fees to
government, up to a certain percentage of the
outstanding balance of the financial instrument, and
provided further that the PARC shall have determined
the allowable percentage mentioned;

59
 *          payment for tuition fees of the immediate
family of the original landholder in government
universities, colleges, trade schools, and other
institutions;
*          payment of bills in public hospitals; and
*          other uses as the PARC may allow from time
to time.
9.8    PD 27 LANDS
Are PD 27 lands also covered by this valuation formula?
No, they are governed by Executive Order No. 228. Under this EO,
the valuation formula under PD 27 is retained. Valuation shall be based
on the Average Gross Production (AGP) determined by the Barangay
Committee on Land Production (BCLP). Land value is computed using
the following formula:
Rice Lands LV = AGP x 2.5 x P35 *
Corn Lands LV = AGP x 2.5 x P31 **
*          government support price for one cavan of 50 kilos of
palay on 21 October 1972
**        government support price for one cavan of 50 kilos of
corn on 21 October 1972
Lease rentals paid to the landowner by the farmer-beneficiary after
21 October 1972 shall be considered as advance payment for the land
and shall, therefore, be deducted from the cost.
Aren't PD 27 lands grossly undervalued since 1972 support prices
are still being used?
The Presidential Agrarian Reform Council (PARC) has recognized
this problem. Many of the landowners covered by PD 27 have not yet
been paid. Had these landowners been paid at the time of the taking of
their lands and the proceeds of the compensation deposited in a bank,
the money would have earned the same interest rate compounded
annually as authorized under the banking laws, rules and regulations.
To address these problems, the PARC in its resolution dated 25
October 1994, approved the grant of an increment of six percent (6%)
yearly interest compounded annually based on the land value as
determined under existing valuation formula, instead of revising the
formula itself.

60
 Guidelines for this have been issued under Administrative Order
No. 13, Series of 1994, "Rules and Regulations Governing the Grant of
Increment of Six Percent (6%) Yearly Interest Compounded Annually on
Lands Covered by Presidential Decree No. 27 and Executive Order No.
228".
Under these guidelines, owners of OLT lands shall be
compensated based on the following:
(Computed land value using the original formula) x (1.06) n
where n = number of years from date of tenancy up to effectivity
date.
Who are the landowners qualified to receive compensation based
on this increment formula?
1.         Landowners whose lands are actually tenanted as of
21 October 1972 or thereafter and covered by OLT;
2.         Landowners who opted for Government financing
through Land Bank of the Philippines as the mode of
compensation; and
3.         Landowners who have not yet been paid for the
value of their land.
In the case of landowners who were partially paid, the yearly
interest of six percent (6%) compounded annually shall be applied to the
unpaid balance.
What is the reckoning date in computing the interest?
For lands tenanted as of 21 October 1972 and covered under
OLT, the date shall be reckoned from 21 October 1972 up to the date of
effectivity of AO 13-94.
For lands tenanted after 21 October 1972 and covered under OLT,
the date shall be reckoned from the date when the land was actually
tenanted up to the effectivity date of AO 13-94.
What will happen to the claims of landowner-payees which were
previously approved for payment by Land Bank?
The landowners shall still be entitled to the difference.
What happens to the 25-years LBP bonds under PD 27?
All outstanding LBP bonds that are retained by the original
landowner-payee, or by his heir, shall be paid by the Bank to the extent
of their matured portion. One-twenty fifth (1/25) of their face value times

61
the number of years from their date of issue to July 17, 1988 (date of EO
228) are deemed to have matured.
How can the original landowner-payee claim payment for the
matured portion of his/her bond holding?
He/she should surrender the old LBP bonds to Land Bank which
pays cash for the matured portion and convert the unmatured portion to
10-year LBP bonds.
Are outstanding old LBP bonds in the hands of bondholders other
than the original landowner-payee entitled to the same right?
No. Old LBP bonds in the hands of bondholders other than the
original landowner-payee are not entitled to the same right.
9.9    EO 407 LANDS
What are EO 407 lands?
These refer to lands suitable to agriculture owned by all
government instrumentalities, including but not limited to government
agencies, government owned and controlled corporations or financial
institutions which have been ordered to be surrendered to the
Department of Agrarian Reform under Executive Order No. 407 issued
on 14 June 1990 by then President Corazon C. Aquino.
Will these lands be covered by the same valuation guidelines as
the private lands covered under CARP?
No, separate valuation guidelines for properties covered by EO
407 have been issued applicable to claims of government financial
institutions which have signed jointly with LBP a Memorandum of
Agreement dated 28 August 1992.
9.10 MT. PINATUBO AFFECTED AREAS
Will landowners in lahar affected areas whose landholdings were
originally subject of acquisition and distribution be compensated?
Joint DAR-LBP Administrative Order No. 03, Series of
1994 provided the policy guidelines governing the acquisition and
distribution of agricultural lands affected by the Mt. Pinatubo eruptions.

Under this guideline, agricultural lands affected by Mt. Pinatubo

eruptions have been classified into three based on the NEDA Region III
Geographic Information System database. These are:
Category I (actually affected)

62
 These are agricultural lands actually covered with lahar and
pyroclastic deposits, including those areas which have become silted,
eroded or continuously flooded for an indefinite period of time.
Category II (not yet affected)
These are agricultural lands not falling under Category I but have
the possibility of being actually affected.
Category III (lands covered by ashfall)
These are agricultural lands actually covered or affected by ashfall
but which remain to be productive.
As a general rule, lands under Category III shall be acquired and
landowners compensated. Compensation of lands under Category I and
II shall be effected under the following conditions:
1.         Claims have been approved by LBP and:
a.         Landowner has executed a Deed of
Assignment, Warranty and Undertaking on or before
the issuance of the Joint DAR-LBP AO 03-94; or,
b.         Transfer Certificate of Title was already
registered in the name of RP on or before the
issuance of the same AO; or
c.         Partial payment was already effected.
2.         Emancipation Patents/Certificates of Land
Ownership Award have been registered on or before 12
June 1991 regardless of whether or not the claim folder is
with the LBP.
CHAPTER 10
LAND DISTRIBUTION
10.1 BASIC PRINCIPLES IN LAND DISTRIBUTION
What are the basic principles in land distribution?
Land distribution is governed by the following basic principles and
policies:
a.         The CARP seeks to promote the establishment of
owner-cultivatorship of economic-size farms as the basis of
Philippine agriculture;

b.         DAR's primary mandate is to distribute agricultural

lands to as many tenants and farmworkers as possible. If

63
 the agricultural land is untenanted or does not have
farmworkers, it is the responsibility of the DAR to locate
qualified beneficiaries pursuant to Section 22 and Section 7
of RA 6657;
c.         In general, lands shall be distributed directly to the
individual beneficiaries;
d.         The award of three hectares to the beneficiaries is in
line with the objective of forming and maintaining economic-
size family farms.
What Administrative Orders govern land distribution?
a.        Administrative Order No. 10, Series of 1990 entitled,
"Rules and Procedures in the Distribution of Private
Agricultural Lands Agrarian Reform Beneficiaries under RA
6657"; and
b.         Administrative Order No. 02, Series of 1992 entitled,
"Supplemental Guidelines on AO No. 10, Series of 1990,
and Other Issuances the Rights of Farmworkers".
When does land acquisition end and when does land distribution
begin?
The cut-off point in the land acquisition process is the transfer of
title from the landowner to the Republic of the Philippines as evidenced
by the Transfer Certificate of Title (TCT) issued by the ROD. Immediately
upon receipt of the TCT, the DAR shall take possession of the land and
proceed with land distribution.
May distribution occur before the end of acquisition?
Yes. The cut-off point above is for compulsory acquisition cases
where landowner refuses to cooperate. Operationally, distribution can
begin earlier, particularly if the landowner is cooperative and is willing to
let the identified beneficiaries cultivate the land.
What proof of land ownership is given to beneficiaries?
Beneficiaries receive the following titles:
a.         Emancipation Patents (EPs) for OLT lands;
b.         Certificates of Land Ownership Award (CLOAs) for
CA, VOS, and 407 lands, resettlement areas and landed
estates; and
c.         Free Patents for public lands.

64
 Beneficiaries of the Integrated Social Forestry Program covering
agro-forestry public lands whose ownership cannot be transferred,
received Certificates of Stewardship Contract (CSCs) which are good for
25 years, renewable for another 25 years.
Is a Certificate of Land Transfer (CLT) an evidence of ownership
of the land?
No. In the case of Magana vs. Paitan (G.R. No. 60269, 13
September 1990), it was held that the mere issuance of CLT does not
vest in the farmer-grantee, ownership of the land described therein. It
merely provides evidence of the government's recognition of the grantee
as the part qualified to avail of the statutory requirements for acquisition
under PD 27. Failure of the farmer-beneficiary to comply with the
requirements will result in the cancellation of the said CLT. Thus, failure
on the part of a farmer/grantee to pay lease/amortization payment to the
landowner or agricultural lessor when they fall due for a period of two
years shall be a ground for forfeiture of the CLT.
10.2 AWARD CEILING
How many hectares of land can an awardee get?
Individual beneficiaries may each receive the following maximum
hectarages:

a.         Three hectares under RA 6657 acquisition modes

(CA, VOS, VLT/DPS, EO 407);
b.         Three hectares for irrigated and five hectares for
unirrigated rice and corn lands covered under the OLT
program of PD 27; and
c.         Three hectares for awardees in settlement areas and
landed estates.
Potential beneficiaries who own less than three hectares of
agricultural land may still receive land under CARP but only to the extent
of the difference between the award limit of three hectares and their
present land ownership. For example:
Award Ceiling                                                             3.0 has.
ARB owns                                                                  1.2 has.
                                                                             ——————
Total Area that may be awarded to ARB                     1.8 has.
Total Land ownership after the award                          3.0 has.

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 In all cases, the aggregate award and the total land ownership of
the ARB as a result of the award shall not exceed three hectares.
Suppose the area actually occupied by a tenant slightly exceeds
the three hectare award ceiling and there is no other tenant in the
landholding, how will the excess area be disposed?
Since there is no guideline governing the allocation of excess area
over the allowable three-hectare ceiling under RA 6657, the pertinent
provision of the Ministry of Agrarian Reform Administrative Order No. 03-
85, Series of 1985 can be applied. This states that "The economic family
size farm to be transferred to a bonafide farmer beneficiary pursuant
to PD 27 shall include a tolerable limit of not more than ten percent
(10%) or 3.3 hectares if irrigated and 5.5 hectares if unirrigated."
Hence, if the excess area is within the 10% tolerable limit (or 3.3
hectares under RA 6657), then the total aggregate area may be awarded
to the qualified farmer-beneficiary.
10.3 LAND DISTRIBUTION PROCEDURES
What are the basic steps in the redistribution of lands under VOS,
CA, and EO 407?
MARO
a.         Upon completion of land acquisition, the first activity
done is the validation of the list of qualified ARBs. This is to
ensure that those who were identified during the acquisition
phase are still present and qualified to receive the land.
b.         Through a letter or through the CARP Beneficiary
Certificate (CBC), the identified ARBs are formally notified
that they have been qualified to receive the land. The notice
also grants the ARBs the usufructuary rights and privileges
and obliges them the duties and responsibilities over the
land.
c.         The ARBs are consulted as to their preferred mode
of distribution, i.e., individual, collective or co-ownership.
Then, Land Distribution Folders are prepared based on the
ARBs' preference and submitted to the PARO.
PARO
a.         Reviews all documents and generates the
Certificates of Land Ownership Awards (CLOAs).
b.         If ARBs prefer individual parcels, then the PARO
requests the DENR to conduct subdivision survey.

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 c.         Submits the CLOAs to the DAR Regional Office
(DARRO) who causes them to be signed by the Secretary.
d.         Registers the CLOAs with the ROD and forwards
them to the MARO for distribution.
e.         The ARBs are allowed to take possession of the land
and use it for production.
10.4 INDIVIDUAL VS. COLLECTIVE DISTRIBUTION
Is individual distribution always required?
No. According to Section 25, RA 6657, the beneficiaries may opt
for collective ownership, such as co-ownership or farmers cooperative or
some other form of collective organization. However, the total area that
may be awarded shall not exceed the total number of beneficiaries
multiplied by three hectares, except in meritorious cases approved by the
PARC. Thus, nine ARBs under a co-ownership may receive not more
than 27 hectares.
Further, in case it is not economically feasible and sound to divide
the land as determined by the DAR, then it shall be owned collectively by
the worker beneficiaries.
Finally, to expedite land distribution, lands may be initially awarded
collectively and later distributed individually after completion of the
subdivision surveys.
This arrangement may be done for any CARP able land whether
private land or public land within proclaimed DAR settlement projects or
public land turned over to the DAR by other government agencies and
institutions pursuant to EO No. 407, as amended by EO 448.
How can the individual beneficiaries be assured of their share in
the collectively held landholding?
DAR shall ensure that the name of the cooperative or the
association and their individual members are properly annotated at the
back of the collective CLOA to protect the farmer-member from possible
summary and unjust separation by the cooperative or association, and
that the fractional share of each ARB shall be specified opposite their
names.
How will lands covered by collective CLOAs be subdivided?
Guidelines have been provided under AO No. 03, Series of 1993,
"Rules and Procedures Governing the Issuance of Individual Titles to
Co-Owners", should the ARBs decide to subdivide lands held
collectively.

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 If held on a co-ownership basis, lands covered by collective CLOA
shall be subdivided in accordance with the actual occupancy of the
ARBs, provided the share of each shall not exceed three hectares.
For landholdings in the name of cooperative or farmers
association, subdivision shall be based on the shares of each member
under the same condition that this shall not exceed three hectares and
provided that the subdivision is determined by DAR to be economically
feasible.
DAR may issue individual CLOAs in the name of the ARBs based
on their request and the approved subdivision plan of the landholding
and supported by a Deed of Partition executed by all co-owners named
in the collective CLOA. Individual CLOAs generated by DAR under this
subdivision shall be on Transfer Certificate of Title (TCT) CLOA forms to
be registered with the ROD.
However, if the ten-year period reckoned from the date of the
issuance of the collective CLOA has already elapsed, issuance of
individual certificates of title shall already be subject to the procedures
and requirements of the Land Registration Authority (LRA) pursuant to
the Land Registration Decree (PD 1529).
What are the procedures for subdividing landholdings previously
covered by collective CLOAs on co-ownership basis?
PARO
a.         Any of the co-owners shall submit to the PARO,
through channel, a written request for the subdivision of the
land.
b.         The PARO shall endorse the request for subdivision
to the DARRO for bidding and award to private contractors
or the DAR itself may instead execute the subdivision
survey of the target landholdings.
DARRO
a.         The DARRO shall bid and award the survey to
private contractors or cause the conduct of the survey by
DAR survey teams if available.
b.         The survey returns shall be submitted to the DENR
for verification and approval.
c.         The approved subdivision plan shall be submitted to
the PARO.
PARO

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 a.         Prepare a Deed of Partition for the signature of all
the co-owners, specifying the lot number and the exact
parcel intended for the co-owner concerned, based on the
approved subdivision plan. The Deed of Partition shall be
duly notarized.
b.         Retrieve the owner's duplicate certificate of title of
the collective CLOA from the ARBs for cancellation by the
ROD.
c.         Generate individual TCT-CLOAs for each co-owner
based on the approved subdivision plan and the duly
notarized Deed of Partition.
d.         Transmit the CLOAs, the Deed of Partition, and
approved subdivision plan to the Register of Deeds
concerned for the registration. The owner's duplicate
certificate of title of the collective CLOA shall be surrendered
to the ROD for cancellation.
e.         Record the registered CLOAs and transmit the same
to the MARO for redistribution to the individual co-owners.
How will this generation of CLOAs be treated in reporting
accomplishment?
Landholdings covered by collective CLOAs already reported as
accomplishment by the DAR field office concerned and subsequently
subdivided and issued individual TCT-CLOAs to the owners shall be
reported and monitored separately in the monthly reporting of the field
offices. However, the area covered by collective CLOA should not be
reported again as hectarage covered upon the issuance of the individual
CLOAs.
Such activities shall be included in the program of the field office
concerned for proper funding.
10.5 RIGHTS AND OBLIGATIONS OF BENEFICIARIES
What are the obligations of the beneficiary?
All ARBs shall exercise the diligence of a good father of the family
in the use, cultivation, and maintenance of the land including the
improvements thereon. Negligence, misuse, or unauthorized sale of the
land, or any support extended to the ARB shall be a ground for the
forfeiture of his or her rights as a beneficiary.

May CARP beneficiaries sell the land awarded to them?

69
 Section 27, RA 6657 provides that lands awarded to the ARBs
may not be sold, transferred or conveyed for a period of ten (10) years
from the award. This may be seen as a means to encourage the ARBs to
cultivate the land and make it productive over a long term.
The exceptions to this rule are if the transfer is through:
a.         hereditary succession;
b.         to the Government;
c.         to the Land Bank; or
d.         to other qualified beneficiaries.
If the land has been transferred to the government or to LBP, the
children of spouse of the ARB shall still have the right to repurchase the
land within two years.
Ownership of lands awarded under PD 27 or EO 228, however,
may be transferred after full payment of amortization by the beneficiary.
(Section 6, EO 228) But there are guidelines now being formulated which
will determine where the ten-year prohibition period under Section 27
may be applicable, and will also provide for additional safeguards to
prevent abuse in the selling of PD 27 lands.
Does this mean that after ten years, under the CARP, the ARB
may sell to anybody provided he or she has fully paid for the land and
the buyer will not have more than five hectares after the transaction?
Yes, the ARB may sell the land provided that the total landholdings
of the buyer after the purchase does not exceed five hectares.
What if the ARB no longer wants to farm?
The ARB has the option to transfer or convey the rights to the land
to any of his or her qualified heirs or to any other beneficiary, even if the
land has not yet been fully paid. The conditions are that the transfer has
the prior approval of the DAR and that the transferee will personally
cultivate the land.
What happens if the new ARBs fail to cultivate the land
themselves?
Then the land shall be transferred to the LBP which shall give
notice of availability of the land to the BARC. The BARC in turn, shall
notify the Provincial Agrarian Reform Coordinating Committee
(PARCCOM).
Under such instances, the LBP shall reimburse the original ARB
one lump sum for the amount of amortizations made including payments

70
for the value of the improvements on the land. The new ARB will have to
start amortizing anew.
Can an agrarian reform beneficiary subdivide in favor of his or her
children the three hectares of land awarded under CARP?
Strictly speaking, no. The three hectares, as the identified
economic-sized family farm, should be preserved as a single operating
unit to promote the farm's economic viability.
Should the beneficiary die or be incapacitated, succession to the
farmholding shall be governed by the pertinent provisions of the Civil
Code, subject to the condition that the land shall not be fragmented. This
means that the land shall be transferred to the spouse of the ARB or in
the absence or incapacity of the spouse, to the eldest child who meets
the qualifications to be a CARP beneficiary, particularly the requirement
of willingness, aptitude and ability to cultivate the land and make it
productive. The heir who succeeds on the land shall pay the other heirs
their corresponding legal shares. In the absence of such children, e.g., if
all the children are less than 15 years old, the land shall be transferred to
the DAR which shall look for a new beneficiary on the land.
Aside from those already mentioned, what are the grounds for the
cancellation of Emancipation Patents (EPs) or Certificates of Land
Ownership Award (CLOA)?
Violations of agrarian laws, rules and regulations are grounds for
the cancellation of registered EPs or CLOAs. These include but are not
limited to the following:
1.         Misuse or diversion of financial and support services
extended to the ARB; (Section 37 of RA 6657).
2.         Misuse of the land; (Section 22, RA 6657) This
refers to any act causing substantial and unreasonable
damage on the land, and causing the deterioration and
depletion of the soil fertility and improvements thereon. It
also includes the act of knowingly planting, growing, raising,
or permitting the planting, growing, raising of any plant
which is the source of a dangerous drug, as defined in PD
No. 1683, as amended. (AO No. 02-94).
3.         Material misrepresentation of the ARB's basic
qualifications as provided under Sec. 22 of RA 6657, PD
27 and other agrarian laws;
4.         Illegal conversion by the ARB's;

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 5.         Sale, transfer, lease or other forms of conveyance by
a beneficiary of the right to use or any other usufructuary
right over the land acquired by virtue of being a beneficiary
in order to circumvent the provisions of the different agrarian
laws. (Lands awarded under PD 27/EO 228, however, may
be transferred after full payment of amortization).
6.         Default in the obligation to pay an aggregate of three
(3) consecutive amortizations in case of VLT/DPS, except in
cases of fortuitous events and force majeure;
7.         Failure of the ARBs to pay for at least three (3)
annual amortizations to the LBP, except in cases of
fortuitous events and force majeure;
8.         Neglect or abandonment of the awarded land
continuously for a period of two (2) calendar years as
determined by the Secretary or his authorized
representative (Section 22, RA 6657);
9.         The land is found to be exempted/excluded from PD
27/EO 228 or CARP coverage or to be part of the
landowner's retained area as determined by the Secretary or
his authorized representative;
10.       Other grounds that will circumvent laws related to
the implementation of the agrarian reform program (see AO
No. 02, Series of 1994).
Who can order the cancellation of a registered EP/CLOA?
The Provincial or Regional Adjudicator which has jurisdiction over
the property may order the cancellation of a registered EP/CLOA in
accordance with the DARAB Rules and Regulations.
Aside from cancellation, the PARAD/RARAD may decide to
include other sanctions for violations of agrarian laws such as forfeiture
of amortization, ejectment of ARB, reallocation of the land to qualified
beneficiary, perpetual disqualification to become an ARB.
What will happen to a tenant who became a beneficiary under PD
27 but whose EP is now being cancelled on the ground that the area
awarded is part of the landowner's retained area?
The farmer will revert to being an agricultural lessee. He/she,
however, will have security of tenure and cannot be ejected from the
land. Amortization payments will be credited as lease rentals and excess
payments shall be reimbursed.

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 Who has the authority to correct an error in the CLOA such as the
omission of the name of the spouse, typing error in the name of the
beneficiary or in the technical description of the property?
It is still the PARAD or the RARAD having jurisdiction over the
property who can order the correction of the title.
CHAPTER 11
PAYMENT BY BENEFICIARIES
11.1 PAYMENT UNDER RA 6657
Must the landowner first agree to the land valuation before the
beneficiaries can receive the land?
No. Learning from the lessons in the previous agrarian reform
programs the CARP now separates acquisition from distribution. These
are now two separate transactions. The former is a transaction between
the government and the landowner, while the latter is a transaction
between the government and the agrarian reform beneficiaries. The
landowner may still be contesting the land valuation but title to the land
may already be transferred first to the Republic of the Philippines then to
the beneficiaries.
Will the beneficiaries have to pay the government the same
amount that government paid to the landowner?
No. DAR Administrative Order No. 6, Series of 1993 entitled,
"Revised Implementing Guidelines and Procedures Governing Payment
of Land Amortization by Agrarian Reform Beneficiaries" provides the
operating guidelines for Section 12 of EO 229 and Section 26 of RA
6657. This AO revised DAR Administrative Order No. 3, Series of
1992 entitled, "Implementing Guidelines and Procedures Governing
Payment of Land Amortization by Farmer-Beneficiaries Pursuant to
Section 26 of RA 6657".

Under AO No. 06-93, lands awarded pursuant to EO 229, RA

6657 and lands acquired under EO 407 shall be repaid by the ARBs to
Land Bank in 30 annual amortizations at six percent (6%) interest per
annum based on the cost of the land and permanent improvements.
These are the regular annual amortizations.
However, to make payments affordable, amortization shall be
reduced to:
*          2.5% of AGP for the first three years;
*          5.0% of AGP on the fourth and fifth year; and to

73
 *          10.0% of AGP from the sixth to the thirtieth year if
this amortization ceiling is lower than the regular
amortization.
Simulation:
Annual Gross Production (AGP) established
during land valuation (AO-06-
92):                                                P15,000.00
Cost of Awarded land covered by
VOS/CA:                               P22,706.38
Capital Recovery Factor of 6% for 30
years:                                           0.07265
Annual Regular Amortization: P 22,706.38 x 0.07265
=                 P1,849.57
Annual Amortization Ceiling:
1st - 3rd Year           :        P15,000 x .
025               =                    P375.00
4th - 5th Year            :        P15,000 x .
050               =                    P750.00
6th - 30th Year          :        P15,000 x .
100               =                 P1,500.00
Compare annual regular amortization (P1,849) with the schedule
of amortization ceiling shown earlier. Since the ceiling is lower than the
annual regular amortization, the ARB will pay based only on the ceiling.
The difference represents the government's subsidy.
What is the "assistance" to farmers?
Assistance to farmers refers to:
a.         the difference between the regular annual
amortization (based on the amount paid or approved for
payment to the landowner) and the affordable amount
during the first five years after the award of the land to the
ARBs; and
b.         the difference between the regular amortization and
ten percent (10%) of the AGP during the 6th to the 30th year
whenever such 10% of AGP is lower than the regular
amortization.
After making payments for 30 years, the beneficiary stops paying.
The difference between what the Government paid to the landowner and

74
what it was able to collect from the ARB is the Government subsidy or
the assistance to farmers.
It may be noted that aside from the difference in the total amounts,
there is also a huge difference in the present value of the total amount
including market rate of interest that the Government will pay the
landowner and what it will receive from the ARB annually for 30 years.
Will the average gross production have to be computed annually?
No. In the case of already productive lands, the AGP shall be
computed once, during the valuation process, based on the peso value
of the annual yield/produce per hectare of the land awarded to farmer-
beneficiaries as established jointly by the DAR and the LBP which is
reflected in the valuation portion of the Claims Valuation and Processing
Form.
If only for this reason, it is imperative to involve the BARC and the
beneficiaries as early as possible to inform them about the data gathered
on the AGP of the land and get their comments and reactions.
How about in newly cultivated lands?
In the case of newly cultivated lands without established AGP, the
terms of repayment shall be as follows:
1.         For lands planted to either perennial or short term
(seasonal) crops, the initial annual repayments by the ARBs
shall be equivalent to 2.5% based on the cost of the land or
2.5% of the imputed AGP, whichever is lower, until such
time that the AGP has been established or determined.
            Imputed
AGP shall be determined using industry data
obtained from government/private entities in the barangay.
In the absence thereof, AGP for the municipality, province or
region in that order, shall be considered.
2.         For idle and abandoned lands, initial annual
repayments shall be equivalent to 2.5% based on the cost of
the land until such time that the AGP has been
established/determined.
In both cases, the average of the first three (3) years production
shall be the basis in establishing the permanent AGP. The first three (3)
years amortization and all subsequent amortizations shall be adjusted
and based on the permanent AGP established.
What if the ARB later on increases his or her production?

75
 The computed annual payments will not change. The benefits of
increased production should all go to the beneficiary's pocket as his or
her incentive.

What if a typhoon or other natural calamity reduces the

beneficiary's production?
The LBP shall formulate guidelines to assist ARBs affected by
natural calamity or force majeure which may include, among others,
suspension of payment, deferment of payment or restructuring of
account.
What if the courts grant the landowner a higher valuation?
Under AO No. 06-92, this will hardly have an effect on the amount
to be paid by the beneficiaries in view of the assistance to farmers. The
government's subsidy will increase but the ARBs' amortization will not
change.
When will the ARB start paying the amortization?
The ARB shall start paying one year after the land has been
awarded to him/her, i.e., the date of registration of the CLOA.
What happens if the ARB defaults in his or her payments?
Although the land has been titled in the name of the beneficiary,
the Land Bank has a lien by way of mortgage on the land. This mortgage
may be foreclosed by the LBP if the ARB does not pay a total of three
annual amortizations, except where the cause of such failure to pay is
brought about by natural calamity or force majeure.
Should LBP foreclose on any awarded land, it shall advise DAR of
such proceedings and the DAR shall subsequently award the land to
other qualified beneficiaries. A beneficiary whose land has been
foreclosed shall thereafter be permanently disqualified from being a
recipient of land under CARP.
11.2 PAYMENT IN OLT LANDS
Will beneficiaries of OLT lands pay under the same amortization
scheme?
No. Payment by OLT beneficiaries is governed by Section 6 of EO
228. This section provides that the beneficiaries shall pay for the total
cost of the land including six percent (6%) interest per annum with a two
percent (2%) interest rebate for prompt payments. Payment shall be
made by the farmer-beneficiary or his heirs to the Land Bank over a
period of 20 years in 20 equal annual amortizations, where:

76
 Annual Amortization = Land Value x 0.087185 *
*          Capital Recovery Factor at 6% per annum for 20
years
How about in lands already valued and financed by LBP for which
beneficiaries have started amortizing? Under PD 27, the period of
repayment is 15 years.
LBP shall extend the period of payment to twenty years.
How will the grant of increment of six percent (6%) yearly interest
compounded annually on OLT lands affect the amortization payment by
OLT beneficiaries?
Although this grant effectively raises compensation to owners of
OLT lands, agrarian reform beneficiaries will not be affected. They shall
continue to amortize the land on the basis of the original land value.
PD 27 provides that lease rental payments made by the farmer-
beneficiary to the landowner after 21 October 1972 shall be considered
as advance payment for the land. What documents are required to serve
as evidence of payment?
Allegations of lease rental payment on the sole basis of affidavits
("pagpapatotoo") executed by the farmer-beneficiaries concerned shall
not be sufficient. DAR Memorandum Circular No. 11, Series of
1994 provides that such affidavits must be supported by additional
evidence. The Memo Circular states that the FB's affidavit must be
confirmed by the landowner and that there should be other corroborative
evidence to substantiate the allegation that payment of lease rental had
been paid to the landowner (e.g., affidavit of BARC members/farmers).
What are the procedures for determining sufficiency of lease rental
payments as advance amortization and consequently, the issuance of
certificate of full payment to the farmer-beneficiary?
1.         MARO shall serve a copy of the FB's affidavit to the
landowner through either:
*          personal delivery
*          registered mail with return card
In either case, there should be proof of service.
2.         Simultaneous to the delivery of the affidavit to the
landowner, the MARO shall also post the affidavit for fifteen
(15) days in the barangay hall, and other conspicuous
places where the property is situated.

77
 3.         MARO shall verify from the records whether or not
lease rentals paid by the FB are sufficient to cover the land
value. The MARO shall likewise validate the veracity of the
landowner's objection if any and submit a report and
recommendation to the PARO within ten-days from the date
service is completed.
4.         PARO issues Certificate of Full Payment if it is found
that rentals paid sufficiently cover the cost of the land and
furnishes photocopies to landowner and FB not later than
ten (10) days from receipt of the MARO's report.
5.         Landowner may file an appeal to the Regional
Director within ten (10) days from receipt of the photocopy.
In turn, the RD decides within ten (10) days from receipt of
the appeal. The RD's decision is final in so far as the DAR is
concerned.
6.         The ROD registers the Emancipation Patent (EP) on
the basis of the PARO's Certificates of Full Payment and the
RD's Order (in case of appeal).
11.3 PAYMENT UNDER VLT/DPS
Is there also a ceiling on payments under VLT/DPS?
Yes, in effect there is a ceiling since the law provides that although
the terms and conditions of the VLT/DPS shall be mutually agreed upon
by the landowner and the ARB, these should not be less favorable to the
ARB than those that would prevail if it were the government acquiring the
land from the landowner and selling it to the beneficiary.
Can lands transferred under VLT/DPS be repossessed if the
agrarian reform beneficiary defaults in his/her payment?
Yes. The VLT/DPS agreement shall contain sanctions for non-
compliance by either party and such shall be duly recorded and its
implementation monitored by the DAR.
Should the beneficiary, for reason other than those brought about
by force majeure or fortuitous events default in his/her obligations for
three (3) consecutive installments to pay the land amortization, he/she
shall be replaced as beneficiary and be permanently disqualified from
being a beneficiary under CARP. DAR shall cancel the CLOA which had
been issued and transfer the land to either:
a.         Qualified heir of the beneficiary who shall assume
the balance of the value of the land; or

78
 b.         In the absence of a qualified heir, a new qualified
beneficiary who, as a condition for such transfer, is willing to
abide by the terms of the existing VLT/DPS agreement and
who will pay for the entire value of the land.
What will happen to the payments made by the previous
beneficiary who has defaulted?
In case of (b) above, the landowner shall refund the previous
beneficiary in one lump sum or on installment basis for the amounts
already paid and for the improvements made by the latter, less the
computed lease rental for the duration of the previous beneficiary's use
of the land and other charges provided by law.
11.4 PAYMENT IN LAHAR AFFECTED AREAS
Are the farmer-beneficiaries in lands affected by the Mt. Pinatubo
eruptions required to continue paying their amortization?
The Joint DAR-LBP Administrative Order No. 03, Series of
1994 provides the policy guidelines and procedures to be followed under
this situation.
Payment of amortization shall be deferred if subject landholding
falls under Category I — actually affected areas (see Page 78 ) until
such time that the land becomes productive again, without prejudice to
the farmer's voluntary payment of amortization. The farmer, however,
should first notify the Land Bank in writing of his/her intention of deferring
payment and this must be approved by Land Bank.
If the landholding falls either under Category II — not yet affected
or Category III — lands covered by ashfall, the farmer shall continue to
pay the amortization.
Will payment also be deferred if the land is under Category I but
acquisition was through voluntary land transfer or direct payment
scheme?
Yes, but instead of notifying the Land Bank, the farmer-beneficiary
concerned shall notify the landowner in writing with the assistance of
DAR of his/her intention to defer payment.
CHAPTER 12
SUPPORT SERVICES
12.1 SUPPORT SERVICES TO LANDOWNERS
What support services shall be provided to the affected
landowners?

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 The support services provided to landowners are:
a.         investment information, financial and counseling
assistance;
b.         facilities, programs and arrangements for exchange
and marketing of LBP bonds; and
c.         other services intended to assist landowners in
productively utilizing the proceeds of the sales of the land for
rural industrialization.
What specific investment incentives are offered to landowners?
If they invest in rural industries, they will be entitled to incentives
granted to a registered enterprise engaged in a pioneer or preferred area
of investment as provided for in the Omnibus Investment Code of 1987,
or to other incentives which may be provided by PARC, LBP, or other
government financial institution.
If the landowners invest the proceeds in a Board of Investment
(BOI) registered company or in any agri-business or agri-industrial
enterprise in the region, the LBP shall redeem the LBP bonds up to thirty
percent (30%) of their face value. (Section 38, RA 6657)

What specific action has been done by DAR to facilitate

assistance to landowners?
Special Order No. 172, Series of 1993 mandated the creation of a
Landowner's Desk in every DAR provincial office. This desk will be
handled by one full-time staff with the position of at least a Supervising
Agrarian Reform Program (SUARPO). This LO's Desk shall handle
exclusively and specifically landowners' problems, issues and concerns.
The LO's Desk Officer shall have the following responsibilities:
1.         Answer landowners' queries and receive complaints
and other concerns brought by the landowners to the
attention of DAR;
2.         Refer these concerns to appropriate DAR units or to
the LBP-Land Valuation Office, or other government
agencies for resolution;
3.         Monitor the action taken on the referrals; and
4.         Assist landowners in close coordination with LBP,
with investment requirements, especially in recycling land
transfer payments back to the countryside.

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12.2    SUPPORT SERVICES TO AGRARIAN REFORM
BENEFICIARIES
What are the support services provided to the agrarian reform
beneficiaries?
Appropriate support services should be provided to the ARBs.
These services include:

a.         land surveys and titling;

b.         liberalized terms on credit facilities and production
loans;
c.         education and extension services,
d.         institutional development;
e.         marketing and management assistance and support
to cooperatives and farmers organizations; and
f.          infrastructures
CHAPTER 13
AGRICULTURAL LEASEHOLD
13.1    LAWS AND ISSUANCES ON LEASEHOLD
What are the laws governing leasehold relationship between
landowners and lessees?
Various laws have been passed governing leasehold tenancy. A
review of such laws would reveal a progression from one of election and
limited operation to one of compulsion and comprehensive application.

a.         RA 1199 — (An Act to Govern the Relations

Between Landholders and Tenants of Agricultural lands.)
(Leasehold and Share Tenancy) 30 August 1954. Under this

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 law, the tenant was given the right to choose a leasehold
tenancy arrangement.
b.         RA 3844 — An Act known as Agricultural Land
Reform Code Instituting Land Reform in the Philippines,
including the Abolition of Tenancy and the Channeling of
Capital Into Industry, 08 August 1963. This law declared
agricultural share tenancy to be contrary to public policy and
was, thereby, abolished.
c.         RA 6389 — An Act Amending RA 3844, otherwise
Known as the Agricultural Land Reform Code, and for Other
Purposes, 10 September 1971. This provided for the
automatic conversion of agricultural share tenancy to
agricultural leasehold but with Section 35 of RA
3844 retained. This section allowed the exemption of certain
landholdings from leasehold — fishponds, salt beds and
lands principally planted to citrus, coconut, cacao, coffee
and other similar permanent trees.
d.         RA 6657 (Section 12) mandated the DAR to
determine and fix immediately the lease rentals in
accordance with Section 34 of RA 3844, but expressly
repealed Section 35 of RA 3844. This, therefore, abolished
the exemptions and made all tenanted agricultural lands
subject to leasehold.
What are the significant implications of these changes in the laws?
The significant implications are as follows:
a.         abolition of share tenancy and conversion to
agricultural leasehold now covers all agricultural lands
without exception;
b.         leasehold is no longer just an option, it exists by
operation of the law; and
c.         leasehold can be a preliminary step to land
ownership.
All share crop tenants were therefore, automatically converted into
agricultural lessees as of 15 June 1988 whether or not a leasehold
agreement has been executed.
WHAT ADMINISTRATIVE ORDER COVERS LEASEHOLD
IMPLEMENTATION?

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 DAR Administrative Order No. 05, Series of 1993, "Rules and
Procedures Governing Agricultural Leasehold and the Determination of
Lease Rental for Tenanted Lands".
This AO supersedes the following AOs:
AO No. 04, Series of 1989, "Rules and Procedures
Governing Agricultural Leasehold and the Determination of
Lease Rental for Tenanted Lands";
AO No. 09, Series of 1991, "Rules and Procedures on
Leasehold Operations in Tenanted Coconut Lands; and
AO No. 04, Series of 1992, "Rules and Procedures on
Leasehold Operations on Tenanted Sugarcane Lands"
Why is there a need to institute leasehold in the retained areas of
landowners?
The DAR should institute leasehold to protect and improve the
tenurial and economic status of tenant-tillers in agricultural lands within
the retained areas and in areas not yet covered.
Leasehold would improve the hold of the tenant on the land
because the lessee shall have physical possession and enjoyment, as
well as management of the land. Furthermore, with the fixing of the lease
rental, the lessee would get more for his or her labor and other inputs.
13.2 TENANCY RELATIONSHIP
What are the conditions set for a tenancy relationship to exist?
All the following conditions must be present for tenancy
relationship to exist:
a.         That the parties are the landholder and the tenant;
b.         That the subject is agricultural land;
c.         That there is consent by the landowner for tenant to
work on the land, given either orally or in writing, expressly
or impliedly;
d.         That the purpose is agricultural production;
e.         That there is personal cultivation or with the help of
the immediate farm household; and
f.          That there is compensation in terms of payment of a
fixed amount in money and/or produce
What is meant by personal cultivation?

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 There is personal cultivation if the tenant cultivates the land
himself/herself or with the aid of the immediate farm household.
Immediate farm household refers to the members of the family of the
lessee and other persons who are dependent upon him/her for support
and who usually help him/her in the activities.
Why should there be leasehold even in coconut lands or other
permanent crops when there is practically no "cultivation" involved?
Cultivation has been defined in separate court rulings as:
"not limited to the plowing and harrowing of the land, but
also husbanding of the ground to forward the products of the
earth by general industry, the taking care of the land and fruits
growing thereon, fencing of certain areas, and the clearing
thereof by gathering dried leaves and cuffing of grasses. In
coconut lands, cultivation includes the clearing of the
landholding, the gather of coconuts, their piling, husking and
handling, as well as the processing thereof into copra, although
at times with the aid of hired laborers" (Coconut Cooperative
Marketing Association, Inc. vs. Court of Appeals, Nos. L-4681-83,
August 19, 1988, 164 SCRA 568; Wenceslao Hernandez vs.
Hon. Intermediate Appellate Court et al, G.R. No. 74323,
September 21, 1990, 189 SCRA 758).
Clearly, there is cultivation involved in coconut lands.
Does a tenancy relationship exist in cases where squatters are
allowed by the landowner to cultivate the land for free?
No, agricultural tenancy does not exist in this case since there is
no expressed or implied agreement to undertake the cultivation of the
land belonging to the landholder. No agreement exists in terms of share
in harvest or payment in a fixed amount. It is, however possible for the
parties to subsequently enter into a leasehold relationship.
When shall a tenancy relationship cease to exist?
The agricultural leasehold relation is extinguished by any of the
following:
a.         abandonment of the landholding without the
knowledge of the agricultural lessor;
b.         voluntary surrender of the landholding by the tenant-
lessee after giving notice to the lessor three months in
advance (Sec. 8, RA 3844); or

84
 c.         absence of an heir to succeed the lessee in the
event of his/her death or permanent incapacity. (RA 3844,
as amended, Sec. 7 and 8)
The leasehold relation is likewise extinguished when the lessee's
dispossession of the land is authorized by the DAR Adjudication Board
or by the proper court in a judgment that is final and executory, for
violations of the leasehold agreement or pertinent provisions of agrarian
laws on leasehold.
On what grounds may a tenant-lessee be dispossessed of his/her
tillage?
An agricultural lessee may be dispossessed of his/her tillage on
the following grounds:
a.         He/she failed to substantially comply with the terms
and conditions of the leasehold contract or with laws
governing leasehold relations, unless the failure is caused
by a fortuitous event or force majeure;
b.         He/she planted crops or used the land for a purpose
other than what had been previously agreed upon. AO No.
05-93, however, now allows the lessee to intercrop or plant
secondary crops after the rental has been fixed, provided
he/she shoulders the expenses;
c.         He/she failed to adopt proven farm practices
necessary to conserve the land, improve its fertility, and
increase its productivity (with due consideration of his/her
financial capacity and the credit facilities available to
him/her);
d.         His/her fault or negligence resulted in the substantial
damage, destruction, or unreasonable deterioration of the
land or any permanent improvement thereon;
e.         He/she does not pay the lease rental when it falls
due except when such non-payment is due to crop failure to
the extent of 75 percent as a result of a fortuitous event; or
f.          He/she employed a sublessee. (Section 36, RA
3844, as amended)
The dispossession shall be by a final and executory judgment.
What if a lessee employed hired labor but religiously pays the
lease rental to the landowner?

85
 The lessee can only employ hired labor if he/she is temporarily
incapacitated and has no immediate family household who will do the
cultivation.
Is the agricultural leasehold relation extinguished by the death or
permanent incapacity of any of the parties?
No. In case the tenant-lessee dies or is permanently incapacitated,
the leasehold relation shall continue between the agricultural lessor and
the member of the lessee's immediate farm household who can
personally cultivate the land. Such person shall be chosen by the lessor
within one month from such death or permanent incapacity from among
the following:
a.         the surviving spouse;
b.         the eldest direct descendant by consanguinity; or
c.         the next eldest descendent or descendants in the
order of their age.
If the death or personal incapacity of the lessee occurs during the
agricultural year, the choice by the lessor shall be done at the end of that
agricultural year. If the lessor fails to exercise his choice within the
prescribed period, the above mentioned order of priority shall be
followed. In case of death or permanent incapacity of the lessor, the
leasehold relation shall bind his/her legal heirs.
What is the effect of transfer of legal ownership of the land?
Leasehold is not extinguished with the transfer of legal ownership
of the land from one landowner to another. Section 10 of RA 3844, as
amended, provides that the purchaser or transferee shall be subrogated
to the rights and substituted to the obligations of the agricultural lessor.
13.3 RIGHTS AND RESPONSIBILITIES OF LESSEE
What are the rights of the lessee?
a.         To have possession 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 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;

86
 e.         To continue in the exclusive possession and
enjoyment of any homelot the lessee may have occupied
upon the effectivity of RA 3844;
f.          To be indemnified for the costs and expenses
incurred in the cultivation and for other expenses incidental
to the improvement of the crop in case the lessee
surrenders, abandons or is ejected from the landholding;
g.         To have the right of pre-emption and redemption;
and
h.         To be paid disturbance compensation in case the
conversion of the farmholding has been approved.
What are the duties and responsibilities of the lessee?
The lessee shall at all times perform the following pursuant to
Section 26 of RA 3844, as amended:

a.         Cultivate and take care of the farm, growing crops,

and other improvements on the land and perform all the
work therein in accordance with proven farm practices;
b.         Inform the lessor within a reasonable time of any
trespass committed by third persons on the farm, without
prejudice to his/her direct action against the trespasser;
c.         Take reasonable care of the work animals and farm
implements delivered to him/her by the lessor and see to it
that they are not used for purposes other than those
intended, or used by another without the knowledge and
consent of the lessor;
            If
any of such work animals or farm implements get
lost or damaged due to the lessee's negligence, he/she shall
pay the lessor the equivalent value of the work animals or
farm implements at the time of the loss or damage;
d.         Keep the farm and growing crops attended to during
the work season. In case of unjustified abandonment or
neglect of his/her farm, any or all of the expected produce
may, upon order of the appropriate body or court, be
forfeited in favor of the lessor to the extent of the damage
caused thereby; and
e.         To pay the lease rental to the lessor when it falls
due.

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 Under RA 3844, as amended, the lessee has also the
responsibility to notify the lessor at least three days before the date of
harvesting, or whenever applicable, the date of threshing. As decided in
a Supreme Court ruling, however, this is no longer required from the
lessee.
Is there a limit in the area a lessee under CARP may cultivate?
No. Since RA 6657 only speaks of the three (3) hectare limit with
respect to the award that may be given to the ARB, this ceiling does not
apply under the leasehold system. The tenant, however, must render
personal cultivation on the entire area leased.
Can a lessee be a tenant in a separate landholding?
Section 27 of RA 3844 includes as one of the prohibited acts of an
agricultural lessee, entering into a contract to work additional
landholdings belonging to a different agricultural lessor to acquire and
personally cultivate an economic family size farm without the knowledge
and consent of the lessor with whom he/she had first entered into
leasehold, if the first landholding is of sufficient size to make him/her and
the members of the immediate farm household fully occupied in its
cultivation.
Based on this provision, it is still possible for a lessee to be a
tenant in another landholding. The prohibition applies if the land
presently cultivated is already of sufficient size to fully occupy the lessee
or his/her immediate household in the cultivation. Even if the size is
already sufficient, cultivation of other landholdings is still possible if there
is consent of the original lessor.
What is meant by "economic family size" farm?

RA 3844 has defined economic family size farm as an area of farm

land that permits efficient use of labor and capital resources of the farm
family and will produce an income sufficient to provide a modest
standard of living to meet a farm family's need for food, clothing, shelter
and education with possible allowance for payment of yearly installments
on the land, and reasonable reserves to absorb yearly fluctuations in
income.
Is the lessee compelled to pay additional rent for the secondary
crops raised by his/her after the execution of the contract?
No, after the rental has been fixed, such rental shall serve as
payment for the use of the land. The lessee may diversify and/or plant

88
secondary crops without paying additional rent, provided that all
expenses are shouldered by him/her.
What are the specific rights of the lessees in sugarcane lands
which should be part of the leasehold agreement?
The lessees in sugar cane lands shall have rights which can be
exercised by them personally or through a duly registered cooperative or
farmers' association of which they are members. These are to:
1.         enter into a contract with the sugar central or millers
for the milling of sugar cane grown on the leased property;
2.         be issued a warehouse receipt (quedan) or
molasses storage certificate by the sugar central for the
manufactured sugar, molasses and other by-products.
3.         have free access to the sugar central's factory,
facilities and laboratory for purposes of checking and/or
verifying records and procedures;
4.         be furnished a weekly statement of cane and sugar
account showing, among other things, the tonnage of the
delivered cane and analysis of the crusher juice;
5.         be given thirty (30) days notice in writing before the
sugar and other by products are sold through public auction;
and
6.         be provided with the standard tonnage allocation by
the miller/sugar central.
What if the sugar central/miller refuses to recognize the rights of
the lessee?
In cases of such refusal by the sugar/miller, then the lessee with
the assistance of DAR and/or the cooperative of which he/she is a
member of, should file a petition with the DARAB.
What if the land under lease is subject of an approved land use
conversion applications?
The lessee may be dispossessed of his/her tillage if such land is
subject of an approved land use conversion application, provided the
lessee is given a disturbance compensation equivalent to five (5) times
the average of the gross harvests on his/her land during the last five (5)
preceding calendar years, and such other benefits he/she is entitled to
as provided for by law.
13.4 RIGHTS AND RESPONSIBILITIES OF LESSOR

89
 What are the rights of the lessor?
Section 29 of RA 3844 provides that it shall be the right of the
lessor to:
a.         Inspect and observe the extent of compliance with
the terms and conditions of the leasehold contract;
b.         Propose a change in the use of the landholding to
other agricultural purposes, or in the kind of crops planted;
c.         Require the lessee, taking into consideration his/her
financial capacity and the credit facilities available to
him/her, to adopt proven farm practices necessary to the
conservation of the land, improvement of the fertility and
increase in productivity; and
d.         Mortgage expected rentals.
What are the duties and responsibilities of a lessor?
The lessor shall, at all times, keep the agricultural lessee in
peaceful possession and cultivation of his/her landholding. In addition,
he/she shall keep intact useful improvements existing on the landholding
at the start of the leasehold relationship such as irrigation and drainage
systems and marketing allotments, which in the case of sugar quotas
shall refer both to domestic and export quotas, provisions of existing
laws to the contrary notwithstanding.
What are the prohibition on the lessor?

a.         To dispossess the lessee of his/her landholding

except upon authorization by the Court under Section
36, RA 3844;
b.         To require the lessee to assume, directly or
indirectly, the payment of the taxes or part thereof levied by
the government on the landholding;
c.         To require the lessee to assume, directly or indirectly
any rent or obligation of the lessor to a third party;
d.         To deal with millers or processors without written
authorization of the lessee in cases where the crop has to
be sold in processed form before payment of the lease
rental;

90
 e.         To discourage, directly or indirectly, the formation,
maintenance or growth of unions or organizations of lessees
in his/her landholding;
f.          For coconut lands, indiscriminate cutting of coconut
trees will be deemed a prima facie evidence to dispossess
the tenant of his/her landholding unless there is written
consent of the lessee and there is certification by the
Philippine Coconut Authority (PCA), copy of the findings and
recommendations of which shall be furnished to affected
tenants or lessees, or a resolution from the Municipal Board
allowing the cutting for valid reasons. (AO-05, Series of
1993 and AO 16, Series of 1989)
Is indiscriminate cutting of coconut trees prohibited only in
tenanted coconut lands?
No, even in lands cultivated by farmworkers.
Should the landowner execute two (2) separate leasehold
contracts with the same lessee, one for the principal crop and the other
for the secondary crop?
No. As a general rule, the landowner and lessee shall only execute
one contract for their leasehold relation. The execution of two contracts
is no longer necessary since the lease rental shall cover the whole
farmholding cultivated by the lessee. Hence, secondary crops shall form
part of the leasehold contract.
There are, however, certain qualifications: the secondary crop
must have already been planted as of 15 June 1988 and the area
covered is more than half a hectare.
What if there are two or more tenants?
If there are two or more tenants on the same lot, each producing a
different crop, they may decide to have a joint leasehold agreements,
whichever is feasible.
What are the liabilities of a lessor if he/she ejects his/her tenant-
lessee without the court's authorization?
A lessor shall be liable for:
a.         fine or imprisonment;
b.         damages suffered by the agricultural lessee in
addition to the fine or imprisonment for unauthorized
dispossession;

91
 c.         payment of attorney's fees incurred by the lessee;
and
d.         the reinstatement of the lessee.
Can the lessor order the lessee to change crops?
No. Section 29 of RA 3844 provides that the lessor may propose a
change in the use of the landholding to other agricultural purposes, or in
the kind of crops to be planted. The change, however, shall be agreed
upon by both the landowner and the lessee. In case of disagreement, the
matter shall be settled by the Provincial Agrarian Reform Adjudicator
(PARAD) or in his/her absence, the Regional Agrarian Reform
Adjudicator (RARAD) according to the best interest of the parties
concerned.
13.5 LEASE RENTAL
How much lease rental should the lessees pay?
The lease rental to be paid by all agricultural lessees shall not be
more than the equivalent of twenty-five percent (25%) of the average
normal harvest during the three (3) agricultural years immediately
preceding the following dates:
*          10 September 1971 — the date of effectivity of RA
6389 for tenanted rice and corn lands;
*          date the tenant opted to enter into leasehold
agreement or as of 15 June 1988, whichever is sooner, for
tenanted sugar lands; or
*          date of leasehold agreement by the parties
concerned or 15 June 1988, whichever is sooner, for all
other agricultural lands after deducting the amount used for
seeds and the cost of harvesting, threshing, loading, hauling
and processing whichever is applicable.
For example, in coconut, the deductible items would depend on
the final product. If the final product is green nuts, then there is no cost of
processing included. If the final product is copra, then the deductible
items would include cost of harvesting, loading and hauling, and the cost
of husking, splitting, scooping and drying.
Can fertilizer be included in the list of allowable deductions for any
particular crop?
No, only those enumerated under Section 34 of RA 3844 as cited
above can be included as a deductible item. However, DAR shall study
the effect of the use of fertilizer and other related expenses as a cost of

92
production and its impact on the rental structure. This shall be taken into
account in the periodic review and adjustment of the rental structure.
How do you compute for the lease rental of newly cultivated land?
In the case of newly cultivated land or land cultivated for a period
less than three years the initial rental shall be based on the harvest of
the first agricultural year, if such harvest is normal, or on the average
harvest during the preceding agricultural years. If there had been no
normal harvest, then the estimated normal harvest when the land was
actually cultivated shall be used. 
  cCAaHD

Once the three normal harvest have been established, the final
rental shall be based on the average normal harvest of these three
preceding agricultural years.
Why is the lessor given only 25% while the lessee retains 75% of
the net produce from the land?
These percentages were provided for under RA 3844 on the
premise that the lessee largely contributes to the production of crops or
fruits; while the lessor's only contribution is the land.

What is the normal harvest?

The normal harvest is the usual or regular produce obtained from
the land when it is not affected by any fortuitous event or force majeure
such as typhoon, flood, drought, earthquake, volcanic eruption, and the
like.
What is an agricultural year?
This is the period of time required for raising a particular
agricultural product, including land preparation, sowing, planting and
harvest of crops, and whenever applicable, threshing of said crops.
In case of crops yielding more than one harvest from one planting
(e.g., sugar cane), the agricultural year shall be the period from the
preparation of the land to the first harvest and thereafter from harvest to
harvest. For sugar cane, ratooning (from thrash burning to harvesting)
shall likewise be considered as one agricultural year. An agricultural
year, therefore, may be shorter or longer than a calendar year. (AO 05-
93).
If there is already an existing leasehold agreement, is there a
need to negotiate another one?
No, the existing leasehold agreement will be respected provided
that the agreed lease rental does not exceed the maximum rental

93
allowed by law. Furthermore, this agreement shall be subject to the
periodic review of the MARO for purposes of determining compliance.
Can the landowner demand for an increase in the agreed or fixed
rental on the ground that there is an increase in yield or production?
The landowner can only demand for an increase in the fixed or
agreed lease rental if he/she introduced capital improvements on the
farm. In such a case, the rental shall be increased proportionately to the
resulting increase in production due to said improvements. The cost of
capital improvement, including the interest thereon, will be determined,
and the number of years shall be fixed within which the increase in rental
shall be paid.
What is capital improvement?
Capital improvement refers to any permanent and tangible
improvement on the land that will result to increased productivity. If done
with the consent of the lessee, then the lease rental shall be increased
proportionately.
What will happen if there is a decrease in production as a result of
large scale replanting in coconut lands? Can the lease rental be
reduced?
Yes, if the lessor initiates large scale replanting and the normal
coconut production is affected, a new lease rental may be computed
proportionate to the decrease in production.
What happens to the lease rental should the tenant-lessee suffer
crop failure due to a fortuitous event or force majeure?
The lessee may defer payment of the lease rental due for the
agricultural year affected by a fortuitous event or force majeure causing
crop failure to the extent of 75 percent. The lease rental shall be paid on
a staggered basis subject to the agreement of both parties.
Normally, such rental is paid in installments every harvest time
beginning the next agricultural year and to continue until the lessee is
fully paid.
13.6 FIXING THE LEASE RENTAL
What is the role of the MARO in the implementation of agricultural
leasehold?
With the assistance of the Barangay Agrarian Reform Committee
(BARC) and the POs/NGOs present in the area, the MARO shall:
1.         Identify all landholdings still under share tenancy and
list the landowner and share-tenants thereon;
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 2.         Together with the PARO, undertake massive
information dissemination on leasehold;
3.         Prioritize areas for leasehold implementation taking
into account presence of strong people's organizations
and/or voluntary application by any lessor or lessee;
4.         Require submission by parties concerned of
documents on production data, normal harvest, and cost of
deductible items during the three immediately preceding
agricultural years. If these are not available, gather
production data released by the proper government agency;
5.         Conduct mediation conference (with the assistance
of the Barangay Council, if there is no BARC) between the
landowner and the lessee for the purpose of fixing the lease
rental.
            If
any party fails to attend the conference despite
notice, mail notice at the last known address of the parties
and post two successive notices at seven days apart at the
municipal, barangay halls and the place where the land is
located. The MARO shall proceed with the computation of
the lease rental. The second notice should be posted at
least ten days prior to the scheduled conference;
6.         In case of disagreement, accomplish the prescribed
leasehold form in five copies in the language or dialect
known to the lessees, explain the contents and have it
signed or thumb marked by the parties or duly authorized
representative before two witnesses;
7.         Register the Leasehold Agreement with the
Municipal Treasurer and furnish each party a copy of the
registered agreement. The PARO, on the other hand, will
have the leasehold agreement annotated at the back of the
Transfer Certificate of Title on file with the Register of
Deeds.
What if there is no agreement reached during the mediation
conference?
If no agreement is reached despite the mediation conferences, the
MARO shall fix the provisional lease rental and prepare the Leasehold
Documentation Folder. Copies of the Order for Provisional Lease Rental
shall be sent to the landowner, lessee and the PARO. The Leasehold
Documentation Folder shall then be transmitted to the PARAD.

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 The PARAD shall review the provisional lease rental within 30
days from the receipt of the documentation folder and issue the order of
lease rental.
Pending the review of the provisional lease rental, the PARAD
upon motion of the landowner shall order the lessee to deposit the
provisional lease rental with the nearest LBP Office in a trust account in
the name of the landowner, if the payment is in cash, or in a designated
bonded warehouse if the payment is in kind and give a written notice to
the MARO and the landowner.
What if either or both the parties concerned disagree with the
order of lease rental made by the PARAD?
Any party who disagrees with the Order of Lease Rental issued by
the PARAD may bring the matter to the DARAB within 15 days from
receipt thereof. Otherwise, the Order shall become final and executory.
3.7    OTHER RELATED LAWS AND ISSUANCES
1.        Presidential Decree (PD) No. 152, promulgated on 31
March 1973, prohibited the employment or use of share-
tenants in complying with the requirements of the law
regarding entry, occupation, improvement and cultivation of
public lands.
2.         PD No. 583, promulgated on 10 November 1974,
prescribed penalty for the unlawful ejectment, exclusion,
removal or ouster of tenant farmers from their landholdings.
3.         PD No. 816 promulgated on 21 October 1975,
penalized any agricultural lessee of rice and corn lands
under PD 27 who deliberately refuses or continues to refuse
to pay rentals or amortization payments when they are due
and remain unpaid within a period of two years.
4.         PD No. 1425, promulgated on 10 June 1978,
strengthened the prohibition against the practice of share
tenancy and provided penalties thereof. Under this Decree,
any tenant who refuses to enter into leasehold contract may
be prosecuted before the Court of Agrarian Relations.
5.         PD No. 1040 promulgated on 21 October 1976,
prohibited and penalized the contracting of share-tenants in
all agricultural lands covered by PD 27.
CHAPTER 14
PRODUCTION AND PROFIT SHARING

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14.1 COVERAGE
What is production and profit sharing?
This is a mandate under Section 16 of EO 229 and Sections 13
and 32 of RA 6657 which requires individuals or entities owning or
operating under lease or management contract, agricultural lands to
execute production and profit sharing plan with their farmworkers or
farmworkers' organization, pending final distribution of the land or
implementation of the stock distribution scheme.

What are the existing Administrative Orders governing production

and profit sharing?
a.         Administrative Order No. 08, Series of 1988,
"Guidelines and Procedures Implementing Production and
Profit Sharing Under RA 6657"
b.         Administrative Order No. 09, Series of 1988,
"Guidelines and Procedures Implementing Production
Sharing Under EO 229"
It will be observed that EO 229 mandated only production sharing
while RA 6657 included profit sharing on top of the production sharing.
Who are required to execute production and profit sharing plan?
The following employers are required to execute Production and
Profit Sharing Plan with their farmworkers if their annual gross sales
exceed Five Million Pesos (P5M):
a.         Any enterprise owning or operating agricultural lands
under lease, management contract, production venture or
other similar arrangement;
b.         Multinational Corporations engaged in agricultural
activities; and
c.         Commercial farms devoted to aquaculture including
salt beds, fishponds and prawn ponds, fruit farms, orchards,
vegetable and cut flower farms, and cacao, coffee and
rubber plantation.
Why are these employers required to execute production and
profit sharing plan with their farmworkers?
Section 2 of RA 6657 declared that agrarian reform program is
founded on the right of the farmers and regular farmworkers, who are

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landless, to own directly or collectively the lands they till, or in the case of
other farmworkers, to receive a just share of the fruits thereof.
This mandated production and profit sharing plan is in pursuit of
this avowed principle of agrarian reform. While awaiting for final land or
stock distribution until the end of the deferment period in the case of
commercial farms, or full control of the land in the case of lease back
arrangements, farmworkers can realize an improvement in their farm
income.
Who are the employees covered?
All farmworkers of covered employers, regardless of duration, who
are directly working on the land of the corporation or other entities,
whether classified as regular, seasonal, technical or other farmworkers
are covered in the mandated Production and Profit Sharing Plan. They
should not, however, own more than three (3) hectares of agricultural
land.
14.2 DAR's AUTHORITY
What is the power given to the DAR in the implementation of
production and profit sharing plan under the CARP?

The DAR through its Secretary or authorized representatives has

the following powers:
1.         To order and administer compliance with the
Production Sharing provisions of EO 229 and
Production/Profit Sharing provisions of RA 6657;
2.         To require covered employers to submit report on
the distributed production/profit shares;
3.         To compel the production of books and documents
of covered employers;
4.         To compel answers to questions needing
clarifications to shed light on problems encountered in the
implementation;
5.         To issue subpoena; and
6.         To enforce its writs through sheriffs or other duly
deputized officers.
14.3 MAIN FEATURES
What are the main features of the mandated plan?
EO 229
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 Under EO 229 and its implementing guideline, AO No. 09, Series
of 1988, covered employers who realize a gross sales in excess of five
million pesos per annum, shall prepare and execute a Production
Sharing Plan whereby at least 2.5 percent of the gross sales from the
production/cultivation of the agricultural lands are distributed as
compensation to their farmworkers over and above the compensation
they currently receive. The employers are not, however, compelled to
pay more than one hundred percent of the regular annual compensation
of the farmworkers.
Regular annual compensation includes all cash remunerations or
earnings regularly paid to an employee by an employer for services
rendered within a year, such as salaries, wages, 13th month pay, bonus,
allowances, commissions and paid leaves, and other income of similar
nature, whether mandated by law or provided by collective bargaining
agreement or established company practices, but excludes payment
arising from the Production and Profit Sharing provided under EO
229 and RA 6657.
The Plan should cover the period from 29 August 1987 (date of
effectivity of EO 229) and 14 June 1988 (date prior to the effectivity
of RA 6657).
Fifty percent (50%) of the Production Share should have been paid
not later than 12 February 1989 and the balance on or before 2 April
1989.
RA 6657
They are required to pay the following Production and Profit
Shares to be given over and above the compensation currently received
by their farmworkers, which shall be distributed based on the following
schedules:
Amount of Production Share:
Three percent (3.0%) of Annual Gross Sales from 15 June 1988,
until final land or corporate stock transfer to the farmworker-beneficiaries
is effected, provided that the employer is not obligated to pay more than
one hundred percent (100%) of the regular annual compensation of the
farmworker-beneficiaries.
*          Fifty percent (50%) of the estimated Production
Share (based on unaudited financial statements) shall be
distributed within sixty (60) days at the end of the accounting
year, with the balance (based on audited financial
statement) payable not more than sixty (60) days thereafter.

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 Amount of Profit Share:
Ten Percent (10%) of net profit after tax, provided that in cases
where the retention right is allowed, the amount to be distributed shall be
reduced by an amount equivalent to the proportion of the retained area
to the total land area.
*          Fifty (50%) of estimated Profit Share (based on
unaudited financial statements) shall be distributed within 90
days at the end of the accounting year, with the balance
based on audited financial statements payable not more
than 60 days thereafter.
For lands to be turned over to the farmworker-beneficiaries, a
transitory period whose length shall be determined by DAR, shall be
established. During this period, farmworkers will be trained to manage
the enterprise. The managerial and supervisory group in place during
this transitory period shall receive at least one percent (1%) of the gross
sales of the entity based on the agreement concluded by the farmworker-
beneficiaries and this group, subject to the approval of DAR.
What is the effect on existing production/profit sharing granted by
employer prior to the promulgation of EO 229 and RA 6657?
It shall be credited as compliance with the mandated production
and profit sharing plan. Provided, however, that where the benefit under
the existing Production and Profit Sharing Plan is less than the
applicable amount required in Administrative Order Nos. 08 and 09,
Series of 1988, the employer shall pay the difference.
What is the DAR's policy on undistributed and unclaimed
production and profit sharing?
All undistributed or unclaimed Production and Profit Shares shall
be deposited by the employer with the nearest Land Bank of the
Philippines branch in the name of the Secretary of Agrarian Reform for
payment to the workers to whom they are due. The employer shall
immediately report such deposits to the nearest DAR Office and sends
notices to the farmworker-beneficiaries. If the money remains
undistributed or unclaimed after two years from the date of deposit, the
same shall be considered forfeited and shall be turned over to the
Agrarian Reform Fund pursuant to Administrative Order, No. 08, Series
of 1988.
Who are required to submit a report on the distributed production
and profit sharing?

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 All covered employers are required to submit a report on the
Production and Profit Shares distributed, including the special payrolls,
under oath signed by the employer or his duly authorized representative,
not later than 30 days after completion of the distribution of the workers'
shares.
14.4 ROLE OF THE MARO
Can the MARO compel covered employers to execute production
and profit sharing plan?
Yes, as long as they realize gross sales in excess of five million
pesos and a net profit after the tax.
In case a covered employer who was granted a deferment refuse
to execute a production and profit sharing plan, what sanction can the
MARO enforce?
A report should immediately be submitted by the MARO to the
PARO. Non-compliance with the provisions on production and profit
sharing is a violation covered by the provisions on Prohibited Acts and
Omissions, and Penalties (Sections 73 and 74 of RA 6657, respectively).
Violation of the provisions on production and profit sharing is
punishable by imprisonment of not less than one month to not more than
three years or a fine of not less than one thousand pesos (P1,000.00)
and not more than fifteen thousand pesos (P15,000.00), or both, at the
discretion of the court.
The MARO may also initiate the cancellation of the Order of
Deferment issued by the DAR Regional Director and subject his land to
compulsory acquisition.
What should the MARO do in case of disputes arising from
production and profit sharing?
The MARO, together with the BARC should mediate and
conciliate. They should convince both parties to settle the dispute
voluntarily. In case there is no success in settling the dispute, this shall
be forwarded to the PARO and if still unsolved, it shall be submitted to
the PARAD for adjudication.
CHAPTER 15
COMMERCIAL FARM DEFERMENT
15.1    MEANING OF COMMERCIAL FARMS AND COMMERCIAL
FARM DEFERMENT
What are commercial farms?

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 Commercial farms are private agricultural lands over five hectares
in size devoted to commercial aqua culture — including salt beds,
fishponds and prawn ponds — fruit farms, orchards, vegetable and cut
flower farms, and cacao, coffee, and rubber plantations.
It should be noted that the definition is limited to these
commodities produced. Thus, other farms although commercial in nature
are not covered by the definition.
Further, Section 11, RA 6657 actually includes in the list lands
devoted to commercial livestock, poultry and swine raising. The Supreme
Court decision in Luz Farms vs. the Secretary of Agrarian Reform (128
SCRA 568), however, has removed these farms from the coverage of
CARP.
What is commercial farm deferment?
Section 11, RA 6657 as implemented by AO 16-88 provides that
the acquisition and distribution of qualified commercial farms shall be
deferred for ten (10) years from 15 June 1988. In case of new farms, the
ten year deferment period shall begin from the first year of commercial
production and operation, as determined by DAR.
15.2 RATIONALE FOR DEFERMENT
Why is coverage of these farms deferred?
The CARP provides for the deferment of the coverage of the farms
mentioned earlier, to allow them to recover their investments and
insulate them from possible disruptions in operations and productivity
during land acquisition and distribution. The commercial farm deferment
provision of RA 6657, which runs counter to the general rule of
immediate land transfer, particularly of large estates, reflects the
numerous compromises that had to be forged by the legislators in the
crafting of the law.
15.3 REQUIREMENTS
Is the deferment automatic?
No. The farm should already be planted to commercial crops or
devoted to commercial farming operations before 15 June 1988. It
should likewise be applied for deferment with the DAR, which shall
approve the application based on whether or not the farm meets the
requirements enumerated in Annex A of AO 16-88. These criteria are on
the density of planting (number of plants or trees per hectare) and
infrastructure and facilities of the farm.

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 When is the deadline for filing of applications for commercial farm
deferment?
The extended deadline for applying deferment was 02 May 1989.
Deadline for application was originally set on 20 March 1989 but was
extended.
A total of 4,620 commercial farms applied as of November 30,
1994. The applications of 1,546 farms have been approved, covering
54,837 hectares. The rest are still being evaluated and processed.
15.4 DEFERMENT PERIOD
When is the start of the ten-year deferment period?
For farms already in commercial production as of 15 June 1988,
the deferment period began as of that date.
For farms already established before 15 June 1988 but were not
yet in commercial production as of that date, the deferment starts from
the first year of commercial production and operations, or at the end of
the gestation period provided in AO 16-88 based on the crop planted or
commodity produced. This is to give the landowner the chance to
recover and profit from his or her investments.
How about for farms with one crop of varying ages?

For farms divided into two or more area planted to a crop, the
deferment period of each area has to be determined, following the same
rules above. Thus, deferment of those areas which were already in
commercial production as of the effectivity of RA 6657 began as of 15
June 1988. Deferment of those areas not yet in commercial production
as of 15 June 1988 began or will begin at the end of the gestation period
of the crop.
On the other hand, for farms with commercial crops intercropped
with other commercial crops, the start of the deferment is based on the
status of the main crop.
What is the gestation period?
The gestation period is the period beginning from the time the crop
or commodity is first planted or raised until the time the crop bears fruit or
the produce are harvested. The end of the gestation period is the start of
commercial production.
The gestation periods listed in Annex A of AO 16-88 were
recommended by the Department of Agriculture.

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15.5 DAR's ROLE DURING DEFERMENT PERIOD
Is a farm granted deferment completely out of CARP coverage for
ten years?
No, for two basic reasons: First, the deferment may be lifted and
the farm subjected to immediate redistribution of the DAR determines
that the purposes for which the deferment is granted no longer exist. The
reason for deferment must be continuously present for the farm to be
continuously deferred. Thus, a deferred vegetable farm may be
compulsorily acquired if the landowner decides to devote the area to
sugar cane production, instead.
The other reason is that a farm granted commercial farm
deferment is required to pay production and profit shares (PPS), if it
realizes gross sales exceeding five million pesos. This is to allow the
farmworkers to receive a just share of the fruits of the farm during the
deferment. The production and profit shares shall be paid upon the start
of the deferment period.
What shall the DAR do during the deferment period?
Aside from monitoring the farm as to compliance with the CFD and
PPS regulations, the DAR shall undertake the necessary steps towards
the acquisition and distribution of the property. These include valuation of
the land, and, more importantly, facilitating the organization of the
farmers by partner NGOs/POs in the area. Organizing the farmers during
the deferment period will smoothen the transfer of land ownership and
prevent disruption of operation.
May a landowner with an approved commercial farm deferment
application change his or her commercial crop?
Yes, provided the total deferment period reckoned from the date of
first approval is not extended.
What happens if a farm which has been granted commercial farm
deferment suffers from a calamity or force majeure? If the crops were
destroyed, will the farm be immediately covered under compulsory
acquisition?
In cases where the crop planted or commodity raised in the area is
destroyed by force majeure and the farm owner wants to replenish the
crop or commodity, the DAR may continue to grant the deferment
provided the following conditions are present:
a.         The landowner can immediately resume commercial
operations;

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 b.         The employment of the workers or beneficiaries is
not affected; and
c.         The ten-year deferment period is not extended.
Who will monitor compliance by landowner with the rules and
regulations on commercial farm deferment?
The DAR Regional Office shall maintain records of the
landowner's operations to monitor compliance with the rules and
regulations on deferment. It is also the Regional Director who signs the
Order of Deferment.
For these purposes, the landowner shall make available to DAR
the farm's premises for ocular inspection, the personnel for interview and
the records for examination during normal business hours.
CHAPTER 16
LAND USE CONVERSION
16.1 DEFINITION
WHAT IS LAND USE CONVERSION?

Conversion the act of changing the current use of a piece of land

into some other use. Specifically for the DAR, land use conversion refers
to the change from agricultural to non-agricultural land use (residential,
commercial, industrial, etc.). From a more technical perspective,
conversion is defined as the act of authorizing the change of the current
use of a piece of land into some other use.
16.2 DAR's STAND ON CONVERSION
Is the DAR against land use conversion?
No. The DAR recognizes that land use conversion is necessary,
even inevitable in the country's march to progress. Many agricultural
lands will have to be given up in favor of industrial estates, commercial
centers, residential subdivisions, etc. Moreover, CARP is not the only
program of Government. Other important programs on tourism, housing,
and industrialization, among others, are being pursued and these all
require land. What the DAR is against is indiscriminate and wasteful land
use conversion. What the DAR wants is to direct land use conversion
such that the productive agricultural lands are preserved for agriculture
and the other programs are implemented in the marginal agricultural
areas.

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 It should be noted that agriculture can be carried out only in certain
types of land. Thus, prime agricultural lands should rightfully be
considered a finite natural resource, further depletion of which would
threaten national food security. In contrast, housing and industrialization,
for example, require land merely for space and may therefore be
implemented in lands marginal for agriculture.
When conversion of agricultural lands coincides with the objectives
of the Comprehensive Agrarian Reform Law to promote social justice,
industrialization, and the optimum use of land as a national resource for
public welfare, it shall be pursued in a speedy and judicial manner.
16.3 DAR's LEGAL MANDATE
What is the DAR's legal mandate in land use conversion?
Executive Order No. 129-A, Section 4 mandates the DAR to
"approve or disapprove the conversion, restructuring or readjustment of
agricultural lands into non-agricultural uses".
Section 5 of the same EO authorizes the DAR to "have exclusive
authority to approve or disapprove conversion of agricultural land for
residential, commercial, industrial, and other land uses as may be
provided for by law".
Section 65 of RA 6657 likewise empowers the DAR to authorize
under certain conditions, the reclassification or conversion and the
disposition of lands awarded to agrarian reform beneficiaries.
Finally, Section 4 of Memorandum Circular No. 54, Series of
1993 of the Office of the President, provides that "action on application
for land use conversion on individual landholdings shall remain as the
responsibility of the DAR, which shall utilize as its primary reference,
documents on the comprehensive land use plans and accompanying
ordinances passed upon and approved by the local government units
concerned, together with the National Land Use Policy, pursuant to RA
No. 6657 and EO-129-A."
What is the Department of Justice Opinion No. 44 and how does
this affect DAR's authority to approve or disapprove conversions?
Under the Department of Justice Opinion No. 44, Series of 1990, a
parcel of land is considered non-agricultural — and, therefore, beyond
the coverage of CARP — if it has been classified as residential,
commercial, or industrial in the City or Municipality Land Use Plan or
Zoning Ordinance approved by the Housing and Land Use Regulatory
Board (HLURB) before 15 June 1988, the date of effectivity of CARL.

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 Under this Opinion, a parcel of land which is planted to coconut
cannot be covered by CARP if it has been reclassified into the town's
industrial zone prior to 15 June 1988.
If a parcel of land is covered by this DOJ opinion, must its
landowner still file an application for conversion with the DAR?
No. All lands falling under this category, i.e., those lands already
classified as commercial, industrial or residential before 15 June 1988 no
longer need any conversion clearance. What the landowner or his duly
authorized representative needs is an exemption clearance from the
DAR. Application for such clearance should be filed with the Regional
Office of the DAR where the land is located. (The procedures and
requirements are detailed in AO No. 06, Series of 1994).
What policy guidelines govern land use conversion?
To operationalize the provisions of various laws, the Department of
Agrarian Reform has issued several policy guidelines to regulate land
use conversion. The latest, Administrative Order No. 12, Series of 1994,
"Consolidated and Revised Rules and Procedures Governing
Conversion of Agricultural Lands to Non-Agricultural Uses", now
consolidates and revises all existing implementing guidelines issued by
the DAR, taking into consideration other Presidential Issuances and
national policies related to land use conversion.
Thus, AO No. 12-94 repeals AO Nos. 8 and 15, Series of 1990
and 1988, General Order No. 01, Series of 1989, AO Nos. 15, 16,
and 18, Series of 1989, AO No. 07, Series of 1992 and amends AO Nos.
1 and 2, Series of 1990.
The provisions of this latest Administrative Order, shall however,
be applicable only to all application filed on or after its date of effectivity
on 10 November 1994. All other applications filed previous to this AO
shall be governed by the pertinent administrative orders or issuances in
force at the time of the filing of the applications, and shall be processed
accordingly.
On the other hand, conversion for selected Regional Agro-
Industrial Centers, Tourism Development Area and sites for socialized
housing shall be processed under Joint NEDA-DAR Memorandum
Circular No. 01, Series of 1993 issued pursuant to Executive Order No.
124, Series of 1993 of the Office of the President.
16.4 DAR's ROLE IN CONVERSION
Operationally, what is the DAR's role in land use conversion?

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 Aside from being the final approving authority, the DAR basically
performs the following functions:
a.         Evaluate the documents submitted for completeness
and veracity;
b.         Determines whether or not the subject land is
covered by CARP;
c.         Determines whether or not the application should be
approved based on the criteria set for land use conversion;
d.         Ensures that the potential agrarian reform
beneficiaries are consulted on the proposed land use
conversion and are properly given their disturbance
compensation and other benefits;
e.         Monitors approved application for compliance with
the requirements;
f.          Together with the DOJ, monitors illegal conversions
and recommends and files criminal cases against
landowners and developers who undertake illegal
conversions.
16.5    MECHANICS OF LAND USE CONVERSION: APPLICATION,
APPROVAL, MONITORING
Who may apply for land use conversion?
The following may apply for conversion:
a.         Owners of private agricultural lands or other persons
duly authorized by the landowner;
b.         Farmer beneficiaries of the Agrarian Reform
Program after the lapse of five (5) years from award,
reckoned from the date of registration of their landholdings,
and who have fully paid their obligations and are qualified,
or persons duly authorized by them.

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 c.         Government agencies, including government-owned
or controlled corporations.
When may an application for conversion be granted?
Conversion may be allowed under the following situation:
1.         If at the time of the application, the lands are
reclassified as commercial, industrial and residential in the
new or revised town plans promulgated by the Local
Government Unit (LGU) and approved by the HLRB or by
the Sangguniang Panlalawigan (SP) after 15 June 1988, in
accordance with Section 20 of RA 7160 (The New
Government Code), as implemented by Malacañang
Memorandum Circular No. 54, Executive Order No. 72,
Series of 1993.
2.         If at the time of the application, the land still falls
within the agricultural zones but:
a.         the land has ceased to be economically
feasible and sound for agricultural purposes, as
certified by the Regional Director of the Department of
Agriculture (DA); or
b.         the locality has become highly urbanized and
the land will have a greater economic value for
residential, commercial or industrial purposes, as
certified by the local government unit.
3.         If the city/municipality does not have a
comprehensive development plan and zoning ordinance
duly approved by HLRB/SP but the dominant use of the
area surrounding the land subject of the application for
conversion is no longer agricultural, or if the proposed land
use is similar to; or compatible with the dominant use of the
surrounding areas as determined by the DAR.
In all cases, conversion shall be allowed only if the DENR issues a
certification that the conversion is ecologically sound.
May conversion be granted for lands covered by a notice of
acquisition?
No. No application for conversion shall be given due course if the
subject land has been covered by any of the following:
a.         Notice of Acquisition under compulsory acquisition or
voluntary offer to sell;

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 b.         Application for stock distribution duly received by
DAR; or
c.         Perfected VLT/DPS agreement between the
landowner and the beneficiaries.
What other lands are non-negotiable for conversion?
Pursuant to Administrative Order No. 20, Series of 1992 (Interim
Guidelines on Agricultural Land Use Conversion and Memo Circular No.
54, Series of 1993 both of the Office of the President, the following are
non-negotiable for conversion.
1.         All irrigated lands where water is available to support
rice and other crop production.
2.         All irrigated lands where water is not available for
rice and other crop production but within areas programmed
for irrigation facility rehabilitation by the Department of
Agriculture (DA) and the National Irrigation Administration
(NIA).
3.         All irrigable lands already covered by irrigation
projects with firm funding commitments at the time of the
application for land use conversion or reclassification.
May conversion be granted for lands with qualified beneficiaries?
Yes. However, for the application for conversion to be approved,
the beneficiaries must first be paid a disturbance compensation which
should not be less than five (5) times the average of the annual gross
value of the harvest on their actual landholdings during the last five (5)
preceding calendar years.
In addition to ensuring that the ARBs are properly paid the
disturbance compensation, the DAR shall exert all efforts to see to it that
free homelots and assured employment for displaced beneficiaries are
provided by the applicant/developer.
Are farmworkers also entitled to disturbance compensation?
Yes. The DAR rules in AO 01-90 that payment of disturbance
compensation is not limited to tenant who will be displaced but also
includes farmworkers.

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 What shall the DAR do in case the ARBs are asking for a
disturbance compensation above the level prescribed by law?
The DAR's principal responsibility in such case is to explain the
provisions of the law to the farmers. The DAR may try to persuade the
parties, particularly the landowner, to a compromise but any increase
beyond the legal requirement is at the discretion of the landowner.
May conversion be granted for any proposed project?
No. To prevent circumvention of coverage under the CARP,
conversion shall be granted only upon evidence that the project to be
established therein is viable and beneficial to the community affected.
How fast should the project be implemented?
Again to prevent circumvention of CARP, the land development
phase of the project should be completed within one year from the
issuance of the Order of Conversion where the area is five hectares or
less. Should the area exceed five hectares, an additional year shall be
allowed for every five hectares or a fraction thereof but in no case shall
the completion of development extend beyond five years from the
issuance of the Order of Conversion. Thus, a twelve (12) hectare area
may be developed within three years, but a 50-hectare landholding
should be developed within five (5) years.
May the DAR cancel or withdraw its approval for land use
conversion?
Yes. The DAR may cancel or withdraw authorization for land use
conversion, based on the following grounds:
a.         Misrepresentation or concealment of material facts in
the application, e.g. capacity of the developer to undertake
the project;

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 b.         Failure to implement and complete the land
development of the area within the specified time; and
c.         Any other violation of the rules and regulations which
are material to the grant of the conversion order.
What will happen to the lands covered by disapproved petitions for
conversion or cancelled or withdrawn conversion order?
Lands covered by a petition for conversion which had been
disapproved or those covered by a conversion order which had been
cancelled or withdrawn shall be placed under CARP compulsory
coverage, in accordance with the schedule of implementation prescribed
in Section 7 of RA 6657 and be distributed to all qualified beneficiaries.
Where should the application for conversion be filed and what are
the procedures to be followed?
Under the new guidelines, while forms can be obtained from any of
the field offices, filing should be done at the Regional Office with the
DAR Regional Center for Land Use Policy, Planning and Implementation
(RCLUPPI). The application should contain the documentary
requirements enumerated in Section 7 of AO-12, Series of 1994.
Application with incomplete documents will not be acted upon and the
applicant will be informed accordingly.
There are also new procedures to be followed which clearly
distinguish the role of various offices.
1.         The Regional Center for Land Use Policy, Planning
and Implementation (RCLUPPI):
*          receives the application and reviews the
required documents for completeness and compliance
with all the requisites;
*          sends Notice of Land Use Conversion to the
DAR Municipal Office (DARMO) for posting;
*          conducts field investigation and dialogues with
affected parties and validates information in the
documents;
*          prepares findings and recommendations;
*          prepares land use conversion folder for every
application attaching all the required documents
submitted by the applicant and endorse it to the
Center for Land Use Policy, Planning and

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 Implementation (CLUPPI) through the Regional
Director, except:
            applications
for conversion involving five (5)
hectares or less of land that are within the non-
agricultural zone per Land Use Plan approved by the
HLRB/Sangguniang Bayan which shall be submitted
to the Regional Director.
Subsequent applications by the same landowners or his
representative, however, on a portion of the same shall be
forwarded to CLUPPI for resolution.
2.         DAR Regional Director
*          Approves or disapproves applications covering
lands within the non-agricultural zones with areas of
five (5) hectares or less on an aggregate or project
basis;
*          Forwards applications already acted upon to
the RCLUPPI for proper disposition;
*          Submits monthly report on approved or
disapproved applications, including pending
applications to the CLUPPI, copy furnished the
DARPO and DARMO.
3.         Center for Land Use Policy, Planning and
Implementation (CLUPPI)
*          reviews and evaluates all land use conversion
folders received from RCLUPPI;
*          whenever necessary, conducts field
investigation on the area and holds dialogues with
government officials and entities, accredited NGOs
and affected farmers and farmworkers with the
assistance of the MARO;
*          for lands fifty (50) hectares or less, prepares
the draft order recommending approval or denial and
forwards the same to the Undersecretary for Policy
and Planning who shall act on it within 45 working
days from the date of receipt of folder from the
RCLUPPI;
*          for areas above 50 hectares, prepares fact
sheet and accomplishes the findings and

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 recommendations and forwards these to the PARC
Land Use Technical Committee (PLUTC) for further
review within ten (10) days from receipt of the folder
from RCLUPPI;
*          submits quarterly report on the status of all
applications to the Secretary, through the
Undersecretary for PPO, copy furnished the PARC
Secretariat.
4.         Undersecretary for Policies and Planning:
*          reviews and approves or disapproves
application for conversion of lands not exceeding fifty
(50) hectares within five (5) working days from receipt
of the folder from CLUPPI;
*          forwards the signed Order to CLUPPI.
5.         PARC Land Use Technical Committee (PLUTC):
*          reviews completeness and consistency of all
folders received from CLUPPI, requires submission of
additional documents or information and conducts
field investigation (if necessary);
*          recommends approval or disapproval of
applications for conversion of lands above fifty (50)
hectares and forwards the same to the Secretary for
his consideration.
6.         DAR Secretary:
*          approves or disapproves land use conversion
applications involving above 50 hectares within five
(5) working days from receipt of folder; and
*          forwards the signed order to CLUPPI.
What is the recourse of an applicant or any aggrieved party who
does not agree with the Regional Director's decision?
A motion for reconsideration of the decision of the Regional
Director can be filed within fifteen (15) days from receipt of the order or
decision. 
  DCIEac

Running of the period is suspended once the motion is filed. If the

motion is denied, the aggrieved party can still make an appeal to the
DAR Secretary.

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 An appeal to the Secretary shall be made in the form of a
memorandum and upon payment of P500.00 as appeal fee.
On the other hand, appeal from the decision of the Undersecretary
shall be made to the Secretary, and from the Secretary to the Office of
the President or the Court of Appeals, as the case may be. The mode of
appeal/motion for reconsiderations, and the appeal fee, from the
Undersecretary to the Office of the Secretary shall be the same as that of
the Regional Director to the Office of the Secretary.
Are there mechanisms installed to ensure that the terms and
conditions of the approved conversion are complied with?
Yes, there will be monitoring of compliance. The RCLUPPI shall
monitor compliance by the applicant/developer based on the terms and
conditions stipulated under AO No. 12-94, including the required posting
of the approved order in a conspicuous place of the project area. The AO
provides that failure to post such notice in the project area shall be a
ground for the suspension of the development of the area and for
possible cancellation of the conversion order. The RCLUPPI shall submit
monthly reports to the Undersecretary for Policy and Planning through
the CLUPPI of all land use conversion transactions, copy furnished the
DARPO and the DARMO.
In turn, the CLUPPI shall evaluate the reports submitted by the
RCLUPPI and render quarterly reports on the status of all land use
conversion to the Secretary, copy furnished the PARC Secretariat.
16.6 LGU's AUTHORITY TO RECLASSIFY
Does RA 7160, otherwise known as the Local Government Code
of 1991 give the cities and municipalities the authority to convert
agricultural lands to non-agricultural uses?
No, what the Code provides is the authority of cities and
municipalities to reclassify lands into uses within their jurisdiction subject
to certain limitations and conditions.
How does reclassification differ from land use conversion?
Reclassification is the act of specifying how agricultural lands shall
be utilized for non-agricultural uses such as residential, industrial,
commercial, as embodied in the land use plan. It also includes the
reversion of non-agricultural lands to agricultural use. On the other hand,
land use conversion is the actual change of agricultural land to non-
agricultural uses.
Although reclassification and conversion are similar in that they
both determine whether a parcel of land should be used for agricultural

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or other purposes, they are different in approach — reclassification is
done through the town planning process taking into account the needs of
the inhabitants for space for housing, industrial, commercial and other
non-agricultural uses, while conversion goes through the DAR's
evaluation process which takes into account the tenants and
farmworkers, if any, on the landholding, the ascertainment of disturbance
compensation, and on who will pay said disturbance compensation.
Furthermore, although land reclassification can be indicative of which
agricultural areas can be converted to non-agricultural uses, it does not
involve an actual change in land use.
What agencies are involved in land reclassification?
Land reclassification is a power exercised by municipal or city
governments through the town planning process, subject to review and
approval by the Provincial Sanggunian through the Provincial Land Use
Council (PLUC). DAR's participation is in the issuance of a certification
that lands for reclassification are either not distributed, not covered by a
Notice of Coverage, or not voluntarily offered for coverage under CARP.
What does the Local Government Code provide with respect to
land reclassification?
Section 20 of RA 7160 and Malacañang Memo Circular No. 54
dated 08 June 1993 prescribing the guidelines governing Section 20,
state that a city or municipality may, through an ordinance passed by the
Sanggunian after conducting public hearings, authorize the
reclassification of agricultural lands and provide for the manner of their
utilization or disposition in the following case:
a.         when the land ceases to be economically feasible
and sound for agriculture as certified by the DA; or
b.         where the land shall have substantially greater
economic value for residential, commercial, or industrial
purposes.
The reclassification shall be based on the following percentage of
the total agricultural land area at the time of the approval of the Code:
o          for highly urbanized and independent component
cities            15%
o          for component cities and first to third class
municipalities      10%
o          for fourth to sixth class
municipalities                                        5%

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 In addition, the following types of agricultural lands shall not be
covered by the said reclassification:
a.         agricultural lands distributed to agrarian reform
beneficiaries subject to Section 65 of RA 6657;
b.         agricultural lands already issued a notice of
coverage or voluntarily offered for coverage under CARP;
c.         agricultural lands identified under Malacañang AO
No. 20-92 and MC 54 as non-negotiable for conversion:
1.         All irrigated lands where water is available to
support rice and other crop production;
2.         All irrigated lands where water is not available
for rice and other crop production but within areas
programmed for irrigation facility rehabilitation by the
Department of Agriculture (DA) and the National
Irrigation Administration (NIA).
3.         All irrigable lands already covered by irrigation
projects with firm funding commitments at the time of
the application for land use conversion or
reclassification.
Is the percentage ceiling on the land area which the LGUs can
reclassify absolute?
No, the President may, when public interest so requires and upon
recommendation of the National Economic and Development Authority
(NEDA) authorize a city or municipality to reclassify lands in excess of
the limits as cited above.
What are the requirements and procedures for reclassification?
a.         The city or municipal development council shall
recommend to the Sangguniang Panglunsod or
Sangguniang Bayan, as the case may be, the
reclassification of agricultural lands within its jurisdiction.
b.         Before enacting the ordinance reclassifying
agricultural lands, the Sanggunian concerned must first
secure the following certificates:
1.         Certification from DA indicating the total area
of existing agricultural lands in the city or municipality,
that such lands are not classified as non-negotiable
for conversion or reclassification; and that the land

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 has ceased to be economically feasible and sound for
agricultural purposes.
2.         Certification from DAR indicating that such
lands are not distributed, or not covered by a notice of
coverage or not voluntarily offered for coverage under
CARP.
c.         The application shall be submitted to the HLRB
which upon receipt shall conduct initial review to determine
if:
1.         the city or municipality has an existing
comprehensive land use plan reviewed and approved
in accordance with Executive Order No. 72 (1993);
and
2.         the proposed reclassification complies with the
limitations prescribed under Section 1 of Memo
Circular No. 54.
d.         The Sanggunian shall conduct public hearings for
the purpose.
e.         Upon receipt of the required certification from the
government agencies, the Sanggunian concerned may now
enact an ordinance authorizing the reclassification of
agricultural lands and providing for the manner of their
utilization or disposition.
After the enactment of the ordinance reclassifying the land, does
this mean the agricultural land can now be converted for non-agricultural
uses?
No. Approval of applications for land use conversions remains the
responsibility of DAR. Hence, individual landholders of the affected areas
should still file an application for conversion. DAR shall utilize as its
primary reference in deciding on the application, the comprehensive land
use plans, and the ordinance passed upon and approved by the
Sanggunian, together with the National Land Use Policy.
CHAPTER 17
LAND TRANSACTION
17.1    LAWS AND ISSUANCES GOVERNING AGRICULTURAL
LAND TRANSACTIONS
What are the laws governing land transaction?

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 17.1.1          RA 6657 contains several specific provisions on land
transactions. They are the following:
a.         Section 6 provides that upon effectivity of the law,
any sale, disposition, lease, management contract or
transfer of possession of private lands executed by the
original landowner in violation of the Comprehensive
Agrarian Reform Law (CARL) shall be null and void.
            However,
those transactions executed prior to the
enactment of the law shall be valid if registered with the
Register of Deeds within a period of three (3) months after
the effectivity of the law, or on 13 September 1988;
b.         Section 70 allows the sale or disposition of
agricultural lands retained by a landowner provided that the
total landholding, including the land being acquired by the
buyer/transferee shall not exceed the landholding ceiling of
five (5) hectares, subject, however, to the right of pre-
emption and/or redemption of tenant/lessee under Sections
11 and 12 of RA 3844, as amended

c.         Section 73 prohibits the sales, transfer, conveyance

or change of the nature of lands outside of urban centers
and city limits either in whole or in part after the effectivity
of RA 6657;
            The
same section also prohibits the sale, transfer or
conveyance by a beneficiary of the right to use or any other
usufructuary right over the land he/she acquired by virtue of
being a beneficiary, in order to circumvent the provisions
of CARL;
d.         Section 27 of RA 6657 further provides that the
lands acquired by beneficiaries may not be sold, transferred
or conveyed except through hereditary succession or to the
government or to other qualified beneficiaries for a period of
ten years. Provided, however, that the children or the
spouse of the transferor shall have a right to repurchase the
land from the government or LBP within a period of two (2)
years; and
e.         Presidential Decree No. 27 originally prohibited the
transfer of title to land acquired pursuant to this Decree
except by hereditary succession or to the government in

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 accordance with the provisions of PD 27, the Code of
Agrarian Reform and other existing laws and regulations.
            However,
Section 6 of Executive Order No. 228 now
allows the transfer of ownership of lands acquired by farmer-
beneficiaries after full payment of amortization.
What are the relevant AOs on land transaction?
a.         Administrative Order No. 01, Series of 1989 entitled
"Rules and Procedures Governing Land Transactions"
provided the implementing guidelines for RA 6657's
provisions on land transaction.
b.         Administrative Order No. 04, Series of 1994 entitled
"Guidelines on the Development of Agro-Tourism Areas in
Accordance with the Tourism Master Plan".
Under this new AO, DAR allows in meritorious cases, the lease or
joint venture arrangement of lands acquired by agrarian reform
beneficiaries under CARP for agro-tourism development purposes. This
is in line with the general objective of agrarian reform in terms of uplifting
the quality of life of the ARBs. Guidelines and safeguards should,
however, be adhered to strictly.
17.2    LAND TRANSACTIONS INVOLVING AGRO-TOURISM
DEVELOPMENT
What are the conditions which must be present to allow lease or
joint venture arrangements for agro-tourism development involving lands
distributed under CARP?
The following conditions must be present:
1.         The area has been identified by government as
priority development area under the Medium Term
Philippine Development Plan, or certified by the Department
of Tourism as a priority area for tourism development;
2.         The dominant use of the area should still be
agricultural such that the area to be developed for tourism
shall be less than 50% of the total area subject to CARP.
Irrigated or irrigable lands are further ineligible for these
purposes;
3.         The agricultural area of the project shall be
continuously maintained by the ARBs who shall supply the
tourism project with agricultural products;

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 4.         The ARBs or their direct descendants shall be given
preference in employment in the tourism project;
5.         All improvements related to tourism shall accrue to
the ARBs or their association at the expiry of the lease
period;
6.         Profit-sharing and other benefits may be negotiated
by DAR in behalf of the ARBs, depending on the exigencies
of the situation;
7.         The lease agreement shall specify the time frame for
development of the subject property but not to exceed five
(5) years reckoned from the date of approval of the lease or
joint venture agreement;
8.         The agreements shall contain provisions for the
violations of the agreements, including cancellations,
penalties/sanctions and the like within the ten-year period
pursuant to Section 27 of RA 6657. (AO 04, Series of 1994).
What kind of arrangements can be entered into by the ARBs if the
above conditions are fulfilled?
1.         Direct lease to the investor/developer under RA
7652;
2.         Lease to a responsible government entity, who in
turn may sublease the property to the investor/developer;
3.         Lease back to the former landowner, who in turn will
develop the area for tourism purposes; or
4.         Joint venture agreement whereby ARB's lease rights
shall be exchanged for shares of stocks, provided the ARBs
shall organize into a farmers cooperative.
17.3    LAND TRANSACTIONS AFTER 15 JUNE 1988
A vendee bought a parcel of agricultural land consisting of fifty
(50) hectares prior to 15 June 1988. However, the deed of sale was not
registered within the three-month period as provided for in Section 6
of RA 6657. The vendee now wants to have the transaction registered
and is willing to have the land covered by CARP. Should the ROD
register the transaction?
Yes, the transaction should be registered even if beyond the
prescribed period. Anyway, the vendee is willing to have it covered under
CARP. To disallow registration and rescind the contract will result in a

121
legal nightmare to the prejudice of the vendee/transferee. DAR can give
clearance for the registration. (DOJ Opinion No. 41, Series of 1992).
Can agricultural lands be mortgaged to guarantee any loan
obligation secured to develop or to improve such lands?
Yes, there are lands that may be the subject of mortgage, lien or
encumbrance. These are the following:
a.         Lands not yet acquired by DAR in accordance with
the schedule of acquisition mentioned in Section 7 of RA
6657.
b.         Those lands chosen by the landowners as their
retention areas; and
c.         Lands already awarded/allocated to the agrarian
reform beneficiaries.
Can banks and other financial institutions acquire title to
agricultural lands subject of a mortgage right or interest?
Banks and other financial institutions allowed by law to hold
mortgage right or security interest in agricultural lands may acquire title
to those mortgaged properties, regardless of areas, subject to existing
laws on compulsory transfer of foreclosed assets and acquisition as
prescribed under Section 16 of RA 6657.
Can government financing institutions and government-owned or
controlled corporations sell or dispose their lands which are suitable for
agriculture directly to private individuals?
No. Executive Order No. 360, Series of 1989 enjoins them to grant
the DAR the right of first refusal in the sale or disposition of their lands
which are suitable for agriculture. This was further amended by EO
407 which mandates all government instrumentalities to surrender to the
DAR all landholdings suitable for agriculture including all pertinent
documents in their custody. In certain instances, they may avail of the
VLT mode of transferring ownership of agricultural lands to qualified
beneficiaries subject to the review and approval of DAR.
17.4    RIGHT OF PRE-EMPTION
What is the right of pre-emption?
Under Section 11 of RA 3844, in case the landowner/lessor
decides to sell his tenanted/leased land, he/she must first offer to sell the
landholding to the tenant or lessee thereof who has the preferential right
to buy the same under reasonable terms and conditions imposed therein.

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 If the land has two or more agricultural tenants or lessees in the
same landholding, how will they exercise their right of pre-emption?
Section 11 of RA 3844 provides that if there are two or more
agricultural tenants or lessees, each shall be entitled to said preferential
right only to the extent of the area actually cultivated by him/her.
What is the prescribed period imposed by law in the exercise of
the right of pre-emption?
The right of pre-emption may be exercised within one hundred
eighty (180) days from notice in writing, which shall be served by the
owner to all tenants or lessees affected.
17.5    RIGHT OF REDEMPTION
What is the right of redemption?
Under Section 12 of RA 3844, in case the landholding is sold to a
third person without the knowledge of the tenant or agricultural lessee,
the latter shall have the right to repurchase said landholding at a
reasonable price and consideration.
If there are two or more tenants or agricultural lessees in the same
landholding, how will they exercise their right of redemption?
If there are two or more tenants or agricultural lessees in the same
landholding, each shall be entitled to said right of redemption only to the
extent of the area actually cultivated by him/her.
What is the prescriptive period imposed by law in order to avail of
the right of redemption?
The right of redemption may be availed of within one hundred
eighty (180) days from notice in writing which shall be served by the
buyer on all tenants/lessees affected and the DAR upon the registration
of the sale, and shall have priority over any other right of legal
redemption.
17.6    VALID TRANSACTIONS
What are the valid transactions under the CARP?
The following transactions are valid:
a.         Those executed by the original landowner in favor of
a qualified beneficiary from among those certified by DAR;
b.         Those in favor of the government, DAR or the LBP;
c.         Those covering lands retained by the landowner
under Section 6 of RA 6657, executed in favor of the

123
 transferee whose total landholdings inclusive of the land to
be acquired do not exceed five hectares, subject, however,
to the right of pre-emption and/or redemption of
tenant/lessee under Sections 11 and 12 of RA 3844, as
amended;
d.         Those executed by ARBs covering lands acquired
under any agrarian law in favor of the government, DAR,
LBP or other qualified beneficiaries certified by DAR; and
e.         Those executed after ten (10) years from the
issuance and registration of the Emancipation Patent (EP)
or Certificate of Land Ownership Award (CLOA).
17.7    INVALID TRANSACTIONS
What are the invalid transactions under CARP?
The following transactions are not valid:
a.         Sale, disposition, lease, management contract or
transfer of possession of private lands executed by the
original landowner prior to 15 June 1988, which are not
registered on or before 13 September 1988, or those
executed after 15 June 1988 covering an area in excess of
the five (5) hectare retention limit in violation of RA 6657;
b.         Those covering lands acquired by the beneficiary
under RA 6657 and executed within ten (10) years from the
issuance and registration of the Emancipation Patent (EP)
or Certificate of Land Ownership Award (CLOA) except
through hereditary succession, to the DAR, LBP or to other
qualified beneficiaries;
c.         Those executed in favor of a person or persons not
qualified to acquire land under Section 22 of RA 6657;
d.         Sale, transfer, conveyance or change of nature of
land outside of urban centers and city limits either in whole
or in part after 15 June 1988, except as provided for under
the rules on land conversion; and
e.         Sales, transfer or conveyance by an ARB of the right
to use or any other usufructuary right over the land he
acquired by virtue of being a beneficiary in order to
circumvent the law.
What are the transactions that may be registered with the Register
of Deeds without clearance from the DAR?

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 The following are the transactions that can be registered without
clearance from the DAR:
a.         Deed of extra-judicial partition of the property of a
deceased who died before 15 June 1988;
b.         Deed of partition of property owned in common by
co-owners prior to 15 June 1988;
c.         Subdivision of title without change of ownership; and
d.         Deed of Real Estate Mortgage executed by the
original landowner or beneficiary.
CHAPTER 18
PUBLIC LANDS
18.1    PUBLIC ALIENABLE AND DISPOSABLE LANDS
How are public alienable and disposable lands to be distributed?
In general, all alienable and disposable public lands suitable to
agriculture shall be distributed by the DENR to qualified citizens of the
Philippines. Agrarian reform beneficiaries may be considered by the
DENR provided that they are certified by DAR and DENR as still
qualified to acquire public lands pursuant to the Joint DAR-DENR
Administrative Order No. 07, Series of 1991.
Areas subject to adverse claims by persons other than the
applicant-tillers cannot be distributed until such claims are settled.
Who are the qualified applicants?
The following are generally qualified to apply for patents to public
lands which are suitable to agricultural purposes and who satisfy
additional existing requirements as prescribed by the Public Land Law
(CA 141, as amended):
1.         a Filipino citizen;
2.         occupant-tiller of the land;
3.         does not own other landholdings, the aggregate area
of which does not exceed the limits allowed for the particular
type of public land application;
4.         is not an illegal entrant/occupant
What are the procedures followed in the distribution of public A &
D lands to qualified applicants?
1.         Filing of public land application shall be done at the
Community Environment and Natural Resources Office
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 (CENRO) having jurisdiction over the subject land. (Note:
only lands covered by approved surveys may be the subject
of a public land application).
2.         Processing of the application, including verification of
qualifications and compliance with all the requirements of
residence, cultivation, payment of required fees, etc., are
done at the CENRO and the Provincial Environment and
Natural Resources Office (PENRO) levels.
3.         Signing of the land patent by the PENRO (up to five
hectares for homestead and free patents), and by the
Regional Environment Director (RED) (up to ten hectares)
and by the DENR Secretary, if in excess of ten hectares.
18.2    INTEGRATED SOCIAL FORESTRY PROGRAM
Are forest lands suitable for agro-forestry also covered by CARP?
Yes, but only under the non-land transfer component of CARP
called the "Integrated Social Forestry Program (ISFP)". Forest lands
suitable for agro-forestry may be allocated to forest occupants under the
principle of stewardship. They cannot be distributed for titling to agrarian
reform beneficiaries in order to protect the forest.

ISFP involves the issuance of long-term tenurial agreements

through Certificates of Stewardship Contracts or Community Forest
Stewardship Agreements effective for twenty (25) years renewable for
another 25 years and the provision of technical, social, material and
other support services to individual forest occupants and forest
communities. With these support services, the DENR hopes to reforest
denuded lands to improve the socio-economic conditions of the
occupants.
What is the maximum land size which can be availed of by
qualified applicants under ISFP?
Seven (7) hectares shall be the maximum size of land that can be
availed of under ISFP.
18.3    SETTLEMENT AREAS
Do the guidelines for public A & D lands suitable to agriculture
apply to DAR settlement areas?
No. All DAR Settlement Projects covered by a Presidential
Proclamation issued before the effectivity of RA 6657 are deemed to
have been classified as alienable and disposable under the powers of

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the Chief Executive to classify lands of the public domain and by virtue of
the expressed provisions in the proclamation authorizing the DAR to
dispose of the lands described in such proclamation.
What rules govern the manner and mode of disposition and titling
of lots in the DAR settlement projects?
a.         Administrative Order No. 09, Series of 1989 entitled
"Rules and Procedures Governing Titling and Distribution of
Lots in DAR Settlement Projects"; and
b.         Administrative Order No. 01, Series of 1992 entitled
"Revised Rules and Procedures Governing the Disposition
of Homelots and Other Lots in Barangay Sites and
Residential, Commercial and Industrial Lots in Town Sites
Within DAR Settlement Projects and Similar Other Areas
Under DAR Jurisdiction".
How much should the ARBs pay for lands distributed in DAR
settlement areas?
None. All lots (agricultural or non-agricultural) shall be distributed
free of cost. No survey fees or other costs relative to the distribution of
the land shall be charged to the beneficiary.
What are the functions of the MARO under these procedures?
1.         Conduct a physical inventory and perform the
following:
a.         Review and evaluate the list of allocatees and
conduct lot verification to determine whether the ARB
allocatees still occupy and till the lots covered by the
Certificates of Allocation;
b.         Require the occupant/tiller to accomplish the
Farmer Beneficiary Application Form (SP Form No.
01);
2.         Evaluate application forms and recommend
appropriate action. Recommendation shall be based on the
following guides:
For applicant with Certificate of Allocation (CA):
a.         If applicant is living and is the actual
cultivator/occupants: Issue CLOA
b.         If deceased but the heirs are actual
cultivators/occupants: Issue CLOA to qualified heirs

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 c.         If not an actual cultivator: Cancel CA and
Issue CLOA to qualified beneficiary
d.         If occupying the wrong lot: Issue CLOA for lot
actually occupied and cancel CA for the
corresponding lot
e.         If absentee CA holder: Consider land covered
by CA abandoned and apply procedures for
cancellation of allocation
            If
applicant has no CA but is a qualified actual
occupant/transferee: Issue CLOA for not more than three
hectares of his/her own choice and preference. Area in
excess shall be distributed with preference to his/her
qualified children.
3.         Consolidate SP Form No. 1 and prepare Summary
FB Data Sheet (SP Form No. 02) for those applicants
recommended for issuance of CLOA. This shall constitute
the Land Distribution Folder.
4.         Endorse the LDF to PARO for review and CLOA
preparation.
5.         Prepare a summary list of vacant and unallocated
lots and lots with certificates of allocation recommended for
cancellation.
What are the grounds for cancellation of allocation?
1.         Absence of the settler/allocatee from the settlement
for more than six (6) months without written permission of
the DAR;
2.         Transfer of rights by transferor without written
consent and approval of the DAR Regional Director
concerned;
3.         Voluntary renunciation or waiver of rights in writing;
4.         Failure to cultivate the lot for a period of more than
six (6) consecutive months from the date of allocation of
said lot; and
5.         Death of settler/allocatee if he/she has no qualified
heir.
What is the award ceiling for qualified beneficiaries?

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 The award ceiling shall not be more than three hectares. However,
qualified beneficiaries who have occupied and cultivated the land and
established their vested rights prior to 15 June 1988, in accordance with
the Public Land Law and other existing laws, shall be awarded the legal
limits allowed by said laws.
Who are the qualified beneficiaries?
1.         landless;
2.         Filipino citizen;
3.         Actual occupant/tiller who is at least 18 years of age
or head of the family at the time of filing of application; and
4.         Has the willingness, ability and aptitude to cultivate
and make the land productive.
Preferential assistance shall be given to:
1.         Qualified women members of the agricultural labor
force;
2.         War veterans and veterans of military campaign;
3.         Retirees of AFP and INP;
4.         Returnees/surrenderees; and
5.         Graduates of agricultural school
What other types of lots can be distributed in the settlement
areas?

Homelot refers to a parcel of land which is intended for farm

residence in a barangay site.
Residential Lot refers to a parcel of land which is intended for
residence in a town site.
Town Site Lot refers to a parcel of land in the town site of a
settlement which is intended either for residential, commercial, or
industrial use.
Industrial Lot refers to a parcel of land in the town site intended as
a site for processing of products and for other industrial purposes.
Who are qualified applicants for these lands?
1.         Filipino citizen;
2.         At least 15 years of age or head of the family at the
time of filing of application; and

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 3.         Applicant or his/her spouse is not the owner-
awardee or allocatee of another homelot, residential,
commercial or industrial lot.
What is the award ceiling for such types of lands within settlement
areas?
A qualified applicant is entitled to acquire only one homelot or one
residential/commercial or industrial lot with an area not more than one
thousand (1,000) square meters. However, an awardee or allocatee of a
homelot or residential lot may still be allowed to acquire one commercial
or industrial lot following the provisions of AO No. 01, Series of 1992.
What are the modes of disposition of homelots and other types of
lots?
1.         Homelots and residential, commercial and industrial
lots shall be disposed of by direct sale to qualified actual
occupants. If the occupant is not qualified, the lot may be
sold to the qualified members of the family. If there is none,
then the lot shall be considered vacant and shall be
disposed of.
2.         Vacant homelots in barangay sites shall be disposed
of through public raffle to qualified applicants.
3.         Vacant residential, commercial and industrial lots
shall be disposed of through public bidding, to the highest
qualified bidder. However, no bid should be less than the
appraised value of the lot.
4.         Lots allotted to or intended for public use, whether
within barangay sites or town sites shall be turned over by
the DAR to the particular government entity or agency
concerned.
5.         An allocatee occupying the lot allocated or awarded
to him/her before the effectivity of said AO 01-92 shall be
issued a CLOA upon payment of the cost of the land.
6.         An allocatee or awardee occupying a different lot
allocated or awarded to him/her before effectivity of the
above mentioned AO shall be awarded the correct lot and
issued a CLOA upon full payment the lot.
7.         Awards/allocations of absentee beneficiaries shall be
cancelled and the lot shall be awarded and titled to the
actual occupants.

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 How much is the cost of these lots?
For homelots, the cost should not be less than three pesos (P3.00)
per square meter; for residential, ten pesos (P10) per square meter; and
fifteen pesos (P15) for industrial and commercial lots allocated or
awarded prior to AO No. 01-92.

18.4    PUBLIC AGRICULTURAL LANDS TURNED OVER BY THE

NATIONAL LIVELIHOOD AND SUPPORT FUND
What rules govern public agricultural lands turned over by the
National Livelihood and Support Fund (NSLF) to the Department of
Agrarian Reform for distribution under CARP?
These are governed by Memorandum Circular No. 07, Series of
1993 entitled "Implementing Guidelines on the Distribution and Titling of
the Public Agricultural Lands Turned Over by the National Livelihood and
Support Fund to the Department of Agrarian Reform for Distribution
Under the CARP Pursuant to EO 407, Series of 1990, as Amended by
EO 448, Series of 1991 and as Clarified under Memorandum Order No.
107 of the President of the Philippines dated 23 March 1993"
Under MO 107, the DAR and the DENR were directed to jointly
determine which areas were classified as alienable and disposable
agricultural lands previous to the effectivity of Proclamation No. 2282 for
disposition by the DAR through the issuance of CLOAs to qualified
beneficiaries. 
  DaScHC

Who are the qualified beneficiaries?

1.         In general, the farmer-tiller or actual occupant shall
be given preference in the distribution of the lands occupied
by him/her provided that the area will not exceed three
hectares per farmer-beneficiary. Areas in excess, if any,
may be distributed to the qualified children or relatives of the
ARB designated by him/her.
2.         Farmers organization may also be issued collective
CLOAs, the total hectarage covered, however, shall not
exceed the number of co-owners or members of the farmers
organization multiplied by three, except in meritorious cases
approved by the PARC.
3.         Cultural communities or indigenous tribal groups
located within the A & D areas with no adverse claims shall
be issued collective CLOA in the name of the community or
the tribe concerned, represented by the acknowledged

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 leader. In case the total hectarage will exceed the three
hectare award ceiling per member, the approval of the
PARC shall be secured.
What portions shall not be covered?
1.         Lands with adverse claims until the adverse claims
are resolved administratively or judicially.
2.         Parcels or lots already titled, except when their area
exceeds the five hectare retention limit, in which case they
shall be covered following the schedule of priorities.
3.         Parcels or lots covered by public land applications
filed with the DENR or the DA. The applicant concerned
shall be allowed to pursue the application with the DENR.
Applicants who wish to instead acquire their lots through
CARP may be allowed to do so provided that they present
proof that they have already requested the DENR to cancel
or reject their applications and that they possess all the
qualifications of an ARB.
4.         Lands which have been proclaimed as reservations
in favor of other government agencies or instrumentalities.
Portions which are not being used for the purpose of the
reservation or not needed by the agency or instrumentality
concerned may be acquired under separate negotiations
initiated by the DAR.
5.         Poblacions, town sites, barangay sites, and similar
sites actually used for residential or non-agricultural
purposes. Their titling shall be pursued under other
government programs under the responsibility of other
government agencies.
6.         All lands utilized as government sites in addition to
those lands specified in Section 10 of RA 6657 (on
exemptions).
7.         Lands intended for or devoted to public use such as
highways, roads, railroads, foreshores, public right of way
and other similar uses, as well as lands under bodies of
water such as rivers, creeks, lakes, bays, natural springs,
irrigation canals, reservoirs, and similar areas under water.
8.         Lands where the actual occupant or claimant may
already be entitled to a free patent under RA
6940 (continuous occupation and cultivation by himself or

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 through his predecessors-in-interest for at least thirty (30)
years prior to 16 April 1990, among other requirements).
The claimant may be allowed to perfect his/her rights
through the DENR. However, occupants or claimants who
prefer to become ARBs instead shall be included in the
CARP if qualified.
9.         All lands that are unclassified or classified as
Timberland or Forest Land, National Parks or Mineral
Lands, even if occupied and fully cultivated. Instead, the
occupants shall be referred to the DENR for possible
inclusion in the ISFP program.
Will these lands be paid for by the beneficiaries?
No, except for the payment of the proportionate cadastral survey
costs as determined by the DENR. If such survey cost is not paid by the
ARB at the time of the CLOA issuance, this shall be annotated as a lien
on the title.
18.5    LANDS OF THE PUBLIC DOMAIN COVERED BY
CANCELLED OR EXPIRED PASTURE LEASE AGREEMENTS
(PLAs) AND TIMBER LICENSE AGREEMENTS (TLAs) PER EO
407
What rules govern the CARP coverage of lands of the public
domain covered by expired PLAs and TLAs?
Joint DAR-DENR Administrative Order No. 02, Series of
1992 provided the rules and procedures on the disposition of lands of the
public domain covered by cancelled or expired Pasture Lease
Agreements (PLAs) and Timber License Agreements (TLAs), following
the provisions of Executive Order No. 407 dated 14 June 1990.

Are these lands acquired by the DAR?

No, under the Joint Administrative Order, the role of the DAR in
lands covered by expired or cancelled PLAs and TLAs is to screen and
identify the ARBs. It is the DENR which, in coordination with DAR,
distributes the land under the ISF program.
How will these lands be allocated to ARBs?
These shall be distributed by the DENR in collaboration with the
DAR, either individually or collectively to ARBs who are duly verified and
screened by the DAR.

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 What are the procedures in the distribution of lands covered by the
expired and cancelled PLAs and TLAs? What are the roles of the DAR
and DENR?
1.         DENR Secretary identifies and declares that certain
expired/cancelled leases are available for CARP.
2.         DAR verifies if the actual occupants-cultivators within
the subject area have been registered as prospective and
qualified beneficiaries pursuant to DAR Administrative Order
No. 10, Series of 1989. If not, it conducts an inventory of the
occupants/cultivators.
3.         If there are registered prospective and qualified
beneficiaries, the DAR reviews the register and in
coordination with DENR, verifies who among them are
actual occupants and prioritizes the allocation giving
preference to actual occupants/cultivators;
4.         The DENR conducts a survey of the parcels
allocated to applicant/beneficiaries;
5.         The applicant, assisted by DAR files the application
for Certificate of Stewardship (CS) in the prescribed form,
together with the certification of the Municipal Agrarian
Reform Officer (MARO) at the DENR/CENRO Office
concerned where the area applied for is located; and
6.         The CENRO issues Certificate of Stewardship (CS)
for areas up to three (3) hectares.
Are lands under cancelled or expired PLAs and TLAs subjected to
titling under CARP?
No, public lands classified as forest lands are inalienable and are
distributed only for stewardship and not for titling through the DENR-
Forest Management Sector (FMS).
What proof of award to agrarian reform beneficiaries will be issued
under expired and cancelled PLAs and TLAs covered by the public
domain?
The DENR issues the Certificate of Stewardship Contract (CSC)
after a Stewardship Agreement is signed between the beneficiary and
the DENR.
Can ARBs acquire title to lands under cancelled or expired PLAs
and TLAs?

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 No. Under the law, these types of lands are inalienable or non-
registrable and therefore cannot be titled to the agrarian reform
beneficiaries. They are however, covered by a long term twenty-five (25)
year lease contract which is renewable for another 25 years.
Can the DENR through the Forest Management Sector (FMS)
refuse to allocate portions of cancelled or expired PLAs and TLAs which
are unoccupied and uncultivated to DAR's selected ARBs?
Yes. The DENR, through the FMS may refuse to allocate,
because RA 6657, Section 7, provides that only pastures and agricultural
leases already cultivated and planted to crops shall be covered. This is
consistent with the inalienable nature of forest lands.
Can occupant-cultivators within expired or cancelled PLAs and
TLAs that are under the ISF program who are not registered as potential
ARBs be displaced, ejected or removed?
No. Under the law, actual occupant-tillers are given preferential
rights in the distribution of lands of the public domain. They shall not be
displaced or removed from the land they till as long as they are directly
working and making their land productive. Qualified occupant-cultivators
of public lands, though unregistered, shall be given priority in the
distribution thereof.
In case conflict arises between the rules of DAR and the DENR on
the allocation and disposition of ISF lands, which rules will be followed?
The DENR Forest Management Bureau rules will be followed.
However, DAR's rules on the screening and selection of ARBs shall be
followed.
18.6    LANDS OF THE PUBLIC DOMAIN COVERED BY
CANCELLED OR EXPIRED FISHPOND LEASE AGREEMENTS
(FLAs) PER EO 407
What rules govern the allocation of cancelled or expired Fishpond
Lease Agreement (FLAs)?
Executive Order No. 407 as amended by EO 448 and as
implemented by a Joint DAR-DA AO No. 05, Series of 1991 govern the
acquisition of cancelled or expired Fishpond Lease Agreement for
distribution to agrarian reform beneficiaries, either individually or
collectively; and Presidential Decree No. 704 (Fisheries Decree of 1975).

What are the main roles of the DAR and DA in the allocation of
cancelled or expired FLAs?

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 The DAR is responsible for the screening and identification of the
ARBs. The DA verifies and identifies through BFAR, fishpond areas
covered by FLAs which are already expired or subject to cancellation.
The DA also subsequently processes the applications of ARBs identified
by the DAR and issues the fishpond lease agreements.
What is the order of priority in the determination of ARBs on lands
covered by cancelled or expired FLAs?
The ARBs are chosen according to the following order of priority
specified in Section 22 of RA 6657:
1.         agricultural lessees and share-tenants;
2.         regular farmworkers;
3.         seasonal farmworkers;
4.         other farmworkers;
5.         actual tiller or occupant of public lands;
6.         collective or cooperative of the above beneficiaries;
and
7.         others directly working on the land.
Why is the allocation of cancelled or expired FLAs being done by
DA-BFAR and not by DAR?
Section 3 of EO 407 specifically provided that the DA and the
DENR, in coordination with the DAR shall redistribute and award
fishponds, pasture lands and other lands of the public domain suitable
for agriculture, subject of cancelled or amended lease agreements, to
qualified agrarian reform beneficiaries identified by the DAR pursuant to
Sections 18 and 22 of RA 6657.
Are lands under expired or cancelled FLAs subjected to titling
under CARP?
Public lands suitable to agriculture are not subject to titling after 9
November 1972 per Sections 23 and 24 of PD No. 704 because they are
disposable only through lease by the DA-BFAR after that date.
CHAPTER 19
LANDED ESTATES
What are landed estates?
Landed Estates are former haciendas or landholdings of private
individuals or corporations which have been acquired by the Government

136
under different laws, for redistribution and resale to deserving tenants
and landless farmers.

What improvements have been made in the procedures for

distribution and/or titling of lots, in agricultural landed estates?
Administrative Order No. 03, Series of 1990, entitled "Revised
Rules and Procedures Governing Distribution and/or Titling of Lots in
Landed Estates Administered by DAR" was issued to revise the tedious
process which has resulted in unnecessary delay in the distribution and
titling of landed estates to qualified beneficiaries.
Under this AO, a CLOA shall immediately be issued to the
qualified beneficiary, including those with Deeds of Sale still pending with
the DAR, provided that all outstanding accounts of an awardee shall be
annotated at the back of the CLOA and duly registered with the ROD.
Outstanding accounts include amortization payments for the land,
farm implements and machineries, if these are not covered by separate
contracts, other loan assistance and accrued interests on overdue
amortization payments and unpaid rentals from 01 January 1988.
What are the terms of payment for the account balances
annotated at the back of the CLOA?
Beneficiaries/allocatees whose amortization payments and unpaid
rentals do not exceed one thousand pesos (P1,000) have three (3) years
starting from the registration of titles to pay their balances.
Those whose obligations exceed one thousand pesos (P1,000)
have five (5) years to pay such obligations.
What will happen if the beneficiaries/allocatees fail to pay such
balances?
Failure to pay the obligations annotated at the back of the CLOA
shall lead to the forfeiture of the lots in favor of the government for
distribution to other qualified beneficiaries/allocatees.

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 What are the functions of the MARO under these revised
procedures?
1.         Conduct a physical inventory and perform the
following:
a.         Identify areas with approved, incomplete,
erroneous and without subdivision surveys.
Recommend to the PARO, the completion/correction
of subdivision surveys within a period not to exceed
one year from the issuance of AO No. 03, Series of
1990 (date of effectivity 22 June 1990);
b.         Review and evaluate the list of
allocatees/awardees and conduct lot verification to
determine whether said awardees/allocatees are still
occupying and tilling the lots. Prepare a master list of
occupants/claimants with corresponding lot numbers,
to be posted simultaneously for a period of 15 days at
the barangay hall, MARO Office and the Municipal
Building;
c.         Assist all actual occupants/tillers who have not
been issued either an Order of Award (OA), Deed of
Sale or Certificate of Land Transfer (CLT) in
accomplishing the FB Application Form;
d.         Undertake the computation of all the
obligations to be paid by the beneficiary.
2.         Evaluate Application Forms and recommend
appropriate action. Recommendation shall be based on the
following guide:
For applicant with OA/CLT:
a.         If applicant is living and is the actual
cultivator/occupant: Issue CLOA;
b.         If deceased but the heirs are actual
cultivators/occupants: Issue CLOA to the estate of the
deceased or to one of the qualified heirs upon the
agreement of the others;
c.         If not actual cultivator/occupant and employs
tenants prior to full payment of the cost of the
land: Cancel OA/CLT and issue CLOA to qualified
actual cultivator/occupant;

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 d.         If permanently incapacitated: Issue CLOA
provided that cultivator/occupant has immediate
members of the farm household who could assist him
in farming;
e.         If applicant mortgaged or sold his/her right and
left the area: Cancel OA/CLT and issue CLOA to
qualified actual occupant/tiller;
f.          If occupying the wrong lot: Issue CLOA for lot
actually occupied and cancel OA/CLT ;
g.         If absentee OA/CLT holder: Cancel OA/CLT
and issue CLOA to qualified actual occupant/tiller.
If actual occupant has no OA/CLT:
a.         and has no other supporting documents: Issue
CLOA provided occupant is qualified and there is no
adverse claimant to the subject lot;
b.         with transfer document (waiver of rights of
previous awardee): Issue CLOA if with DAR approval;
and if without DAR approval, still, issue CLOA
provided occupant is qualified and there is no adverse
claimant;
3.         Prepare Land Distribution Folder for Landed Estates
for applicants recommended for issuance of CLOA.
4.         Endorse the LDF to PARO for review and approval
as a basis for CLOA preparation.
5.         Prepare a list of vacant and unawarded lots and lots
with awards recommended for cancellation.
6.         Post the list of vacant and unallocated lots and lots
with awards recommended for cancellation for 15 days at
the MARO office and other conspicuous places within the
landed estate.
7.         Identify and prioritize the list of farmer-beneficiaries
in close coordination with the BARC for consideration in the
distribution of available lots.
8.         Prepare separate Land Distribution Folders for new
beneficiaries; and
9.         Endorse LDF to PARO for review and consolidation.
What are the grounds for cancellation of orders of award?

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 1.         Absence of the awardee from the landed estate for
more than six (6) months without doing any effort to make
the land productive;
2.         Willful transfer of rights and is no longer occupying
the lot;
3.         Voluntary renunciation or waiver of rights in
writing;   IHcTDA

4.         Failure to cultivate the lot for a period of six (6)

consecutive months from the date subject lot was awarded;
and
5.         Death of awardee if he/she has no qualified heir.
(A.O. No. 3, Series of 1990)
What is the award ceiling for qualified beneficiaries?
The award ceiling shall not be more than three hectares. However,
qualified beneficiaries who have occupied and cultivated the land and
established their vested rights prior to 15 June 1988 in accordance with
then existing laws shall be awarded the legal limits allowed by said laws.
In the case of homelots, the award ceiling shall be 1,000 square
meters.
Who are the qualified beneficiaries?
1.         Landless;
2.         Filipino citizen;
3.         Actual occupant/tiller who is at least 15 years of age
or head of the family at the time of filing of applicant; and
4.         Has the willingness, ability and aptitude to cultivate
and make the land productive.
CHAPTER 20
BARANGAY AGRARIAN REFORM COMMITTEE (BARC)
20.1    LAWS AND ISSUANCES ON BARC
What is BARC ?

BARC or Barangay Agrarian Reform Committee is a CARP

implementing unit at the barangay level. Its organization was first
mandated by Executive Order No. 229 in 1987 and in 1988 by RA 6657.

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 Through the organization of the BARCs, the implementation of the
CARP will become truly community based where people at all levels
participate in decision making because they are in a better position to
know and understand the realities in the community.
What are the laws governing the organization of BARC ?
Section 19 of EO 229 which enumerated the composition and
functions of the BARC; and
Sections 46 and 47 of RA 6657 which further defined BARC
functions in addition to those provided in EO 229.
What guidelines provide the procedures for the formation,
organization and strengthening of the BARCs?
Administrative Order No. 14, Series of 1990 entitled, "Revised
Implementing Guidelines in the Formation, Organization and Operation
of the Barangay Agrarian Reform Committee".
This Administrative Order amended AO 05-89 to provide detailed
set of implementing rules for the formation, organization, and
operationalization of the BARC.
20.2    FUNCTIONS OF THE BARC
What are the functions of the BARC ?
The BARC is intended to facilitate the land transfer program in the
community. It also provides a convenient forum for resolving agrarian
issues, and allows the local farmer organizations the opportunity to
propose policies and coordinate the efficient delivery of support services.
Under EO 229, the BARC is tasked to perform the following
functions:
1.         Participate and give support to the implementation of
programs on agrarian reform;
2.         Mediate, conciliate or arbitrate agrarian conflicts and
issues that are brought to it for resolution; and
3.         Perform such other functions that the Presidential
Agrarian Reform Council (PARC), its Executive Committee,
or the DAR Secretary may delegate from time to time.
In addition, RA 6657 further delineated these functions as:
1.         Assist in the identification of qualified beneficiaries
and landowners within the barangay;

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 2.         Attest to the accuracy of the initial parcellary
mapping of the beneficiary's tillage,
3.         Assist in the initial determination of the value of the
land;
4.         Coordinate the delivery of support services to
beneficiaries;
5.         Assist qualified beneficiaries in obtaining credit from
lending institutions;
6.         Assist the DAR representative in the preparation of
periodic reports on CARP implementation for submission to
the DAR.
20.3 BARC COMPOSITION
Who compose the BARC ?
AO No. 14-90 revised the composition of the BARC, following the
rule of proportionate sectoral representation based on the land-to-the-
tiller principle. Hence, sectors are defined on the basis of one's access or
lack of access to the land. The BARC is now composed of 13 members
who are representatives of sectors and organizations, as well as
government agencies.
Membership is divided into two groups: seven regular voting
members and six ex-officio non-voting members.
Regular Voting Members
1.         farmer and farmworker
beneficiaries                                           (4)
2.         non-beneficiary farmers and
farmworkers                                  (1)
3.         agricultural cooperatives and other farmer
organizations          (1)
4.         landowners                                                                   
                   (1)
It should be noted that the voting members are all residents of the
barangay. This residency requirement ensures that agrarian reform
implementation will indeed be community based. Regular activities of the
BARC can be better ensured when majority of its members are residents
of the community.
Ex-Officio Non-Voting Members:

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 5.         municipal or provincial based non-government
organizations   (1)
6.         barangay
council                                                                             (1)
7.         Land Bank of the
Philippines                                                        (1)
8.         Department of Agriculture — official assigned in the
area       (1)
9.         Department of Environment and Natural Resources
—
            official assigned in the
area                                                          (1)
10.       DAR — Agrarian Reform Program Technologist
            assigned in the
area                                                                        (1)
What is meant by "proportionate" sectoral representation and why
should this principle be followed in the composition of the BARC ?
Proportionate sectoral representation means bigger sectors shall
have bigger representation. This ensures democratic participation of the
intended beneficiaries of the CARP and wider participation of farmers in
planning, organization and management of agrarian reform activities.
Who comprise the farmer and farmworker beneficiaries sector?
This sector is composed of the following:
landless workers;
share tenants;
agricultural lessees, including ISF beneficiaries; and
amortizing owners.
Who compose the non-beneficiary farmer and farmworkers
sector?
The non-beneficiary farmers and farmworkers sector is composed
of the small owner-cultivators who own and till not more than five (5)
hectares of agricultural lands, either by personal cultivation or with the
help of the immediate household.
Since membership in the BARC is based on sectoral
representation, i.e., land tenure classification, what sector shall be
represented by a farmer leader who is a leaseholder and farmworker at

143
the same time, or a farmer-beneficiary who is also a member of a farmer
organization?
A farmer with mixed tenure shall represent a sector where he/she
primarily derives his/her regular income. This consideration is based on
the experience that one cannot compel any individual or a group into
action if he/they are not directly affected by the issues or problems being
raised.
20.4 BARC OFFICERS
Who are the BARC officers and how are they elected?
There are three elected positions in the BARC. These are the
Chairperson, Vice Chairperson, and an Assistant Secretary (The BARC
Secretary is automatically the DAR ARPT).
These three officers are elected by the sectoral representatives —
the regular voting members. Hence, all BARC officers are residents of
the barangay.
The thirteen-member BARC shall form different committees based
on need and priority activities. They shall select the committee heads
deemed as appropriate.

Can a barangay chairperson be an officer of the BARC even if he

is not a beneficiary of the CARP?
Yes. A barangay chairperson may be elected as regular officer
(with voting power) of the BARC if he/she represents any of the four
sectors composing the BARC (e.g., ARBs, non-ARBs, farmer
organization or cooperative, or landowners), provided, however that he is
not appointed ex-officio member representing the barangay council.
What is the length of tenure of BARC member official?

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 The elected BARC representatives will serve a maximum of two
(2) years while the BARC officers will serve at the pleasure of the
committee.
When can a BARC member/official be terminated?
A BARC member may be removed by a simple majority vote or
upon serving a maximum period of two years.
Who replaces a terminated BARC member?
A BARC member who is unable to complete his/her term of office
for some reasons is replaced by an alternate member who will serve the
remaining tenure of the original member.
20.5 FORMATION OF BARC
Should BARCs be organized in all the barangays nationwide?
No. They should be organized where they are needed. The
MARO/ARPT together with partner POs/NGOs should jointly identify and
prioritize where BARCs should be organized and/or strengthened.
The BARC Manual established the following criteria:
1.         High farmers discontent and desire for agrarian
reform;
2.         Wide hectarage covered by CARP;
3.         Large number of actual and potential beneficiaries;
and
4.         Willingness of the ARBs in the community to
organize/strengthen the BARC.
These criteria are very similar to the criteria set for ARC selection.
Given the ARC development thrust of the Department, priority should
therefore be given to ARC areas.
When should BARCs be organized?
BARCs are organized or should be reorganized if the community is
fully aware of and feels the need for it. BARCs are formed out of the
people's willingness to address agrarian reform issues and problems. Its
formation cannot be forced, otherwise, the spirit of volunteerism will not
be present. If its formation is forced, the people will perceive it as a
burden and members will expect DAR to financially support them as
compensation for their work.
Should a BARC be organized even if there are no farmer
organizations, associations or cooperatives in the barangay?

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 Initial efforts of DAR and partner NGOs should be focused on
encouraging the organization of ARBs instead of the formation of a
BARC.
What are the processes involved in the organization of the
BARC ?

There are four stages in the organization of the BARC. These are:
1.         Pre-Organization Stage. This is the process by
which the MARO prepares the sectors concerned in the
organization of BARC. He/she performs the following
functions:
a.         coordinates with the FOs and/or NGOs;
b.         briefs the FOs and/or NGOs about BARC;
c.         identifies the areas where the BARC will be
organized in coordination with the FOs/NGOs; and
d.         identifies together with the FO/NGO the
respective responsibilities of each sector.
In areas where there is no existing FO/NGO, the MARO
takes a more active role in the formation of base groups.
2.         BARC Organization. When the sectors are fully
aware of the need to organize BARC, the MARO, together
with the FOs and/or NGOs, convene the representatives of
the sectors concerned to discuss with them the CARL, the
functions of the BARC, the schedule of the first meeting and
the schedule of election of officers. After discussing the
intent of the committee, the election of the BARC officers
and the planning workshop are conducted.
3.         BARC Operation and Management. After the BARC
is formally organized, the committee prepares plans and
mechanisms for the performance of its duties.
4.         Alliance Building. The BARC coordinates with other
entities within and outside the community for its identified
needs. Simultaneously, it establishes a network to sustain
itself as a people's organization.
20.6 MEDIATION AND CONCILIATION
Is BARC a quasi-judicial body?

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 No, the BARC is only mandated to mediate and conciliate agrarian
disputes at the barangay level. Mediation and conciliation refers to the
process whereby the contending parties are persuaded by the BARC to
settle their disputes amicably. The BARC does not render a decision.
(See page 48)
What does settlement of disputes at the lowest possible level
mean?
The capability of the BARC and the community must be harnessed
to resolve local agrarian conflicts at the barangay level and avoid as
much as possible passing this responsibility to outside entities or to
higher levels. This will promote the speedy and cost-free administration
of justice; alleviate the congestion of court and DARAB dockets, and
develop a sense of commitment among landowner and farmer-
beneficiaries to comply with their agreements, thus ensuring the
successful implementation of CARP.
As the first structure for conflict management, at what levels will
agrarian disputes be resolved?
Agrarian conflicts settlement could be done at the following levels:
1.         BARC chairperson or his/her duly authorized
representative;
2.         BARC panel; and
3.         BARC en banc.
Who decides on the mechanism to be followed in the settlement of
disputes?
The BARC Chairman after evaluating the case may decide at
which level settlement will be initiated.
Who shall compose the panel of mediators/conciliators/arbitrators?
The panel shall be composed of three (3) BARC members
designated by the BARC Chairperson.
Who selects the members of the panel of
mediators/conciliators/arbitrators?
Members of the panel of mediators/conciliators/arbitrators are
designated by the BARC chairperson upon recommendation of other
members.
What happens if a member of the panel fails to attend the
mediation/conciliation conference?

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 The presence of two members in any panel constitutes a quorum
to do business. The chairperson may also replace any member who is
absent or incapacitated.
What are the procedures to be followed in the settlement of
disputes by the BARC ?
Administrative Order No. 08, Series of 1994 spelled out the
procedures for the settlement of agrarian disputes.
1.         A written or verbal complaint shall be lodged with the
BARC. Written complaints shall be in Mediation and
Conciliation M/C Form 1 while verbal complaint shall be
reduced in writing by the BARC Chairperson or Secretary.
2.         The BARC Chairperson interviews the complainant
regarding vital information.
3.         The BARC Chairperson issues a Notice of Meeting
to both the complainant and defendant.
4.         The BARC en banc, panel or the Chairperson then
endeavors to have the contending parties agree to an
amicable settlement. All agreements are written down and
signed by the contending parties.
How long will the BARC resolve disputes lodged with them?
The BARC shall endeavor to mediate, conciliate and settle
agrarian disputes lodged before it within thirty (30) days from the time it
takes cognizance of the dispute.
What will happen if the BARC fails to resolve agrarian disputes
within thirty days?
If the BARC fails to settle the dispute within thirty days, it shall
issue a certification that the dispute has not been settled, together with a
copy of the proceedings and furnish a copy to the concerned parties
within seven (7) days after the expiration of the 30 day period. This
certification must be attested by the BARC Chairperson and endorsed by
the MARO to the PARAD or to the PARO for appropriate action.
Is the MARO allowed to resolve disputes or problems presented
before him/her without the presence of the BARC chairman and
members?
Yes. The MARO can immediately resolve disputes or problems
presented before him/her even in the absence of the BARC Chairperson
and its members. Although the BARC would be the ideal forum for the
resolution of disputes and problems, this must not limit or prevent the

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MARO from performing his/her duties. Delays in the resolution of cases
may result in further complications.
Does the BARC have any jurisdiction over criminal offenses
under RA 6657?
No. Only the Special Agrarian Court (a branch of the Regional
Trial Court) has the original and exclusive jurisdiction of all criminal
offenses under RA 6657 (including petitions for determination of just
compensation for landowners).
CHAPTER 21
DAR ADJUDICATION BOARD
21.1 DARAB JURISDICTION
What is the jurisdiction of the DARAB?
The DARAB has primary and exclusive jurisdiction, both original
and appellate, to determine and adjudicate all agrarian disputes involving
the implementation of the CARP under RA 6657, EO Nos. 228, 229,
and 129-A, RA 3844 as amended by RA 6389, PD 27 and other agrarian
laws and their implementing rules and regulations.
Specifically, such jurisdiction shall include but not limited to cases
involving the following:

1.         Cases involving the rights and obligations of persons

engaged in the management, cultivation and use of all
agricultural lands covered by the CARP and other agrarian
laws;
2.         Cases involving the valuation of land and preliminary
determination and payment of just compensation, fixing and
collection of lease rentals, disturbance compensation,
amortization payments and similar disputes concerning the
functions of the Land Bank of the Philippines (LBP);
3.         Cases involving the annulment or cancellation of
lease contracts or deeds of sale or their amendments
involving lands under the administration and disposition of
the DAR or LBP;
4.         Cases arising from, or connected with membership
or representation in compact farms, farmers' cooperatives
and other registered farmers' associations or organizations,
related to lands covered by the CARP and other agrarian
laws;

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 5.         Cases involving the sale, alienation, mortgage,
foreclosure, pre-emption and redemption of agricultural
lands under the coverage of the CARP or other agrarian
laws;
6.         Cases involving the issuance, correction and
cancellation of Certificates of Landownership Award
(CLOAs) and Emancipation Patents (EPs) which are
registered with the Land Registration Authority;
7.         Cases previously falling under the original and
exclusive jurisdiction of the defunct Court of Agrarian
Relations under Section 12 of Presidential Decree No. 946,
except sub-paragraph (2) thereof and Presidential Decree
No. 815; and
8.         Such other agrarian cases, disputes, matters or
concerns referred to it by the DAR Secretary.
However, matters involving strictly the administrative
implementation of the CARP and agrarian laws and regulations, shall be
the exclusive prerogative of and cognizable by the DAR Secretary.
Is the rule that the DARAB cannot take cognizance of any agrarian
dispute unless there is a certification of the BARC where the land is
located that the dispute has not been successfully settled absolute?
No. Rule III of the DARAB Revised Rules of Procedure allows the
DARAB to take cognizance of an agrarian dispute even without the
BARC certification if:
1.         The dispute does not fall under any of the exceptions
enumerated;
2.         The required certification cannot be complied with for
valid reasons like the 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.
However, the lack of the required certification cannot be made a
ground for the dismissal of the action. Every opportunity will be given the
complainant to secure the certification.

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 What are the exceptions referred to in No. 1 above?
BARC certification shall not be required in the following cases:
1.         Where the issue involves the valuation of land to
determine just compensation for its acquisition;
2.         Where one party is a public or private corporation,
partnership, association or juridical person, or a public
officer or employee and the dispute relates to the
performance of his official functions;
3.         Where the matter at issue involves merely the
administrative implementation of agrarian reform law, rule,
guideline, or policy; and
4.         Such other cases where the Secretary of Agrarian
Reform may determine that the matter at issue is beyond
the pale of mediation, conciliation or compromise.
 
Footnotes

1.        CARP scope is presently being validated.

 
 

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