No date supplied

ACKNOWLEDGMENT
BARIE would like to thank the following offices for their
valuable inputs: Legal Affairs Office, Bureau of Land Acquisition
and Distribution, Special Concerns Office, Policy and Strategic
Research Service, and the Land Use Conversion Committee.
Likewise, BARIE would like to thank Mr. Gil R. Tuparan for writing
portions of the initial draft.
FOREWORD
The Department of Agrarian Reform is cognizant of the role
that various DAR Frontliners, like the MAROs and ARPTs play in
the implementation of the Comprehensive Agrarian Reform
Program at the grassroots level. As frontliners, they are the first
contact of the program's various clientele. It is from them that
the agrarian reform beneficiaries, the landowners, and the
general public get their first impressions of DAR as a social
development agency.
In the course of implementing the program, these field
implementors are often faced with issues and problems due to
varied understanding and interpretation of the CARP law and its
implementing guidelines and issuances.
To address this, BARIE, in coordination with other DAR
units, produced in 1993 the first edition of the Handbook for
CARP Implementors. This resource material which was
distributed to all MAROs and other field personnel was developed
to enhance the knowledge, attitude and commitment of DAR
frontliners in implementing the program.
Since last year, however, new implementing guidelines as
well as amendments to the existing Administrative Orders were
issued. This prompted BARIE to produce the Second Edition of
the Handbook for DAR Frontliners to ensure that the resource
material is well updated and responsive to the needs of the field
implementors. The Handbook which is also presented in a

1
question-and-answer format, contains an updated discussion of
the various provisions of the program and its implementing
mechanisms, procedures and guidelines.
It is hoped that this Handbook will be a valuable reference
tool in transforming our field personnel into successful and multi-
faceted implementors of the agrarian reform program.
(SGD.) ERNESTO D. GARILAO
Secretary

HANDBOOK FOR CARP IMPLEMENTORS

TABLE OF CONTENTS

Chapter 1 : AGRARIAN REFORM CONCEPTS AND

PRINCIPLES

1.1 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

2
 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
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

3
 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
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

4
 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
14.3 Main Features
14.4 Role of the MARO

Chapter 15 : COMMERCIAL FARM DEFERMENT

5
 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

6
 18.4 Public Agricultural Lands Turned Over by the
National Livelihood Support Fund
18.5 Lands of the Public Domain Covered by
Cancelled or Expired Pasture Lease Agreements and Timber License
Agreements Per EO 407
18.6 Lands of the Public Domain Covered by
Cancelled or Expired Fishpond Lease Agreements

Chapter 19 : LANDED ESTATES

Chapter 20 : BARANGAY AGRARIAN REFORM

COMMITTEE (BARC)

20.1 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,

7
 to include the totality of factors and support
services designed to lift the economic status of
the beneficiaries,
and all other arrangements alternative to the
physical redistribution of lands, such as
production or profit-sharing, labor administration
and the distribution of shares of stock, which will
allow beneficiaries to receive a just share of the
fruits of the land they work." (Section 3, RA 6657)
Basically, agrarian reform is land reform — the transfer of
control and ownership of agricultural land to the actual tillers —
plus a package of support services: economic and physical
infrastructure support services (ECOPISS), (e.g., credit,
extension, irrigation, roads and bridges, marketing facilities), and
human resource and institutional development or social
infrastructure building and strengthening (SIBS).
What is being "Reformed" in Agrarian Reform?
Agrarian reform seeks to correct numerous defects in the
country's agrarian structure. Foremost among these is the
concentration of land ownership in only a few people, such that
the huge majority of the population does not have access to land.
According to the 1980 Census of Agriculture, farms less than
three hectares in size predominate in the Philippines,
representing nearly 70% of the 3.4 million total number of farms.
However, they cover only 30% of the country's 9.7 million
hectares total farm area. In contrast, farms with areas of more
than 10 hectares are very few, constituting only 3.5% of the
number of farms. Yet they cover 26% of the farm area.
So what's wrong with that?
The concentration of the ownership of lands in the hands of
a very few means that the majority is deprived of the opportunity
to use land as a basic production resource. The failure to access
land results in unemployment, low incomes, low productivity,
poor purchasing power, and sluggish rural economies.

8
 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?
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

9
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.
1.5 AGRARIAN REFORM: COUNTER-
INSURGENCY TOOL?
Will agrarian reform cure all of the country's ills?

10
 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

11
employment based on sound agricultural development and
agrarian reform, . . ."

Article XIII, Social Justice and Human Rights, Section 4 —

"The State shall, by law, undertake an agrarian reform program
founded on the right of farmers and regular farmworkers, who are
landless, to own directly or collectively the lands they till or in
the case of other farmworkers, to receive a just share of the
fruits thereof ."
"The State shall encourage and undertake the just
distribution of all agricultural lands, subject to such priorities
and reasonable retention limits as the Congress may prescribe,
taking into account ecological, development or equity
considerations, and subject to the payment of just compensation.
"In determining the retention limits, the State shall respect
the right of small landowners. The State shall further provide
incentives for voluntary landsharing."
Article XIII, Section 6 — "The State shall apply the
principles of agrarian 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
12
Justice and Industrialization, Providing the Mechanisms for its
Implementation and/or other Purposes, was subsequently passed
by Congress, signed into law on 10 June 1988 and became
effective on 15 June 1988. This is now known as the
Comprehensive Agrarian Reform Law (CARL) of 1988. (By
tradition, the anniversary of CARP is commemorated on this
date).
CHAPTER 3
CARP COVERAGE
3.1 CARP SCOPE
What is the scope of CARP?
The ownership or control of about 10.3 million
hectares 1
of agricultural land, representing about one-third of
the total land area of the Philippines shall be transferred over a
ten-year period to an estimated 3.9 million beneficiaries.

What lands are covered by CARP?

The CARP covers, regardless of tenurial arrangement and
commodity produced, all public and private lands devoted to or
suitable for agriculture and not classified as mineral, forest,
residential, commercial or industrial' land.
The two criteria for coverage, therefore, 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

13
 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;

* idle or abandoned;
* voluntarily offered;
* foreclosed by government financial institutions
(GFIs);
* acquired by the Presidential Commission on Good
Government (PCGG); and

14
* 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.

15
 Given such phasing, how many hectares can now (1994) be
acquired if a landowner's property has an area of?
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;

16
 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?
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".

17
 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 premature must
already be devoted to livestock, poultry and swine raising as
of 15 June 1988. Nevertheless, the landowner who wishes to
convert his crop land for this purpose must apply for
conversion, the processing of which shall be governed by AO
Nos. 1 and 2, Series of 1990. Among other requirements,
there should be:
1. the consent of agrarian reform
beneficiaries and/or their waiver of rights; and,
2. certification from the Regional Director
of the Department of Agriculture that the poultry,
livestock or swine project is of greater economic
value than the present agricultural use.
Conversion of the crop land without the benefit of
conversion approval will be construed as an intent to avoid
application of RA 6657 and shall be considered as invalid and
illegal. The land will be covered under CARP without prejudice
to the filing of charges against the landowner.
Suppose a landowner has been granted exclusion from
CARP for his landholding devoted to livestock raising but
subsequently, he/she stopped its operations and went into
crop production, can the land still be subject to CARP?
Yes, the area or portion no longer used for livestock
raising purpose shall automatically revert to the category of
agricultural land and shall be covered by CARP.
What are the procedures in applying for exclusion of a
landholding devoted to livestock, poultry and swine raising ?
1. Landowner files the application for
exclusion with the DAR Provincial Agrarian Reform
Office, together with the documentary requirements;
2. The PARO, with the assistance of the
BARC, the MARO, the Municipal Livestock Inspector,

18
 and a livestock/poultry and swine specialist of the
DA shall conduct a field investigation, and prepare
report of findings and recommendations for
submission to the Regional Director.
3. Regional Director undertakes final
review and evaluation of the application and issues
the Order of Exclusion or Denial.
4.2 EXEMPTIONS
What lands are exempted from CARP coverage?
The following are exempted from the coverage of CARP:
a. Lands actually, directly, and exclusively
used and found to be necessary for parks, wildlife,
forest reserves, reforestation, fish sanctuaries and
breeding grounds, watersheds and mangroves,
national defense, school sites and campuses
including experimental farm stations operated by
public or private schools for educational purposes,
seeds and seedlings research and pilot production
centers, church sites and convents appurtenant
thereto, mosque sites and Islamic centers
appurtenant thereto, communal burial grounds and
cemeteries, penal colonies and penal farms actually
worked by the inmates, and government and private
research and quarantine centers; and
b. Lands with eighteen percent (18%)
slope and over, except those already developed as
of 15 June 1988. (Sec. 10, RA 6657)
What is the scope of the exemption that may be granted?
The exemption means that the subject parcel of land will
not be acquired and distributed under the CARP for as long as
the reasons for the exemption continue to exist. However, the
other components of the program, e.g., leasehold and the
Integrated Social Forestry Program may be implemented
where applicable.

19
 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)

20
 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

21
 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?
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.

22
 3. The PARO reviews and evaluates the
ALEF and prepares comments, findings and
recommendations. If all documents are in order,
forwards them to the Regional Director.
4. The RD reviews and evaluates the ALEF
and the findings and recommendations of the PARO
and the MARO. If documents are in order, issues an
Order of Approval or Order of Denial. This applies to
applications for exemption for all land sizes.
5. The RD forwards the Order to the PARO
for distribution to the contending parties and
counsel, if any, copy furnished the Office of the
Secretary, Undersecretary for Field Operations,
Legal Affairs Office and the Management
Information Service within 15 days from the release
of the Order. The Order becomes final 15 days from
receipt of the same, unless an appeal is made to the
DAR Secretary.
6. In case of denial of the application, DAR
shall cause the acquisition and distribution of the
property.
What is the recourse of a party who disagrees with the
decision of the Regional Director?
Any party who disagrees with the RD's decision may file a
written motion for reconsideration within 15 days from receipt
of the Order. The RD shall then rule on the motion for
reconsideration. Should the motion for reconsideration be
deemed, the aggrieved party could appeal to the DAR
Secretary within the balance of the 15 day period. The
Secretary shall render a decision within 30 days after receipt
of the appeal.
4.4 PROCEDURES FOR ISSUANCE OF
EXEMPTION CLEARANCE BASED ON DOJ OPINION NO.
44

23
 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.

24
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

25
 LAND ACQUISITION
5.1 REQUISITES IN LAND ACQUISITION
What lands are acquired under CARP?
Only the private lands devoted to or suitable for
agriculture, regardless of the agricultural products raised or
can be raised therein, are subject of land acquisition. The
lands of the public domain suitable for agriculture already
belong to the State and are just distributed through either Free
Patents for Alienable and Disposable (A&D) lands or
Certificates of Land Ownership Awards (CLOAs) for
resettlement sites. In addition, stewardship contracts are
awarded for public lands covered by the Integrated Social
Forestry Program (ISFP).
It must be noted that the private agricultural lands
include those owned by private entities and those owned or
held by government agencies, corporations, and
instrumentalities.
Specifically, the following lands may be acquired under
CARP:
a. 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:

26
 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);
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

27
 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 of Lands Voluntarily Offered
or Compulsorily Acquired as Embodied in
Administrative Order No. 06, Series of 1992;

28
 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:

29
 a. those that have become permanently or
regularly devoted to non-agricultural purposes;
b. those that have become unproductive
by reason of force majeure or any other fortuitous
event, provided that prior to such event, such land
was previously used for agricultural or other
economic purpose. (Section 3, RA 6657)
Can the DAR compulsorily acquire a landholding whose
ownership is under litigation or judicial proceedings?
Yes, if it is clear that no matter what the outcome of the
litigation may be, the land is still covered under CARP. In such
case, the DAR shall select the retained area and the
compensation for the land shall be held in trust pending the
resolution of the disputes.
However, if one or both of the parties to the case are
groups of individuals, the hectarage involved in the possible
exercise of the right of retention should be considered in the
acquisition of the land.
However, in the case of PCGG/APT acquired assets
whose ownership is contested in court, the DAR and the PCGG
have an understanding that a proper motion will be filed in
court to allow DAR to acquire such property, even pending
litigation.
What if the person who is declared by the court as the
lawful owner subsequently disagrees with the area chosen by
DAR for retention? What if he has exercised retention in
another property?
The CLOA could be amended by the DAR or the landowner
filing a petition with the DARAB. However, if the landowner is
no longer entitled to retention, then the area previously set
aside for retention may also be covered.
A couple owning only 30 hectares died in January 1988
leaving as heirs six children with ages ranging 25-40. No
partition of the property has been done and the children do not

30
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, 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

31
protest and let the Regional Director rule on the matter. ( AO-
09, series of 1994).
If in the course of coverage, the owner alleges that the
property is already reclassified as residential since 1986, what
should you do?
The MARO should determine if the property is covered
by DOJ Opinion No. 44 and whether an application for
exemption has been filed by the landowner. He should also
investigate the actual land use and whether the land is
irrigated, irrigable or is programmed for irrigation. He should
also check the zoning plan or municipal/city ordinance
approved by the HLURB. Only if it is clear that the said
landholding does not fall within any of the above, should the
MARO proceed with the acquisition of the property.
If in the course of coverage, the owner alleges that about
one year before the notice of acquisition, he has filed an
application for conversion, what should you do?
The MARO should check the allegation, i.e., whether
there really was an application for conversion filed a year ago.
If there is none, conversion is not possible because the notice
of acquisition has already been issued. If there is, the issue of
conversion should first be resolved.
5.2.2 VOLUNTARY OFFER TO SELL (VOS)
What is the VOS scheme?
VOS is a scheme wherein landowners come forward and
voluntarily offer their agricultural lands for coverage
regardless of the phasing. The DAR encourages this mode
because VOS generally ensures the cooperation of the
landowners.

What are the existing policy guidelines governing VOS?

The implementing policy guidelines on VOS are:

32
 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?

33
 Yes. In this case, the MARO should secure a statement of
account from the creditor and recommend the settlement of
the obligation through payment in LBP bonds.
Can government financial institutions voluntarily offer
foreclosed but redeemable properties which are not yet
transferred to them?
No. The GFIs have to wait for the expiration of the
redemption period.
Are landowners allowed to withdraw lands offered under
the VOS scheme?
No. The exceptions are the instances provided in
Administrative Order No. 05, Series of 1992, namely:
a. If the subject landholding is part of the
landowner's retained area, provided the landowner
has not yet received any payment;
b. If the landowner wants to shift the
mode of acquisition from VOS to VLT/DPS;
c. If the offered land is to be covered in
1994 and the landowner wants to wait for the
compulsory coverage under Phase III-B. If the Notice
of Valuation has been served, however, the
withdrawal may no longer be allowed.
d. If the DAR determines the landholding
to be more suitable for a town site, resettlement or
institutional 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:

34
 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)
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.

35
 Among others, the field implementor (Municipal Agrarian
Reform Officer or Agrarian Reform Program Technologist —
MARO or SARPT/ARPT) must explain to the ARBs: (1) that the
land will sooner or later be acquired under CA subject to the
phasing; and (2) about how much they will have to pay under
the CA mode.
VLT/DPS is a scheme favorable to the Government for two
reasons. First, Government does not have to pay for the land.
Second, the agreement between the two parties facilitates
land acquisition and distribution. The DAR, however, ought to
ensure that the beneficiaries know what they are entering into
and that terms and conditions of the VLT/DPS are not
disadvantageous to the ARBs.
Who are the qualified beneficiaries under VLT/DPS?
The qualified beneficiaries are the same as those who
would be beneficiaries if the land were to be covered under
compulsory acquisition or voluntary offer to sell. (See Sec.
22, RA 6657).
What is the prescribed period for the completion of
VLT/DPS negotiations?
Negotiations for VLT/DPS between the landowner and the
beneficiaries must be completed and the agreement arrived at
must be submitted within one (1) year from the time the DAR
receives the notice of application for VLT/DPS.
What if negotiations for VLT/DPS are not resolved after
one year?
If VLT/DPS negotiations remain unresolved after one year,
the land shall be covered under compulsory acquisition.
When should the transfer of possession and land
ownership of the land be done?
The transfer of possession and ownership should be done
immediately after the submitted VLT/DPS agreement is
approved by the DAR. Certificates of Land Ownership Award

36
(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:
* all agricultural lands owned or
controlled by government departments, agencies or
instrumentalities, including lands foreclosed by
government financing institutions;

37
 * 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

38
 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?
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.

39
 What is the first step in land acquisition?
Land acquisition, regardless of the mode, begins with the
identification of landowners, landholdings and beneficiaries
covered by CARP.
Under the Land Acquisition and Distribution Tracking
System (LADTRACKS) and the CARP Scope Validation project,
field offices have been tasked to prepare a master list or
inventory of landholdings in their area of coverage. This
inventory is derived from the LISTASAKA statements, as
verified or complemented by the records of the Register of
Deeds and Assessor's Offices, review of the municipal town
plan and zoning ordinances, field surveys, interview and
community consultations, and general knowledge of the land
ownership pattern in the barangays or municipalities.
With these basic tools, the landowners who own
agricultural lands in excess of the retention limit may be
easily determined and their lands classified according to the
implementation phase or order of priority of CARP.
5.5 PRIORITIZATION OF LANDS FOR COVERAGE
What are the criteria for prioritizing the coverage of
landholdings in the master list?
Quality land distribution cannot be overemphasized. More
than just meeting the targets, land distribution should be done
with the end in mind of uplifting the farmer beneficiaries' living
condition. Priority should, therefore, be given to areas where
success of beneficiaries development is paramount. The
following should be the basic considerations in the
prioritization of covered areas:
a. Barangays covered by identified ARCs;
b. Level of organization of the farmers —
Consistent with the people-centered development
thrust of the DAR, the higher the level of
organization of farmers, the greater should be the
priority. This will not only facilitate the land

40
 acquisition and distribution process but also hasten
the development of viable agrarian reform
communities in the area;
c. Incidence of agrarian unrest — The
greater the incidence of unrest, the higher should be
the priority to promote the resolution of the agrarian
disputes. Utmost care should however, be made to
ensure that the landholding is indeed covered by
CARP;
d. Number of farmers to be benefitted —
The higher the number, the greater should be the
priority, again in line with people-centered
development;
e. Size of the landholding — Inasmuch as
nearly the same efforts will have to be expended for
either big or small landholdings, it makes sense to
put higher priority on the larger landholding;
f. Presence of support factors — Areas
with cooperative landowners, supportive community
leaders and local government executives, active
BARCs and POs/NGOs, etc. should receive higher
priority because it is in these areas where agrarian
reform implementation will have greater chances of
success;
g. Presence of a title over the property —
Titled properties are easier to acquire because, as it
is the norm under our Torren's Title System, the title
is the strongest proof of the land ownership. Untitled
properties require much more difficult
documentation to ensure that the land actually
exists and that the current landowner is being
addressed. Thus, all other considerations being
equal, titled properties should receive higher
priority.
5.6 RECONSTITUTION OF TITLE

41
 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 property, in case of judicial

42
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.

43
 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;
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

44
petition was filed by DAR, then it shall shoulder this cost
chargeable against CARP funds. Otherwise, it will have to be
borne by the farmer-beneficiary or the cooperative or farmers
association.
5.7 UNTITLED PRIVATE PROPERTIES
Can untitled private properties be placed under CARP?
DAR's petition on the issue of placing untitled or
unregistered private agricultural lands under CARP is that if
there is no adverse claimant over the subject landholding (e.g.,
there is no court case), then submission of documentary
and/or testimonial evidence shall be conclusive proof of
ownership. The landholding may be acquired under CARP and
the landowner entitled to payment in accordance with
pertinent laws and DAR rules and regulations as resolved
under DOJ Opinion No. 176, Series of 1992.
What if there are two or more claimants and there is a
pending court case, to whom shall payment be made?
If there are two or more claimants and there is a pending
court case, coverage of the land under CARP should proceed
and the processing of claim folder should continue without
interruption. But payment of said property shall only be
effected to the claimant who has been declared by the Court
as the lawful owner.
What safeguards have been instituted to ensure that
untitled and unregistered private agricultural lands being
covered by the program are properly supported by adequate
documents?
Under Administrative Order No. 01, Series of 1993, seven
items are listed as documentary requirements for processing
claim folders of untitled properties. These are:
1. Survey plan of the property duly
approved by the Land Management Bureau, and if
not available, a sketch plan certified to by said
office, and technical description thereof;

45
 2. Certified copy of the present Tax
Declaration in the name of claimant with correct lot
number/s and area per approved plan;
3. Instruments of acquisition covering the
subject property, such as Deed of Sale, Donation,
Transfer, etc. in favor of claimant and those of
his/her predecessor/s interest;
4. Certification of the Assessor concerned
showing the Tax Declaration issued, the declarant/s,
the area covered, and the basis for the issuances
and cancellations thereof pertaining to the
property/ies from the first declaration up to the tax
declaration issued in the name of the claimant;
5. Certification from the Clerk of Court
concerned whether or not the property/ies identified
in the plan is/are covered by land registration
proceedings or civil case, and if the same is used as
bond or bail in other court actions;
6. Certificates of the DENR-LMS stating
the year the property/ies identified in the plan may
already be considered as private agricultural land,
and the persons having the best claim of ownership
thereof; and
7. Certification from the Office of the
Register of Deeds and Assessor concerned to the
effect that as per their records, the property/ies as
appearing in the approved survey plan is/are free
from all liens and encumbrances.
5.8 FIELD INVESTIGATION

How will the landowner know that his or her land is being
covered by CARP?
A landowner who has been identified should be notified
by the MARO that his or her landholding is now covered by

46
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?

47
 In the event that there is a difference or variance in the
findings of the DAR and the LBP as to the propriety of
coverings the land under CARP, whether in whole or in part, on
the issue of suitability to agriculture, degree of development
or slope, and on the issue affecting idle lands, the conflict
shall be resolved by a composite team composed of DAR, DA,
DENR, and LBP representatives which shall jointly conduct
further investigation thereon. The team shall submit its written
report of findings within five days from the conclusion of the
inspection. Such findings shall be binding to both DAR and LBP
pursuant to the Joint Memorandum Circular of the DAR, LBP,
DENR, and DA dated 27 January 1992. If the issue involved is
on the suitability to agriculture and its development, the
chairperson shall be the DA representative. If it is on the
percentage slope, the DENR representative shall be the
chairperson of the team.
Why must the BARC and prospective ARBs be involved in
the field investigation?
It is important to involve not only the other concerned
CARP implementing agencies but also the BARC and the
prospective beneficiaries because the people from the locality
have a wealth of information on the physical, agricultural and
tenurial characteristics of the land. It is also wise to involve
them from the beginning to generate their support and
encourage their crucial participation in the development
process.
CHAPTER 6
AGRARIAN REFORM BENEFICIARIES
6.1 QUALIFICATIONS OF BENEFICIARIES

What are the qualifications of an agrarian reform

beneficiary?
To be an agrarian reform beneficiary, one must:
a. be landless;

48
 b. be at least 15 years old or head of the
family at the time the property was transferred in
the name of the Republic of the Philippines; and
c. have the willingness, ability and
aptitude to cultivate the land and make it as
productive as possible. (Section 23, Republic Act
No. 6657)
Items (b) and (c) above are meant to ensure that the
recipients of the land will judiciously use it and make it a
productive agricultural land.
What is the definition of landless?
A landless person is defined by Section 25, RA 6657 as
one who owns less than three (3) hectares of agricultural land.
Section 7, RA 6657 also provides that an owner-tiller may still
be a beneficiary of another land he or she does not own but is
actually cultivating to the extent of the difference between the
area of the land he/she owns and the award ceiling of three
hectares.
Thus, a tenant who owns one hectare of agricultural land
may still qualify as a beneficiary for two hectares of land.
Who are disqualified from becoming beneficiaries?
a. Those who fail to meet the
qualifications as provided for under Section 22
of RA 6657.
b. Beneficiaries who have culpably sold,
disposed or abandoned their lands.
c. Beneficiaries whose lands have been
foreclosed by the LBP or repossessed by the
landowner (in the case of VLT/DPS) for 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.

49
6.2 ORDER OF PRIORITY
What is the order of priority among the possible
beneficiaries?
Section 22 of RA 6657 provides that lands covered by
CARP shall be distributed as much as possible to landless
residents of the same barangay or, in the absence thereof,
landless residents of the same municipality.
The order of priority then starts with:
a. Qualified children. The qualified
children of the landowner are the first group entitled
to be beneficiaries of the land. They are entitled to
receive three hectares each.
b. Tenants and Lessees. The next group is
composed of the agricultural lessees and share
tenants. These farmers are entitled to receive the
area of their tillage but not to exceed three (3)
hectares, he or she may be awarded an additional
area representing the difference, subject to the
availability of land.
c. The order of priority then goes down as
follows:
* regular farmworkers;
* seasonal farmworkers;
* other farmworkers;
* actual tillers or occupants of
public lands;
* collectives or cooperatives of the
beneficiaries; and
* others directly working on the
land.
Given such order of priority, must all farmers in a class
be allocated three hectares each before anyone in the next
class can be identified as also a beneficiary of the land? For
50
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
51
managerial or supervisory functions (e.g., chemists,
agronomists, veterinarians, soil analysts).
Managerial or Supervisory farmworker is a natural
person who is employed by an agricultural enterprise or farm
vested with powers or prerogatives: (1) to lay down and
execute management policies; (2) to hire, transfer, suspend,
layoff, recall, discharge, assign or discipline employees; and/or
(3) to effectively recommend such managerial actions.
Who among 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?

52
 It refers to any controversy relating to tenurial
arrangements, whether leasehold, tenancy, stewardship, or
otherwise, over land devoted to agriculture, including disputes
concerning farmworkers, associations or representation of
persons in negotiation, fixing, maintaining, changing or
seeking to arrange terms and conditions of such tenurial
arrangements.
It also includes controversy relating to compensation of
lands acquired under RA 6657 and other terms and conditions
of transfer of ownership from landowners to farmworkers,
tenants and other ARBs, whether the disputants stand in
proximate relation of farm operator and beneficiary, landowner
and tenant, or lessor and lessee.
Can farmworkers who are husband and wife each receive
three hectares?
Yes, they may be entitled to three hectares each
provided that their vested rights to the land have been duly
established, in which case, they shall be issued separate
CLOAs. (AO-02, Series of 1993)
6.4 SCREENING OF BENEFICIARIES
Is it the landowner who selects the beneficiaries of
his/her landholding?
No. The landowner does not have the right to select who
the beneficiaries should be. Except in the case of Voluntary
Land Transfer or Direct Payment Scheme, land acquisition and
distribution involves two separate transactions. First, the
government buys the land from the landowner and then sells it
to the farmer-beneficiaries. It is not the landowner, therefore,
who is selling the landholding to the farmer-beneficiaries.
It is the Municipal Agrarian Reform Officer (or the
Agrarian Reform Program Technologist), together with the
BARC who screens the beneficiaries.

53
 Even in the case of VLT/DPS, the landowner cannot just
select a beneficiary. The beneficiary must qualify and it is still
the MARO and the BARC who will do the screening.
What is the recourse of farmers who claim they have a
priority over those who have been identified by the MARO as
the beneficiaries of the land?
The farmers can file a protest with the MARO or the PARO
who is currently processing the claim folder. Once a written
protest is filed, the MARO or PARO shall comment on the said
protest and submit the same to the Regional Director who
shall rule on the protest. If the parties disagree with the RD's
decision, they can file a written motion for reconsideration. If
the motion is denied, the farmers can file an appeal to the DAR
Secretary. (AO-09, Series of 1994)
What can be done in case the tenants or tillers refuse to
be interviewed and identified as beneficiaries?
The MARO and the BARC should advise the potential
ARBs about the consequences of their refusal. If they still
refuse, the MARO and BARC should execute a certification to
this effect and post it in conspicuous places for 30 days.
Thereafter, new ARBs may be instituted. The MARO should,
however, exercise great care under this situation. Refusal to
be identified as beneficiaries can be due to several reasons,
such as lack of assurance of support services which used to
be provided by the landowner, fear of the landowner especially
if the farmers are unorganized. That is why, MAROs should not
overlook the importance of social preparation activities prior
to land distribution.
What can be done in case the occupants of an idle and
abandoned agricultural land are found to have prematurely
entered the landholding?
Premature entry is strongly discouraged. Should it
happen, however, the first consideration should be whether
the occupants are the qualified beneficiaries of the land, or
some other persons have superior rights to receive the land. In

54
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:

55
 a. Landowners whose lands have been
covered by PD 27 are allowed to keep the area they
originally retained thereunder. Thus, if a landowner
retained seven hectares under OLT, he/she is
allowed under CARP to keep the said area.
b. Original homestead grantees or their
direct compulsory heirs who still own the original
homestead as of 15 June 1988 are allowed to retain
the same areas as long as they continue to
cultivate the same homestead. Thus, a landowner
may, for example, continue to keep his/her 12-
hectare homestead.
7.2 LAND OWNERSHIP CEILING
What is the land ownership ceiling?
The land ownership ceiling is likewise five hectares. A
person who does not own agricultural land may not buy more
than five hectares. A person who already owns two hectares
of agricultural land may buy only up to three hectares more.
This is in line with the State's objective of controlling and
democratizing the ownership of land as a natural resource.
7.3 QUALIFICATIONS FOR THE EXERCISE OF THE
RIGHT OF RETENTION
Who may apply for retention?
All owners of private agricultural lands with a total area
of more than five hectares, except those who have already
been granted full retention (7 hectares) under PD 27.
May a corporation also retain five hectares?
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

56
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.
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.

57
 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.
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"?

58
 "Directly managing" refers to the cultivation of the land
through personal supervision under the system of labor
administration. (DAR Memo Circular No. 04-1994) It should be
interpreted along the lines of farm management as an actual
major activity being performed by the landowner's child from
which he or she derives income. Farm management should
likewise be the child's primary occupation.

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

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

59
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.

60
 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;
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.

61
 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?
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.

62
 Note that the waiver is on the right to choose; the
landowner still has the right to retain.
If the land is voluntarily offered for sale, the landowner
may exercise right of retention at the time of the voluntary
offer.
When may qualified children apply for an award of not
more than three hectares each?
The application must be filed within a period of thirty (30)
days from date of receipt by the landowner of the Notice of
Coverage or from the date of the Voluntary Offer to Sell.
However, for those areas for which notices of coverage
have already been sent to the landowners, qualified children
have at least one (1) year to file an application reckoned from
31 March 1994 (date of effectivity of DAR Memo Circular No.
04, Series of 1994). In case of failure of the children to file
their application within the specific period, the property shall
be distributed to qualified beneficiaries pursuant to Section 22
of RA 6657.
7.8 OBLIGATIONS OF LANDOWNERS AND LIMITS TO
THE DISPOSITION OF THE RETAINED AREAS
What is the obligation of the landowner with respect to
his or her retained area?
The landowner has the obligation to cultivate the
retained area directly or through labor administration in order
to make it productive. This is in line with the CARP principle
that land has a social function and land ownership has a social
responsibility. (AO No. 11, Series of 1990)
What are the limits to the disposition of the retained
area?
1. A landowner may sell the land even to
one not qualified to be a beneficiary, provided that
after the sale, the buyer will not own more than five
hectares of agricultural land.

63
 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
64
 b. lands used for residential,
commercial, industrial or other urban purposes.
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

65
 original landowner's intention. (AO No. 04, Series of
1991)
A landowner who retained seven hectares of rice land
under PD 27 now wants to retain an additional five hectares
of coconut land under RA 6657. Should the landowner's claim
be granted?
No. The landowner may not retain a total of twelve (12)
hectares. He/she may, however, voluntarily offer the seven-
hectare rice land and apply for the retention of five hectares of
coconut land. Following the decision on the Association of
Small Landowners case, the landowner shall keep the seven
hectares originally retained in PD 27 while the five-hectare
coconut land shall be covered under CARP.
Note also that if a landowner retained only two (2)
hectares of rice land under PD 27, he/she may still retain
three hectares under RA 6657.
When is landowner deemed to have waived his/her right
of retention under PD 27?
As provided in DAR Administrative Order No. 04, Series
of 1991, the performance of any of the following acts signifies
waiver:
1. signing of the Landowner-Tenant
Production Agreement and Farmer's Undertaking
(LTPA-FU) covering the subject property;
2. entering into a direct payment scheme
agreement as evidenced by a Deed of Transfer over
the subject property; and
3. signing/submission of other documents
indicating consent to have the subject property
covered, such as the form-letter of the Land Bank on
the disposition of the cash and bond portions of a
land transfer claim for payment, the Deed of
Assignment, Warranties and Undertaking executed
in favor of the LBP.

66
 Other similar acts may likewise be construed as waiver.
The above list is not exclusive.
7.11 HOMESTEAD LANDS
What is DAR's policy in the case of homestead lands?
Under Section 6, RA 6657, agricultural lands covered by
Homestead Patents shall not be covered under CARP if the
following conditions are present:
1. The original homestead grantee or
his/her direct compulsory heirs still own the land on
15 June 1988; and
2. The original homestead grantee or
his/her direct compulsory heirs cultivate the land as
of 15 June 1988 and continue to cultivate the same.
In the absence of these conditions, the homestead land
will not be exempted from OLT or CARP coverage. However,
the grantee or the heirs can retain seven or five hectares, as
the case may be The excess areas shall be covered by CARP.
The Alita Case, notwithstanding, it is the mandate of the law
that in all cases, the security of tenure of the farmers and
farmworkers on the land shall be respected.
CHAPTER 8
LAND SURVEY
What should be done in the case of titles/landholdings
covered by CARP but with defective technical descriptions or
no available survey records?
The Provincial Agrarian Reform Officers (PAROs) should
turn over to their counterpart Provincial Environment and
Natural Resources Officers (PENROs) of DENR, all
titles/landholdings covered by CARP with defective technical
descriptions or where no available survey records could be
found. This is an agreement reached between the DAR and
DENR last 23 July 1992.

67
 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?

68
 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-

69
93 provide that full payment of just compensation may be
considered achieved upon the Land Bank's deposit of the
value of the land in a trust account in the name of the
landowner. Once this deposit is made, the title can be
transferred in the name of the Republic of the Philippines.
9.2 LAND VALUATION FACTORS
What does the law provide as the factors to be
considered in the valuation of lands under CARP?
Section 17, RA 6657 enumerates ten (10) factors to be
considered in the determination of just compensation:
a. 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
70
 AO No. 06, Series of 1992, "Rules and Regulations
Amending the Valuation of Lands Voluntarily Offered and
Compulsorily Acquired as Provided for Under AO 17, Series of
1989 as Amended, Issued Pursuant to RA 6657".
AO 06-92 supersedes AO No. 05, Series of 1988; AO No.
06, Series of 1989, AO No. 17, Series of 1989, and AO No. 03,
Series of 1991.
What can be considered as a major improvement in the
latest Administrative Orders on land valuation?
By giving more weight on the net income from the land in
the formula, AO No. 06-92 has substantially raised the land
value. Furthermore, AO No. 11-94 has dropped the
landowner's LISTASAKA declaration from the formula. These
are expected to lessen landowners' rejection of the offered
price and facilitate the acquisition of the land.
What is now the basic formula for the valuation of lands
covered by VOS and CA?
The basic formulation for the valuation of lands covered
by VOS and CA regardless of the date of offer or coverage of
the claim is:
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)
where:
LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration
Capitalized Net Income refers to the difference between
the gross sales (AGP x SP) and the cost of operations (CO)
capitalized at 12%. In equation form, this is expressed as:
CNI = (AGP x SP) - CO
__________________
12
where:

71
 AGP = latest available 12 month's gross production
immediately preceding the date of offer in case of VOS or date
of notice of coverage in case of CA.
SP = the average of the latest available 12-month's
selling prices prior to the date of receipt of the claim folder by
LBP for processing, such prices to be secured from the
Department of Agriculture (DA) and other appropriate
regulatory bodies or, in their absence, from the Bureau of
Agricultural Statistics. If possible, SP data shall be gathered
from the barangay or municipality where the property is
located. In the absence thereof, SP may be secured within the
province or region.
CO = Cost of Operations
When the cost of operations could not be obtained or
verified, an assumed new income rate (NIR) of 20% shall be
used. Landholdings planted to coconut which are productive at
the time of offer/coverage shall continue to use the 70% NIR.
This formula shall be used if all three factors are present,
relevant and applicable.
When the CS factor is not present and CNI and MV are
applicable, the formula shall be:
LV = (CNI x 0.9) + (MV x 0.1)
When the CNI factor is not present, and CS and MV are
applicable, the formula shall be:
LV = (CS x 0.9) + (MV x 0.1)
When both the CS and CNI are not present and only MV is
applicable, the formula shall be:
LV = MV x 2
In no case shall the value of idle land using the above
formula exceed the lowest value of a land within the same
estate under consideration or within the same barangay or
municipality (in that order) approved by LBP within one (1)
year from receipt of claim folder.

72
 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

73
Adjudication Board, through the Provincial Adjudicator, to
conduct summary administrative proceedings to determine the
value of the land. The value determined in these proceedings
are then re-offered to the landowner. The landowner may still
reject or not respond to this offer and instead file a case
before the Special Agrarian Courts.
In the meantime that the landowner is contesting the
valuation of the land or is not responding to the Government's
offer, the Government may proceed to distribute the property
upon deposit in a trust account of the initial value offered.
Where will the summary administrative proceedings be
conducted? Will a landowner residing in Mindanao be required
to go to the central office?
Not necessarily. It would depend on the total amount of
compensation in question. If the government's offer does not
exceed two million pesos (P2,000,000), the proceedings shall
be conducted by the Provincial Agrarian Reform Adjudicator
concerned. If the compensation offered is more than two
million pesos but does not exceed five million (P5,000,000)
then the case will be handled by the Regional Agrarian Reform
Adjudicator (RARAD). But if the amount in question exceeds
five million pesos, then the proceedings shall be conducted by
the DAR Adjudication Board (DARAB). ( AO No. 08, Series of
1993)
Is the Adjudication Board's 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?

74
 Yes. The process of land valuation must involve the
agrarian reform beneficiaries, their organizations, the BARC,
and the landowner concerned. Their involvement is ensured in
various provisions of the law.
Section 3, EO 129-A declares that . . . "partnership
between government and organization of farmers and
farmworkers in agrarian reform policy formulation, program
implementation and evaluation shall be institutionalized. . . . "
Section 47, RA 6657 specifies that the BARC shall,
among other things, "assist in initial determination of the
value of the land".
Section 18, RA 6657 further states that "The LBP shall
compensate the landowners in such amount as may be agreed
upon by the landowner and the DAR and the LBE. . . "
9.6 MODES OF COMPENSATION
How will landowners be compensated?
Under Voluntary Land Transfer, the landowner will be
paid directly in cash or in kind by the 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

75
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 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.

76
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;
* payment for tuition fees of the
immediate family of the original landholder in
government universities, colleges, trade
schools, and other institutions;

77
 * 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

78
six percent (6%) yearly interest compounded annually based
on the land value as determined under existing valuation
formula, instead of revising the formula itself.
Guidelines for this have been issued
under Administrative Order No. 13, Series of 1994, "Rules and
Regulations Governing the Grant of Increment of Six Percent
(6%) Yearly Interest Compounded Annually on Lands Covered
by Presidential Decree No. 27 and Executive Order No. 228".
Under these guidelines, owners of OLT lands shall be
compensated based on the following:
(Computed land value using the original formula) x (1.06)
n
where n = number of years from date of tenancy up to
effectivity date.
Who are the landowners qualified to 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

79
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 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.

80
 Will these lands be covered by the same valuation
guidelines as the private lands covered under CARP?
No, separate valuation guidelines for properties covered
by EO 407 have been issued applicable to claims of
government financial institutions which have signed jointly
with LBP a Memorandum of Agreement dated 28 August 1992.
9.10 MT. PINATUBO AFFECTED AREAS
Will landowners in lahar affected areas whose
landholdings were originally subject of acquisition and
distribution be compensated?
Joint DAR-LBP Administrative Order No. 03, Series of
1994 provided the policy guidelines governing the acquisition
and distribution of agricultural lands affected by the Mt.
Pinatubo eruptions.

Under this guideline, agricultural lands affected by Mt.

Pinatubo eruptions have been classified into three based on
the NEDA Region III Geographic Information System database.
These are:
Category I (actually affected)
These are agricultural lands actually covered with lahar
and pyroclastic deposits, including those areas which have
become silted, eroded or continuously flooded for an indefinite
period of time.
Category II (not yet affected)
These are agricultural lands not falling under Category I
but have the possibility of being actually affected.
Category III (lands covered by ashfall)
These are agricultural lands actually covered or affected
by ashfall but which remain to be productive.
As a general rule, lands under Category III shall be
acquired and landowners compensated. Compensation of

81
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 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;

82
 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;

83
 b. Certificates of Land Ownership Award
(CLOAs) for CA, VOS, and 407 lands, resettlement
areas and landed estates; and
c. Free Patents for public lands.
Beneficiaries of the Integrated Social Forestry Program
covering agro-forestry public lands whose ownership cannot
be transferred, received Certificates of Stewardship Contract
(CSCs) which are good for 25 years, renewable for another 25
years.
Is a Certificate of Land Transfer (CLT) an evidence of
ownership of the land?
No. In the case of Magana vs. Paitan (G.R. No. 60269, 13
September 1990), it was held that the mere issuance of CLT
does not vest in the farmer-grantee, ownership of the land
described therein. It merely provides evidence of the
government's recognition of the grantee as the part qualified
to avail of the statutory requirements for acquisition under PD
27. Failure of the farmer-beneficiary to comply with the
requirements will result in the cancellation of the said CLT.
Thus, failure on the part of a farmer/grantee to pay
lease/amortization payment to the landowner or agricultural
lessor when they fall due for a period of two years shall be a
ground for forfeiture of the CLT.
10.2 AWARD CEILING
How many hectares of land can an awardee get?
Individual beneficiaries may 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

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 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.
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."

85
 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.
c. Submits the CLOAs to the DAR Regional
Office (DARRO) who causes them to be signed by
the Secretary.

86
 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.

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 How will lands covered by collective CLOAs be
subdivided?
Guidelines have been provided under AO No. 03, Series
of 1993, "Rules and Procedures Governing the Issuance of
Individual Titles to Co-Owners", should the ARBs decide to
subdivide lands held collectively.
If held on a co-ownership basis, lands covered by
collective CLOA shall be subdivided in accordance with the
actual occupancy of the ARBs, provided the share of each
shall not exceed three hectares.
For landholdings in the name of cooperative or farmers
association, subdivision shall be based on the shares of each
member under the same condition that this shall not exceed
three hectares and provided that the subdivision is determined
by DAR to be economically feasible.
DAR may issue individual CLOAs in the name of the ARBs
based on their request and the approved subdivision plan of
the landholding and supported by a Deed of Partition executed
by all co-owners named in the collective CLOA. Individual
CLOAs generated by DAR under this subdivision shall be on
Transfer Certificate of Title (TCT) CLOA forms to be registered
with the ROD.
However, if the ten-year period reckoned from the date of
the issuance of the collective CLOA has already elapsed,
issuance of individual certificates of title shall already be
subject to the procedures and requirements of the Land
Registration Authority (LRA) pursuant to the Land Registration
Decree (PD 1529).
What are the procedures for subdividing landholdings
previously covered by collective CLOAs on co-ownership
basis?
PARO

88
 a. Any of the co-owners shall submit to
the PARO, through channel, a written request for the
subdivision of the land.
b. The PARO shall endorse the request for
subdivision to the DARRO for bidding and award to
private contractors or the DAR itself may instead
execute the subdivision survey of the target
landholdings.
DARRO
a. The DARRO shall bid and award the
survey to private contractors or cause the conduct
of the survey by DAR survey teams if available.
b. The survey returns shall be submitted
to the DENR for verification and approval.
c. The approved subdivision plan shall be
submitted to the PARO.
PARO
a. Prepare a Deed of Partition for the
signature of all the co-owners, specifying the lot
number and the exact parcel intended for the 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

89
 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?

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;

90
 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).

91
 Under such instances, the LBP shall reimburse the
original ARB one lump sum for the amount of amortizations
made including payments for the value of the improvements on
the land. The new ARB will have to start amortizing anew.
Can an agrarian reform beneficiary subdivide in favor of
his or her children the three hectares of land awarded under
CARP?
Strictly speaking, no. The three hectares, as the
identified economic-sized family farm, should be preserved as
a single operating unit to promote the farm's economic
viability.
Should the beneficiary die or be incapacitated,
succession to the farmholding shall be governed by the
pertinent provisions of the Civil Code, subject to the condition
that the land shall not be fragmented. This means that the
land shall be transferred to the spouse of the ARB or in the
absence or incapacity of the spouse, to the eldest child who
meets the qualifications to be a CARP beneficiary, particularly
the requirement of willingness, aptitude and ability to cultivate
the land and make it productive. The heir who succeeds on the
land shall pay the other heirs their corresponding legal shares.
In the absence of such children, e.g., if all the children are less
than 15 years old, the land shall be transferred to the DAR
which shall look for a new beneficiary on the land.
Aside from those already mentioned, what are the
grounds for the cancellation of Emancipation Patents (EPs) or
Certificates of Land Ownership Award (CLOA)?
Violations of agrarian laws, rules and regulations are
grounds for the cancellation of registered EPs or CLOAs.
These include but are not limited to the following:
1. Misuse or diversion of financial and
support services extended to the ARB; (Section 37
of RA 6657).
2. Misuse of the land; (Section 22, RA
6657) This refers to any act causing substantial and

92
unreasonable damage on the land, and causing the
deterioration and depletion of the soil fertility and
improvements thereon. It also includes the act of
knowingly planting, growing, raising, or permitting
the planting, growing, raising of any plant which is
the source of a dangerous drug, as defined in PD
No. 1683, as amended. (AO No. 02-94).
3. Material misrepresentation of the ARB's
basic qualifications as provided under Sec. 22 of RA
6657, PD 27 and other agrarian laws;
4. Illegal conversion by the ARB's;
5. Sale, transfer, lease or other forms of
conveyance by a beneficiary of the right to use or
any other usufructuary right over the land acquired
by virtue of being a beneficiary in order to
circumvent the provisions of the different agrarian
laws. (Lands awarded under PD 27/EO 228,
however, may be transferred after full payment of
amortization).
6. Default in the obligation to pay an
aggregate of three (3) consecutive amortizations in
case of VLT/DPS, except in cases of fortuitous
events and force majeure;
7. Failure of the ARBs to pay for at least
three (3) annual amortizations to the LBP, except in
cases of fortuitous events and force majeure;
8. Neglect or abandonment of the
awarded land continuously for a period of two (2)
calendar years as determined by the Secretary or
his authorized representative (Section 22, RA 6657);
9. The land is found to be
exempted/excluded from PD 27/EO 228 or CARP
coverage or to be part of the landowner's retained
area as determined by the Secretary or his
authorized representative;

93
 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.
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?

94
 No. Learning from the lessons in the previous agrarian
reform programs the CARP now separates acquisition from
distribution. These are now two separate transactions. The
former is a transaction between the government and the
landowner, while the latter is a transaction between the
government and the agrarian reform beneficiaries. The
landowner may still be contesting the land valuation but title
to the land may already be transferred first to the Republic of
the Philippines then to the beneficiaries.
Will the beneficiaries have to pay the government the
same amount that government paid to the landowner?
No. DAR Administrative Order No. 6, Series of
1993 entitled, "Revised Implementing Guidelines and
Procedures Governing Payment of Land Amortization by
Agrarian Reform Beneficiaries" provides the operating
guidelines for Section 12 of EO 229 and Section 26 of RA
6657. This AO revised DAR Administrative Order No. 3, Series
of 1992 entitled, "Implementing Guidelines and Procedures
Governing Payment of Land Amortization by Farmer-
Beneficiaries Pursuant to Section 26 of RA 6657".

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

229, RA 6657 and lands acquired under EO 407 shall be
repaid by the ARBs to Land Bank in 30 annual amortizations at
six percent (6%) interest per annum based on the cost of the
land and permanent improvements. These are the regular
annual amortizations.
However, to make payments affordable, amortization
shall be reduced to:
* 2.5% of AGP for the first three years;
* 5.0% of AGP on the fourth and fifth
year; and to
* 10.0% of AGP from the sixth to the
thirtieth year if this amortization ceiling is lower
than the regular amortization.

95
 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: 0.07
265
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

96
 during the 6th to the 30th year whenever such 10%
of AGP is lower than the regular amortization.
After making payments for 30 years, the beneficiary stops
paying. The difference between what the Government paid to
the landowner and what it was able to collect from the ARB is
the Government subsidy or the assistance to farmers.
It may be noted that aside from the difference in the total
amounts, there is also a huge difference in the present value
of the total amount including market rate of interest that the
Government will pay the landowner and what it will receive
from the ARB annually for 30 years.
Will the average gross production have to be computed
annually?
No. In the case of already productive lands, the AGP shall
be computed once, during the valuation process, based on the
peso value of the annual yield/produce per hectare of the land
awarded to farmer-beneficiaries as established jointly by the
DAR and the LBP which is reflected in the valuation portion of
the Claims Valuation and Processing Form.
If only for this reason, it is imperative to involve the BARC
and the beneficiaries as early as possible to inform them about
the data gathered on the AGP of the land and get their
comments and reactions.
How about in newly cultivated lands?
In the case of newly cultivated lands without established
AGP, the terms of repayment shall be as follows:
1. For lands planted to either perennial or
short term (seasonal) crops, the initial annual
repayments by the ARBs shall be equivalent to 2.5%
based on the cost of the land or 2.5% of the imputed
AGP, whichever is lower, until such time that the
AGP has been established or determined.
Imputed AGP shall be determined using
industry data obtained from government/private

97
 entities in the barangay. In the absence thereof,
AGP for the municipality, province or region in that
order, shall be considered.
2. For idle and abandoned lands, initial
annual repayments shall be equivalent to 2.5%
based on the cost of the land until such time that
the AGP has been established/determined.
In both cases, the average of the first three (3) years
production shall be the basis in establishing the permanent
AGP. The first three (3) years amortization and all subsequent
amortizations shall be adjusted and based on the permanent
AGP established.
What if the ARB later on increases his or her production?
The computed annual payments will not change. The
benefits of increased production should all go to the
beneficiary's pocket as his or her incentive.

What if a typhoon or other natural calamity reduces the

beneficiary's production?
The LBP shall formulate guidelines to assist ARBs
affected by natural calamity or force majeure which may
include, among others, suspension of payment, deferment of
payment or restructuring of account.
What if the courts grant the landowner a higher
valuation?
Under AO No. 06-92, this will hardly have an effect on the
amount to be paid by the beneficiaries in view of the
assistance to farmers. The government's subsidy will increase
but the ARBs' amortization will not change.
When will the ARB start paying the amortization?
The ARB shall start paying one year after the land has
been awarded to him/her, i.e., the date of registration of the
CLOA.

98
 What happens if the ARB defaults in his or her payments?
Although the land has been titled in the name of the
beneficiary, the Land Bank has a lien by way of mortgage on
the land. This mortgage may be foreclosed by the LBP if the
ARB does not pay a total of three annual amortizations, except
where the cause of such failure to pay is brought about by
natural calamity or force majeure.
Should LBP foreclose on any awarded land, it shall advise
DAR of such proceedings and the DAR shall subsequently
award the land to other qualified beneficiaries. A beneficiary
whose land has been foreclosed shall thereafter be
permanently disqualified from being a recipient of land under
CARP.
11.2 PAYMENT IN OLT LANDS
Will beneficiaries of OLT lands pay under the same
amortization scheme?
No. Payment by OLT beneficiaries is governed by Section
6 of EO 228. This section provides that the beneficiaries shall
pay for the total cost of the land including six percent (6%)
interest per annum with a two percent (2%) interest rebate for
prompt payments. Payment shall be made by the farmer-
beneficiary or his heirs to the Land Bank over a period of 20
years in 20 equal annual amortizations, where:
Annual Amortization = Land Value x 0.087185 *

* Capital Recovery Factor at 6% per

annum for 20 years
How about in lands already valued and financed by LBP
for which beneficiaries have started amortizing? Under PD 27,
the period of repayment is 15 years.
LBP shall extend the period of payment to twenty years.
How will the grant of increment of six percent (6%) yearly
interest compounded annually on OLT lands affect the
amortization payment by OLT beneficiaries?

99
 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.
3. MARO shall verify from the records
whether or not lease rentals paid by the FB are

100
 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

101
his/her obligations for three (3) consecutive installments to
pay the land amortization, he/she shall be replaced as
beneficiary and be permanently disqualified from being a
beneficiary under CARP. DAR shall cancel the CLOA which had
been issued and transfer the land to either:
a. Qualified heir of the beneficiary who
shall assume the balance of the value of the land; or
b. In the absence of a qualified heir, a new
qualified beneficiary who, as a condition for such
transfer, is willing to abide by the terms of the
existing VLT/DPS agreement and who will pay for
the entire value of the land.
What will happen to the payments made by the previous
beneficiary who has defaulted?
In case of (b) above, the landowner shall refund the
previous beneficiary in one lump sum or on installment basis
for the amounts already paid and for the improvements made
by the latter, less the computed lease rental for the duration of
the previous beneficiary's use of the land and other charges
provided by law.
11.4 PAYMENT IN LAHAR AFFECTED AREAS
Are the farmer-beneficiaries in lands affected by the Mt.
Pinatubo eruptions required to continue paying their
amortization?
The Joint DAR-LBP Administrative Order No. 03, Series of
1994 provides the policy guidelines and procedures to be
followed under this situation.
Payment of amortization shall be deferred if subject
landholding falls under Category I — actually affected areas
(see Page 78 ) until such time that the land becomes
productive again, without prejudice to the farmer's voluntary
payment of amortization. The farmer, however, should first
notify the Land Bank in writing of his/her intention of deferring
payment and this must be approved by Land Bank.

102
 If the landholding falls either under Category II — not yet
affected or Category III — lands covered by ashfall, the farmer
shall continue to pay the amortization.
Will payment also be deferred if the land is under
Category I but acquisition was through voluntary land transfer
or direct payment scheme?
Yes, but instead of notifying the Land Bank, the farmer-
beneficiary concerned shall notify the landowner in writing
with the assistance of DAR of his/her intention to defer
payment.
CHAPTER 12
SUPPORT SERVICES
12.1 SUPPORT SERVICES TO LANDOWNERS
What support services shall be provided to the affected
landowners?
The support services provided to landowners are:
a. investment information, 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

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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.
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:

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 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 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.

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 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?
DAR Administrative Order No. 05, Series of 1993, "Rules
and Procedures Governing Agricultural Leasehold and the
Determination of Lease Rental for Tenanted Lands".

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 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;

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 e. That there is personal cultivation or
with the help of the immediate farm household; and
f. That there is compensation in terms of
payment of a fixed amount in money and/or produce
What is meant by personal cultivation?
There is personal cultivation if the tenant cultivates the
land himself/herself or with the aid of the immediate farm
household. Immediate farm household refers to the members
of the family of the lessee and other persons who are
dependent upon him/her for support and who usually help
him/her in the activities.
Why should there be leasehold even in coconut lands or
other permanent crops when there is practically no
"cultivation" involved?
Cultivation has been defined in separate court rulings as:
"not limited to the plowing and harrowing of the
land, but also husbanding of the ground to forward the
products of the earth by general industry, the taking
care of the land and fruits growing thereon, fencing of
certain areas, and the clearing thereof by gathering
dried leaves and cuffing of grasses. In coconut lands,
cultivation includes the clearing of the landholding, the
gather of coconuts, their piling, husking and handling, as
well as the processing thereof into copra, although at
times with the aid of hired laborers" (Coconut
Cooperative Marketing Association, Inc. vs. Court of
Appeals, Nos. L-4681-83, August 19, 1988, 164 SCRA 568;
Wenceslao Hernandez vs. Hon. Intermediate Appellate
Court et al, G.R. No. 74323, September 21, 1990, 189
SCRA 758).
Clearly, there is cultivation involved in coconut lands.
Does a tenancy relationship exist in cases where
squatters are allowed by the landowner to cultivate the land
for free?

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 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
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

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 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?
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:

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 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;

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 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

112
 equivalent value of the work animals or farm
implements at the time of the loss or damage;
d. Keep the farm and growing crops
attended to during the work season. In case of
unjustified abandonment or neglect of his/her farm,
any or all of the expected produce may, upon order
of the appropriate body or court, be forfeited in favor
of the lessor to the extent of the damage caused
thereby; and
e. To pay the lease rental to the lessor
when it falls due.
Under RA 3844, as amended, the lessee has also the
responsibility to notify the lessor at least three days before
the date of harvesting, or whenever applicable, the date of
threshing. As decided in a Supreme Court ruling, however, this
is no longer required from the lessee.
Is there a limit in the area a lessee under CARP may
cultivate?
No. Since RA 6657 only speaks of the three (3) hectare
limit with respect to the award that may be given to the ARB,
this ceiling does not apply under the leasehold system. The
tenant, however, must render personal cultivation on the
entire area leased.
Can a lessee be a tenant in a separate landholding?
Section 27 of RA 3844 includes as one of the prohibited
acts of an agricultural lessee, entering into a contract to work
additional landholdings belonging to a different agricultural
lessor to acquire and personally cultivate an economic family
size farm without the knowledge and consent of the lessor
with whom he/she had first entered into leasehold, if the first
landholding is of sufficient size to make him/her and the
members of the immediate farm household fully occupied in its
cultivation.

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 Based on this provision, it is still possible for a lessee to
be a tenant in another landholding. The prohibition applies if
the land presently cultivated is already of sufficient size to
fully occupy the lessee or his/her immediate household in the
cultivation. Even if the size is already sufficient, cultivation of
other landholdings is still possible if there is consent of the
original lessor.
What is meant by "economic family size" farm?

RA 3844 has defined economic family size farm as an

area of farm land that permits efficient use of labor and capital
resources of the farm family and will produce an income
sufficient to provide a modest standard of living to meet a
farm family's need for food, clothing, shelter and education
with possible allowance for payment of yearly installments on
the land, and reasonable reserves to absorb yearly
fluctuations in income.
Is the lessee compelled to pay additional rent for the
secondary crops raised by his/her after the execution of the
contract?
No, after the rental has been fixed, such rental shall
serve as payment for the use of the land. The lessee may
diversify and/or plant secondary crops without paying
additional rent, provided that all expenses are shouldered by
him/her.
What are the specific rights of the lessees in sugarcane
lands which should be part of the leasehold agreement?
The lessees in sugar cane lands shall have rights which
can be exercised by them personally or through a duly
registered cooperative or farmers' association of which they
are members. These are to:
1. enter into a contract with the sugar
central or millers for the milling of sugar cane grown
on the leased property;

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 2. be issued a warehouse receipt (quedan)
or molasses storage certificate by the sugar central
for the manufactured sugar, molasses and other by-
products.
3. have free access to the sugar central's
factory, facilities and laboratory for purposes of
checking and/or verifying records and procedures;
4. be furnished a weekly statement of
cane and sugar account showing, among other
things, the tonnage of the delivered cane and
analysis of the crusher juice;
5. be given thirty (30) days notice in
writing before the sugar and other by products are
sold through public auction; and
6. be provided with the standard tonnage
allocation by the miller/sugar central.
What if the sugar central/miller refuses to recognize the
rights of the lessee?
In cases of such refusal by the sugar/miller, then the
lessee with the assistance of DAR and/or the cooperative of
which he/she is a member of, should file a petition with the
DARAB.
What if the land under lease is subject of an approved
land use conversion applications?
The lessee may be dispossessed of his/her tillage if such
land is subject of an approved land use conversion application,
provided the lessee is given a disturbance compensation
equivalent to five (5) times the average of the gross harvests
on his/her land during the last five (5) preceding calendar
years, and such other benefits he/she is entitled to as provided
for by law.
13.4 RIGHTS AND RESPONSIBILITIES OF LESSOR
What are the rights of the lessor?

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 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;

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 c. To require the lessee to assume,
directly or indirectly any rent or obligation of the
lessor to a third party;
d. To deal with millers or processors
without written authorization of the lessee in cases
where the crop has to be sold in processed form
before payment of the lease rental;
e. To discourage, directly or indirectly, the
formation, maintenance or growth of unions or
organizations of lessees in his/her landholding;
f. For coconut lands, indiscriminate
cutting of coconut trees will be deemed a prima
facie evidence to dispossess the tenant of his/her
landholding unless there is written consent of the
lessee and there is certification by the Philippine
Coconut Authority (PCA), copy of the findings and
recommendations of which shall be furnished to
affected tenants or lessees, or a resolution from the
Municipal Board allowing the cutting for valid
reasons. (AO-05, Series of 1993 and AO 16, Series
of 1989)
Is indiscriminate cutting of coconut trees prohibited only
in tenanted coconut lands?
No, even in lands cultivated by farmworkers.
Should the landowner execute two (2) separate leasehold
contracts with the same lessee, one for the principal crop and
the other for the secondary crop?
No. As a general rule, the landowner and lessee shall only
execute one contract for their leasehold relation. The
execution of two contracts is no longer necessary since the
lease rental shall cover the whole farmholding cultivated by
the lessee. Hence, secondary crops shall form part of the
leasehold contract.

117
 There are, however, certain qualifications: the secondary
crop must have already been planted as of 15 June 1988 and
the area covered is more than half a hectare.
What if there are two or more tenants?
If there are two or more tenants on the same lot, each
producing a different crop, they may decide to have a joint
leasehold agreements, whichever is feasible.
What are the liabilities of a lessor if he/she ejects his/her
tenant-lessee without the court's authorization?
A lessor shall be liable for:
a. fine or imprisonment;
b. damages suffered by the agricultural
lessee in addition to the fine or imprisonment for
unauthorized dispossession;
c. payment of attorney's fees incurred by
the lessee; and
d. the reinstatement of the lessee.
Can the lessor order the lessee to change crops?
No. Section 29 of RA 3844 provides that the lessor may
propose a change in the use of the landholding to other
agricultural purposes, or in the kind of crops to be planted.
The change, however, shall be agreed upon by both the
landowner and the lessee. In case of disagreement, the matter
shall be settled by the Provincial Agrarian Reform Adjudicator
(PARAD) or in his/her absence, the Regional Agrarian Reform
Adjudicator (RARAD) according to the best interest of the
parties concerned.
13.5 LEASE RENTAL
How much lease rental should the lessees pay?
The lease rental to be paid by all agricultural lessees
shall not be more than the equivalent of twenty-five percent
(25%) of the average normal harvest during the three (3)
agricultural years immediately preceding the following dates:

118
 * 10 September 1971 — the date of
effectivity of RA 6389 for tenanted rice and corn
lands;
* date the tenant opted to enter into
leasehold agreement or as of 15 June 1988,
whichever is sooner, for tenanted sugar lands; or
* date of leasehold agreement by the
parties concerned or 15 June 1988, whichever is
sooner, for all other agricultural lands after
deducting the amount used for seeds and the cost of
harvesting, threshing, loading, hauling and
processing whichever is applicable.
For example, in coconut, the deductible items would
depend on the final product. If the final product is green nuts,
then there is no cost of processing included. If the final
product is copra, then the deductible items would include cost
of harvesting, loading and hauling, and the cost of husking,
splitting, scooping and drying.
Can fertilizer be included in the list of allowable
deductions for any particular crop?
No, only those enumerated under Section 34 of RA
3844 as cited above can be included as a deductible item.
However, DAR shall study the effect of the use of fertilizer and
other related expenses as a cost of production and its impact
on the rental structure. This shall be taken into account in the
periodic review and adjustment of the rental structure.
How do you compute for the lease rental of newly
cultivated land?
In the case of newly cultivated land or land cultivated for
a period less than three years the initial rental shall be based
on the harvest of the first agricultural year, if such harvest is
normal, or on the average harvest during the preceding
agricultural years. If there had been no normal harvest, then
the estimated normal harvest when the land was actually
cultivated shall be used. cCAaHD

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

What is the normal harvest?

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

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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.

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 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;
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

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 computation of the lease rental. The second notice
should be posted at least ten days prior to the
scheduled conference;
6. In case of disagreement, accomplish
the prescribed leasehold form in five copies in the
language or dialect known to the lessees, explain
the contents and have it signed or thumb marked by
the parties or duly authorized representative before
two witnesses;
7. Register the Leasehold Agreement with
the Municipal Treasurer and furnish each party a
copy of the registered agreement. The PARO, on the
other hand, will have the leasehold agreement
annotated at the back of the Transfer Certificate of
Title on file with the Register of Deeds.
What if there is no agreement reached during the
mediation conference?
If no agreement is reached despite the mediation
conferences, the MARO shall fix the provisional lease rental
and prepare the Leasehold Documentation Folder. Copies of
the Order for Provisional Lease Rental shall be sent to the
landowner, lessee and the PARO. The Leasehold
Documentation Folder shall then be transmitted to the PARAD.
The PARAD shall review the provisional lease rental
within 30 days from the receipt of the documentation folder
and issue the order of lease rental.
Pending the review of the provisional lease rental, the
PARAD upon motion of the landowner shall order the lessee to
deposit the provisional lease rental with the nearest LBP
Office in a trust account in the name of the landowner, if the
payment is in cash, or in a designated bonded warehouse if
the payment is in kind and give a written notice to the MARO
and the landowner.
What if either or both the parties concerned disagree
with the order of lease rental made by the PARAD?

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 Any party who disagrees with the Order of Lease Rental
issued by the PARAD may bring the matter to the DARAB
within 15 days from receipt thereof. Otherwise, the Order shall
become final and executory.
3.7 OTHER RELATED LAWS AND ISSUANCES
1. Presidential Decree (PD) No. 152,
promulgated on 31 March 1973, prohibited the
employment or use of share-tenants in complying
with the requirements of the law regarding entry,
occupation, improvement and cultivation of public
lands.
2. PD No. 583, promulgated on 10
November 1974, prescribed penalty for the unlawful
ejectment, exclusion, removal or ouster of tenant
farmers from their landholdings.
3. PD No. 816 promulgated on 21 October
1975, penalized any agricultural lessee of rice and
corn lands under PD 27 who deliberately refuses or
continues to refuse to pay rentals or amortization
payments when they are due and remain unpaid
within a period of two years.
4. PD No. 1425, promulgated on 10 June
1978, strengthened the prohibition against the
practice of share tenancy and provided penalties
thereof. Under this Decree, any tenant who refuses
to enter into leasehold contract may be prosecuted
before the Court of Agrarian Relations.
5. PD No. 1040 promulgated on 21
October 1976, prohibited and penalized the
contracting of share-tenants in all agricultural lands
covered by PD 27.
CHAPTER 14
PRODUCTION AND PROFIT SHARING
14.1 COVERAGE

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 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
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 cut flower farms, and cacao, coffee and rubber
plantation.
Why are these employers required to execute production
and profit sharing plan with their farmworkers?
Section 2 of RA 6657 declared that agrarian reform
program is founded on the right of the farmers and regular
farmworkers, who are landless, to own directly or collectively
the lands they till, or in the case of other farmworkers, to
receive a just share of the fruits thereof.
This mandated production and profit sharing plan is in
pursuit of this avowed principle of agrarian reform. While
awaiting for final land or stock distribution until the end of the
deferment period in the case of commercial farms, or full
control of the land in the case of lease back arrangements,
farmworkers can realize an improvement in their farm income.
Who are the employees covered?
All farmworkers of covered employers, regardless of
duration, who are directly working on the land of the
corporation or other entities, whether classified as regular,
seasonal, technical or other farmworkers are covered in the
mandated Production and Profit Sharing Plan. They should not,
however, own more than three (3) hectares of agricultural
land.
14.2 DAR's AUTHORITY
What is the power given to the DAR in the
implementation of production and profit sharing plan under the
CARP?

The DAR through its Secretary 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;

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 2. To require covered employers to submit
report on the distributed production/profit shares;
3. To compel the production of books and
documents of covered employers;
4. To compel answers to questions
needing clarifications to shed light on problems
encountered in the implementation;
5. To issue subpoena; and
6. To enforce its writs through sheriffs or
other duly deputized officers.
14.3 MAIN FEATURES
What are the main features of the mandated plan?
EO 229
Under EO 229 and its implementing guideline, AO No.
09, Series of 1988, covered employers who realize a gross
sales in excess of five million pesos per annum, shall prepare
and execute a Production Sharing Plan whereby at least 2.5
percent of the gross sales from the production/cultivation of
the agricultural lands are distributed as compensation to their
farmworkers over and above the compensation they currently
receive. The employers are not, however, compelled to pay
more than one hundred percent of the regular annual
compensation of the farmworkers.
Regular annual compensation includes all cash
remunerations or earnings regularly paid to an employee by an
employer for services rendered within a year, such as salaries,
wages, 13th month pay, bonus, allowances, commissions and
paid leaves, and other income of similar nature, whether
mandated by law or provided by collective bargaining
agreement or established company practices, but excludes
payment arising from the Production and Profit Sharing
provided under EO 229 and RA 6657.

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 The Plan should cover the period from 29 August 1987
(date of effectivity of EO 229) and 14 June 1988 (date prior to
the effectivity of RA 6657).
Fifty percent (50%) of the Production Share should have
been paid not later than 12 February 1989 and the balance on
or before 2 April 1989.
RA 6657
They are required to pay the following Production and
Profit Shares to be given over and above the compensation
currently received by their farmworkers, which shall be
distributed based on the following schedules:
Amount of Production Share:
Three percent (3.0%) of Annual Gross Sales from 15 June
1988, until final land or corporate stock transfer to the
farmworker-beneficiaries is effected, provided that the
employer is not obligated to pay more than one hundred
percent (100%) of the regular annual compensation of the
farmworker-beneficiaries.
* Fifty percent (50%) of the estimated
Production Share (based on unaudited financial
statements) shall be distributed within sixty (60)
days at the end of the accounting year, with the
balance (based on audited financial statement)
payable not more than sixty (60) days thereafter.
Amount of Profit Share:
Ten Percent (10%) of net profit after tax, provided that in
cases where the retention right is allowed, the amount to be
distributed shall be reduced by an amount equivalent to the
proportion of the retained area to the total land area.
* Fifty (50%) of estimated Profit Share
(based on unaudited financial statements) shall be
distributed within 90 days at the end of the
accounting year, with the balance based on audited

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 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.

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 CHAPTER 15
COMMERCIAL FARM DEFERMENT
15.1 MEANING OF COMMERCIAL FARMS AND
COMMERCIAL FARM DEFERMENT
What are commercial farms?

Commercial farms are private agricultural lands over five

hectares in size devoted to commercial aqua culture —
including salt beds, fishponds and prawn ponds — fruit farms,
orchards, vegetable and cut flower farms, and cacao, coffee,
and rubber plantations.
It should be noted that the definition is limited to these
commodities produced. Thus, other farms although
commercial in nature are not covered by the definition.
Further, Section 11, RA 6657 actually includes in the list
lands devoted to commercial livestock, poultry and swine
raising. The Supreme Court decision in Luz Farms vs. the
Secretary of Agrarian Reform (128 SCRA 568), however, has
removed these farms from the coverage of CARP.
What is commercial farm deferment?
Section 11, RA 6657 as implemented by AO 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

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6657, which runs counter to the general rule of immediate land
transfer, particularly of large estates, reflects the numerous
compromises that had to be forged by the legislators in the
crafting of the law.
15.3 REQUIREMENTS
Is the deferment automatic?
No. The farm should already be planted to commercial
crops or devoted to commercial farming operations before 15
June 1988. It should likewise be applied for deferment with
the DAR, which shall approve the application based on
whether or not the farm meets the requirements enumerated
in Annex A of AO 16-88. These criteria are on the density of
planting (number of plants or trees per hectare) and
infrastructure and facilities of the farm.
When is the deadline for filing of applications for
commercial farm deferment?
The extended deadline for applying deferment was 02
May 1989. Deadline for application was originally set on 20
March 1989 but was extended.
A total of 4,620 commercial farms applied as of
November 30, 1994. The applications of 1,546 farms have been
approved, covering 54,837 hectares. The rest are still being
evaluated and processed.
15.4 DEFERMENT PERIOD
When is the start of the ten-year deferment period?
For farms already in commercial production as of 15 June
1988, the deferment period began as of that date.
For farms already established before 15 June 1988 but
were not yet in commercial production as of that date, the
deferment starts from the first year of commercial production
and operations, or at the end of the gestation period provided
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.

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 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.
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

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(PPS), if it realizes gross sales exceeding five million pesos.
This is to allow the farmworkers to receive a just share of the
fruits of the farm during the deferment. The production and
profit shares shall be paid upon the start of the deferment
period.
What shall the DAR do during the deferment period?
Aside from monitoring the farm as to compliance with the
CFD and PPS regulations, the DAR shall undertake the
necessary steps towards the acquisition and distribution of
the property. These include valuation of the land, and, more
importantly, facilitating the organization of the farmers by
partner NGOs/POs in the area. Organizing the farmers during
the deferment period will smoothen the transfer of land
ownership and prevent disruption of operation.
May a landowner with an approved commercial farm
deferment application change his or her commercial crop?
Yes, provided the total deferment period reckoned from
the date of first approval is not extended.
What happens if a farm which has been granted
commercial farm deferment suffers from a calamity or force
majeure? If the crops were destroyed, will the farm be
immediately covered under compulsory acquisition?
In cases where the crop planted or commodity raised in
the area is destroyed by force majeure and the farm owner
wants to replenish the crop or commodity, the DAR may
continue to grant the deferment provided the following
conditions are present:
a. The landowner can immediately resume
commercial operations;
b. The employment of the workers or
beneficiaries is not affected; and
c. The ten-year deferment period is not
extended.

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 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
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productive agricultural lands are preserved for agriculture and
the other programs are implemented in the marginal
agricultural areas.
It should be noted that agriculture can be carried out only
in certain types of land. Thus, prime agricultural lands should
rightfully be considered a finite natural resource, further
depletion of which would threaten national food security. In
contrast, housing and industrialization, for example, require
land merely for space and may therefore be implemented in
lands marginal for agriculture.
When conversion of agricultural lands coincides with the
objectives of the Comprehensive Agrarian Reform Law to
promote social justice, industrialization, and the optimum use
of land as a national resource for public welfare, it shall be
pursued in a speedy and judicial manner.
16.3 DAR's LEGAL MANDATE
What is the DAR's legal mandate in land use conversion?
Executive Order No. 129-A, Section 4 mandates the DAR
to "approve or disapprove the conversion, restructuring or
readjustment of agricultural lands into non-agricultural uses".
Section 5 of the same EO authorizes the DAR to " have
exclusive authority to approve or disapprove conversion of
agricultural land for residential, commercial, industrial, and
other land uses as may be provided for by law".
Section 65 of RA 6657 likewise empowers the DAR to
authorize under certain conditions, the reclassification or
conversion and the disposition of lands awarded to agrarian
reform beneficiaries.
Finally, Section 4 of Memorandum Circular No. 54, Series
of 1993 of the Office of the President, provides that " action on
application for land use conversion on individual landholdings
shall remain as the responsibility of the DAR, which shall
utilize as its primary reference, documents on the
comprehensive land use plans and accompanying ordinances

136
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.
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

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Presidential Issuances and national policies related to land
use conversion.
Thus, AO No. 12-94 repeals AO Nos. 8 and 15, Series of
1990 and 1988, General Order No. 01, Series of 1989, AO Nos.
15, 16, and 18, Series of 1989, AO No. 07, Series of 1992 and
amends AO Nos. 1 and 2, Series of 1990.
The provisions of this latest Administrative Order, shall
however, be applicable only to all application filed on or after
its date of effectivity on 10 November 1994. All other
applications filed previous to this AO shall be governed by the
pertinent administrative orders or issuances in force at the
time of the filing of the applications, and shall be processed
accordingly.
On the other hand, conversion for selected Regional Agro-
Industrial Centers, Tourism Development Area and sites for
socialized housing shall be processed under Joint NEDA-DAR
Memorandum Circular No. 01, Series of 1993 issued pursuant
to Executive Order No. 124, Series of 1993 of the Office of the
President.
16.4 DAR's ROLE IN CONVERSION
Operationally, what is the DAR's role in land use
conversion?

Aside from being the final approving authority, the DAR

basically performs the following functions:
a. Evaluate the documents submitted for
completeness and veracity;
b. Determines whether or not the subject
land is covered by CARP;
c. Determines whether or not the
application should be approved based on the criteria
set for land use conversion;
d. Ensures that the potential agrarian
reform beneficiaries are consulted on the proposed
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 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.
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

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 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;
b. Application for stock distribution duly
received by DAR; or

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 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?

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 Yes. The DAR rules in AO 01-90 that payment of
disturbance compensation is not limited to tenant who will be
displaced but also includes farmworkers.

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

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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;

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 * 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 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

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 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 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)

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 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.
An appeal to the Secretary shall be made in the form of a
memorandum and upon payment of P500.00 as appeal fee.

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 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?

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 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 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,

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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%
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:

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 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

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 reclassification; and that the land has ceased
to be economically feasible and sound for
agricultural purposes.
2. Certification from DAR indicating
that such lands are not distributed, or not
covered by a notice of coverage or not
voluntarily offered for coverage under CARP.
c. The application shall be submitted to
the HLRB which upon receipt shall conduct initial
review to determine if:
1. the city or municipality has an
existing comprehensive land use plan reviewed
and approved in accordance with Executive
Order No. 72 (1993); and
2. the proposed reclassification
complies with the limitations prescribed under
Section 1 of Memo Circular No. 54.
d. The Sanggunian 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

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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?
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;

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 The same section also prohibits the sale,
transfer or conveyance by a beneficiary of the right
to use or any other usufructuary right over the land
he/she acquired by virtue of being a beneficiary, in
order to circumvent the provisions of CARL;
d. Section 27 of RA 6657 further
provides that the lands acquired by beneficiaries
may not be sold, transferred or conveyed except
through hereditary succession or to the government
or to other qualified beneficiaries for a period of ten
years. Provided, however, that the children or the
spouse of the transferor shall have a right to
repurchase the land from the government or LBP
within a period of two (2) years; and
e. Presidential Decree No. 27 originally
prohibited the transfer of title to land acquired
pursuant to this Decree except by hereditary
succession or to the government in accordance with
the provisions of PD 27, the Code of Agrarian
Reform and other existing laws and regulations.
However, Section 6 of Executive Order
No. 228 now allows the transfer of ownership of
lands acquired by farmer-beneficiaries after full
payment of amortization.
What are the relevant AOs on land transaction?
a. Administrative Order No. 01, Series of
1989 entitled "Rules and Procedures Governing
Land Transactions" provided the implementing
guidelines for RA 6657's provisions on land
transaction.
b. Administrative Order No. 04, Series of
1994 entitled "Guidelines on the Development of
Agro-Tourism Areas in Accordance with the Tourism
Master Plan".

153
 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;
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;

154
 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

155
land covered by CARP. Should the ROD register the
transaction?
Yes, the transaction should be registered even if beyond
the prescribed period. Anyway, the vendee is willing to have it
covered under CARP. To disallow registration and rescind the
contract will result in a legal nightmare to the prejudice of the
vendee/transferee. DAR can give clearance for the
registration. (DOJ Opinion No. 41, Series of 1992).
Can agricultural lands be mortgaged to guarantee any
loan obligation secured to develop or to improve such lands?
Yes, there are lands that may be the subject of mortgage,
lien or encumbrance. These are the following:
a. Lands not yet acquired by DAR in
accordance with the schedule of acquisition
mentioned in Section 7 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.

156
This was further amended by EO 407 which mandates all
government instrumentalities to surrender to the DAR all
landholdings suitable for agriculture including all pertinent
documents in their custody. In certain instances, they may
avail of the VLT mode of transferring ownership of agricultural
lands to qualified beneficiaries subject to the review and
approval of DAR.
17.4 RIGHT OF PRE-EMPTION
What is the right of pre-emption?
Under Section 11 of RA 3844, in case the
landowner/lessor decides to sell his tenanted/leased land,
he/she must first offer to sell the landholding to the tenant or
lessee thereof who has the preferential right to buy the same
under reasonable terms and conditions imposed therein.
If the land has two or more agricultural tenants or
lessees in the same landholding, how will they exercise their
right of pre-emption?
Section 11 of RA 3844 provides that if there are two or
more agricultural tenants or lessees, each shall be entitled to
said preferential right only to the extent of the area actually
cultivated by him/her.
What is the prescribed period imposed by law in the
exercise of the right of pre-emption?
The right of pre-emption may be exercised within one
hundred eighty (180) days from notice in writing, which shall
be served by the owner to all tenants or lessees affected.
17.5 RIGHT OF REDEMPTION
What is the right of redemption?
Under Section 12 of RA 3844, in case the landholding is
sold to a third person without the knowledge of the tenant or
agricultural lessee, the latter shall have the right to
repurchase said landholding at a reasonable price and
consideration.

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 If there are two or more tenants or agricultural lessees in
the same landholding, how will they exercise their right of
redemption?
If there are two or more tenants or agricultural lessees in
the same landholding, each shall be entitled to said right of
redemption only to the extent of the area actually cultivated
by him/her.
What is the prescriptive period imposed by law in order to
avail of the right of redemption?
The right of redemption may be availed of within one
hundred eighty (180) days from notice in writing which shall be
served by the buyer on all tenants/lessees affected and the
DAR upon the registration of the sale, and shall have priority
over any other right of legal redemption.
17.6 VALID TRANSACTIONS
What are the valid transactions under the CARP?
The following transactions are valid:
a. Those executed by the original
landowner in favor of a qualified beneficiary from
among those certified by DAR;
b. Those in favor of the government, DAR
or the LBP;
c. Those covering lands retained by the
landowner under Section 6 of RA 6657, executed in
favor of the transferee whose total landholdings
inclusive of the land to be acquired do not exceed
five hectares, subject, however, to the right of pre-
emption and/or redemption of tenant/lessee under
Sections 11 and 12 of RA 3844, as amended;
d. Those executed by ARBs covering lands
acquired under any agrarian law in favor of the
government, DAR, LBP or other qualified
beneficiaries certified by DAR; and

158
 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.

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 What are the transactions that may be registered with
the Register of Deeds without clearance from the DAR?
The following are the transactions that can 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):

160
 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 (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

161
cannot be distributed for titling to agrarian reform
beneficiaries in order to protect the forest.

ISFP involves the issuance of long-term tenurial

agreements through Certificates of Stewardship Contracts or
Community Forest Stewardship Agreements effective for
twenty (25) years renewable for another 25 years and the
provision of technical, social, material and other support
services to individual forest occupants and forest
communities. With these support services, the DENR hopes to
reforest denuded lands to improve the socio-economic
conditions of the occupants.
What is the maximum land size which can be availed of
by qualified applicants under ISFP?
Seven (7) hectares shall be the maximum size of land that
can be availed of under ISFP.
18.3 SETTLEMENT AREAS
Do the guidelines for public A & D lands suitable to
agriculture apply to DAR settlement areas?
No. All DAR Settlement Projects covered by a Presidential
Proclamation issued before the effectivity of RA 6657 are
deemed to have been classified as alienable and disposable
under the powers of the Chief Executive to classify lands of
the public domain and by virtue of the expressed provisions in
the proclamation authorizing the DAR to dispose of the lands
described in such proclamation.
What rules govern the manner and mode of disposition
and titling of lots in the DAR settlement projects?
a. Administrative Order No. 09, Series of
1989 entitled "Rules and Procedures Governing
Titling and Distribution of Lots in DAR Settlement
Projects"; and
b. Administrative Order No. 01, Series of
1992 entitled "Revised Rules and Procedures

162
 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;

164
 4. Failure to cultivate the lot for a period
of more than six (6) consecutive months from the
date of allocation of said lot; and
5. Death of settler/allocatee if he/she has
no qualified heir.
What is the award ceiling for qualified beneficiaries?
The award ceiling shall not be more than three hectares.
However, qualified beneficiaries who have occupied and
cultivated the land and established their vested rights prior to
15 June 1988, in accordance with the Public Land Law and
other existing laws, shall be awarded the legal limits allowed
by said laws.
Who are the qualified beneficiaries?
1. 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?

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 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
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

166
 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.
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.

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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

168
 adverse claims shall be issued collective CLOA in
the name of the community or the tribe concerned,
represented by the acknowledged leader. In case
the total hectarage will exceed the three hectare
award ceiling per member, the approval of the PARC
shall be secured.
What portions shall not be covered?
1. Lands with adverse claims until the
adverse claims are resolved administratively or
judicially.
2. Parcels or lots already titled, except
when their area exceeds the five hectare retention
limit, in which case they shall be covered following
the schedule of priorities.
3. Parcels or lots covered by public land
applications filed with the DENR or the DA. The
applicant concerned shall be allowed to pursue the
application with the DENR. Applicants who wish to
instead acquire their lots through CARP may be
allowed to do so provided that they present proof
that they have already requested the DENR to
cancel or reject their applications and that they
possess all the qualifications of an ARB.
4. Lands which have been proclaimed as
reservations in favor of other government agencies
or instrumentalities. Portions which are not being
used for the purpose of the reservation or not
needed by the agency or instrumentality concerned
may be acquired under separate negotiations
initiated by the DAR.
5. Poblacions, town sites, barangay sites,
and similar sites actually used for residential or non-
agricultural purposes. Their titling shall be pursued
under other government programs under the
responsibility of other government agencies.

169
 6. All lands utilized as government sites in
addition to those lands specified in Section 10 of RA
6657 (on exemptions).
7. Lands intended for or devoted to public
use such as highways, roads, railroads, foreshores,
public right of way and other similar uses, as well as
lands under bodies of water such as rivers, creeks,
lakes, bays, natural springs, irrigation canals,
reservoirs, and similar areas under water.
8. Lands where the actual occupant or
claimant may already be entitled to a free patent
under RA 6940 (continuous occupation and
cultivation by himself or through his predecessors-
in-interest for at least thirty (30) years prior to 16
April 1990, among other requirements). The claimant
may be allowed to perfect his/her rights through the
DENR. However, occupants or claimants who prefer
to become ARBs instead shall be included in the
CARP if qualified.
9. All lands that are unclassified or
classified as Timberland or Forest Land, National
Parks or Mineral Lands, even if occupied and fully
cultivated. Instead, the occupants shall be referred
to the DENR for possible inclusion in the ISFP
program.
Will these lands be paid for by the beneficiaries?
No, except for the payment of the proportionate cadastral
survey costs as determined by the DENR. If such survey cost
is not paid by the ARB at the time of the CLOA issuance, this
shall be annotated as a lien on the title.
18.5 LANDS OF THE PUBLIC DOMAIN COVERED BY
CANCELLED OR EXPIRED PASTURE LEASE AGREEMENTS
(PLAs) AND TIMBER LICENSE AGREEMENTS (TLAs)
PER EO 407

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 What rules govern the CARP coverage of lands of the
public domain covered by expired PLAs and TLAs?
Joint DAR-DENR Administrative Order No. 02, Series of
1992 provided the rules and procedures on the disposition of
lands of the public domain covered by cancelled or expired
Pasture Lease Agreements (PLAs) and Timber License
Agreements (TLAs), following the provisions of Executive
Order No. 407 dated 14 June 1990.

Are these lands acquired by the DAR?

No, under the Joint Administrative Order, the role of the
DAR in lands covered by expired or cancelled PLAs and TLAs
is to screen and identify the ARBs. It is the DENR which, in
coordination with DAR, distributes the land under the ISF
program.
How will these lands be allocated to ARBs?
These shall be distributed by the DENR in collaboration
with the DAR, either individually or collectively to ARBs who
are duly verified and screened by the DAR.
What are the procedures in the distribution of lands
covered by the expired and cancelled PLAs and TLAs? What
are the roles of the DAR and DENR?
1. DENR Secretary identifies and declares
that certain expired/cancelled leases are available
for CARP.
2. DAR verifies if the actual 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

171
 them are actual occupants and prioritizes the
allocation giving preference to actual
occupants/cultivators;
4. The DENR conducts a survey of the
parcels allocated to applicant/beneficiaries;
5. The applicant, assisted by DAR files the
application for Certificate of Stewardship (CS) in the
prescribed form, together with the certification of
the Municipal Agrarian Reform Officer (MARO) at the
DENR/CENRO Office concerned where the area
applied for is located; and
6. The CENRO issues Certificate of
Stewardship (CS) for areas up to three (3) hectares.
Are lands under cancelled or expired PLAs and TLAs
subjected to titling under CARP?
No, public lands classified as forest lands are inalienable
and are distributed only for stewardship and not for titling
through the DENR-Forest Management Sector (FMS).
What proof of award to agrarian reform beneficiaries will
be issued under expired and cancelled PLAs and TLAs covered
by the public domain?
The DENR issues the Certificate of Stewardship Contract
(CSC) after a Stewardship Agreement is signed between the
beneficiary and the DENR.
Can ARBs acquire title to lands under cancelled or
expired PLAs and TLAs?
No. Under the law, these types of lands are inalienable or
non-registrable and therefore cannot be titled to the agrarian
reform beneficiaries. They are however, covered by a long
term twenty-five (25) year lease contract which is renewable
for another 25 years.
Can the DENR through the Forest Management Sector
(FMS) refuse to allocate portions of cancelled or expired PLAs

172
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

173
beneficiaries, either individually or collectively;
and Presidential Decree No. 704 (Fisheries Decree of 1975).

What are the main roles of the DAR and DA in the

allocation of cancelled or expired FLAs?
The DAR is responsible for the screening and
identification of the ARBs. The DA verifies and identifies
through BFAR, fishpond areas covered by FLAs which are
already expired or subject to cancellation. The DA also
subsequently processes the applications of ARBs identified by
the DAR and issues the fishpond lease agreements.
What is the order of priority in the determination of ARBs
on lands covered by cancelled or expired FLAs?
The ARBs are chosen according to the following order of
priority specified in Section 22 of RA 6657:
1. 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.

174
 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 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.

175
 What are the terms of payment for the account balances
annotated at the back of the CLOA?
Beneficiaries/allocatees whose amortization payments
and unpaid rentals do not exceed one thousand pesos (P1,000)
have three (3) years starting from the registration of titles to
pay their balances.
Those whose obligations exceed one thousand pesos
(P1,000) have five (5) years to pay such obligations.
What will happen if the beneficiaries/allocatees fail to
pay such balances?
Failure to pay the obligations annotated at the back of
the CLOA shall lead to the forfeiture of the lots in favor of the
government for distribution to other qualified
beneficiaries/allocatees.
What are the functions of the MARO under these revised
procedures?
1. Conduct a physical 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;

176
 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;
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 ;

177
 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?

178
 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 ?
179
 BARC or Barangay Agrarian Reform Committee is a CARP
implementing unit at the barangay level. Its organization was
first mandated by Executive Order No. 229 in 1987 and in
1988 by RA 6657.
Through the organization of the BARCs, the
implementation of the CARP will become truly community
based where people at all levels participate in decision
making because they are in a better position to know and
understand the realities in the community.
What are the laws governing the organization of BARC ?
Section 19 of EO 229 which enumerated 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:

180
 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;
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.

181
 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:
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 —

182
 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

183
shall be represented by a farmer leader who is a leaseholder
and farmworker at the same time, or a farmer-beneficiary who
is also a member of a farmer organization?
A farmer with mixed tenure shall represent a sector
where he/she primarily derives his/her regular income. This
consideration is based on the experience that one cannot
compel any individual or a group into action if he/they are not
directly affected by the issues or problems being raised.
20.4 BARC OFFICERS
Who are the BARC officers and how are they elected?
There are three elected positions in the BARC. These are
the Chairperson, Vice Chairperson, and an Assistant Secretary
(The BARC Secretary is automatically the DAR ARPT).
These three officers are elected by the sectoral
representatives — the regular voting members. Hence, all
BARC officers are residents of the barangay.
The thirteen-member BARC shall form different
committees based on need and priority activities. They shall
select the committee heads deemed as appropriate.

Can a barangay chairperson be an officer of the BARC

even if he is not a beneficiary of the CARP?
Yes. A barangay chairperson may be elected as regular
officer (with voting power) of the BARC if he/she represents
any of the four sectors composing the BARC (e.g., ARBs, non-
ARBs, farmer organization or cooperative, or landowners),
provided, however that he is not appointed ex-officio member
representing the barangay council.
What is the length of tenure of BARC member official?
The elected BARC representatives will serve a maximum
of two (2) years while the BARC officers will serve at the
pleasure of the committee.
When can a BARC member/official be terminated?

184
 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.

185
 Should a BARC be organized even if there are no farmer
organizations, associations or cooperatives in the barangay?
Initial efforts of DAR and partner NGOs should be focused
on encouraging the organization of ARBs instead of the
formation of a BARC.
What are the processes involved in the organization of
the BARC ?

There are four stages in the organization of the BARC.

These are:
1. Pre-Organization Stage. This is the
process by which the MARO prepares the sectors
concerned in the organization of BARC. He/she
performs the following functions:
a. coordinates with the FOs and/or
NGOs;
b. briefs the FOs and/or NGOs about
BARC;
c. identifies the areas where the
BARC will be organized in coordination with the
FOs/NGOs; and
d. identifies together with the
FO/NGO the respective responsibilities of each
sector.
In areas where there is no existing FO/NGO, the
MARO takes a more active role in the formation of
base groups.
2. BARC Organization. When the sectors
are fully aware of the need to organize BARC, the
MARO, together with the FOs and/or NGOs, convene
the representatives of the sectors concerned to
discuss with them the CARL, the functions of the
BARC, the schedule of the first meeting and the
schedule of election of officers. After discussing the
186
 intent of the committee, the election of the BARC
officers and the planning workshop are conducted.
3. BARC Operation and Management. After
the BARC is formally organized, the committee
prepares plans and mechanisms for the performance
of its duties.
4. Alliance Building. The BARC
coordinates with other entities within and outside
the community for its identified needs.
Simultaneously, it establishes a network to sustain
itself as a people's organization.
20.6 MEDIATION AND CONCILIATION
Is BARC a quasi-judicial body?
No, the BARC is only mandated to mediate and conciliate
agrarian disputes at the barangay level. Mediation and
conciliation refers to the process whereby the contending
parties are persuaded by the BARC to settle their disputes
amicably. The BARC does not render a decision. (See page 48)
What does settlement of disputes at the lowest possible
level mean?
The capability of the BARC and the community must be
harnessed to resolve local agrarian conflicts at the barangay
level and avoid as much as possible passing this responsibility
to outside entities or to higher levels. This will promote the
speedy and cost-free administration of justice; alleviate the
congestion of court and DARAB dockets, and develop a sense
of commitment among landowner and farmer-beneficiaries to
comply with their agreements, thus ensuring the successful
implementation of CARP.
As the first structure for conflict management, at what
levels will agrarian disputes be resolved?
Agrarian conflicts settlement could be done at the
following levels:

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 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?
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.

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 2. The BARC Chairperson interviews the
complainant regarding vital information.
3. The BARC Chairperson issues a Notice
of Meeting to both the complainant and defendant.
4. The BARC en banc, panel or the
Chairperson then endeavors to have the contending
parties agree to an amicable settlement. All
agreements are written down and signed by the
contending parties.
How long will the BARC resolve disputes lodged with
them?
The BARC shall endeavor to mediate, conciliate and
settle agrarian disputes lodged before it within thirty (30) days
from the time it takes cognizance of the dispute.
What will happen if the BARC fails to resolve agrarian
disputes within thirty days?
If the BARC fails to settle the dispute within thirty days, it
shall issue a certification that the dispute has not been
settled, together with a copy of the proceedings and furnish a
copy to the concerned parties within seven (7) days after the
expiration of the 30 day period. This certification must be
attested by the BARC Chairperson and endorsed by the MARO
to the PARAD or to the PARO for appropriate action.
Is the MARO allowed to resolve disputes or problems
presented before him/her without the presence of the BARC
chairman and members?
Yes. The MARO can immediately resolve disputes or
problems presented before him/her even in the absence of the
BARC Chairperson and its members. Although the BARC would
be the ideal forum for the resolution of disputes and problems,
this must not limit or prevent the MARO from performing
his/her duties. Delays in the resolution of cases may result in
further complications.

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 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;

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 4. Cases arising from, or connected with
membership or representation in compact farms,
farmers' cooperatives and other registered farmers'
associations or organizations, related to lands
covered by the CARP and other agrarian laws;
5. Cases involving the sale, alienation,
mortgage, foreclosure, pre-emption and redemption
of agricultural lands under the coverage of the CARP
or other agrarian laws;
6. Cases involving the issuance,
correction and cancellation of Certificates of
Landownership Award (CLOAs) and Emancipation
Patents (EPs) which are registered with the Land
Registration Authority;
7. Cases previously falling under the
original and exclusive jurisdiction of the defunct
Court of Agrarian Relations under Section 12
of Presidential Decree No. 946, except 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:

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 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.
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

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 issue is beyond the pale of mediation, conciliation or
compromise.

Footnotes

1. CARP scope is presently being validated.

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