SECTION 31.

CORPORATE LANDOWNERS
A. Is the Stock Distribution Option a valid manner of implementing agrarian reform under
the Constitution? Or is it a way of circumventing the apparent mandate to distribute land
to landless farmers?
a.1 Constitution:
> Distribution of title
> Profit-sharing
> Land-sharing

not independently exclusive of each other nor is any one superior to the others

Purpose:
a. to secure greater productivity; and
b. to alleviate poverty.
Landowner - Profit-sharing through the stock-option plan
*Hacienda Luisita - the first stock distribution option plan approved by the workers and
the PARC of DAR.
B. How has the Stock Distribution Option been applied?
Section 31:
b.1 Corporations owning agricultural lands utilized for agricultural production and
existing as of June 15, 1988 (date of effectivity of CARL) - Voluntary stock distribution
plan
*New corporations incorporated after the effectivity of CARL, like Hacienda Luisita "spin-offs"
b.2 Stock distribution option - filed and approved within two (2) years from effectivity
of CARL and prior to DAR's notice of compulsory acquisition.
*CARL policy: If the application is denied, the land will immediately be subject to
compulsory acquisition.
C. Can the stock distribution option still be availed of at present?
c.1 Sec. of Justice: Pending applications which had not yet been acted by DAR, PARC
may still approve or deny the same because the two year period is merely
discretionary, and not mandatory.
D. What are the basic criteria for evaluation of the Stock Distribution Option?
d.1 Continued operation of the corporation with its agricultural land intact - viable;
potential for growth and increased profitability.
d.2 Plan for Stock Distribution to qualified beneficiaries - increased income and
greater benefits

d.3 Stock distribution Plan - acceptable to a majority(50% + 1)

d.4 Plan - provision requiring periodic audit by a CPA chosen by the beneficiaries
d.5 Beneficiaries - atleast one (1) representative in the BOD or in the management or
Executive Commitee, if one exists. Otherwise, articles of incorporation and/or by-laws
must be amended.
d.6 Waiver of the beneficiary who avails the stock option.
d.7 Other Criteria

SECTION 32. PRODUCTION SHARING

A. Is this section valid?
a.1 "Distribution of 3% of gross sales and 10% of net profits" - confiscatory and violative
of due process ( Luz Farms v. The Hon. Sec. of DAR)
a.2 The whole section - discriminatory against those who own or operate "under lease
or management contracts"
- increase wages in regard a particular class
- Existing laws - determine wages to farmworkers
- "product-sharing" - neither mitigate nor exempt land from being distributed
a.3 Fourth paragraph of Sec. 32 - managerial, supervisory or technical farmworkers are
constitutionally disqualified as a beneficiary.
SECTION 32-A. INCENTIVES
INCENTIVE PLAN (mandatory) - to be executed with their regular fishpond or prawn
farmworkers or fishpond or prawn farmworkers' organization by Individuals or entities owning
or operating fish ponds and prawn farms.
-7.5% of NET PROFIT BEFORE TAX to be distributed within 60 days at teh end of the fiscal year.
-safeguarding the rights of regular fishpond or prawn farmworkers: books of fishpond or prawn
farm owners shall be subject to periodic audit or inspection by CPA chosen by the workers.
*this provision do not apply to agricultural lands subsequently converted to fishpond or prawn
farms. Provided, the size of the land converted does not exceed the retention limit of the
landowner.
SECTION 33. PAYMENT OF SHARES OF COOPERATIVE OR ASSOCIATION
-those acquired by farmer beneficiaries or worker beneficiaries shall be fully paid. (to
be determined by the Land bank.)
- Landowner and LBP shall provide CREDIT FINANCING to assist the farmer beneficiaries
or worker beneficiaries in the payment of said shares.
SECTION 34. VALUATION OF LANDS

A. Who has the authority to determine just compensation for lands under RA 6657?
a. 1 DAR - primarily determines the valuation of land for purposes of just
compensation
a.2 Executive Order No. 405 (issued June 1990): Amends or modified Section 34 and
Section 16 of RA 6657, thus, authority has been transferred to the LAND BANK.
a.3 DAR v RTC (La Carlota) & Cuenca:
Private landowner raised a constitutional issue on the validity of EO No. 405 series of
1990 on the ground that it modifies or amends the law and President Aquino no longer
had any law-making power as the Philippine Congress was already organized pursuant
to the 1987 Constitution.
*Constitutional system: Separation of Powers - confine legislative powers to the
legislature, executive powers to the executive department and judicial powers to the
judiciary.
- Independence and Equality: all three branches of the government are not permitted
to encroach upon the powers of one another.
- renders EO No. 405 unconstitutional. Necessarily, all valuations made by Land Bank
under such Executive Order are null and void.
B. Must section 34 be read in isolation, or is it subject to the constitutional provision on
just compensation and judicial pronouncements thereon?
b.1 Section 34 must be read in relation to the concept of just compensation as
established by the Constitution and judicial pronouncements.
*when in conflict, constitutional provisions must prevail over the statute.
"Just Compensation" - judicial issue
b.2 Assumption: "Just compensation" in Article XIII, section 4 intended to have the
meaning they had at that time as established by jurisprudence.
b.3 Former Solicitor General Estelito Mendoza observes the following infirmity:
"The last paragraph of Sec. 34 is one-sided. If the price is accepted by the workersbeneficiaries, the landowner has the right to appeal the valuation to the Special
Agrarian Court. But the provision does not mention any situation in which the price is
accepted by the landowner. Apparently, the objective simply is for PARC to determine
a price which would be accepted by the "workers-beneficiaries." It should be pointed
out that the provision is somewhat deceptive."
C. Does DAR or LBP have a formula to govern land valuation under CARP?
c.1 Administrative Order No. 5 series of 1998, "Revised Rules and Regulations
Governing the Valuation of Lands Voluntarily Offered or Compulsory Acquired pursuant
to RA 6657
*Supersedes AO No. 11 series of 1994 and AO No. 6 series of 1992
D. Is there a major improvement in the latest Administrative Orders on land valuation?

d.1 AO No. 06-92: Substantially raised the land value by giving more weight on the NET
INCOME from the land. AO No. 11-94: Dropped the landowner's LISTA-SAKA declaration
from the formula.
*Lessen the possibility of landowner's rejection of the offered price, thus, facilitate
the acquisition of land.
d.2 Most landowners find the valuation unsatisfactory - Below the market value
considering neither governmental zonal valuation nor independent appraisal company
is taken into account.
- Use of gross production, being limited to the past 12 months only instead of an
average over three years or so.

SECTION 35. CREATION OF SUPPORT SERVICES OFFICE

A. What is the reason behind the amendment?
a.1 Section 1 of RA 7905 amended Section 35, items 2, 8 and 11 of RA 6657:
*Development and dissemination of information - agrarian reform, plants and crops for
cultivation and marketing
*Effective information system through the Department of Agriculture - promote
marketing and minimize spoilage of agricultural produce
a.2 Section 2 of RA 7905 amended Section 36 of RA 6657
*Funding for support services
B. Are the services enumerated here sufficiently funded and implemented?
b.1 Support Service Office - includes thirteen (13) services.
* No appropriations
*Provision- a mere statement of intent
SECTION 36. FUNDING FOR SUPPORT SERVICES
A. What is the status and condition of Funding for Support Services?
a.1 Increased to 40% of the total agrarian reform appropriations
a.2 DAR - integrated LAD and PBD strategy
a.3 Establishment of two (2) ARCs per year per legislative district
a.4 DAR - complementary support services for non-ARC areas
a.5 DAR - proposals and grants, aids and other form of financial assistance from any
source, in close coordination with the COCAR and with notice to concerned legislative
representative prior to implementation
B. Is this an adequate and practical way of funding the support services?

b.1 Preferable for Congress - appropriations for support services in the Annual
Appropriations Act
*Provision - useful guide in providing appropriations for agrarian reform
*DAR - authority to receive financial assistance from any source (foreign grants or
aids), thus, conditions may be imposed.
C. What is the implication of inadequate support services?
c.1 Agricultural production - fallen far below expected level
*Almost all crops - suffered severe decline in production
*All agricultural crops - negative growth
c.4 Importation of basic commodities - rice, sugar, corn, coconut oil.

SECTION 37. SUPPORT SERVICES FOR THE AGRARIAN REFORM BENEFICIARIES

A. What are the conditions of Support Services for Agrarian Reform Beneficiaries?
a.1 State - adopt the integrated policy of support services to ARBs;
a.2 DAR, DOF and BSP - reforms to liberalize access to credit by ARs (social terms or
agricultural credit facilities)
a.3 30% of the 40% support services allocation - set aside and available for agricultural
credit facilities
*1/3 - subsidies to support initial capitalization of new ARBs
*2/3 - provide access to socialized credit for ARBs and leaseholders
a.4 LBP and other concerned government financial institutions, accredited savings and
credit cooperatives, financial service cooperatives and accredited cooperative banks provide delivery system for disbursement of financial assistance
a.5 All financial institutions may accept as collateral for loans the purchase orders,
marketing agreements or expected harvests;
a.6 70% of the 40% support services allocation - 15% earmarked for farm inputs and 5%
for seminars, trainings and the like;
a.7 Direct and active DAR assistance - education and organization of actual and
potential ARBs;
a.8 PARC - adopt, implement and monitor policies and programs to ensure
fundamental equality of women and men in the implementation of the program.
SECTION 37-A. EQUAL SUPPORT FOR RURAL WOMEN
Rural Women: those engaged directly or indirectly in farming or fishing as their source
of livelihood, whether paid or unpaid, regular or seasonal, or in food preparation, managing
teh household, caring for the children, and other similar activities.

SECTION 38. SUPPORT SERVICES FOR LANDOWNERS

A. What are the support services for landowners?
a.1 Investment assistance
a.2 LBP shall redeem an LOs agrarian reform bonds at Face Value as an incentive,
provided:
*At least fifty percent (50%) of the proceeds - must be invested in a BOI-registered
company or in any agri-business or agro-industrial enterprise where landholdings are
covered by CARP
a.3 Additional two percent (2%) incentive in cash - provided, 1) maintains enterprise as
a going concern for 5 years; or 2) keeps investment in a BOI-registered firm for 5
years, provided further, rights of ARBs are not prejudiced or impaired thereby;
a.4 DAR, LBP, And the DTI - jointly formulate the program to execute these provisions
under the supervision of the PARC, provided no discriminatory requirement (sex,
religious, economic, social, cultural and political) be used in accessing these support
services.