CHAPTER 1

Coverage of the Comprehensive Agrarian Reform Program

The Comprehensive Agrarian Reform Program
The Comprehensive Agrarian Reform Program (CARP) is implemented by Republic Act No.
6657 (1988) otherwise known as the "Comprehensive Agrarian Reform Law". Prior to its enactment on
10 June 1988, President Corazon C. Aquino issued Proclamation No. 131 (1987) instituting a
comprehensive agrarian reform program, and Executive Order No. 229 (1987) providing the mechanics
for its implementation. RA 6657 took effect on 15 June 1988.
While expressly repealing specific provisions of prior enactments on agrarian reform, RA 6657 provides
that the provisions of RA 3844 (1963), Presidential Decree No. 27 (1972) and PD 266 (1973), EO
228 (1987) and EO 229 (1987) and other laws not inconsistent with it shall have suppletory effect.
RA 6657 was enacted pursuant to the constitutional mandate enshrined in Section 4, Art. XIII of
the 1987 Constitution, which provides:
SEC. 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. To this end, 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,
developmental, or equity considerations, and subject to the payment of just compensation. In
determining retention limits, the State shall respect the right of small landowners. The State shall further
provide incentives for voluntary land-sharing.
The constitutionality of RA 6657 has been upheld in Association of Small Landowners v. Secretary of
Agrarian Reform, 175 SCRA 342 (1989) and companion cases. The Supreme Court held that the
requirement of public use has already been settled by the Constitution itself. It noted that "[n]o less than
the 1987 Charter calls for agrarian reform which is the reason why private agricultural lands are to be
taken from their owners, subject to the prescribed retention limits." (at 378)
While RA 6657 itself has been held constitutional, the Supreme Court in a subsequent case, Luz
Farms v. Secretary of Agrarian Reform, 192 SCRA 51 (1990), declared unconstitutional Sec. 3 (b), 10
and 11 thereof in so far as they include lands devoted to the raising of livestock, swine and poultry within
its coverage. As a result of this ruling, Congress enacted RA 7881 (1995) amending these provisions
and incorporating new provisions to existing ones. The amendments adopted the Luz doctrine by
removing livestock, swine and poultry farms from CARP coverage.
Scope of CARP
The Constitution in Sec. 4, Art. XIII, mandates the just distribution of all agricultural lands, subject to
such priorities and reasonable retention limits that the Congress may prescribe, taking into account
ecological, developmental or equity considerations and subject to the payment of just compensation.
Prior to RA 6657, the operative law on land distribution was PD 27 (1972). However, PD 27 is limited
in scope, covering only tenanted private agricultural lands primarily devoted to rice and corn operating
under a system of share-crop or lease tenancy, whether classified as landed estate or not. The
constitutional provision therefore expanded the scope of agrarian reform to cover all agricultural lands.
RA 6657 operationalized this constitutional mandate and provides in Sec. 4 thereof that the CARP
shall cover, regardless of tenurial arrangement and commodity produced, all public and private
agricultural lands, as provided in Proclamation No. 131 and EO 229 including other lands of the public
domain suitable for agriculture. More specifically, the following lands are covered by CARP:

a)
All alienable and disposable lands of the public domain devoted to or
suitable for agriculture;
b)
All lands of the public domain in excess of the specific limits as
determined by Congress in Sec. 4 (a) of RA 6657;
c)
All other lands owned by the government devoted to or suitable for
agriculture; and
d)
All private lands devoted or suitable for agriculture regardless of the
agricultural products raised or that can be raised thereon (Rep. Act No.
6657 [1988], Sec. 4).
Definition of agricultural land
Sec. 3 (c) of RA 6657 defines agricultural lands as follows:
(c) Agricultural Land refers to land devoted to agricultural activity as defined in
this Act and not classified as mineral, forest, residential, commercial or industrial
land.
Sec. 3 (b) of RA 6657, as amended by RA 7881 (1995), defines "agricultural activity" as follows:
(b) Agriculture, Agriculture Enterprise or Agricultural Activity means cultivation
of soil, planting of crops, growing of fruit trees, including the harvesting of such
farm products, and other farm activities and practices performed by a farmer in
conjunction with such farming operations done by persons whether natural or
juridical.
In Natalia v. DAR, 225 SCRA 278 (1993), the Supreme Court held:
Section 4 of RA 6657 provides that the CARL "shall cover, regardless of tenurial arrangement and
commodity produced, all public and private agricultural lands." As to what constitutes "agricultural land,"
it is referred to as "land devoted to agricultural activity as defined in this Act and not classified as
mineral, forest, residential, commercial or industrial land." The deliberations of the Constitutional
Commission confirm this limitation. "Agricultural lands" are only those lands which are "arable and
suitable agricultural lands" and "do not include commercial and industrial lands" (at 282, 283).
Agricultural lands reclassified by local governments
into "forest conservation zones"
Agricultural lands reclassified by local government units (LGUs) into "forest conservation zones" even
prior to the effectivity ofCARL do not become forest land under Sec. 3 (c) of RA 6657 as to be exempted
from CARP coverage.
It should be noted that under the Constitution, lands of the public domain are classified into
agricultural, forest or timber, mineral lands and national parks (CONST., Art. XII, Sec. 3). These
classifications are called primary classifications or "classification in the first instance." The same
provision of the Constitution also provides that agricultural lands of the public domain may be further
classified according to the uses to which they may be devoted. This further classification of agricultural
land is referred to as secondary classification. The responsibility over primary classification of lands of
the public domain is vested in the President who exercises such power upon the recommendation of the
Department of Environment and Natural Resources (DENR) (Com. Act No. 141 [1936], Sec. 6; EO
192 [1987]). On the other hand, the authority to reclassify agricultural lands into residential, commercial
or industrial is lodged, among others, in cities and municipalities (Rep. Act No. 7160 [1991], Sec. 20).
The group of lands referred to in Sec. 3 (c) of RA 6657 as non-agricultural (i.e., mineral, forest,
residential, commercial or industrial) is a mix of primary and secondary classifications. Forest and

mineral lands are, under the Constitution and Commonwealth Act No. 141 (1936), primary
classifications, while the rest are secondary classifications.

Petitioner Natalia Realty, Inc. is the owner of a 125.0078-ha land set aside by
Presidential Proclamation No. 1637 (1979) as townsite area for the Lungsod
Silangan Reservation. Estate Developers and Investors Corporation (EDIC), the
developer of the area, was granted preliminary approval and locational
clearances by the then Human Settlements Regulatory Commission (HSRC) for
the establishment of the Antipolo Hills Subdivision therein. In November 1990, a
Notice of Coverage was issued by DAR on the undeveloped portion of the
landholding. The developer filed its objections and filed this case imputing grave
abuse of discretion to respondent DAR for including the undeveloped portions of
its landholding within the coverage of CARP.

Reclassification by LGUs of agricultural lands into "forest conservation zones" does not have the
effect of converting such lands into forest lands as to be exempted from CARP. Firstly, an agricultural
land is already a primary classification and, hence, can only be subjected to secondary classification.
Secondly, LGUs have no authority or power to make primary classifications considering that such power
is the sole prerogative of the President exercising such power upon the recommendation of the DENR.
The forest (or mineral) land referred to in Sec. 3 (c) of RA 6657 is therefore to be understood as
referring to forest (or mineral) land declared to be such by the President/DENR and not by the
LGUs. DAR Administrative Order No. 1 (1990) makes this qualification in its definition of "agricultural
land," as follows:
. . . Agricultural land refers to those devoted to agricultural activity as defined in R.A. 6657 and not
classified as mineral or forest by the Department of Environment and Natural Resources (DENR) and its
predecessor agencies, and not classified in town plans and zoning ordinances as approved by the
Housing and Land Use Regulatory Board (HLURB) and its preceding competent authorities prior to 15
June 1988 for residential, commercial or industrial use.
Agricultural lands reclassified LGUs into residential,
commercial or industrial
Taking into consideration the effectivity of the law, the secondary classifications mentioned in Sec. 3
(c) of RA 6657 are treated according whether they were classified as such before or after the effectivity
of the law on 15 June 1988.
If the agricultural land was classified as residential, commercial or industrial by the LGU and
approved by the Housing and Land Use Regulatory Board (HLURB), or its predecessor agencies, prior
to 15 June 1988, the land will be recognized as so classified under Sec. 3 (c) of RA and is therefore not
covered by CARP. However, an exemption clearance from DAR is still necessary to confirm or declare
its exempt status. (DAR Adm. O. No. 6 [1994]).
This is based on Department of Justice Opinion No. 44 (1990) which provides that with respect to the
conversion of agricultural lands covered by RA 6657 to non-agricultural uses, the authority of the DAR to
approve such conversion may be exercised from the date of its effectivity or on 15 June 1988. Thus, all
lands already classified as commercial, industrial or residential before that date no longer need any
conversion clearance from the DAR.
If an agricultural land is reclassified after 15 June 1988, the provisions on land conversion
under CARL and its implementing rules will apply (Rep. Act No. 6657 [1988], sec. 65; DAR Adm. O. No.
1 [1999]).
Conversion prior to 15 June 1988 through presidential proclamation binding
before DAR
The reasoning in DOJ Opinion No. 44 (1990) was validated by the Supreme Court in Natalia v. DAR,
supra. This case involved the question of whether or not lands already classified for residential,
commercial or industrial use, as approved by HLURB and its precursor agencies, prior to 15 June 1988
are covered by CARP. SDHCac

Natalia Realty, Inc. vs. Department of Agrarian Reform

225 SCRA 278 (1993)
Facts:

Issue:
Are lands already classified for residential, commercial or industrial use, and
approved by HLURB and its precursor agencies prior to 15 June 1988, covered
by RA 6657?
Held:
Sec. 4 of RA 6657 states that the CARL covers "regardless of tenurial
arrangement and commodity produced, all public and private and agricultural
lands" and as per the transcripts of the Constitutional Commission, "agricultural
lands" covered by agrarian reform refers only to those which are "arable and
suitable lands" and "do not include commercial, industrial and residential lands."
The land subject of the controversy has been set aside for the Lungsod Silangan
Reservation by Proclamation No. 1637 prior to the effectivity of RA 6657 and in
effect converted these lands into residential use. Since the Natalia lands were
converted prior to 15 June 1988, DAR is bound by such conversion, and thus it
was an error to include these within the coverage of CARL.
Exemptions and Exclusions
Sec. 10 of RA 6657, as amended by RA 7881 (1995), specifically enumerates the exemptions and
exclusions from CARP, as follows:
a)
Lands actually, directly or exclusively used for parks and wild-life, forest
reserves, reforestation, fish sanctuaries and breeding grounds, watersheds and
mangroves (Rep. Act No. 6657 [1988], sec. 10 [a], as amended by Rep. Act No.
7881 [1995]).
b)
Private lands actually, directly and exclusively used for prawn farms and
fishponds: Provided, That said prawn farms and fishponds have not been
distributed and Certificate of Land Ownership Award (CLOA) issued to agrarian
reform beneficiaries (ARBs) under CARP (Sec. 10 [b]).
c)
Lands actually, directly and exclusively used and found to be necessary
for national defense, school sites and campuses, including experimental farm
stations operated by public or private schools for educational purposes, seeds
and seedling research and pilot production center, 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, government and private research and quarantine
centers and all lands with eighteen percent (18%) slope and over, except those
already developed (Sec. 10 [c]).

Lands devoted to raising of livestock, swine and poultry. The Luz Farms
Case.
Before its amendment by RA 7881, Sec. 3(b) of RA 6657 included in its definition of agricultural
activity the "raising of livestock, poultry or fish". Likewise, the original Sec. 11 of RA 6657 on commercial
farming provided that "lands devoted to commercial livestock, poultry and swine raising shall be subject
to compulsory acquisition within ten (10) years from the effectivity of the Act." However, the Supreme
Court in Luz Farms vs. Secretary of Agrarian Reform, supra, held that Sec. 3 (b) and Sec. 11 of RA
6657(along with Sec. 13 and 32) are unconstitutional in far as they include the raising of livestock and
swine in the coverage of CARP.

Luz Farms vs. Secretary of the Department of Agrarian Reform

DAR AO 9 (1993) imposes two (2) conditions in order that these lands may be exempted: (a) that the
land or portion thereof is exclusively, directly, or actually used for livestock, poultry and swine raising as
of 15 June 1988; and (b) the farm must satisfy the ratios of land, livestock, poultry and swine, as follows:
cattle, carabao and horse raising

maximum of 1 head to 1 hectare; 21 heads

for every 1.7815 hectares of
infrastructure

sheep and goat raising

7 heads to 1 hectare; 147 heads for every

0.7205 hectare of infrastructure

swine raising

21 heads of hogs for every 0.5126 hectare of

infrastructure

poultry raising

500 layers for every 0.53 hectare of

infrastructure or 1000 boilers
for every 1.428 hectares of
infrastructure

192 SCRA 51 (1990)

Facts:
Petitioner Luz Farms is a corporation engaged in livestock and poultry business.
It seeks to nullify Sec. 3 (b) and Sec. 11 of RA 6657 in so far as they apply to
livestock and poultry business.
Held:

Fishponds and prawn ponds

With the amendment of Sec. 3 (c), 10 and 11 of RA 6657 by RA 7881, fishponds and prawnponds
are also exempted from the coverage of CARP, provided that said lands have not been distributed to
ARBs and no CLOAs have been issued.

Sec. 3 (b) and Sec. 11 of RA 6657 are unconstitutional in so far as they include
lands devoted to raising livestock, swine and poultry within its coverage. The use
of land is incidental to but not the principal factor or consideration of productivity
in this industry. The Supreme Court held that:

To be exempted, the agricultural land must have been actually, directly and exclusively used for
prawn farms and fishponds as of 12 March 1995, the date of effectivity of RA 7881. To avail of the
exemption, a landowner or his authorized representative still has to file a written application for land
exemption/exclusion with the DAR Provincial Office (DAR Adm. O. No. 3 [1995]).

The transcripts of deliberations of the Constitutional Commission of 1986 on the

meaning of the word "agricultural," clearly show that it was never the intention of
the framers of the Constitution to include livestock and poultry industry in the
coverage of the constitutionally-mandated agrarian reform program of the
government.

In cases were the fishponds or prawn farms have been subjected to CARP, by voluntary offer to sell,
commercial farms deferment or notice of compulsory acquisition, they can be exempt from CARP if a
simple and absolute majority of the actual regular workers or tenants consent to the exemption within
one (1) year from the effectivity of RA 7881 or on 12 March 1995. In cases where the fishponds or
prawnponds have not been subjected to CARP, the consent of the farm workers shall no longer be
necessary (Rep. Act No. 6657 [1988], sec. 10[b], as amended).

The Committee adopted the definition of "agricultural land" as defined under

Section 166 of RA 3844, as land devoted to any growth, including but not limited
to crop lands, saltbeds, fishponds, idle and abandoned land (Record, CONCOM,
August 7, 1986, Vol. III, p. 11).
The Supreme Court noted that the intention of the Committee to limit the
application of the word "agriculture" is further shown by the proposal of
Commissioner Jamir to insert the word "arable" to distinguish this kind of
agricultural land from such lands as commercial and industrial lands and
residential properties. The proposal, however, was not considered because the
Committee contemplated that agricultural lands are limited to arable and suitable
agricultural lands and therefore, do not include commercial, industrial and
residential lands (Record, CONCOM, 7 August 1986, Vol. III, p. 30).
Moreover, in his answer to Commissioner Regalado's interpellation,
Commissioner Tadeo clarified that the term "farmworker" was used instead of
"agricultural worker" in order to exclude therein piggery, poultry and livestock
workers (Record, CONCOM, August 2, 1986, Vol. II, p. 621).

Sec. 4 of RA 7881 also amended RA 6657 by introducing a new provision mandating the introduction
of an incentive plan for employees of all fishponds and prawn farms. Operators and entities owning or
operating fishponds and prawn farms are directed to execute within six (6) months from its effectivity an
incentive plan with their regular fishpond or prawn farm worker's organization, if any, whereby seven
point five percent (7.5%) of net profits before tax from the operation of the fishpond or prawn farms are
distributed within sixty (60) days at the end of the fiscal year as compensation to regular and other pond
workers over and above their current compensation. This incentive plan requirement, however, does not
apply to agricultural lands subsequently converted to fishponds or prawn farms provided that the size of
the land converted does not exceed the retention limit of the landowner.
Lands used for academic or educational use. The CMU case.
In Central Mindanao University vs. DARAB, 215 SCRA 85 (1992), the Supreme Court passed upon
the exemption of lands directly, actually and exclusively used and found to be necessary for school sites
and campuses, including experimental farm stations operated by public or private schools for
educational purposes provided for under Sec. 10 of RA 6657, as amended.

Central Mindanao University vs. Department of Agrarian Reform

Adjudication Board
215 SCRA 86 (1992)
Facts:
On 16 January 1958, President Carlos Garcia issued Proclamation No. 467
reserving for the Mindanao Agricultural College, now the CMU, a piece of land to
be used as its future campus. In 1984, CMU embarked on a project titled
"Kilusang Sariling Sikap" wherein parcels of land were leased to its faculty
members and employees. Under the terms of the program, CMU will assist
faculty members and employee groups through the extension of technical knowhow, training and other kinds of assistance. In turn, they paid the CMU a service
fee for use of the land. The agreement explicitly provided that there will be no
tenancy relationship between the lessees and the CMU.
When the program was terminated, a case was filed by the participants of the
"Kilusang Sariling Sikap" for declaration of status as tenants under the CARP. In
its resolution, DARAB, ordered, among others, the segregation of 400 hectares of
the land for distribution under CARP. The land was subjected to coverage on the
basis of DAR's determination that the lands do not meet the condition for
exemption, that is, it is not "actually, directly, and exclusively used" for
educational purposes.
Issue:
Is the CMU land covered by CARP? Who determines whether lands reserved for
public use by presidential proclamation is no longer actually, directly and
exclusively used and necessary for the purpose for which they are reserved?
Held:
The land is exempted from CARP. CMU is in the best position to resolve and
answer the question of when and what lands are found necessary for its use. The
Court also chided the DARAB for resolving this issue of exemption on the basis
of "CMU's present needs." The Court stated that the DARAB decision stating that
for the land to be exempt it must be "presently, actively exploited and utilized by
the university in carrying out its present educational program with its present
student population and academic faculty" overlooked the very significant factor of
growth of the university in the years to come. SHECcT
The CMU case is unique as it involves land transferred by the state to CMU through PD 467 which
provided for its commitment to a specific use and purpose. Thus, the said land was already set aside for
a specific purpose and, in effect, was taken outside the coverage of agrarian reform by law. It is
submitted that a more accurate basis for the exemption should have been that the exclusive use of the
land both present and future has been determined by law, and not because of the determination of
the CMU of what it needs and how it intends to use it.
In ruling that the CMU is in the best position to determine the use of the land and not DAR, the
Supreme Court seems to have overlooked EO 407 (1990), as amended by EO 448 (1991), which
provides that DAR is vested with the power to determine whether lands reserved for public uses by
presidential proclamation is no longer actually, directly and exclusively used and necessary for the
purpose for which they are reserved. Said EO provides that:

Sec. 1-A. All lands or portions thereof reserved by virtue of Presidential

proclamations for specific public uses by the government, its agencies and
instrumentalities, including government-owned or controlled corporations suitable
for agriculture and no longer actually, directly and exclusively used or necessary
for the purposes for which they have been reserved, as determined by the
Department of Agrarian Reform in coordination with the government agency or
instrumentality concerned in whose favor the reservation was established, shall
be segregated from the reservation and transferred to the Department of Agrarian
Reform for distribution to qualified beneficiaries under the Comprehensive
Agrarian Reform Program.
Thus, DAR in coordination with the agency or department involved, can determine whether the
purpose or use for which the lands reserved continues to exist and therefore establish if they continue to
be exempt from CARP coverage.
The Supreme Court's statement that lands of universities and academic institutions need not be
actually, directly and exclusively used for educational or research purposes at the time of the effectivity
of the RA 6657 to be exempt from CARP also fails to consider Sec. 10 of RA 6657. Sec. 10 is explicit
that only those lands that are "actually, directly, and exclusively" used and found necessary for the uses
enumerated therein are exempt from CARP coverage. A literal interpretation of the provision implies that
the exemption applies only to those lands already committed for the enumerated purposes at the date of
the effectivity of law on 15 June 1988. Thus, agricultural land acquired by academic institutions for
academic, educational, or research purposes after 15 June 1988, or those owned by them but not
committed exclusively, actually, and directly to the abovementioned uses before or on such date, are
covered by CARP. For its exclusion from acquisition and distribution, and for its commitment to said
purposes, the institution may file before DAR for clearance to convert these lands into non-agricultural
use.
Lands with 18% slope
Lands with 18% slope or over are exempt from CARP coverage unless these are found to be
agriculturally developed as of 15 June 1988.
This rule on exemption is based on PD 705 (1975), or the "Revised Forestry Code of the Philippines,"
which provides that lands with a slope of 18% or over are generally reserved as forest lands. Sec. 15
thereof states that "no land of the public domain eighteen per cent (18%) in slope or over shall be
classified as alienable and disposable" and that "lands eighteen per cent (18%) in slope or over which
have already been declared as alienable and disposable shall be reverted to the classification of forest
lands by the Department Head, to form part of the forest reserves, unless they are already covered by
existing titles or approved public land application, or actually occupied openly, continuously, adversely
and publicly for a period of not less than thirty (30) years as of the effectivity of this Code, where the
occupant is qualified for a free patent under the Public Land Act.
If the land has 18% slope or over and is agriculturally developed as of 15 June 1988, the same shall
be allocated to the qualified applicants in the following manner:
a)
If land is classified as forest land, and therefore is inalienable and
indisposable, this shall be allocated by the DENR under its Integrated Social
Forestry Program;
b)
If classified as alienable and disposable, this shall be allocated by the
Land Management Bureau-DENR and DAR pursuant to the provisions of CA
141 and the Joint DAR-DENR AO 2 (1988); and

c)
If private agricultural land, this shall be acquired in accordance with the
provisions of RA 6657 (DAR Adm. O. No. 13 [1990], item E, part II).
Effects of exemption
Sec. 10 of RA 6657 provides that exempted or excluded lands are removed from the coverage of
CARP. However, there are two (2) contending views on whether these exempted or excluded lands are
perpetually taken out from coverage of the CARP.
The first view is that lands exempted or excluded from the law are permanently taken out from
coverage of the CARP. The basis of this interpretation is the phraseology of Sec. 10 which states that
exempted lands are "exempt from the coverage of the law." The legal effect of this interpretation is that
the owner can use and dispose the land as he deems fit without the need for any clearance from DAR.
The second view is that excluded and exempted lands can be covered by CARP when the reason for
their exemption ceases to exist. Thus, when the reason for exemption ceases to exist for lands exempt
under the Luz Farms ruling or Sec. 10, as amended by RA 7881(except lands with 18% slope), they are
removed from the exemption and are treated like any other agricultural land.
It must be remembered that the lands subject of exemption under Sec. 10 of RA 6657 and the Luz
Farms ruling are considered agricultural lands as defined by Sec. 3 (c) of RA 6657, that is, they are in
fact suitable to agriculture and not classified as mineral, forest, residential, commercial or industrial
lands, but are exempt or excluded from CARP by reason of their actual use and their necessity for other
purposes. Thus, in the event that these lands cease to be used or necessary for the purposes for which
they are exempted, they are removed from the application of Sec. 10 and are then subject to CARP
coverage.
The second view is anchored on the spirit and intent of the law to cover all agricultural lands suitable
to agriculture. Moreover, asRA 6657 is a social welfare legislation the rules of exemptions and
exclusions must be interpreted restrictively and any doubts as to the applicability of the law should be
resolved in favor of inclusion.
In either case, the security of tenure of tenants enjoyed prior to 15 June 1988 shall be respected even
when the lands are exempted. As to farmworkers, the exemption of the land shall not cause the loss of
the benefits to which they are entitled under other laws. In addition, they are granted preference in the
award of other lands covered by CARP (DAR Adm. O. No. 13 [1990], part II).
Homesteads
In Alita vs. CA, the Supreme Court stated that homesteads are exempt from agrarian reform.

Held:
No. While PD 27 decreed the emancipation of tenants from the bondage of the soil and transferring to
them ownership of the land they till, the same cannot be invoked to defeat the very purpose of the
enactment of the Public Land Act or CA 141. In Patricio v. Bayog, 112 SCRA 45, it was held that:
The Homestead Act has been enacted for the welfare and protection
of the poor. The law gives a needy citizen a piece of land where he may build a
modest house for himself and family and plant what is necessary for
subsistence and for the satisfaction of life's other needs. The right of the
citizens to their homes and to the things necessary for their subsistence is as
vital as the right to life itself. They have a right to live with a certain degree of
comfort as become human beings, and the State which looks after the welfare
of the people's happiness is under a duty to safeguard the satisfaction of this
vital right.
In this regard, Sec. 6 of Article XIII of the 1987 Constitution provides:
Section 6. The State shall apply the principles of agrarian reform
or stewardship, whenever applicable in accordance with law, in the disposition
or utilization of other natural resources, including lands of public domain under
lease or concession suitable to agriculture, subject to prior rights, homestead
rights of small settlers, and the rights of indigenous communities to their
ancestral lands.
Moreover, Sec. 6 of RA 6657 contains a proviso supporting the inapplicability of PD 27 to lands covered
by homestead patents like those of the property in question, reading:
Section 6. Retention Limits. . . . Provided further, That original
homestead grantees or their direct compulsory heirs who still own the original
homestead at the time of the approval of this Act shall retain the same areas as
long as they continue to cultivate said homestead.
xxx

xxx

xxx

While homestead lots are declared exempt under PD 27, they are not expressly declared as such
under RA 6657. However, Sec. 6 of RA 6657 provides that homesteaders are allowed to retain the total
homestead lot subject to the conditions provided in the same section and as set DAR MC 4 (1991), to
wit:
a)
That the original homestead grantee or his/her direct compulsory heirs
still own the land on 15 June 1988;

Alita vs. Court of Appeals

b)
The original homestead grantee or his or her compulsory heirs cultivate
the land as of 15 June 1988 and continue to cultivate the same.

170 SCRA 706 (1989)

Facts:
Subject matter of the case consists of two (2) parcels of land acquired by
respondents' predecessors-in-interest through homestead patent under the
provisions of CA 141. Respondents wanted to personally cultivate these lands,
but the petitioners refused to vacate, relying on the provisions of PD 27 and PD
316 and appurtenant regulations issued by the then Ministry of Agrarian Reform.

It also provides that the tenants of lands covered by homestead patents exempted from PD 27 or
retained under RA 6657 shall not be ejected therefrom but shall remain as leaseholders therein.
Schedule of Implementation
Sec. 7 of RA 6657 lays out the schedule of acquisition and distribution of all agricultural lands through
a period of ten (10) years from the effectivity of the Act:
Phase

Issue:
Are lands obtained through homestead patent covered under PD 27?

Lands Covered

Rice and corn lands under Presidential

Schedule
1988-1992

Decree No. 27;

all idle or abandoned lands;

all private lands voluntarily offered by the owners

In view of the passing of the ten (10)-year period in 1998, Congress passed RA 8532 (1998) providing
for the funding for land acquisitions for another ten (10) years.
Idle or abandoned lands
Sec. 22 of Art. XVIII of the 1987 Constitution and Sec. 18 (h) of EO 229 prioritizes the immediate
expropriation or acquisition of idle or abandoned lands.

for agrarian reform;

all lands foreclosed by the government financial

Sec 3 (e) of RA 6657 defines idle or abandoned land as "any agricultural land 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 the government as provided
under RA 6657. However land that has become permanently or regularly devoted to non-agricultural
purposes is not to be considered as idle or abandoned. Neither can it be considered as abandoned or
idle any land which has 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."

institutions;

all lands acquired by the Presidential Commission

on Good Government (PCGG); and

all other lands owned by the government devoted

to or suitable for agriculture

II

All alienable and disposable public agricultural

1992-1995

lands;

all arable public agricultural lands under agroforest, pasture and agricultural leases already
cultivated and planted to crops in accordance;

all public agricultural lands which are to be opened

for new development and resettlement;

and all private agricultural lands in excess of

fifty (50) hectares,

III-A

Landholdings above twenty-four (24)

1998-1992

Private agricultural lands with areas above the

To expedite the disposition of lands owned by the government, President Corazon C. Aquino
issued EO 407 (1990) directing all government instrumentalities, government agencies, government
owned and controlled corporations or financial institutions to transfer to the Republic of the Philippines,
through the DAR, all landholdings suitable for agriculture. Sec. 3 of EO 407 (1990) likewise provides for
the redistribution and award of fishponds, pasturelands and other lands of public domain suitable for
agriculture subject of cancelled or amended lease agreement to the agrarian reform beneficiaries. EO
448 (1991) and EO 506 (1992) amendedEO 407 by including all lands or portions thereof reserved by
virtue of presidential proclamations for specific public uses by the government, its agencies and
instrumentalities, and no longer actually, directly and exclusively used or necessary for the purposes for
which they have been reserved. These also excluded national parks and other protected areas,
proposed national parks, game refuge, bird sanctuaries, wild-life 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.
Commercial farms

hectares up to fifty hectares; and

III-B

Lands owned by government

1994-1998

retention limit up to 24 hectares

Though Sec. 7 of RA 6657 provides a fixed time table for the implementation of the
CARP law, this provision should be interpreted as merely directory, rather than mandatory in
character. This is the gist of DOJ Opinion No. 9 (1997). It has been held that the difference
between a mandatory and a directory provision is often determined on grounds of expediency.
Where a provision embodies a rule of procedure rather than one of substance, the provision as to
time will be regarded as directory only notwithstanding the mandatory nature of the language used.
Sec. 5 of RA 6657 is more procedural in nature than substantive. The ten (10)-year period is
merely a time frame given to DAR for the acquisition and distribution of public and private
agricultural lands covered by RA 6657. It is merely a guide to DAR in setting its priorities, and it is
not, by any means, a limitation of its authority. Hence, Sec. 5 of RA 6657 should not be construed
as a prescriptive period, the lapse of which bars the DAR from covering the land under CARP.
Thus, DAR need not wait for the full coverage of those lands in the first phase before those in the
succeeding phases could be covered. DAR may also proceed with the coverage of lands in different
phases simultaneously.

Sec. 11 of RA 6657 allowed the deferment of the coverage of commercial farms. Deferred
commercial farms shall be subject to immediate compulsory acquisition and distribution after ten (10)
years from the effectivity of RA 6657 on 15 June 1988. For new farms, the ten (10)-year deferment will
begin from the first year of commercial production and operation.
For a commercial farm to be qualified for deferment, it must have been planted to commercial crop or
devoted to commercial farming operations before 15 June 1988. DAR AO 16 (1988) provided a 60-day
period for the filing of applications of deferment which lapsed on 2 May 1989.
DAR AO 16 (1988) explicitly allows the DAR to automatically subject the lands to redistribution when
it determines that the purpose for which deferment is granted no longer exists as when the particular
farm areas ceases to be commercially productive. During the deferment period, the DAR shall initiate
steps to acquire the lands. Final land transfer to the beneficiaries shall be effected at the end of the
deferment period. The acquisition and distribution of these deferred commercial farms are governed
by DAR AO 9 (1998).
Retention
Sec. 4, Art. XIII of the 1987 Constitution subjects the distribution of agricultural lands for agrarian
reform to "reasonable retention limits as Congress may prescribe. Sec. 6 of RA 6657 operationalizes this

mandate and observes the right of persons to own, or retain, directly or indirectly public or private
agricultural land, the size of which shall vary according to factors governing a viable family-size farm in
such as commodity produced terrain, infrastructure, and soil fertility, but in no case shall exceed five (5)
hectares.
The retention limits under Sec. 6 of RA 6657 covers all persons whether natural or juridical. Juridical
persons like corporations and partnerships are therefore subject to the five (5)-hectare limit.
With respect to married couples, their maximum retention limit is determined by the nature of their
property relations. For marriages covered by the New Civil Code, in the absence of an agreement for the
judicial separation of property, spouses who own only conjugal properties may retain a total of not more
than five (5) hectares of such properties. However, if either or both of them are landowners in their own
respective rights (capital and/or paraphernal), they may retain not more than five (5) hectares of their
respective landholdings. In no case, however, shall the total retention of such couple exceed ten (10)
hectares. (DAR Adm. O. No. 5 [2000], sec. 9 [g]).
For marriages covered by the Family Code, which took effect on 3 August 1988, a husband owning
capital property and/or a wife owning paraphernal property may retain not more than five (5) hectares
each provided they executed a judicial separation of properties prior to entering into the marriage. In the
absence of such an agreement, all properties (capital, paraphernal and conjugal) shall be considered to
be held in absolute community, i.e., the ownership relation is one, and, therefore, only a total of five (5)
hectares may be retained. (DAR Adm. O. No. 5 [2000], sec. 9 [h]).
The five (5)-hectare retention limit applies to all lands regardless of how acquired (i.e., by purchase,
award, succession, donation) as the law does not distinguish. Thus, a child who was awarded three (3)
hectares as a preferred beneficiary under Sec. 6 of RA 6657and subsequently acquires a five (5)hectare landholding of his parent by succession can retain only five (5) hectares of the total landholding.
Landowners have the obligation to cultivate directly or through labor administration, and thereby
make productive the area he retains. He is also prohibited from making any constructions therein or
commit it to purposes incompatible with its agricultural nature. Before a landowner can commit the
retained land to non-agricultural purposes, he must first secure a conversion order from DAR, otherwise
he can be held liable for premature conversion (see DAR Adm. O. No. 1 [1999]).
Award to children
If a landowner has children, three (3) hectares may be awarded to each subject to the following
qualifications:
a)

that he is at least fifteen (15) years old as of 15 June 1988; and

b)
that he is actually tilling the land or directly managing it (Rep. Act No.
6657 [1988], sec. 6).

Exceptions to the 5-hectare retention limit

The five (5)-hectare retention limit under RA 6657 does not apply to original homestead grantees or
their direct compulsory heirs at the time of the approval of RA 6657 who continue to cultivate the same,
and to those entitled to retain seven (7) hectares under PD 27.
In the Association cases, the Supreme Court held that landowners who failed to exercise their rights
to retain under PD 27 can avail of their rights of retention under Sec. 6 of RA 6657 and retain only five
(5) hectares. However, in the resolution of the Supreme Court on the motion for consideration in the said
case, the Court qualified that those who, prior to the promulgation of RA 6657, complied with the
requirements under Letter of Instruction (LOI) Nos. 41, 45 and 52 regarding the registration of the
landholdings, shall be allowed to enjoy the seven (7) hectare retention limit. All those who refused to
comply with the requirements cannot, in view of the passage of CARL, demand that their retention limit
be determined under PD 27.
Thus, the following OLT owners are still entitled to retain seven (7) hectares even if they exercised
their right of retention underPD 27 after 15 June 1988:
a)

Those landowners who complied with the requirement of either LOI 41, 45 or 52;

b)
Those who filed their applications before the deadline set (27 August 1985 as provided by AO. 1
[1985]) whether or not they have complied with LOI Nos. 41, 45 or 52;
c)
Those who filed their applications after the deadline but complied with the requirements of LOI
41, 45 or 52; and
d)
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 in Association of
Small Landowners vs. Hon. Secretary of DAR; supra) (DAR Adm. O. No. 4 [1991]).
Exercise of right of retention
While Sec. 6 of RA 6657 acknowledges the right of the landowners to choose the area to be retained,
it requires that the area be compact and contiguous, and shall be least prejudicial to the entire
landholding and the majority of the farmers therein (DAR Adm. O. No. 5 [2000], sec 2 [b]).
Sec. 4 of DAR AO 5 (2000) provides that under the Compulsory Acquisition (CA) scheme, the
landowner shall exercise his right of retention within sixty (60) days from receipt of the Notice of
Coverage from DAR. Failure to exercise this right within the prescribed period means that the landowner
waives his right to choose which area to retain. Thereafter, the Municipal Agrarian Reform Officer
(MARO) shall designate the retained area for the landowner.

DAR MC 4 (1994) defined the term "directly managing" as the cultivation of the land through personal
supervision under the system of labor administration. DHcESI

Under the Voluntary Offer to Sell (VOS) scheme, the right of retention shall be exercised at the time
the land is offered for sale. The offer should specify and segregate the portion covered by VOS and the
portion applied for retention; otherwise, the landowner shall be deemed to have waived his right of
retention over the subject property (DAR Adm. O. No. 5 [2000], sec. 4).

The award to the child is not to be taken from the retained land of the landowner and is awarded to
the child in his own right as a beneficiary. Thus, the award is not automatic. The child is merely given a
preference over other beneficiaries.

As a matter of policy, all rights acquired by the tenant-farmers under PD 27 and the security of tenure
of the farmers or farmworkers on the land prior to the approval of RA 6657 shall be respected (DAR
Adm. O. No. 5 [2000], sec. 2 [c]).

As the right of the child is derived from his being a beneficiary, he must not only meet the
requirements of preference laid out in Sec. 6 of RA 6657, but also all the other qualifications of a
beneficiary enumerated under Sec. 22 of RA 6657. Thus, he must also be landless, a resident of the
barangay or municipality where the land is located, and must have the willingness, aptitude and ability to
cultivate and make the land as productive as possible. Moreover, he is subject to the same liabilities,
responsibilities and limitations imposed on all agrarian reform beneficiaries.

In case the area selected by the landowner or awarded for retention by the DAR is tenanted, the
tenant has two (2) options:
a)
To remain as a lessee. If he chooses to remain in the area retained, he
shall be considered a lease holder and shall lose his right to be a beneficiary; or

b)
Be a beneficiary in the same or another agricultural land with similar or
comparable features.
The tenant must exercise either option within one (1) year after the landowner manifests his choice of
the area for retention, or from the time the MARO has chosen the area to be retained by the landowner,
or from the time an order is issued granting the retention (DAR Adm. O. No. 5 [2000], sec. 10).
Sec. 10 of DAR AO 5 (2000) further provides that in case the tenant declines to enter into leasehold
and there is no available land to transfer, or if there is, the tenant refuses the same, he may choose to be
paid disturbance compensation by the landowner.
Where Certificates of Land Transfer (CLTs), Emancipation Patents (EPs) or Certificates of Land
Ownership Award (CLOAs) have already been issued on the land chosen by the landowner as retention
area, the DAR shall immediately inform the agrarian reform beneficiaries (ARBs) concerned and provide
them the opportunity to contest the landowner's claim. Moreover, the DAR shall ensure that the affected
ARBs, should they so desire, be given priority in the distribution of other lands of the landowner or other
lands identified by the DAR for redistribution, subject to the rights of those already in the area (DAR
Adm. O. No. 5 [2000], sec. 11)
Waiver of right of retention
Sec. 7 of DAR AO 5 (2000) provides that the following acts constitute waiver on the landowner's right
of retention:
a)
Executing an affidavit, letter or any other document duly attested by the
MARO, Provincial Agrarian Reform Officer (PARO) or Regional Director (RD)
indicating that he is expressly waiving his retention right over subject landholding;
b)
Signing of the Landowner-Tenant Production Agreement and Farmer's
Undertaking (LTPA-FU) or Application to Purchase and Farmer's Undertaking
(APFU) covering subject property;
c)
Entering into a Voluntary Land Transfer/Direct Payment Scheme (VLTDPS) agreement as evidenced by a Deed of Transfer over the subject property;
d)
Offering the subject landholding under VOS scheme and failure to
indicate his retained area;
e)
Signing/submission of other documents indicating consent to have the
entire property covered, such as the form letter of the LBP on the disposition of
the cash and bond portions of a land transfer claim for payment, and the Deed of
Assignment, warranties and undertaking executed in favor of the LBP;
f)

Performing acts which constitute estoppel by laches; and

g)
Doing such act or acts as would amount to a valid waiver in accordance
with applicable laws and jurisprudence.
Public Lands
Public lands pertain to all lands that were not acquired by private persons or corporations either by
grant or purchase. These lands are either (a) disposable (alienable) public lands or (b) non-disposable
public lands.
CA 141 (1936), otherwise known as the "Public Land Act", governs the administration and disposition
of lands of the public domain. Sec. 9 thereof classifies alienable or disposable lands of the public domain
as (a) agricultural; (b) residential, commercial, industrial or for similar productive purposes; (c)

educational, charitable, or other similar purposes; or (d) reservations for town sites and for public and
quasi-public uses.
Non-disposable public lands or those not susceptible of private appropriation and include the
following: (a) timber lands which are governed by PD 705 (1975) or the Revised Forestry Code; and (b)
mineral lands which are governed by RA 7942 (1995) or the Philippine Mining Act of 1995 and other
related laws.
All lands of the public domain are under the exclusive jurisdiction of the DENR except those placed
by law and/or by executive issuances under the jurisdiction of other government agencies. Under Sec. 3
and 5 of CA 141, the Secretary of Agriculture and Natural Resources (now the Secretary of DENR) is the
executive officer charged with carrying out the provisions of the Public Land Act. It is empowered to
prepare and issue such forms, instructions, rules and regulations consistent with the Public Land Act.
Sec. 6 ofCA 141 (see also EO 192 [1987]) reserves the power to classify lands in the public domain into
either agricultural (disposable), timber or mineral lands to the President, with the recommendation of the
Secretary of DENR.
Under Sec. 4 of RA 6657, public and private agricultural lands and lands of the public domain suitable
for agriculture are covered by CARP. It provides, among others, that all alienable and disposable lands
of the public domain devoted or suitable or devoted to agriculture (Sec 4 [a]) and all lands of the public
domain in excess of the specific limits of the public domain as determined by Congress (Sec. 4 [b]) shall
be covered by CARP. It has also been determined that public agricultural lands that are untitled and
privately claimed are covered by CARP. In response to a query by DAR, the Department of Justice
issued Opinion No. 176 (1992)which stated:
. . . Thus, it has been held that there should be no distinction in the application of the law where non is
indicated therein (SSS vs. City of Bacolod, 115 SCRA 412) . . . By said rule, the term "private agricultural
lands" in the aforementioned section should be interpreted as including all private lands, whether titled or
untitled. . . .
RA 6657 has created an overlapping of jurisdictions between the DENR and the DAR over the
disposition of these lands. RA 6657mandates DAR to acquire and distribute these public lands to
agrarian beneficiaries while CA 141 vests upon the DENR the power to control, survey, classification,
lease, sale or any other form of concession or disposition and management of the lands of the public
domain.
To resolve the overlapping mandates of the DENR and DAR in the disposition and distribution of
public lands for CARP purposes, the two agencies issued Joint DAR-DENR MC 9 (1995) which
recognizes that lands of the public domain are under the jurisdiction of the DENR unless placed by law
and/or by executive issuances under the jurisdiction of other government departments or entities. Under
the said circular, the disposition of non-registrable lands of the public domain is the exclusive
responsibility of the DENR under its various programs (i.e., the Integrated Social Forestry). In this
instance, the role of the DAR is to assist the DENR in identifying and screening of farmer beneficiaries.
The responsibility and authority of DAR to distribute public lands shall be limited to the following:
a)
Lands proclaimed by the President as DAR Resettlement Projects and
placed under the administration of the DAR for distribution to qualified farmer
beneficiaries under CARP;
b)

Lands which are placed by law under the jurisdiction of DAR; and

c)
Lands previously proclaimed for the various government departments,
agencies and instrumentalities and subsequently turned over to the DAR
pursuant to EO 407 (1990), as amended by EO 448 and 506.

Untitled public alienable and disposable lands are still within the exclusive jurisdiction of DENR
pursuant to CA 141. However, in accordance with DOJ Opinion No. 176 (1992), Joint DAR-DENR MC 14
(1997) provides that all untitled public alienable and disposable lands are deemed "private" if the criteria
specified in RA 6940 for the determination of whether or not a person has already acquired a
recognizable private right over a landholding is met, namely:
a)
Continuous occupancy and cultivation by oneself or through one's
predecessors-in-interest for at least thirty (30) years prior to the effectivity of RA
6940 on 16 April 1990;
b)
The land must have been classified as alienable and disposable for at
least thirty (30) years prior to the effectivity on 16 April 1990;
c)

One must have paid the real estate tax thereon; and

d)

There are no adverse claims on the land.

For these privately claimed public alienable and disposable lands, the DENR first issues a Free
Patent to qualified applicants for the retained area of not more than five (5) hectares. The DAR shall then
cover the excess area and issue a CLOA or EP and distribute these to qualified beneficiaries. TcCDIS
For untitled public alienable and disposable lands which are tenanted and with claimants not qualified
under the criteria specified inRA 6940, the disposition shall be under the jurisdiction of the DENR. The
role of the DAR in this case is limited to the documentation and protection of the leasehold arrangement
between the public land claimant and the tenants.
If the alienable and disposable land is not tenanted but has actual farm occupants, and the public
land claimant lacks the requisite thirty (30)-year possession, these shall be under the jurisdiction of the
DENR and the appropriate tenurial instrument shall be applied.
It is submitted, however, that these alienable and disposable lands that are privately claimed by
claimants who are not qualified under the criteria set under RA 6940 (1990) should be turned over to
DAR for distribution under CARP. As these claimants/tenants are mere occupants and can not be
granted Free Patents by the DENR, these land should instead be committed for agrarian purposes.
A recently issued DENR MC 22 (1999) entitled "DENR Jurisdiction over all Alienable ad Disposable
Lands of the Public Domain," seems to abrogate or set aside Joint DAR-DENR MC 14 (1997). It directs
all Regional Executive Directors to strictly exercise DENR's jurisdiction over all alienable and disposable
lands of the public domain, including those lands not specifically placed under the jurisdiction of other
government agencies, and prepare the same for disposition to qualified and legitimate recipients under
the People's Alliance for the Rehabilitation of Environment of the Office of the Secretary of the DENR.
This recent issuance impliedly prohibits the turnover of alienable and disposable lands to CARP, and
thus, effectively removes remaining public alienable and disposable lands out of the scope of CARP.
While merely an administrative order that can not overturn legislation on the matter, DENR MC 22
(1999) poses another roadblock which if not corrected or legally challenged in court can derail the
already delayed coverage of public agricultural lands. Sec. 7 of RA 6657 explicitly provides that alienable
and disposable public agricultural lands are among the priority lands for distribution. Needless to say, the
political implications of government's reluctance to commit public agricultural lands for agrarian ends in
the face of its relentless expropriation of private landholdings is serious.
Ancestral Lands
Sec. 9 of RA 6657 defines ancestral lands as those lands that include, but not limited to, lands in
actual, continuous and open possession of an indigenous cultural community and its members. Sec. 3
(b) of RA 8371 (1997) or the "Indigenous Peoples Rights Act of 1997," has a more encompassing
definition, to wit:

Sec. 3.

Definition of Terms. . . .
b). Ancestral Lands Subject to Section 56 hereof, refers to lands occupied,
possessed and utilized by individuals, families, and clans who are members of
the ICCs/IPs (indigenous cultural communities/indigenous peoples) since time
immemorial, by themselves or through their predecessors-in-interests, under
claims of individual or traditional group ownership continuously, to the present,
except when interrupted by war, force majeure or displacement by force, deceit,
stealth or as a consequence of government projects and other voluntary dealings
entered into by government and private individuals/corporations, including, but
not limited to, residential lots, rice terraces or paddies, private forests, swidden
farms and treelots;

Policy for ancestral lands under CARP

CARP ensures the protection of the right of ICCs/IPs to their ancestral lands to ensure their
economic, social and cultural well being. Systems of land ownership, land use, and modes of settling
land disputes of the ICCs/IPs shall be recognized and respected in line with principles of selfdetermination and autonomy.
The Presidential Agrarian Reform Committee (PARC), notwithstanding any law to the contrary, has
the power to suspend the implementation of the CARP with respect to ancestral lands for the purpose of
identifying and delineating such lands. It shall also respect laws on ancestral domain enacted by the
respective legislators of autonomous regions, subject to the provisions of the Constitution and the
principles enunciated in RA 6657 and other national laws.
However, the full protection of the rights of the ICCs/IPs to their ancestral lands under CARP is
hampered by various legal constraints. For one, while Sec. 9 respects or protects the rights of the
ICCs/IPs to their ancestral lands as means to protect their economic, social and cultural well-being, its
definition of ancestral lands is circumscribed by the limitation that the Torrens System shall be respected.
This is a fundamental legal setback to the rights of ICCs/IPs. It should be noted that the vested rights of
these communities to ancestral lands have been recognized to have pre-existed the Regalian Doctrine
which underlie the government's perspective to full ownership and control over natural resources as well
as the current legal system that regulates private property rights.
CARP involves alienable and disposable lands only while ancestral lands of ICCs/IPs encompass
forest and mineral lands and other lands of the public domain which are by definition inalienable and
indisposable. Thus, the benefit of being awarded CLOAs over ancestral lands to these ICCs/IPs are
limited to private agricultural lands and public agricultural lands transferred to DAR.
In any case, to promote and protect the rights of the ICCs/IPs over ancestral lands situated in
inalienable and indisposable public lands, DAR issues member/s of the ICCs who are engaged in
agricultural activities over the said lands CARP Beneficiary Certificate (CBC). Though these do not vest
title, it likewise recognizes the claim of the ICC over these lands and allows them to access support
services from DAR.
RA 8371 (1997) has a more expansive definition of ancestral domains and ancestral lands which
includes lands that are legally determined as indisposable and inalienable public lands. RA 8371 is a
clear departure from earlier law and regulation for not only does it expand the definition of ancestral
lands but recognizes the right of the ICCs/IPs to own these lands. National Commission on Indigenous
Peoples (NCIP), a body created by RA 8371, is vested, among others with the power and issue
Certificates of Ancestral Domain/Land Titles over ancestral lands.
CHAPTER 2
Agricultural Leasehold

Agricultural Tenancy
Definition and nature of agricultural tenancy
Agricultural tenancy is defined as "the physical possession by a person of land devoted to agriculture,
belonging to or legally possessed by another for the purpose of production through the labor of the
former and of the members of his immediate farm household in consideration of which the former agrees
to share the harvest with the latter or to pay a price certain or ascertainable, whether in produce or in
money, or both." (RA 1199 [1954], sec. 3)
In Gelos vs. CA, 208 SCRA 608 (1992), the Supreme Court held that agricultural tenancy is not a
purely factual relationship. The written agreement of the parties is far more important as long it is
complied with and not contrary to law.

Gelos vs. Court of Appeals

208 SCRA 608 (1992)
Facts:
Rafael Gelos was employed by Ernesto Alzona and his parents as their laborer on a 25,000-sq. m
farmland. They executed a written contract which stipulated that as hired laborer Gelos would receive a
daily wage of P5.00. Three (3) years later, Gelos was informed of the termination of his services and was
asked to vacate the property. Gelos refused and continued working on the land. Alzona filed a complaint
for illegal detainer. The lower court found Gelos as tenant of the property and entitled to remain thereon
as such. The decision was reversed by the Court of Appeals. DHACES
Issue:
What is the nature of the contract between Gelos and Alzona?
Held:
The parties entered into a contract of employment, not a tenancy agreement. The
agreement is a lease of services, not of the land in dispute. . . . The petitioner
would disavow the agreement, but his protestations are less than convincing. His
wife's testimony that he is illiterate is belied by his own testimony to the contrary
in another proceeding. Her claim that they were tricked into signing the
agreement does not stand up against the testimony of Atty. Santos Pampolina,
who declared under his oath as a witness (and as an attorney and officer of the
court) that he explained the meaning of the document to Gelos, who even read it
himself before signing it. . . . Gelos points to the specific tasks mentioned in the
agreement and suggests that they are the work of a tenant and not of a mere
hired laborer. Not so. The work specified is not peculiar to tenancy. What a tenant
may do may also be done by a hired laborer working under the direction of the
landowner, as in the case at bar. It is not the nature of the work involved but the
intention of the parties that determines the relationship between them. As this
Court has stressed in a number of cases, "tenancy is not a purely factual
relationship dependent on what the alleged tenant does upon the land. It is also a
legal relationship. The intent of the parties, the understanding when the farmer is
installed, and as in this case, their written agreements, provided these are
complied with and are not contrary to law, are even more important."
Classes of agricultural tenancy

Agricultural tenancy is classified into share tenancy and leasehold tenancy (M. A. GERMAN, SHARE
AND LEASEHOLD TENANCY, 13 [1995]).
Share tenancy means "the relationship which exists whenever two persons agree on a joint
undertaking for agricultural production wherein one party furnishes the land and the other his labor, with
either or both contributing any one or several of the items of production, the tenant cultivating the land
personally with aid of labor available from members of his immediate farm household, and the produce
thereof to be divided between the landholder and the tenant." (Rep. Act No. 3844 [1963]. Sec. 166 [25]).
With the passage of RA 3844, share tenancy has been declared to be contrary to public policy and
abolished (Rep. Act No. 3844[1963], sec. 4) except in the case of fishponds, saltbeds, and lands
principally planted to citrus, coconuts, cacao, coffee, durian and other similar permanent trees at the
time of the approval of said Act (Rep. Act No. 3844 [1963], sec. 35). When RA 6389 (1971) was enacted,
agricultural share tenancy has been automatically converted to leasehold but the exemptions remained.
It was only under RA 6657 when the exemptions were expressly repealed.
Leasehold tenancy exists when a person who, either personally or with the aid of labor available from
members of his immediate farm household undertakes to cultivate a piece of agricultural land
susceptible of cultivation by a single person together with members of his immediate farm household,
belonging to or legally possessed by, another in consideration of a fixed amount in money or in produce
or in both (Rep. Act No. 1199 [1954], sec. 4).
Under RA 6657, the only agricultural tenancy relation that is recognized is leasehold tenancy. Said
law expressly repealed Sec. 35 of RA 3844, making all tenanted agricultural lands throughout the
country subject to leasehold.
Leasehold tenancy may be established by operation of law, that is, through the abolition of share
tenancy under Sec. 4 of RA 3844; through the exercise by the tenant of his right to elect leasehold; or by
agreement of the parties either orally or in writing, expressly or impliedly, which was the condition before
1972 (M.A. German, supra, at 27).
Leasehold relation is instituted in retained areas with tenant(s) under RA 6657 or PD 27 who opts to
choose to remain therein instead of becoming a beneficiary in the same or another agricultural land with
similar or comparable features. The tenant must exercise his option within one (1) year from the time the
landowner manifests his choice of the area for retention (Rep. Act No. 6657[1988], sec. 6). Leasehold
relation also exists in all tenanted agricultural lands that are not yet covered under CARP (DAR Adm. O.
No. 5 [1993]).
The institution of leasehold in these areas ensure the protection and improvement of the tenurial and
economic status of tenant-tillers therein. (Rep. Act No. 6657 [1988], sec. 6).
Leasehold tenancy distinguished from civil law lease
In Gabriel vs. Pangilinan, 58 SCRA 590 (1974), the Supreme Court distinguished leasehold tenancy
from civil law lease.
There are important differences between a leasehold tenancy and a civil law
lease. The subject matter of leasehold tenancy is limited to agricultural land; that
of civil law lease may be either rural or urban property. As to attention and
cultivation, the law requires the leasehold tenant to personally attend to, and
cultivate the agricultural land, whereas the civil law lessee need not personally
cultivate or work the thing leased. As to purpose, the landholding in leasehold
tenancy is devoted to agriculture, whereas in civil law lease, the purpose may be
for any other lawful pursuits. As to the law that governs, the civil law lease is
governed by the Civil Code, whereas leasehold tenancy is governed by special
laws (at 596).

Elements of Agricultural Tenancy

of nine (9) cavans of palay per hectare for one agricultural year . . . must be of
the same variety (of palay) as that produced by the LESSEE."

The following are the essential requisites for the existence of a tenancy relation:
a)

The parties are the landholder and the tenant;

b)

The subject is agricultural land;

The land is definitely susceptible of cultivation by a single person as it is of an

area of only four and a half (4-1/2) ha. This court has held that even a bigger
area may be cultivated personally by the tenant, singly or with the help of the
members of his immediate farm household.

c)
There is consent by the landholder for the tenant to work on the land,
given either orally or in writing, expressly or impliedly;
d)

From the stipulation that "the rental must be of the same variety as that produced
by the LESSEE," it can reasonably be inferred that the intention of the parties
was that Macaraeg personally work the land, which he did as found by the
Agrarian Court, thus: "In the instant case, petitioner (Macaraeg) cultivated the
landholding belonging to said respondent (Teodoro) for the agricultural year
1960-61 in consideration of a fixed annual rental." (italics supplied) Moreover,
there is no evidence that Macaraeg did not personally cultivate the land in
dispute. Neither did Teodoro allege, much less prove, that Macaraeg availed of
outside assistance in the cultivation of the said riceland.

The purpose is agricultural production;

e)
There is personal cultivation or with the help of the immediate farm
household; and
f)
There is compensation in terms of payment of a fixed amount in money
and/or produce. (Carag vs. CA, 151 SCRA 44 [1987]; Gabriel vs. Pangilinan, 58
SCRA 590 [1974]; Oarde vs. CA, 280 SCRA 235 [1997]; Qua vs. CA, 198 SCRA
236 [1991])

Teodoro is the registered owner of the disputed landholding and he delivered the
possession thereof to Macaraeg in consideration of a rental certain to be paid in
produce. Evidently, there was a valid leasehold tenancy agreement. Moreover,
the provision that the rental be accounted in terms of produce 9 cavans per
hectare is an unmistakable earmark, considering the other stipulations, that
the parties did actually enter into a leasehold tenancy relation (at 1617;underscoring supplied).

The Supreme Court emphasized in numerous cases that "(a)ll these requisites must concur in order
to create a tenancy relationship between the parties. The absence of one does not make an occupant of
a parcel of land, or a cultivator thereof, or a planter thereon, ade jure tenant. This is so because unless a
person has established his status as a de jure tenant, he is not entitled to security of tenure nor is he
covered by the Land Reform Program of the Government under existing tenancy laws." (Caballes v.
DAR, 168 SCRA 254 [1988])
In the case of Teodoro vs. Macaraeg, 27 SCRA 7 (1969), the Court found all the elements of an
agricultural leasehold relation contained in the contract of lease executed by the parties.

Agricultural tenancy relation is different from farm employer-farm employee relation. The Court
clarified the difference in the case of Gelos vs. CA, 208 SCRA 608 (1992), as follows:
On the other hand, the indications of an employer-employee relationship are: 1)
the selection and engagement of the employee; 2) the payment of wages; 3) the
power of dismissal; and 4) the power to control the employee's conduct
although the latter is the most important element.

Teodoro vs. Macaraeg

According to a well-known authority on the subject, tenancy relationship is

distinguished from farm employer-farm worker relationship in that: "In farm
employer-farm worker relationship, the lease is one of labor with the agricultural
laborer as the lessor of his services and the farm employer as the lessee thereof.
In tenancy relationship, it is the landowner who is the lessor, and the tenant the
lessee of agricultural land. The agricultural worker works for the farm employer
and for his labor he receives a salary or wage regardless of whether the
employer makes a profit. On the other hand, the tenant derives his income from
the agricultural produce or harvest." (at 614)

27 SCRA 7 (1969)
Facts:
Macaraeg had been the lessee of the property of Teodoro for the past seven (7)
years when he was advised by the latter to vacate the property because it would
be given to another tenant. Thereafter, a new tenant was installed who forbade
Macaraeg from working on the riceland. On the other hand, Teodoro denied that
Macaraeg was his tenant and claimed that he had always leased all of his 39hectare riceland under civil lease. He further claimed that after the expiration of
his "Contract of Lease" with Macaraeg in 1961, the latter did not anymore renew
his contract.
Held:
The Contract of Lease between the parties contains the essential elements of a
leasehold tenancy agreement. The landholding in dispute is unmistakably an
agricultural land devoted to agricultural production. More specifically, the parties
stipulated that "the property leased shall be used or utilized for agricultural
enterprise only." Furthermore, the parties also agreed that the farmland must be
used for rice production as could be inferred from the stipulation that "the rental

Parties: landholder and tenant

Tenant defined.
A tenant is "a person who by himself, or with the aid available from within his immediate household,
cultivates the land belonging to or possessed by another, with the latter's consent for purposes of
production, sharing the produce with the landholder or for a price certain or ascertainable in produce or
in money or both, under the leasehold tenancy system." (Rep. Act No. 1199 [1954], sec. 5 (a)).
An overseer of a coconut plantation is not considered a tenant.

Zamoras vs. Su, Jr.

fruit-bearing trees on the land and filled with adobe stones the area intended for
vegetables. On the other hand, Castillo denied that Ignacio was his tenant but
that the latter was only a "magsisiga" of the landholding and that he did not ask
permission from Ignacio when he constructed his rest house. The trial court
found no tenancy relationship between the parties but this was reversed by the
Court of Appeals.

184 SCRA 248 (1990)

Facts:
Zamoras was hired by Su as overseer of his coconut land in Dapitan City.
Zamoras was tasked to have the land titled in Su's name. He was also "assigning
portions of the land to be worked by tenants, supervising the cleaning, planting,
care and cultivation of the land, the harvesting of coconuts and selling of the
copra." As compensation, he was paid salary of P2,400 per month plus 1/3 of the
proceeds of the sales of the copra. Su got another 1/3 of the proceeds while the
other third went to the tenants. In 1981, Su obtained a loan from Anita Hortellano
and the latter was authorized by Su to harvest the coconuts. Meanwhile, he
informed Zamoras that he was being temporarily laid-off until the loan is settled.
Zamoras filed a case for illegal termination and breach of contract before the
Regional Arbitration Branch of the Ministry of Labor. The Labor Arbiter held that
Zamoras' dismissal was without just cause and ordered Zamoras reinstatement.
On appeal, the National Labor Relation Commission reversed the Labor Arbiter
by holding that there is no employee-employer relation existing between the
parties but a landlord-tenant relation hence jurisdiction rests with the agrarian
court. Zamoras assailed the decision of NLRC.
Held:
The NLRC's conclusion that a landlord-tenant relationship existed between Su
and Zamoras is not supported by the evidence which shows that Zamoras was
hired by Su not as a tenant but as overseer of his coconut plantation. As
overseer, Zamoras hired the tenants and assigned their respective portions which
they cultivated under Zamoras' supervision. The tenants dealt directly with
Zamoras and received their one-third share of the copra produce from him. The
evidence also shows that Zamoras, aside from doing administrative work for Su,
regularly managed the sale of copra processed by the tenants. There is no
evidence that Zamoras cultivated any portion of Su's land personally or with the
aid of his immediate farm household.
The following circumstances indicate an employer-employee relationship
between them: 1. Zamoras was selected and hired by Su as overseer of the
coconut plantation. 2. His duties were specified by Su. 3. Su controlled and
supervised the performance of his duties. He determined to whom Zamoras
should sell the copra produced from the plantation. 4. Su paid Zamoras a salary
of P2,400 per month plus one-third of the copra sales every two months as
compensation for managing the plantation."

Held:
The element of personal cultivation is absent in this case. The alleged tenant "is
a businessman by occupation and this is his principal source of income. He
manufactures hollow blocks. He also has a piggery and poultry farm as well as a
hardware store on the land adjoining the subject land. To add to that, the
respondent farms the riceland of one Dr. Luis Santos. It is thus evident that the
working hours of the respondent as a businessman and his other activities do not
permit him to undertake the work and obligations of a real tenant. This is further
supported by the undisputed fact that the respondent cannot even personally
perform the work of a smudger because on 22 October 1986, the respondent
hired some 20 people who are not members of his family to cut and burn the
grass in the premises of the subject land." (at 535-536).
An owner tilling his own agricultural land is not a tenant within the contemplation of the law (Baranda
vs. Baguio, 189 SCRA 194 (1990).
In Oarde vs. CA, et al., 280 SCRA 235 (1997), certifications of tenancy/non-tenancy issued by DAR
are not conclusive.
"The certifications issued by administrative agencies or officers that a certain
person is a tenant are merely provisional and not conclusive on courts, as ruled
by this Court in Cuao vs. Court of Appeals, citing Puertollano vs. IAC. Secondly,
it is well-settled that the "findings of or certifications issued by the Secretary of
Agrarian Reform, or his authorized representative, in a given locality concerning
the presence or absence of a tenancy relationship between the contending
parties is merely preliminary or provisional and is not binding upon the courts." (at
246)
Landholder-lessor
A landholder-lessor is defined as "any person, natural or juridical, either as owner, lessee,
usufructuary or legal possessor of agricultural land, who lets, leases or rents to another said property for
purposes of agricultural production and for a price certain or ascertainable either in an amount of money
or produce." (Rep. Act No. 1199 [1954], sec. 42). Thus, consent need not be necessarily given
personally by the registered owner as long as the person giving the consent is the lawful landholder as
defined by law.

There is no tenancy relation because the element of personal cultivation does not exist.
Bernas vs. Court of Appeals
Castillo vs. CA

225 SCRA 119 (1993)

205 SCRA 529 (1992)

Facts:
Facts:

Alberto Ignacio filed a complaint for injunction against Castillo alleging that he is
the agricultural tenant of the latter. He claims that Castillo allowed him to
construct a rest house in the property and that, thereafter, Castillo started cutting

Natividad Deita is the owner of a 5,831-sq m property which she entrusted to her
brother, Benigno, so that he could use the fruits thereof to defray the cost of his
children's education in Manila. The property was leased by Bernas pursuant to a
production sharing arrangement executed between Bernas and Benigno.

Natividad played no part in this arrangement. In 1985, the lots were returned by
Benigno to his sister but when the owners sought to take possession, Bernas
refused to relinquish the property. Bernas was claiming that he was an
agricultural lessee entitled to security of tenure. Natividad filed an action for
recovery of possession. The trial court ruled in favor of Bernas but this was
subsequently reversed by the CA.
Issue:
Is consent by a legal possessor, even if without the consent of landowner,
sufficient to create tenancy relationship?
Held:

Held:
Baltazar is not a tenant because no consent was given by Pengzon. As held
in Tiongson v. Court of Appeals, 130 SCRA 482, tenancy relationship can only be
created with the consent of the true and lawful landholder through lawful means
and not by imposition or usurpation. "So the mere cultivation of the land by
usurper cannot confer upon him any legal right to work the land as tenant and
enjoy the protection of security of tenure of the law (Spouses Tiongson vs. Court
of Appeals, 130 SCRA 482)."
Successors-in-interest of the true and lawful landholder/owner who gave the consent are bound to
recognize the tenancy established before they acquired the agricultural land.

Yes. As legal possessor of the property, Benigno had the authority and capacity
to enter into an agricultural leasehold relation with Bernas. "The law expressly
grants him, as legal possessor, authority and capacity to institute an agricultural
leasehold lessee on the property he legally possessed." (at 125-126)

Endaya vs. Court of Appeals

215 SCRA 109 (1992)

Subject is agricultural land

Facts:

For agricultural tenancy to exist, the subject of the agreement must be an agricultural land.

Spouses San Diego owned a 2.0200-ha rice and corn land. The property has
been cultivated by Pedro Fideli as a tenant of the couple under a 50-50 sharing
agreement. In 1974, a lease contract was executed between spouses San Diego
and a certain Regino Cassanova for a period of four (4) years at P400.00 per ha
per annum rental and gave him the authority to oversee the planting of crops.
The contract was subsequently renewed to last until 1980. In both cases, Fideli
signed as witness. While the contract was subsisting, Fideli continuously worked
on the property, sharing equally with Cassanova the net produce of the harvests.
In 1980, the land was sold to spouses Endaya. Fideli continued tilling the land
despite the Endaya's demand to vacate the property. Fideli refused to leave and
deposited with Luzon Development Bank the landowner's share in the harvests.
Fideli filed a complaint praying that he be declared the agricultural tenant of the
Endayas. The trial court ruled in favor of the Endayas but the same was
subsequently reversed by the CA holding that Fideli is an agricultural lessee
entitled to security of tenure.

RA 6657 defines the term "agricultural land" as "land devoted to agricultural activity as defined in this
Act and not classified as mineral, forest, residential, commercial or industrial land." (see discussion on
scope of CARP, Chapter I). Under RA 3844, "agricultural land" refers to land devoted to any growth,
including but not limited to crop lands, salt beds, fish ponds, idle land and abandoned land.
The area of agricultural land that a lessee may cultivate has no limit, but he should cultivate the entire
area leased. The three (3) hectare limit under RA 6657 applies only to the award that may be given to
the agrarian reform beneficiary.
Consent by landholder
As discussed earlier, consent must be given by the true and lawful landholder of the property.
In Hilario vs. IAC, 148 SCRA 573 (1987), the Supreme Court held that tenancy relation does not exist
where a usurper cultivates the land.

Held:
Hilario vs. Intermediate Appellate Court
148 SCRA 573 (1987)
Facts:
Salvador Baltazar was working on the land pursuant to a contract executed
between him and Socorro Balagtas involving a two (2)-ha property. According to
Baltazar, in 1965, he relinquished 1.5 ha to certain individuals and what remained
under his cultivation was -ha owned by Corazon Pengzon. After Socorro's
death, no new contract was executed. Sometime in 1980, the Hilarios started
cultivating a 4,000-sq m portion of the property and enjoined Baltazar from
entering the same. The Hilarios claimed that they acquired the landholding from
the Philippine National Bank after a foreclosure proceeding. On the other hand,
Corazon Pengzon explained that she did not get any share from the produce of
the land since 1964 and she would not have accepted it knowing that she did not
own the property anymore.

It is true that the Court has ruled that agricultural tenancy is not created where
the consent of the true and lawful owners is absent. But this doctrine
contemplates a situation where an untenanted farm land is cultivated without the
landowner's knowledge or against her will or although permission to work on the
farm was given, there was no intention to constitute the worker as the agricultural
lessee of the farm land. The rule finds no application in the case at bar where the
petitioners are successors-in-interest to a tenanted land over which an
agricultural leasehold has long been established. The consent given by the
original owners to constitute private respondent as the agricultural lessee of the
subject landholding binds private respondents who, as successors-in-interest of
the Spouses San Diego, step into the latter's shoes, acquiring not only their rights
but also their obligations. (at 118; underscoring supplied).
Purpose is agricultural production
Tenancy status arises only if an occupant of a parcel of land has been given its possession for the
primary purpose of agricultural production.

Compensation in money and/or produce

Caballes vs. Department of Agrarian Reform

In Matienzo v. Servidad, 107 SCRA 276 (1981), the Supreme Court held that:

168 SCRA 248 (1988)

A tenant is defined under section 5(a) of Republic Act No. 1199 as a person who,
himself, and with the aid available from within his immediate household,
cultivates the land belonging to or possessed by another, with the latter's consent
for purposes of production, sharing the produce with the landholder under the
share tenancy system, or paying to the landholder a price certain or
ascertainable in produce or in money or both, under the leasehold tenancy
system. From the above definition of a tenant, it is clear that absent a sharing
arrangement, no tenancy relationship had ever existed between the parties. What
transpired was that plaintiff was made overseer over a 7-hectare land area; he
was to supervise applications for loans from those residing therein; he was
allowed to build his house thereon and to plant specified plants without being
compensated; he was free to clear and plant the land as long as he wished; he
had no sharing arrangement between him and defendant; and he was not
obligated to pay any price certain to nor share the produce, with the
latter. CaSHAc

Facts:
Spouses Caballes acquired subject land from the Millenes family. Prior to the
sale, Abajon constructed his house on a portion of the property, paying a monthly
rental to the owner. Abajon was also allowed to plant on a portion of the land and
that the produce thereof would be shared by them on a 50-50 basis. When the
new owners took over, they told Abajon to transfer his dwelling to the southern
portion of the property because they would be building a poultry near Abajon's
house. Later, the Caballes asked Abajon to leave because they needed the
property. Abajon refused. During the trial the former landowner testified that
Abajon dutifully gave her 50% share of the produce of the land under his
cultivation.
Held:
The fact of sharing alone is not sufficient to establish a tenancy relationship. The
circumstances of this case indicate that the private respondent's status is more of
a caretaker who was allowed by the owner out of benevolence or compassion to
live in the premises and to have a garden of some sort at its southwestern side
rather than a tenant of the said portion. Agricultural production as the primary
purpose being absent in the arrangement, it is clear that the private respondent
was never a tenant of the former owner, Andrea Millenes. Consequently, Sec. 10
of RA 3844, as amended, does not apply. Simply stated, the private respondent
is not a tenant of the herein petitioner.
Personal cultivation
Cultivation
Under DAR AO 5 (1993), cultivation is not limited to the plowing and harrowing of the land, but also
the 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 cutting of grasses. In coconut lands, cultivation includes the clearing of the landholding, the
gathering of the coconuts, their piling, husking and handling as well as the processing thereof into copra,
although at times with the aid of hired laborers.
Meaning of "Personal Cultivation"
"Personal cultivation" exists when a person cultivates the land by himself and with the aid available
from his immediate farm household.
In Oarde vs. CA, et al., supra, the Court held that the element of personal cultivation is essential for
an agricultural leasehold. There should be personal cultivation by the tenant or by his immediate farm
household or members of the family of the lessee or other persons who are dependent upon him for
support or who usually help him in his activities (Evangelista vs. CA, 158 SCRA 41). The law is explicit in
requiring the tenant and his immediate family to work the land (Bonifacio vs. Dizon, 177 SCRA 294), and
the lessee cannot hire many persons to help him cultivate the land (De Jesus vs. IAC, 175 SCRA 559).
In Gabriel vs. Pangilinan, supra, the Court held that the tenancy relation was severed when the tenant
and/or his immediate farm household ceased from personally working the fishpond when he became ill
and incapacitated.

Security of Tenure
Under Sec. 7 of RA 1199, "the agricultural leasehold relation once established shall confer upon the
agricultural lessee the right to continue working on the landholding until such leasehold relation is
extinguished. The agricultural lessee shall be entitled to security of tenure on his landholding and cannot
be ejected therefrom unless authorized by the Court for causes herein provided."
The Supreme Court has consistently ruled that once a leasehold relation has been established, the
agricultural lessee is entitled to security of tenure. The tenant has a right to continue working on the land
except when he is ejected therefrom for cause as provided by law (De Jesus vs. IAC, 175 SCRA 559
[1989]).
Transfer of ownership or legal possession does not affect security of tenure.
In Tanpingco vs. IAC, 207 SCRA 653 (1992), the Court upheld the validity of donation but the donee
must respect the rights of the tenant and ordered the donee to pay the tenant disturbance compensation.

Tanpingco vs. Intermediate Appellate Court

207 SCRA 653 (1992)
Facts:
In 1985, Tanpingco filed a complaint for payment of disturbance compensation
against Benedicto Horca, Sr. Tanpingco alleged that he is the tenant-lessee in
Horca's riceland under a leasehold contract; that he was asked to desist from
working on the land because it was already donated to the Ministry of Education,
Culture and Sports; and that he is willing to accept disturbance compensation or
in the alternative to remain as tenant-lessee of the subject land.
Issue:
Is the security of tenure of a tenant affected by the transfer of ownership or legal
possession of an agricultural land?
Held:

Under Art. 428 of the Civil Code, the owner has the right to dispose of a thing
without other limitations than those established by law. As an incident of
ownership, therefore, there is nothing to prevent a landowner from donating his
naked title to the land. However, the new owner must respect the rights of the
tenant. Sec. 7 of RA No. 3844, as amended, gives the agricultural lessee the
right to work on the landholding once the leasehold relationship is established. It
also entitles him to security of tenure on his landholding. He can only be ejected
by the court for cause. Time and again, this Court has guaranteed the continuity
and security of tenure of a tenant even in cases of a mere transfer of legal
possession. As elucidated in the case of Bernardo v. Court of Appeals (168
SCRA 439 [1988]), security of tenure is a legal concession to agricultural lessees
which they value as life itself and deprivation of their landholdings is tantamount
to deprivation of their only means of livelihood. Also, under Section 10 of the
same Act, the law explicitly provides that the leasehold relation is not
extinguished by the alienation or transfer of the legal possession of the
landholding. The only instances when the agricultural leasehold relationship is
extinguished are found in Section 8, 28 and 35 of the Code of Agrarian Reforms
of the Philippines. The donation of the land did not terminate the tenancy
relationship. However, the donation itself is valid." (at 657-658; underscoring
supplied).
Constitutionality of the provision on security of tenure
The constitutionality of the provision on security of tenure has long been settled by the Supreme
Court in the case of Primero vs. Court of Agrarian Relations, 101 Phil. 675 (1957).

Primero vs. Court of Agrarian Relations

101 Phil. 675 (1957)

justice precepts of the Constitution and in the exercise of the police power of the
state to promote the commonwealth. It is a statute relating to public subjects
within the domain of the general legislative powers of the State and involving the
public rights and public welfare of the entire community affected by it. Republic
Act 1199, like the previous tenancy laws enacted by our lawmaking body, was
passed by congress in compliance with the constitutional mandates that "the
promotion of social justice to insure the well-being and economic security of all
the people should be the concern of the State" (Art II, sec. 5) and that "the state
shall regulate the relations between landlord and tenant in agriculture" (Art. XIV,
sec. 6). (at 680).
In Pineda vs. de Guzman, 21 SCRA 1450 (1967), the Supreme Court also held:
Section 49 of the Agricultural Tenancy Act, Republic Act 1199, as amended,
enunciates the principle of security of tenure of the tenants, such that it
prescribes that the relationship of landholder and tenant can only be terminated
for causes provided by law. The principle is epitomized by the axiom on land
tenure that once a tenant, always a tenant. Attacks on the constitutionality of this
guarantee have centered on the contention that it is a limitation on freedom of
contract, a denial of the equal protection of the law, and an impairment of or a
limitation on property rights. The assault is without reason. The law simply
provides that the tenancy relationship between the landholder and his tenant
should be preserved in order to insure the well-being of the tenant and protect
him from being unjustly dispossessed of the land. Its termination can take place
only for causes and reasons provided in the law. It was established pursuant to
the social justice precept of the State to promote the common weal. (Primero vs.
Court of Industrial Relations, G.R. No. L-10594, May 29, 1957) (at 1456).
Rights and Responsibilities of the Parties
Rights and responsibilities of lessee
The lessee shall have the following rights:

Facts:
Primero owns a tenanted riceland in Cavite. Because of his desire to let the
property to one Porfirio Potente, he notified his tenant advising the latter to
vacate the land. The tenant refused. Primero filed a case with CAR which
subsequently dismissed the same. On appeal, Primero assailed the
constitutionality of Sec. 9 and 50 of RA 1199 claiming that said provisions are
limitations on freedom of contract, a denial of equal protection of law, and an
impairment of, or limitation on, property rights.
Held:
The provisions of law assailed as unconstitutional do not impair the right of the
landowner to dispose or alienate his property nor prohibit him to make such
transfer or alienation; they only provide that in case of transfer or in case of
lease, as in the instant case, the tenancy relationship between the landowner and
his tenant should be preserved in order to insure the well-being of the tenant or
protect him from being unjustly dispossessed by the transferee or purchaser of
the land; in other words, the purpose of the law in question is to maintain the
tenants in the peaceful possession and cultivation of the land or afford them
protection against unjustified dismissal from their landholdings. Republic Act 1199
is unquestionably a remedial legislation promulgated pursuant to the social

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 the 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;
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 (Rep. Act No. 3844[1963], sec. 23, 24, 25, 11,
12, 36)
On the other hand, the lessee shall have the following responsibilities under Sec. 26 of RA 3844:

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)
To be issued a warehouse receipt (quedan) or molasses storage
certificate by the sugar central for the manufactured sugar, molasses and other
by-products;

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)
To have free access to the sugar central's factory, facilities, and laboratory
for purposes of checking and/or verifying records and procedures in the
processing of sugarcane through professional representation;

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;

d)
To 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;

d)
and

Keep the farm and growing crops attended to during the work season;

e)
To be given 30 days notice in writing before the sugar and other byproducts are sold through public auction; and

e)

To pay the lease rental to the lessor when it falls due.

f)
To be provided with the standard tonnage allocation by the miller/sugar
central.

One of the rights of a lessee is to be entitled to a homelot. But only the tenant-lessee has this right and
that members of the immediate family of the tenants are not entitled to a homelot.

Cecilleville Realty and Service Corporation vs. Court of Appeals

278 SCRA 819 (1997)
Facts:
Petitioner Cecilleville Realty owns a parcel of land, a portion of which is occupied
by Herminigildo Pascual. Despite repeated demands, Herminigildo refused to
vacate the property and insisted that he is entitled to occupy the land since he is
helping his mother, the corporation's tenant, to cultivate the property.
Held:
Only a tenant is granted the right to have a home lot and the right to construct or
maintain a house thereon. And here, private respondent does not dispute that he
is not petitioner's tenant. In fact, he admits that he is a mere member of Ana
Pascual's immediate farm household. Under the law, therefore, we find private
respondent not entitled to a homelot. Neither is he entitled to construct a house of
his own or to continue maintaining the same within the very small landholding of
petitioner. . . . Thus, if the Court were to follow private respondent's argument and
allow all the members of the tenant's immediate farm household to construct and
maintain their houses and to be entitled to not more than one thousand (1,000)
square meters each of home lot, as what private respondent wanted this Court to
dole-out, then farms will be virtually converted into rows, if not colonies, of
houses.
In sugarcane lands, the lessee shall have the following rights to be exercised by him personally or
through a duly registered cooperative/farmers' association of which he is a bona fide member (DAR
Adm. O. No. 5 [1993]):
a)
To enter into a contract with the sugar central millers for the milling of the
sugarcane grown on the leased property;

Rights and responsibilities of lessor

The lessor shall have the following rights:
a)
To inspect and observe the extent of compliance with the terms and conditions of the leasehold
contract;
b)
To propose a change in the use of the landholding to other agricultural purposes, or in the kind of
crops planted;
c)
To 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)

To mortgage expected rentals (Rep. Act No. 3844 [1963], sec. 29):

The lessor may propose a change in use but the change shall be agreed upon by the landowner and
the lessee. In case of disagreement, the matter may be settled by the Provincial Agrarian Reform
Adjudicator (PARAD), or in his absence the Regional Agrarian Reform Adjudicator (RARAD) (DAR Adm.
O. No. 5 [1993])
The lessor shall have the following obligations:
a)

To keep the lessee in peaceful possession and cultivation of the land; and

b)
To keep intact such permanent useful improvements existing on the
landholding at the start of the leasehold relation (Rep. Act No. 3844 [1963], sec.
30).
Sec. 31 of RA 3844 provides that the lessor is prohibited to perform any of the following acts:
a)
To dispossess the lessee of his/her landholding except upon authorization
by the Court;
b)
To require the lessee to assume, directly or indirectly, the payment of the
taxes or part thereof levied by the government on the land;
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; and
f)
For coconut lands, indiscriminate cutting of coconut trees will be
deemed prima facie evidence to dispossess the tenant of his/her landholding
unless there is written consent of the lessee and there is PCA certification, 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 (DAR Adm. O. No. 5 [1993] and DAR Adm. O. No. 19 [1989]).

Spouses Gavino and Florencia Nisnisan are the owners of a 4.9774 hectare land
in Davao del Sur. Policarpio, the son of Gavino, has been cultivating one (1) ha of
said land since 1961. In 1976, Gavino and Policarpio executed a leasehold
contract which stipulates a sharing arrangement of 1/3:2/3 of the harvest. In
1978, Gavino sold two (2) ha of the land, including the land tenanted by
Policarpio, to spouses Mancera. As a result of the sale, Policarpio and family
were ousted. They then filed an action for reinstatement of tenancy against the
Manceras. The Manceras, on the other hand, countered that spouses Nisnisan
have no cause of action because they voluntarily surrendered their landholding.
Issue:
Is the tenant deemed to have voluntarily surrendered subject landholding?

Termination of Tenancy Relation

Held:

Causes for termination of leasehold relation

Section 8 of RA 3844 provides that agricultural leasehold relation shall be extinguished by the
following acts or omissions:
a)
Abandonment of the landholding without the knowledge of the agricultural
lessor;
b)
Voluntary surrender of the landholding by the agricultural lessee, written
notice of which shall be served three months in advance; or
c)
Absence of an heir to succeed the lessee in the event of his/her death or
permanent incapacity.
Conversion of the land to non-agricultural uses also extinguishes the leasehold relation because the
subject land is no longer an agricultural land and the purpose is no longer agricultural production.
However, under Sec. 16 of DAR AO 1 (1999), the tenant affected by the conversion is entitled to
disturbance compensation which must be paid within sixty (60) days from the issuance of the order of
conversion.
Abandonment
In the case of Teodoro vs. Macaraeg, supra, it was held that the word "abandon," in its ordinary
sense, means to forsake entirely, to forsake or renounce utterly. "The emphasis is on the finality and the
publicity with which some thing or body is thus put in the control of another, and hence the meaning of
giving up absolutely, with intent never again to resume or claim one's rights or interests." In other words,
the act of abandonment constitutes actual, absolute and irrevocable desertion of one's right or property. .
. . Likewise, failure to cultivate the land by reason of the forcible prohibition to do so by a third party
cannot also amount to abandonment, for abandonment presupposes free will." (at 19-20; underscoring
supplied).
Voluntary surrender of property
The tenant's intention to surrender landholding cannot be presumed, much less determined by mere
implication, but must be convincingly and sufficiently proved.

Other than their bare allegations, private respondents failed to present any
evidence to show that petitioners-spouses surrendered their landholding
voluntarily after the private respondents purchased the subject property.
Moreover, the filing of the complaint for reinstatement of leasehold tenancy by
petitioners-spouses against private respondents before the CAR militates against
the private respondents' claim that petitioners-spouses voluntarily surrendered
their landholding to them. Under Sec. 8 of RA 3844, voluntary surrender, as a
mode of extinguishing agricultural leasehold tenancy relations, must be
convincingly and sufficiently proved by competent evidence. The tenant's
intention to surrender the landholding cannot be presumed, much less
determined by mere implication.
Effect of death or permanent incapacity of tenant-lessee on leasehold relation
Under Sec. 9 of RA 3844, in case of death or permanent incapacity, the leasehold relation continues
between the lessor and the person who can cultivate the land personally, chosen by the lessor within
one month from such death or incapacity, from among the following:
a)

The surviving spouse;

b)

The eldest direct descendant by consanguinity;

c)

The next eldest descendant or descendants in the order of age.

The age requirement is applied under the presumption that all heirs/successors are qualified.
The leasehold relation is not terminated by death or permanent incapacity of the landholder-lessor. It
binds his legal heirs (Rep. Act No. 3844 [1963], sec. 9).
Also, Sec. 10 of RA 3844 provides that the mere expiration of the term or period in a leasehold
contract nor by sale, alienation or transfer of the legal possession of the landholding does not
extinguished leasehold. In these cases, the transferee is subrogated to the rights and substituted to the
obligations of the lessor.
Dispossession of Tenants
Under Sec. 36 of RA 3844, dispossession of tenants may be authorized by the Court in a judgment
that is final and executory if after due hearing it is shown that:

Nisnisan, et al vs. Court of Appeals

294 SCRA 173 (1998)
Facts:

a)
The lessee failed to substantially comply with the terms and conditions of
the contract or with pertinent laws unless the failure is caused by a fortuitous
event or force majeure;

b)
The lessee planted crops or used the land for a purpose other than what
has been previously agreed upon;
(Note: Under DAR AO 5 [1993], the lessee is now allowed to intercrop or
plant secondary crops after the rental has been fixed, provided the lessee
shoulders the expenses.)
c)
The lessee failed to adopt proven farm practices necessary to conserve
the land, improve its fertility, and increase its productivity taking into consideration
the lessee's financial capacity and the credit facilities available to him;
d)
There has been substantial damage, destruction or unreasonable
deterioration of the land or any permanent improvement thereon due to the fault
or negligence of the lessee;
e)
The lessee failed to pay lease rental on time except when such nonpayment is due to crop failure to the extent of 75% as a result of a fortuitous
event;
f)

The lessee employed a sub-lessee; or

g)
The landholding is declared by the DAR to be suited for residential,
commercial, industrial or some other urban purposes subject to payment of
disturbance compensation to the lessee.
(Note: Under Sec. 36 [1] of RA 3844, as amended by RA 6389, disturbance compensation is
equivalent to five [5] times the average of the gross harvest on his landholding during the last five [5]
preceding calendar years.)
In the case of Garchitorena vs. Panganiban, 6 SCRA 338 (1962), it was held that when non-payment
of lease rentals occurs for several years, said omission has the effect of depriving the landowner of the
enjoyment of the possession and use of the land.
Under Sec. 36 (1) of RA 3844, as amended, a lessor who ejects his tenant without the court's
authorization 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.

Determination of Lease Rentals

The lease rental shall not be more than the equivalent of 25% of the average normal harvest during
the three (3) agricultural years preceding the following dates:

10 September 1971, the date of effectivity of RA 6389 for tenanted rice

and corn lands;

15 June 1988 or date the tenant opted to enter into leasehold agreement,
whichever is sooner, for tenanted sugar lands; or

15 June 1988 or date of leasehold agreement by the parties concerned,

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 (DAR Adm. O. No. 5 [1993]).
DAR AO 5 (1993) defines "normal harvest" as the usual or regular produce obtained from the land
when it is not affected by any fortuitous event like drought, earthquake, volcanic eruption, and the like. If
there had been no normal harvest, the estimated normal harvest during the three (3) preceding
agricultural years shall be considered as the normal harvest.
"Agricultural year" refers to the period of time required for raising a particular product, including the
preparation of the land, sowing, planting and harvesting of crops and, whenever applicable, threshing of
said crops: Provided, however, That in case of crops yielding more than one harvest from one planting,
"agricultural year" shall be the period from the preparation of the land to the first harvest and thereafter
from harvest to harvest. In both cases, the period may be shorter or longer than a calendar year.
The law states that only the amount used for seeds and the cost of harvesting, threshing, loading,
hauling, and processing, whichever is applicable, are considered allowable deductions from the normal
harvest in order to determine the lease rental.
The lease rental shall cover the whole farmholding attended to by the lessee. Computation of lease
rental shall include both primary and secondary crops existing as of 15 June 1988. Secondary crops
which are planted to an aggregate area of half a hectare or less shall not be included in the computation
of the lease rental (DAR Adm. O. No. 5 [1993]).
If the land has been cultivated for a period of less than three agricultural years prior to 15 June 1988,
the initial rental shall be based on the average normal harvest during the preceding agricultural years
when the land was actually cultivated.
After the lapse of the first three (3) normal harvests, the final rental shall be based on the average
normal harvest during these three (3) preceding agricultural years.
CHAPTER 3
Land Acquisition
Registration of Landholdings and Landowners
Sec. 14 of RA 6657 requires all persons, natural or juridical, and government entities that own or
claim to own agricultural lands, whether, in their names or in the name of others, are required, to file a
sworn statement with the assessor's office, containing the following data:
a)

the description and area of the property;

b)

the average gross income from the property for at least three (3) years;

c)

the names of all tenants and farmworkers therein;

d)
the crops planted in the property and the area covered by each crop as of
1 June 1987;
e)
the terms of mortgages, lease, and management contracts subsisting as
of 1 June 1987; and
f)
the latest declared market value of the land as determined by the city or
provincial assessor.
The registration drive, denominated as Listasaka II, is governed by Department of Finance MC 5
(1988).
Effect of failure to register

Under Sec. 4 of EO 229 (1987), which originally provided for the compulsory registration of
agricultural landholdings, if the landowner fails to register within the prescribed period, the government
shall base the valuation of his property for landowner compensation purposes on the City/Provincial
Assessor's value.

private agricultural lands; lands acquired by the Presidential Commission on Good Government (PCGG),
and public agricultural lands.

The effects of non-registration provided in Sec. 40 of EO 229, however, are now deemed superseded
by Sec. 14 of RA 6657 which does not provide for such effects. In the Association cases, the Supreme
Court stated:

At the time of the deliberations on House Bill No. 400, otherwise known as "An Act Instituting a
Comprehensive Agrarian Reform Program and Providing the Mechanism for Its Implementation," and
Senate Bill No. 249, otherwise known as "An Act Instituting a Comprehensive Agrarian Reform Program
to promote Social Justice and Industrialization, Providing the Mechanism for its Implementation and for
Other Purposes," the agrarian reform program was already in place, albeit limited in scope. Specifically,
on 21 October 1972 then President Marcos, through PD 27, instituted the agrarian reform program and
placed all tenanted rice and corn lands under its coverage. On 17 July 1987, President Aquino
issued EO 228 which declared full ownership by qualified farmer beneficiaries of lands they acquired by
virtue of PD 27.

The complaint against the effects of non-registration of the land under E.O. No.
229 does not seem to be viable any more as it appears that Section 4 of the said
Order has been superseded by Section 14 of the CARP Law. This repeats the
requisites of registration as embodied in the earlier measure but does not
provide, as the latter did, that in case of failure or refusal to register the land, the
valuation thereof shall be that given by the provincial or city assessor for tax
purposes. On the contrary, the CARP Law says that the just compensation shall
be ascertained on the basis of the factors mentioned in its Section 17 and in the
manner provided for in Section 16.
Registration of Potential Beneficiaries
The law requires the DAR to register all potential beneficiaries and compile a data bank containing
pertinent information on them.
The registration of beneficiaries is governed by DAR AO 10 (1989). The objectives of this activity
include the validation of data reported by landowners under the LISTASAKA program, and to provide
basic data for the planning and development of support programs.
Beneficiaries of PD 27 who have culpably sold, disposed of, or abandoned their lands, and
landowners of PD 27 beneficiaries who already own or have already received at least three (3) hectares
of land are excluded from registration, they being disqualified to become beneficiaries under Secs. 22
and 23 of RA 6657.
Effect of farmer's failure to register
The failure of a farmer to register does not have any effect prejudicial to his rights as a potential
farmer-beneficiary. DAR AO 10 (1989) does not provide for any penalty against the failure of a farmer to
register. He may simply avail of the next registration period. Under this administrative order, the
registration of new qualified registrants is undertaken as a continuing activity of the DAR.
Landholdings Covered by CARP
The schedule of acquisition and distribution of agricultural lands covered by CARP is provided for
under Sec. 7 of RA 6657. Land distribution and acquisition covers three phases. However, this does not
mean that in the implementation of the program, a particular category should be finished first before
going to the next category. In other words, the three (3) phases as outlined in Sec. 7 should not be
interpreted as an exclusive order of priority. Rather, what is contemplated is simultaneous over-all
implementation (Records of the Senate, Volume I, No. 101, pp. 3239-32340; Speech of Rep. Roo,
Congressional Deliberations, 6 October 1987). The guiding principle in the implementation of the
program is the readiness of the different farmer groups to work fully without restraints on the land and
make the land productive (Sponsorship Speech of Rep. Andolana, Congressional Deliberations, 23
September 1987).
It is within this framework that the following lands are to be acquired by the Republic of the
Philippines for ultimate distribution to the qualified farmer-beneficiaries: rice and corn lands under PD
27/EO 228; idle or abandoned lands; lands foreclosed by private and government financial institutions;

Rice and corn lands under PD 27 and EO 228

During the congressional deliberations, it was noted that as of 1987 or fourteen (14) years of
implementation of PD 27, approximately 547,000 hectares involving 397,896 beneficiaries had been left
untouched. The inclusion of rice and corn lands underPD 27 and EO 228 in the CARP is to be seen as a
mere continuation of an unfinished business. (Speech of Rep. Gillego, Congressional Deliberations, 6
October 1987).
Idle or abandoned land
The DAR is mandated to initiate the expropriation or acquisition of idle or abandoned agricultural
lands at the earliest possible time for distribution to farmer-beneficiaries of the agrarian reform program
(Const. Art. XVIII, sec 22; EO 229, sec 18[h]). Idle or abandoned land refers to any agricultural land not
cultivated, tilted 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 the
government as provided under this Act, but not include land that has become permanently or regularly
devoted to non-agricultural purposes. It does not include land which has become unproductive by reason
of force majeure or any other fortuitous event, provided that prior such event, such land was previously
used for agricultural or other economic purpose (RA 6657, sec 3 [e]).
Private agricultural lands
Private agricultural lands within the context of RA 6657 refer to those lands devoted to agricultural
activity and not classified as residential, commercial or industrial owned by persons, whether natural or
juridical, other than the government or its instrumentalities. Abandoned private agricultural lands,
commercial farms and agricultural lands subject of mortgage or foreclosure by natural or juridical
persons, private banking or financial institutions are special classes of private agricultural lands subject
of acquisition or distribution to farmer-beneficiaries.
Agricultural lands under mortgage or foreclosure
Mortgage is an accessory contract whereby the debtor (or a third person) guarantees the
performance of the principal obligation by subjecting real property or real rights as security in case of
non-fulfillment of said obligation within the period agreed upon. A mortgage follows the property whoever
the possessor may be and subjects it to the fulfillment of the obligation for whose security it was
constituted. (Bonnevie vs. Court of Appeals, 125 SCRA 122, [1983]). Therefore, even if the ownership of
the mortgaged property changes, the encumbrance, unless extinguished by any means allowed by law,
subsists. The parties to such contract, the mortgagee and the mortgagor under the law, have their
respective rights and obligations. It is the essence of the mortgage contract that when the principal
obligation becomes due, the things in which the mortgage consists may be alienated for the payment to
the creditor. (New Civil Code, Art. 2087) This remedy is referred to as foreclosure. In the foreclosure

proceedings, the mortgaged property is sold on default of the mortgagor in satisfaction of the mortgage
debt.
The nature and the legal effects of and legal relationships formed by a contract of mortgage gives rise
to an important issue: at what point may the creditor be considered as the landowner and when may he
be treated as a mere lienholder for the purpose of placing the landholdings under CARP coverage?
When placing mortgaged private agricultural lands under CARP, it is important to distinguish between
the status of creditor as landowner and creditor as lien-holder/mortgagee. The significance of this
distinction lies in the rights and obligations to which the landowner and mortgagee are entitled and
subjected to as enumerated in Sec. 8 and 9 of DAR AO 1 (2000). Thus, the creditor-mortgagee shall be
considered as the landowner for the purpose of covering the properties under CARP under two (2)
circumstances: (a) when the mortgagee is the purchaser in the foreclosure sale and the redemption
period has already expired where the right of redemption exists; or (b) when the mortgagee is the
purchaser in the foreclosure sale and said sale is confirmed by the court in cases where only equity of
redemption is provided (DAR Adm. O. No. 1 [2000], sec. 4).
On the other hand, the creditor is considered as a lien-holder or mortgagee if as of the date the land
transfer claim was received by the Land Bank of the Philippines (LBP) from the DAR and either of the
following circumstances obtain: the mortgage debt is not yet due and demandable; or the mortgage debt
is already due and demandable but the mortgagee has not foreclosed on the property; or the mortgage
has already been foreclosed but the period to exercise the right of redemption has not expired or the
foreclosure sale has not yet been confirmed by the court in cases where there is only equity of
redemption (DAR Adm. O. No. 1 [2000], sec. 5)
It is likewise important to state that mortgages and other claims registered with the register of deeds
shall be assumed by the government (when landholdings subject or mortgage or claim is acquired for
CARP purposes) up to an amount equivalent to the landowner's compensation value as provided in Sec.
72 (b) of RA 6657. In other words, the government shall assume the mortgage indebtedness not
exceeding the just compensation due the landowner. For instance, the debt secured by the mortgage is
P100,000.00. Assuming that when the mortgaged landholding is placed under the CARP and acquired
by the government, the landowner's just compensation is determined to be P80,000.00. In this case,
what the government merely assumes is P80,000.00 out of the P100,000.00 indebtedness. This amount
is what the government is obligated to pay the landowner by virtue of its acquisition under CARP. It
cannot be made to pay the balance of P20,000.00. Said amount is collectible from the debtor/mortgagor.
The obligation of the debtor to pay the debt to the mortgagee stands although the mortgaged property to
secure the payment of said debt may have been transferred to a third person. (Mccullough & Co. vs.
Veloso, 46 Phil. 1, [1924]).
Commercial farms
Commercial farms are private agricultural lands devoted to commercial livestock, poultry and swine
raising, and aquaculture including saltbeds, fishponds and prawn ponds, fruit farms, orchards, vegetable
and cut-flower farms, and cacao, coffee and rubber plantations. These farms are subject to immediate
compulsory acquisition and distribution after ten (10) years from the effectivity ofRA 6657 or 15 June
1988. In the case of new farms, the ten (10)-year period begins from the first year of commercial
production and operation as determined by DAR (Rep. Act No. 6657 [1988], sec. 11). Upon the
expiration of the ten (10)-year deferment period on 15 June 1998, the DAR issued AO 9 (1998),
otherwise known as "Rules and Regulations on the Acquisition, Valuation, Compensation and
Distribution of Deferred Commercial Farms." All commercial farms whose deferment expired as of 15
June 1998 shall be subject to immediate acquisition and distribution under the CARP. Those whose
deferments have yet to expire will be acquired and distributed only upon expiration of their respective
deferment periods as originally determined by the DAR or earlier if the DAR determines that the purpose
for which it was deferred no longer exists and revokes its deferment (DAR Adm. O. No. 9 [1998], sec. 2

[a]). All infrastructure facilities and improvements including buildings, roads, machineries, receptacles,
instruments or implements permanently attached to the land which are necessary and beneficial to the
operations of the farm as determined by the DAR, and shall be subject to acquisition upon the
recommendation of the ARBs (DAR Adm. O. No. 9 [1998], sec. 2 [d]).
Commercial farms with expired deferment period shall be acquired through VOS, CA or direct
payment scheme. The acquisition of facilities and improvements as a general rule, shall be encouraged
through the direct payment scheme (DAR Adm. O. No. 9 [1998], sec. 24).
Corporate farms
Corporate farms are those owned or operated by corporations or other business associations (Rep.
Act No. 6657 [1988], sec. 29). Corporate farms may be acquired through voluntary land transfer, VOS,
CA and voluntary stock distribution plan (Rep. Act No. 6657[1988], sec. 31). It must be noted that
corporate farm owners cannot avail of the ten-year deferment period under DAR AO 9 (1998). Only
commercial farms are subject of deferment. (Rep. Act No. 6657 [1988], sec. 11; DAR Adm. O. No. 9
[1998]).
Lands owned by the State in proprietary capacity
Under Sec. 1 of EO 407 (1990), all government instrumentalities were directed to transfer to the
Republic of the Philippines through the DAR all landholdings suitable for agriculture. The government
instrumentalities directed to do so included government agencies, government owned and controlled
corporations or financial institutions such as the Development Bank of the Philippines, Philippine
National Bank, Republic Planters Bank, Asset Privatization Trust, Presidential Commission on Good
Government, Department of Agriculture, State Colleges and Universities, Department of National
Defense and others.
Modes of Acquisition of Private Agricultural Lands
CARP is founded on the right of landless farmers and regular farmers to own directly or collectively
the lands they till through the just distribution of all agricultural lands. To achieve this end, a mechanism
is provided in the law for the identification, acquisition, distribution of agricultural lands. As earlier
discussed, CARP covers both private and public agricultural lands. Since the State owns the latter, they
just need to be identified and distributed to the beneficiaries. Private agricultural lands, upon the other
hand, generally have to go through the acquisition process before their ultimate distribution to the
farmers.
In order for the acquisition process to be completed, several requisites must be satisfied. First, the
land should be privately owned and found suitable for agriculture. Second, there are beneficiaries willing
to take over the ownership of the land and make it more productive. Third, the landowner is paid just
compensation or deposit in cash or LBP bonds is made in his name if the value is contested. Finally, title
to the land is transferred in the name of the Republic of the Philippines.
It must be clarified, however, that full payment of just compensation is not necessarily required in
Voluntary Land Transfer (VLT)/Direct Payment Scheme (DPS) because the terms of payment of just
compensation are governed by the mutual agreement of the parties, i.e., the farmer-beneficiary and the
landowner. Likewise, under EO 407, the payment of just compensation to the government instrumentality
as landowner may come even after land distribution, that is, thirty (30) days from the registration of the
ownership documents by the Register of Deeds in favor of the Department of Agrarian Reform (Exec.
Order No. 407 [1990], sec. 1, par. 4).
In the same manner that full payment of just compensation is not always necessary to complete
acquisition, transfer of title to the Republic of the Philippines is not necessary in VLT/DPS since the
landholding is directly transferred from the landowner to the beneficiary.

The modes by which private agricultural lands may be acquired are as follows: Operation Land
Transfer (OLT), Voluntary Offer to Sell (VOS), Voluntary Land Transfer/ Direct Payment Scheme
(VLT/DPS), Compulsory Acquisition (CA), and Voluntary Stock Distribution in the case of corporate
farms.
Operation Land Transfer
Operation Land Transfer (OLT) is a mechanism established for the implementation of PD 27 (1972)
and EO 228 (1987). It is a mode by which ownership of tenanted rice and corn lands is transferred to
tenant-beneficiaries. It must be stressed that for lands to come under OLT pursuant to PD 27, there must
be first showing that they are tenanted lands. (Castro vs. CA, 99 SCRA 722 [1980])
LOI 227 (1974) was issued by then President Marcos directing the immediate extension of the OLT to
the landholdings of over seven (7) hectares. Subsequently, LOI 474 (1976) was issued placing all
tenanted rice and corn lands with areas of seven (7) ha or less belonging to landowners who own other
agricultural lands exceeding seven (7) ha or lands used for residential, commercial, industrial, or other
urban purposes from which they derive adequate income to support themselves and their families.
LOI 474 was subjected to constitutional scrutiny in the case of Zurbano vs. Estrella, 137 SCRA 333
(1989). In this case, petitioners who are owners of 56.14 ha of coconut lands and 1.86 ha of ricelands,
assailed the constitutionality of LOI 474, arguing that it is a class legislation and therefore a violation of
the equal protection clause. Furthermore, petitioners averred that said issuance is violative of the due
process clause as it would be, as applied to them, a taking of private property without just compensation.
The Supreme Court in upholding its constitutionality held that:
. . . there is no legal basis for declaring LOI No. 474 void on its face on equal
protection, due process and taking of property without just compensation
grounds. The Constitution decrees no less than the emancipation of tenants, and
there are safeguards therein to assure that there are no arbitrariness or injustice
in its enforcement. There are, moreover, built-in safeguards to preclude any
unlawful taking of the property. There is no merit to the contention that LOI 474
denies equal protection. To condemn as class legislation an executive act
intended to promote the welfare of tenants is to ignore not only the letter of the
Constitution incidentally cited in the petition itself requiring the formulation
and implementation of an agrarian reform program aimed at emancipating the
tenant from the bondage of the soil, but also the nation's history. . . . The attack
on due process ground is unavailing as on the face of the challenged measure
fairness and justice may easily be discerned. Nothing in its language lend
support to the contention that consequences so harsh and drastic would attend
its implementation. In language, scheme and framework, this Letter of Instruction
reveals the plan and purpose to attain the goal envisioned by the Constitution but
with due regard to the land owners affected. . . . Neither is there any merit on the
contention that there would be a taking of private property for public use without
just compensation. The Constitution itself imposes the duty of the State to
emancipate the tenants from the bondage of the soil. What is more, even a
month before its adoption by the 1971-1972 Constitutional Convention, P.D. No.
27 was issued. Its validity, to repeat, was unanimously sustained by this Tribunal.
No other conclusion could have been reached, conforming as it did to what the
fundamental law ordained.
In the case of Locsin vs. Valenzuela, 194 SCRA 195 (1991), the Supreme Court explained the legal
effect of land being placed under OLT as vesting ownership in the tenant. However, in a subsequent
case, Vinzons-Magana vs. Estrella, 201 SCRA 536 [1991], the High Tribunal, citing Pagtalunan vs.
Tamayo which predated the Locsin case, ruled that the mere issuance of a certificate of land transfer

does not vest ownership in the farmer/grantee. There seems to be an inconsistency regarding the
treatment of the legal effect of the placing of the property under the Operation Land Transfer. This is
because the issuance of a Certificate of Land Transfer (CLT) over a landholding presupposes that the
property has already been covered under the OLT. Therefore, if indeed, as the Locsin doctrine
enunciated, ownership of the land is transferred to the farmer at the time the property is placed under
OLT, then, it necessarily follows the CLT, being an instrument issued subsequent to the coverage of the
land under OLT, is evidence of ownership. However, the latter case of Vinzons-Magana disputes this
conclusion.
In the case of Locsin vs. Valenzuela, 194 SCRA 195 (1991), the petitioners are owners of a
landholding which was subject to the lifetime usufructuary of private respondent. The subject landholding
was placed under the Operation Land Transfer. Petitioners filed a collection suit against the private
respondent claiming that the payments made by the tenants in the subject properties should be
considered as amortization payments for the price of land and as such should belong to the landowners
and not to the usufructuary. The Court, upholding the petitioners contention, by construing PD No. 27 in
relation to PD No. 57, Department Circular No. 8, dated 1 April 1975 and EO No. 228 dated 17 July
1987, ruled that under PD No. 27, the tenant-farmer became owner of the land as of 21 October 1972.
. . . Reading the foregoing provisions together, we observe that under
Presidential Decree No. 27, the basic statute, the tenant-farmer became owner of
a family-size farm of five (5) hectares or, if the land was irrigated, three (3)
hectares, and that the tenant-owner had to pay for the cost of the land within
fifteen (15) years by paying fifteen (15) equal annual amortization payments.
Thus, it appears clear that ownership over lands (like Lot No. 2-C-A-3) subjected
to Operation Land Transfer moved from the registered owner (the old landowner)
to the tenants (the new landowners). The fifteen (15) annual amortizations to be
paid by the tenants-owners were intended to replace the landholdings which the
old landowners gave up in favor of the new landowners, the tenants-owners. It
follows that in respect of land subjected to Operation Land Transfer, the tenantsfarmers became owners of the land they tilled as of the effective date of
Presidential Decree No. 27, i.e., 21 October 1972. Pending full payment of the
cost of the land to the old landowner by the Land Bank of the Philippines, the
leasehold system was "provisionally maintained" but the "lease rentals" paid by
the tenants-farmers prior to such full payment by the Land Bank to the old
landowner, would be credited no longer as rentals but rather as "amortization
payments" of the price of the land, the unamortized portion being payable by the
Land Bank. In respect of lands brought within the coverage of Operation Land
Transfer, the leasehold system was legally and effectively terminated immediately
on 21 October 1972 (notwithstanding the curious statement in Department
Circular No. 8 that it was "provisionally maintained"). It was in respect of lands
not yet subjected to the terms and effects of Operation Land Transfer that the
leasehold system did continue to govern the relationship between the "landowner
and his tenant-tillers".
The exemption of the old landowner from the capital gains tax on the
amortization payments made to him by the tenants-purchasers, under
Presidential Decree No. 57 (supra), underscores the fact, referred to above, that
ownership or dominion over the land moved immediately from landowner to
tenant-farmer, rather than upon completion of payment of the price of the land. In
general, capital gains are realized only when the owner disposes of his property. .
..

In the case of Pagtalunan vs. Tamayo, 183 SCRA 252 (1990), petitioner sought to intervene in the
expropriation proceedings filed by the Republic of the Philippines over the subject parcel of land.
Petitioner argues that he, being a bona fide tenant of and holder of Certificate of Land Transfer covering
the subject properties, is entitled to the proceeds of the expropriation. The Supreme Court, in rejecting
petitioner's contention, ruled that the petitioner, being merely a CLT holder is not the owner of the subject
property and thus, not entitled to just compensation. In explaining the nature of the CLT, the Court stated
that:
. . . However, a careful study of the provisions of Pres. Decree No. 27, and the
certificate of land transfer issued to qualified farmers, will reveal that the transfer
of ownership over these lands is subject to particular terms and conditions the
compliance with which is necessary in order that the grantees can claim the right
of absolute ownership over them.
Under Pres. Decree No. 266 which specifies the procedure for the registration of
title to lands acquired under Pres. Decree No. 27, full compliance by the grantee
with the abovementioned undertakings is required for a grant of title under the
Tenant Emancipation Decree and the subsequent issuance of an emancipation
patent in favor of the farmer/grantee [Section 2, Pres. Decree No. 226]. It is the
emancipation patent which constitutes conclusive authority for the issuance of an
Original Certificate of Transfer, or a Transfer Certificate of Title, in the name of the
grantee.
The mere issuance of the certificate of land transfer does not vest in the
farmer/grantee ownership of the land described therein. The certificate simply
evidences the government's recognition of the grantee as the party qualified to
avail of the statutory mechanisms for the acquisition of ownership of the land
tilled by him as provided under Pres. Decree No. 27. Neither is this recognition
permanent nor irrevocable. Failure on the part of the farmer/grantee to comply
with his obligation to pay his lease rentals or amortization payments when they
fall due for a period of two (2) years to the landowner or agricultural lessor is a
ground for forfeiture of his certificate of land transfer [Section 2, Pres. Decree No.
816].
Clearly, it is only after compliance with the above conditions which entitle a
farmer/grantee to an emancipation patent that he acquires the vested right of
absolute ownership in the landholding a right which has become fixed and
established, and is no longer open to doubt or controversy . . . . At best, the
farmer/grantee, prior to compliance with these conditions, merely possesses a
contingent or expectant right of ownership over the landholding. . . .
The Pagtalunan doctrine was reiterated in the case of Vinzons-Magana vs. Estrella, 201 SCRA 536
(1991). In this case, the petitioner assailed the constitutionality of LOI No. 474 and its implementing
guideline, DAR Memorandum Circular No. 78-1978 . Moreover, petitioner prayed for the cancellation of
the CLT over the subject landholding arguing that the issuance of the CLT in favor of the tenant without
first expropriating the property to pay the petitioner landowner the full market value thereof before ceding
and transferring the land to the tenant is unconstitutional as it is confiscatory and violative of the due
process clause. The Supreme Court, brushing aside the petitioner's theory, held that the issue of the
constitutionality of the taking of private property under the CARP law has already been settled by the
Court. Moreover, citing the Pagtalunan case, the Court explained the nature of the CLT, stating that it
does not vest in the farmer/grantee ownership of the land described therein. Therefore, there is no taking
of property without payment of just compensation.

It is noted that in all three cases, the facts from which the controversy arose occurred prior to the
issuance of EO 228 of then President Aquino which declared that full ownership to qualified beneficiaries
of the lands covered by PD No. 27 as of 21 October 1972. Likewise, all cases were promulgated after
the issuance of EO No. 228 in 1987. Therefore, it cannot be said that the reason behind the Locsin ruling
declaring the effect of OLT as vesting ownership in the tenant is the fact that EO 228, which categorically
clarified the legal effect of PD No. 27, was factored in the discussion of the case. Why then was EO No.
228 not considered in the subsequent case of Vinzons-Magana when it was already in effect then?
The ponente instead referred to the pre-Locsin case ofPagtalunan vs. Tamayo. In so doing, it ignored
altogether the legal implications of the Locsin doctrine.
Voluntary Offer to Sell
Voluntary Offer to Sell (VOS) is a scheme whereby the landowners voluntarily offer their agricultural
lands for coverage regardless of phasing. It does not, however, mean that landholdings voluntarily
offered for sale are automatically accepted by DAR. A VOS may be rejected if the landholding is not
suitable for agriculture, or has a slope of more than eighteen percent (18%) and is undeveloped.
Likewise, said offer may be refused if there are no takers or persons willing to be agrarian reform
beneficiaries and, lastly, the only identified ARBs are the qualified children of the landowner. [DAR A. O.
No. 06 (1997)]
As a general rule, withdrawal of VOS shall no longer be allowed after the receipt by the DAR of the
letter offer for VOS, i.e., CARP Form No. 1. (DAR A.O. No. 06 [1997], II [A]). However, DAR may allow
the withdrawal of voluntary offers to sell if the withdrawal of VOS is for the purpose of acquisition and
compensation through the Voluntary Land Transfer/ Direct Payment Scheme (VLT/DPS), provided, that
the claim folder has not yet been forwarded to the LBP for the computation of the land value. (DAR A.O.
No. 06 [1997] II [A] 2nd par.). DAR may also allow the withdrawal of VOS if the subject landholding is
determined by DAR to be more suitable for a townsite, resettlement site or individual site needed to
address a matter of national interest or concern in calamity situation (DAR A.O. No. 06 [1997], II [C]).
In case lands voluntarily offered for sale are subsequently found to be outside the coverage of CARP,
such lands shall be reconveyed to the original transferors. The manner of reconveyance is governed
by A.O. No. 09, Series of 1997.
In the case of commercial farms, the offer to sell must have been submitted before the expiration of
the deferment period in order that their acquisition through VOS may be allowed, otherwise the property
shall be placed under compulsory acquisition (Section 8 [a]DAR A. O. No. 02-1998).
Landowners who voluntarily offer their lands for sale shall be entitled to an additional five percent
(5%) cash payment. It must be noted, however, that banks and other financial institutions are not
covered by said incentive. (Rep. Act No. 6657, [1988 ], Sec. 19)
Voluntary Land Transfer/ Direct Payment Scheme
Voluntary Land Transfer or Direct Payment Scheme (VLT/DPS) is a mode of acquisition whereby the
landowner and the beneficiary enter into a voluntary arrangement for the direct transfer of the lands to
the latter. Not all private agricultural lands may be subject of voluntary land transfer. For instance, lands
mortgaged with banking and/or financial institutions cannot be the subject of VLT/DPS.
All notices for voluntary land transfer must be submitted to the DAR within the first year of the
implementation of the CARP. Negotiations between the landowners and qualified beneficiaries covering
any voluntary land transfer which remain unresolved after one (1) year shall not be recognized and such
land shall instead be acquired by the government and transferred pursuant to the Comprehensive
Agrarian Reform Law. [Rep. Act No. 6657 (1988), sec. 20.] It must be stressed that this should not be
construed to mean that VLT/DPS is no longer allowed after one year from the effectivity of R.A. 6657. It
is submitted that VLT/DPS may be entered into even beyond 15 June 1989, or one year after the

effectivity of R.A. No. 6657. It is argued that that the exact moment when the one-year period under
Section 20, par (a) of R.A. No. 6657 within which notices of VLT/DPS may be filed commences from the
date when the land subject of the VLT/DPS is scheduled for acquisition and distribution according to the
various phases of implementation described under Section 7 and 11 and the landowner is served a
notice of acquisition of his landholding.
If the law intended that the one year period be reckoned from the approval or effectivity of RA 6657, it
would have expressly said so, as it did in the provisions on priorities (Sec. 7), commercial farms (Sec.
11), and stock transfer option (Sec. 31). Instead, the law used the phrase "within the first year of
implementation of the CARP" which is at the time Section 16 is implemented relative to specific and
distinct classes of agricultural lands. [Memorandum of Asst. Sec. Peaflor for the Secretary, August 23,
1999, p. 6.]
Section 20 (b) of R.A. No. 6657 provides that the terms and conditions of the transfer under this
mode shall not be less favorable to the transferee than those of the government's standing offer to
purchase from the landowner and to resell to the beneficiaries, if such offers have been made and are
fully known to both parties.(Sec. 20 (b)) However this does not mean that existence of "a standing
government offer" is not essential to the consummation of a VLT/DPS. The restriction imposed under
Section 20 (b) relative to the government's standing offer, is not absolute. The law itself subjects its
application only in instances where there is a prior offer by the government and that the same is known
to both the landowner and the qualified beneficiaries. [Memorandum of Asst. Sec. Peaflor for the
Secretary, August 23, 1999, p. 6.]
The terms and conditions of VLT/DPS should include the immediate transfer of possession and
ownership of the land in favor of the identified beneficiaries. Certificates of Land Ownership Award
(CLOAs) shall be issued to the ARBs with proper annotations. [DAR A.O. No. 08, 1997 (Section II (E).].
The voluntary agreement shall include sanctions for non-compliance by either party and shall be duly
recorded and its implementation monitored by the DAR. [Rep. Act No. 6657 (1988), sec. 20.]
Direct payments in cash or in kind may be made by the farmer-beneficiary to the landowner under
terms to be mutually agreed upon by both parties, which shall be binding upon them, upon registration
with the approval by the DAR. Said approval should be received by the farmer-beneficiary within thirty
(30) days from the date of registration. In the event they cannot agree on the price of land, the procedure
for compulsory acquisition as provided in Section 16 shall apply. The LBP shall extend financing to the
beneficiaries for purposes of acquiring the land. [Rep. Act No. 6657 (1988), sec. 21.]
A pressing issue respecting VLT/DPS is its application to commercial farms. One school of thought
espouses the theory that VLT/DPS cannot apply to commercial farms as Section 11 of R.A. No.
6657 specifically requires their ". . . immediate compulsory acquisition and distribution . . ." beginning 15
June 1998. Hence, it is argued that commercial farms may be acquired only through compulsory
acquisition.
It is submitted that commercial farms may be acquired not only through compulsory acquisition but
through VLT/DPS as well.
There is no dispute that commercial farms whose deferments have expired as of 15 June 1998 are
subject to immediate compulsory acquisition and distribution as provided in Section 11 of R.A. No. 6657.
It should be stressed, however, that all acquisitions under R.A. No. 6657 are compulsory in nature, in the
sense that the landowners whose agricultural lands are covered by CARP have really no choice except
to submit to the program.
The procedures for acquisition of private lands are provided for under Chapter V, Section 16 (a) to (f).
The procedure for land acquisition are further elaborated by Chapter VI, Section 17 through Section 21.
These provisions prescribe specific rules for valuation and payment which include, among others,
Section 20 on voluntary land transfer and Section 21 on direct payment of beneficiaries. Thus, even as

the process of compulsory acquisition under Section 16 is already in motion, the option available under
Sections 20 and 21 may still be exercised. The foregoing framework of acquisition is the context within
which the phrase "immediate compulsory acquisition," as used in Section 11 should be understood.
The situation now is that before commercial farms could be compulsorily acquired and distributed
pursuant to Section 16, the preliminary steps for their acquisition have to be continued or pursued, to wit:
identification of beneficiaries, inspection or technical survey and valuation. During this period, the
landowners and the qualified beneficiaries may, by reason of the options available under Section 20 and
21, manifest their intent to voluntarily arrange for direct transfer and payment of the property. In short,
the phrase "immediate compulsory acquisition" under Section 11 of R.A. No. 6657, when taken in the
context of the procedures for acquiring lands under CARP, still includes VLT/DPS as an option for
valuation and payment of commercial farms subject of acquisition. [Memorandum of Asst. Sec. Peaflor
for the Secretary, August 23, 1999, pp. 2-5]
DPS involving commercial farms may be availed of any time during the acquisition process, after the
preparation of the master list but prior to the transmittal of the claim folder to the LBP. If the notice of
acquisition is served by the parties upon to the DAR prior to the preparation of the master list, the notice
shall be validated by the MARO with identified ARBs included in the master list, in a referendum to be
held for this purpose. Acquisition under DPS of lands with liens and encumbrances may be allowed
provided that the amount corresponding to the mortgage over the subject landholding shall be deducted
from the total value of the land to be paid by the ARBs. Provided further that said agreement shall be
upon mutual consent of both the ARBs and the landowner, duly concurred with by the mortgagee or
lienholder. In case of delinquent real estate taxes, the ARBs may be allowed to assume such liability to
be deducted from the total value of the land. Upon mutual consent of the ARBs and the landowner, duly
concurred with by the mortgagor or the lienholder, the ARBs may assume the mortgage, provided that
such obligation shall not exceed the annual amortization otherwise due to the land pursuant to Section
26 of RA 6657, if the subject landholding was acquired under VOS or CA [DAR A. O. No. 09 (1998),
Section 9 (b)].
Compulsory Acquisition
Compulsory acquisition is a mode whereby the land is expropriated by the State in accordance with
the procedure outlined in Section 16 of R.A. No. 6657.
All private agricultural lands which have become due under the phase of implementation as provided
in Section 7 of R.A. No. 6657are subject to compulsory acquisition. However, where the landowner opts
for other modes of acquisition such as voluntary offer to sell or voluntary land transfer, compulsory
acquisition is suspended. In these cases, if negotiations fail, CA is resumed. Likewise, all idle or
abandoned agricultural lands regardless of size are subject to compulsory acquisition. Lands subjected
to Compulsory Acquisition may be allowed to shift to Voluntary Land Transfer/Direct Payment Scheme or
Voluntary Offer to Sell provided that the claim folder had not yet been forwarded to the LBP for the
computation of land value. [DAR A. O. 06, (1997) II (D).]
Voluntary stock distribution of corporate farms
Voluntary stock distribution is an alternative arrangement to the physical distribution of lands wherein
corporate owners voluntarily divest a portion of their capital stock, equity or participation in favor of their
workers or other qualified beneficiaries. Stock ownership is based on the capital stocks of the
corporation and is equivalent to the agricultural land actually devoted to agricultural activities valued in
relation to the total assets of the corporation. (Rep. Act No. 6657 [1988], sec. 31 as implemented
by DAR Adm. O. No. 10 [1988] and DAR Adm. O. No. 1 [1991])
To safeguard the rights of farmer-beneficiaries, corporate farms with a voluntary stock distribution
plan must comply with the following conditions:

1)
The books of the corporation or association shall be subject to periodic
audit by certified public accountants chosen by the beneficiaries;

DARMO conducts preliminary ocular inspection to determine initially whether or not the property may be
covered under CARP.

2)
Irrespective of the value of their equity in the corporation or association,
the beneficiaries shall be assured of at least one (1) representative in the board
of directors, or in a management or executive committee, if one exists, of the
corporation or association; and

If the property is coverable under CARP, the process of acquisition continues. DARMO sends the
landowner the Notice of Coverage and Field Inspection with a copy of the Pre-OCI Report by personal
delivery with proof of service or by registered mail with return card. However, in the case of deferred
commercial farms, the Order of Deferment previously issued over the landholding shall serve, upon
expiration of the deferment period of the subject commercial farm, as the Notice of Coverage, supported
by the Compliance Work Program and Summary of Exceptions originally submitted with the approved
deferment application. However, for record purposes, the landowner shall be served a Notice of
Expiration of Deferment which shall contain a reminder of his right to retention should he wish to
exercise the same. [Section 9 (a) (1), DAR A.O. No. 02-1998]. The landowner is invited to join the field
investigation to select his retention area and to submit his statement of production and income. If the
landowner cannot be contacted or refuses to accept said Notice, the notice shall be effected by
publication in a newspaper of national circulation. Likewise, a notice on the schedule of the field
investigation shall be sent to the BARC, DENR, DA, LBP and prospective beneficiaries. The DARMO
then shall post a copy of the notice of coverage and field inspection for seven working days in the
bulletin board of the barangay and municipal halls where the property is located and issues Certification
of Posting Compliance. Thereafter, the DARMO shall conduct joint field investigation of the property with
the LBP, DENR, DA BARC, landowner and prospective ARBs. Jointly with the LBP and BARC, the
DARMO shall prepare the Field Investigation Report and the Land Use Map. The DARMO shall
screen/select qualified ARBs and cause the signing of the Application Purchase and Farmer's
Undertaking (APFU).The DARMO shall forward the claim folder to DARPO for review and completion of
documents. The land is then surveyed. The claim folder is sent to the Land Bank for valuation. At this
stage, the DARPO sends the Notice of Land Valuation and Acquisition to the Landowner (DAR A. O. No.
02 (1996)as amended by DAR A.O. No. 1 (1998).]

3)
Any shares acquired by such workers and beneficiaries shall have the
same rights and features as all other shares. Moreover, any transfer of shares of
stock by the original beneficiaries shall be void unless said transaction is in favor
of a qualified and registered beneficiary within the same corporation. (Rep. Act
No. 6657 [1988], sec. 31 as implemented by DAR Adm. O. No. 10 [1988]).
However, corporate farm owners cannot avail of voluntary stock distribution at present. Section 31
of RA 6657 states that "if within two (2) years from the effectivity of CARP, the land or stock transfer has
not been made or the plan for such stock distribution has not been approved by the Presidential Agrarian
Reform Council (PARC) within the same period, the agricultural land of the corporate owners or
corporation shall be subject to compulsory acquisition under existing DAR rules and regulations.
The Case of Hacienda Luisita
Hacienda Luisita, Inc. is a corporate farm owning a total of 4,916 hectares planted to sugarcane
located in Tarlac. In May 1988, it applied to avail of the stock distribution plan under CARP. The
application was approved in November 1988. The farm has a total of 355,531,462 shares of stocks with
a par value of P1.00 per share. One-third of these shares is subject for distribution to the farmworkerbeneficiaries (FBs) under the stock distribution plan. The shares for the FBs are to be distributed in a
span of 30 years. At the time of application for stock distribution, there were about 6,000 FBs within the
farm. Under its stock distribution plan, FBs are supposed to receive cash dividends accruing to their
respective shares, homelots, representation in the Board of Directors, production based incentives, and
other fringe benefits.
Procedure for Acquisition of Private Agricultural Lands
The procedure for the acquisition of private agricultural lands as provided for in Sec. 16, RA 6657 are
as follows:
a)
After having identified the land, the landowners and the beneficiaries, the
DAR shall send its notice to acquire the land to the owners thereof, by personal
delivery or registered mail, and post the same in a conspicuous place in the
municipal building and barangay hall of the place where the property is located.
Said notice shall contain the offer of the DAR to pay a corresponding value in
accordance with the valuation set forth in Sections 17 and 18, and other pertinent
provisions hereof.
DAR identifies the land to be covered by CARP as well as the landowners and beneficiaries thereof
on the basis of a master list or inventory of landholdings prepared by the field offices pursuant to the
Land Acquisition and Distribution Tracing System (LADTRACKS) and the CARP Scope Validation
Project. Said master list in turn is obtained from the LISTASAKA statements as verified or complemented
by the records of the Register of Deeds and Assessor's Offices, review of town plan and zoning
ordinances, field surveys, interviews and community consultations and general knowledge of the land
ownership pattern in the barangays or municipalities. The identification of lands is done by the DAR
Municipal Office (DARMO) which gathers documents such as OCT/TCT, tax declaration, copy of the
approved survey plan of the property and prepares the claim folder of the landowner. Thereafter, the

In the preliminary stage of the acquisition process, notice to the landowner is vital to the validity of
coverage and acquisition of the landholding. The Supreme Court had occasion to discuss and stress the
importance of these notices in the case of Roxas & Co. vs. CA, G.R. No. 127876, December 17, 1999.
In this case, petitioner Roxas and Co., a domestic corporation owns three haciendas. Notices of
acquisition informing the landowner that two of the haciendas were being compulsorily acquired were
sent by the DAR and served on the administrator in his address in the hacienda. The administrator
participated in the acquisition proceedings as representative of the owner. Subject landholdings were
acquired by the DAR and subsequently distributed to the beneficiaries. The petitioner assailed the
validity of the acquisition proceedings on the ground, among others, that it was denied due process as
no notice of acquisition was ever served on it. The Supreme Court held that:
. . . the procedure in sending notices is important to comply with the requisites of
due process especially when the owner is a juridical entity.
. . . The Notice of Acquisition in Section 16 of the CARL is required to be sent to
the landowner by personal delivery or registered mail. Whether the landowner be
a natural or juridical person to whose address the Notice may be sent by
personal delivery or registered mail, the law does not distinguish. The DAR
administrative orders also do not distinguish. In the proceedings before the DAR
the distinction between natural and juridical persons in the sending of notices
may be found in the Revised Rules of Procedure of the DARAB. Service of
pleadings before the DARAB is governed by Section 6, Rule V of the DARAB
Revised Rules of Procedure. Notices and Pleadings are served on private
domestic corporations or partnerships in the following manner:
"Section 6. Service Upon Private Domestic or Partnership. If defendant is a
corporation organized under the laws of the Philippines or a partnership duly

registered service may be made on the president, manager, secretary, cashier,

agent or any of its directors or partners"
Similarly, the Revised Rules of Court of the Philippines, in Section 13, Rule 14
provides:
"Section 13. Service upon private domestic corporation or partnership. If the
defendant is a corporation organized under the laws of the Philippines or a
partnership duly registered, service may be made on the president, manager,
secretary, cashier, agent or any of its directors."
Summonses, pleadings and notices in cases against private domestic
corporation before the DARAB and the regular courts are served on the
president, manager, secretary, cashier, agent or any of its directors. These
persons are those through whom the private domestic corporation or partnership
is capable of action.
Jaime Pimentel (the administrator) is not the president, manager, secretary,
cashier, agent or any of its director of the landowner corporation. Is he, the
administrator of the two Haciendas, considered an agent of the corporation?
The purpose of all rules for the service of process on a corporation is to make it
reasonably certain that the corporation will receive prompt notice in an action
against it. Service must be made on a representative so integrated with the
corporation as to make it a priori supposable that he will realize his
responsibilities and know what he should do with any legal papers served on him,
and bring home to the corporation notice of the filing of the action. The DAR's
evidence does not indicate whether the administrator's duties is so integrated
with the corporation that he would immediately realize his responsibilities and
know what he should do with any legal papers served on him. . . ."
It is submitted that the DARAB Rules and Procedure and the Rules of Court were improperly applied
to the aforecited case. The rules on service of summons provided in the Rules Court should have not
been applied since what is involved in this case is acquisition proceedings which is administrative in
nature. Moreover, it must be emphasized that the DAR, in adjudicating agrarian reform matters, is not
bound by technical rules of procedure. (Sec. 50, R.A. 6657). What is important in administrative
adjudication is the right to be heard. Said requirement was substantially complied with in this case
considering that the administrator, who takes charge of the daily operations of the subject properties,
participated in the acquisition proceedings. Therefore, it cannot be argued that there was denial of due
process. Finally, the application of the DARAB Rules of Procedure is erroneous. This is so since the
matter of service of notice of acquisition does not fall within the jurisdiction of the DARAB.
b)
Within thirty (30) days from the date of receipt of written notice by
personal delivery or registered mail, the landowner, his administrator or
representative shall inform the DAR of his acceptance or rejection of the offer.
c)
If the landowner accepts the offer of the DAR, the Land Bank of the
Philippines (LBP) shall pay the landowner the purchase price of the land within
thirty (30) days after he executes and delivers a deed of transfer in favor of the
government and surrenders the Certificate of Title and other muniments of title.
d)
In case of rejection or failure to reply, the DAR shall conduct summary
administrative proceedings to determine the compensation for the land requiring
the landowner, the LBP and other interested parties to submit evidence as to the
just compensation for the land, within fifteen (15) days from the receipt of the

notice. After the expiration of the above period, the matter is deemed submitted
for decision. The DAR shall decide the case within thirty (30) days after it is
submitted for decision.
The constitutionality of the aforementioned provision was upheld by the Supreme Court in the case
of Association of Small Land Owners in the Philippines, Inc., vs. Secretary of Agrarian Reform , 175
SCRA 343 (1989):
Objection is raised, however, to the manner of fixing the just compensation,
which it is claimed is entrusted to the administrative authorities in violation of
judicial prerogatives. Specific reference is made to Section 16(d), which provides
that in case of the rejection or disregard by the owner of the offer of the
government to buy his land. . .
To be sure, the determination of just compensation is a function addressed to the
courts of justice and may not be usurped by any other branch or official of the
government. . . .
A reading of the aforecited Section 16(d) will readily show that it does not suffer
from the arbitrariness that rendered the challenged decrees constitutionally
objectionable. Although the proceedings are described as summary, the
landowner and other interested parties are nevertheless allowed an opportunity
to submit evidence on the real value of the property. But more importantly, the
determination of the just compensation by the DAR is not by any means final and
conclusive upon the landowner or any other interested party, for Section 16(f)
clearly provides: Any party who disagrees with the decision may bring the matter
to the court of proper jurisdiction for final determination of just compensation. The
determination made by the DAR is only preliminary unless accepted by all parties
concerned. Otherwise, the courts of justice will still have the right to review with
finality the said determination in the exercise of what is admittedly a judicial
function."
Said ruling was reiterated in the case of Vinzons-Magana vs. Estrella, 201 SCRA 538 (1991).
The factors to be considered in the determination of just compensation as enumerated in Section 17
of R.A. No. 6657 are not exclusive. The DAR and LBP are not confined in their determination of just
compensation to the factors/criteria set forth in said provision. Notably, Section 17 does not provide hard
and fast rules which must be strictly adhered to by DAR and LBP in the determination of just
compensation. While said section provides that the factors/criteria mentioned therein" shall be
considered" it does not expressly state that only these factors/criteria and no other shall be considered.
The factors/criteria set forth in Sections 17, 18 and other pertinent provisions for that matter should be
deemed as mere standards to guide the proper officials in the determining just compensation, but in no
case shall control or limit such determination, the ultimate consideration being that the compensation be
the full and fair equivalent of the property taken from its owner by the expropriator. [DOJ Opinion No. 109
(1991), July 25, 1991).]
In the case of Land Bank of the Philippines vs. CA and Pascual, G. R. No. 128557, December 29,
1999, the Supreme Court ruled that in the determination of just compensation pursuant to Section 18
of R.A. No. 6657, consent of the farmer-beneficiary is not needed. Furthermore, the Court ruled that
once the Land Bank agreed to the valuation, it is its duty to pay the landowner said amount. In this case,
private respondent's properties were subjected to Operation Land Transfer. Consequently, the PARO
issued a valuation of the land which was rejected by the private respondent who filed a case before the
PARAD seeking to annul the PARO's valuation. The PARAD, ruled in favor of private respondent, came
up with its own valuation, and directed the petitioner LBP to pay private respondent said amount.
Petitioner refused to pay the value of the land as determined by the PARAD arguing among others that

since it merely guarantees or finances the payment of the value of the land, the farmer-beneficiary's
consent, is indispensable and that the only time the petitioner becomes legally bound to finance the
transaction is when the farmer-beneficiary approves the appraised value of the land. In other words,
petitioner asserts that the landowner, the DAR, the Land Bank and the farmer-beneficiary must all agree
to the value of the land as determined by them. The Court, brushing aside petitioner's contention, stated:
A perusal of the law however shows that the consent of the farmer-beneficiary is
not required in establishing the vinculum juris for the proper compensation of the
landowner. Section 18 of R. A. No. 6657 states
Sec. 18.
Valuation and Mode of Compensation.
The LBP shall compensate the landowner in such amount as may
be agreed upon by the landowner and the DAR and the LBP in
accordance with the criteria provided for in Sections 16 and 17 and
other pertinent provisions hereof, or as may be finally determined
by the court as just compensation for the land.
As may be gleaned from the aforementioned section, the landowner, the DAR
and the Land Bank are the only parties involved. The law does not mention the
participation of the farmer beneficiary.
. . . Once the Land Bank agrees with the appraisal of the DAR, which bears the
approval of the landowner, it becomes its legal duty to finance the transaction. In
the instant case, petitioner participated in the valuation proceedings held in the
Office of the PARAD through its counsel . . .
e)
Upon receipt by the landowner of the corresponding payment or, in case
of rejection or no response from the landowner, upon the deposit with an
accessible bank designated by the DAR of the compensation in cash or in LBP
bonds in accordance with this Act, the DAR shall take immediate possession of
the land and shall request the proper Register of Deeds to issue a Transfer
Certificate of Title (TCT) in the name of the Republic of the Philippines. The DAR
shall thereafter proceed with the redistribution of the land to the qualified
beneficiaries.
The CARP Law conditions the transfer of possession and ownership of the land to the government on
the receipt by the landowner of the corresponding payment or the deposit by the DAR of the
compensation in cash or LBP bonds with an accessible bank. Until then, title remains with the
landowner. No outright change of ownership is contemplated either. (Association of Small Land Owners
in the Philippines vs. Secretary of Agrarian Reform), 175 SCRA 343 (1989.)
It must be noted, however, that the opening of a trust account and issuance of a certification from
Land Bank that a certain sum has been earmarked for the landowner does not constitute substantial
compliance with Section 16(e) of R.A. No. 6657. In the case of LBP vs. CA [248 SCRA 149 (1995)]
respondent landowners assailed the acquisition of their properties on the ground that there was a taking
without just compensation. They averred that the "earmarking," "reservation" and "deposit in trust" made
by the DAR and the Land Bank pursuant to DAR A. O. No. 09-1990 is not equivalent to just
compensation under R.A. No. 6657. The Court nullified DAR A.O. No. 09-1990, ruling as follows:
. . . It is very explicit from Section 16 (e) that the deposit must be made only in
"cash" or in "LBP bonds." Nowhere does it appear nor can it be inferred that the
deposit can be made in any other form. If it were the intention to include a "trust
account" among the valid modes of deposit, that should have been made
express, or at least, qualifying words ought to have appeared from which it can
be fairly deduced that a "trust account" is allowed. In sum, there is no ambiguity

in Section 16 (e) of R. A. No. 6657 to warrant an expanded construction of the

term "deposit." . . .
. . . The ruling in the Association of Small Landowners case [that payment of the
just compensation is not always required to made fully in money] merely
recognized the extraordinary nature of the expropriation to be undertaken under
R. A. No. 6657 thereby allowing a deviation from the traditional mode of payment
other than in cash. It did not, however, dispense with the settled rule that there
must be full payment of just compensation before title to the expropriated
property is transferred. . . .
What the Supreme Court nullified was merely the form in which the deposit was made, i.e., the
deposit in trust and not the deposit per se as payment to the landowners for the expropriated lands.
Thus, in effect, the Court in making such pronouncement, upheld the validity of deposit per se as
payment of just compensation.
f)
Any party who disagrees with the decision may bring the matter to the
court of proper jurisdiction for final determination.
In the case of Association of Small Landowners, the Supreme Court explained that the determination
of just compensation is a function addressed to the courts of justice. [175 SCRA 343 (1989)].
The operating procedures for the acquisition of private agricultural lands are outlined in the following
administrative issuances:

DAR A. O. No. 2, Series of 1996 entitled "Revised Rules Governing the

Acquisition of Agricultural Lands Subject of Voluntary Offer to Sell (VOS) and
Compulsory Acquisition (CA) Pursuant to R. A. 6657" as amended by DAR A. O.
No. 2-98;

DAR A. O. No. 09, Series of 1998 entitled "Rules and Regulations on the
Acquisition, Valuation, Compensation and Distribution of Deferred Commercial
Farms";

DAR A. O. No. 08, Series of 1997 entitled "Revised Rules on the

Acquisition and Distribution of Compensable Agricultural Lands Under VLT/DPS";

DAR A. O. No. 12, Series of 1990 entitled "Policy Guidelines and

Operating Procedures in the Identification and Acquisition of Idle and Abandoned
Lands".
Reconstitution of Lost or Damaged Title
A pressing operational problem besetting agrarian reform implementors is the delay in the acquisition
and distribution of agricultural lands with lost or destroyed titles. To address this concern, DAR
Memorandum Circular No. 05, Series of 1994 was issued outlining the procedures on the reconstitution
of lost or destroyed titles.
Reconstitution of a certificate of title denotes restoration of the instrument which is supposed to have
been lost or destroyed in its original form and condition. The purpose of the reconstitution of title or any
document is to have the same reproduced, after proper proceedings, in the same form they were when
the loss or destruction occurred. (Heirs of Pedro Pinote vs. Dulay 198 SCRA 12 [1990])
There are two types of reconstitution of titles: judicial and administrative. Judicial reconstitution
partakes of a land registration proceeding and is perforce a proceeding in rem. (Republic vs.
Intermediate Appellate Court, 157 SCRA 62 [1988]). Judicial reconstitution is governed by Republic Act
No. 26 in relation to Section 110 of P. D. No. 1529. Administrative reconstitution of title is likewise

governed by Republic Act No. 26, as amended by Republic Act No. 6732. Under DAR Memorandum
Circular No. 5 (1994), the Department of Agrarian Reform (DAR), through the duly authorized DAR
lawyer, may file a petition for administrative or judicial reconstitution when the notice of coverage over
landholdings whose titles were lost or destroyed has already been issued.
As a general rule, the remedy for the reconstitution of lost or destroyed original copies of certificates
of titles in the offices of the Register of Deeds is the filing of a petition for judicial reconstitution of title.
However, administrative reconstitution of lost or destroyed original copies of certificates of title may be
availed of in case of substantial loss or destruction of land titles due to fire, flood or other force majeure
where the number of certificates lost or damaged is at least ten (10) percent of the total number of titles
in the custody of the Register of Deeds but in no case shall the number of titles lost or damaged be less
than five hundred (500) as determined by the Administrator of the Land Registration Authority. (Section
1, R.A. No. 6732 [1989]).

invalidation of the said section will result in the nullification of the entire program,
killing the farmer's hopes even as they approach realization and resurrecting the
spectre of discontent and dissent in the restless countryside. That is not in our
view the intention of the Constitution, and that is not what we shall decree today"
(at 388).
Determination of Just Compensation
Under Sec. 17 of RA 6657, the factors considered in the determination of just compensation are:
a)

cost of acquisition;

b)

current value of like properties;

c)

nature of land;

d)

actual use;

e)

income;

CHAPTER 4

f)

sworn valuation by the landowner;

Just Compensation

g)

tax declaration;

h)

assessment by government assessors;

Detailed discussion of the procedures for the filing of petition for reconstitution are provided for
in R.A. No. 6732 as implemented by LRA Circular dated 26 July 1989, R.A. No. 26 as amended, LRA
Circular No. 35 dated 13 June 1983 and DAR Memorandum Circular No. 05, Series of 1994.

Definition

i)
social and economic benefits contributed by farmers and farmworkers and
by the government; and

Just compensation means the equivalent for the value of the property at the time of its taking. It
means a fair and full equivalentfor the loss sustained. All the facts as to the condition of the property and
its surroundings, its improvements and capabilities should be considered. (Export Processing Zone
Authority vs. Dulay, 149 SCRA 305 [1987]).
In the case of Association of Small Landowners in the Philippines, Inc. vs. Secretary of Agrarian
Reform, supra, the Supreme Court further explained the meaning of "just compensation". It said:

j)
non-payment of taxes or loans secured from government financing
institutions on land.
The provisions of RA 6657 on just compensation do not provide hard-and-fast rules which must be
strictly adhered to by DAR and the LBP in determining just compensation.

Just compensation is defined as the full and fair equivalent of the property taken
from its owner by the expropriator. It has been repeatedly stressed by this Court
that the measure is not the taker's gain but the owner's loss. The word "just" is
used to intensify the meaning of the word "compensation" to convey the idea that
the equivalent to be rendered for the property to be taken shall be real,
substantial, full, ample.
As held in Republic of the Philippines v. Castellvi, there is compensable taking
when the following conditions concur: (1) the expropriator must enter a private
property; (2) the entry must be for more than a momentary period; (3) the entry
must be under warrant or color of authority; (4) the property must be devoted to
public use or otherwise informally appropriated or injuriously affected; and (5) the
utilization of the property for public use must be in such a way as to oust the
owner and deprive him of beneficial enjoyment of the property. All these are
envisioned in the measures before us (at 378, 379).
(T)he content and manner of the just compensation provided for in the aforequoted Section 18 of the CARP Law is not violative of the Constitution. We do not
mind admitting that a certain degree of pragmatism has influenced our decision
on this issue, but after all this Court is not a cloistered institution removed from
the realities and demands of society or oblivious to the need for its enhancement.
The Court is as acutely anxious as the rest of our people to see the goal of
agrarian reform achieved at last after the frustrations and deprivations of our
peasant masses during all these disappointing decades. We are aware that

Notably, while Section 17 provides that the factors/criteria mentioned therein

"shall be considered" in determining just compensation, it does not expressly
state that only these factors/criteria, and no others, shall be considered.
. . . The factors/criteria set forth in Section 17, and in Section 18 and other
pertinent provisions for that matter, should be deemed as mere standards to
guide the proper officials in determining just compensation, but should in no case
control or limit such determination, the ultimate consideration being that the
compensation be the "full and fair equivalent of the property taken from its owner
by the expropriator".
. . . In every case, what should control is the "just-ness" of the proposal taking
into account the "revolutionary" nature of the expropriation under the
CARL. (DOJ Opinion No. 109 (1991))."
Valuation or Computation
General formula
The basic formula for the valuation of lands covered by Voluntary Offer to Sell and Compulsory
Acquisition 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
The above formula is used if all the three (3) factors are present, relevant, and
applicable (DAR Admin. O. No. 5 [1998]). In any case, the resulting figure in the equation is always
multiplied to the number of area or hectarage of land valued for just compensation.
To illustrate the formula wherein all of the factors above mentioned are present:
Area : 3 hectares

Capitalized Net Income : P24,900

Market Value : P10,000

Comparable Sales : P 5,000

The land value is : LV = (24,900 x 0.6) + (5,000 x 0.3) + (10,000 x 0.1)

= (14,940) + (1,500) + (1,000)
= (17,440) x (3 hectares)
= P 52,320
Computation of land value
Whenever one of the factors in the general formula is not available, the computation of land value will
be any of the three (3) computations or formulae:
LV = (CNI x 0.9) + (MV x 0.1)
[if the comparable sales factor is missing]
LV = (CS x 0.9 ) + (MV x 0.1)
[if the capitalized net income is unavailable]
LV = MV x 2
[if only the market value factor is available]
In case the comparable sales factor (CS) is relevant or applicable, the land value is computed in
accordance with the general formula where MV is based on the lowest productivity classification of the
land.
In every case, the value of idle land using the formula MV x 2 should not exceed the lowest value of
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 claimfolder (DAR Admin. O. No. 5 [1998]).
Computation of land value under certain conditions
Valuation of lands planted to permanent but not yet fruit-bearing crops
There are times when the land being valued is planted to permanent crops which are not yet
productive or not yet fruit-bearing at the time of the Field Investigation (FI) of the land. The land value is
equivalent to the value of the land plus the cumulative development cost (CDC) of the crop from land
preparation up to the time of FI. In equation form, the land value can be computed as:
LV = (MV x 2) + CDC
Where:

a)
The market value (MV) to be used is the applicable unit market value
(UMV) classification of idle land.
b)
The cumulative development cost (CDC) is grossed-up from the date of
FI up to the date of LBP Claim Folder (CF) receipt for processing but in no case
should the grossed-up CDC exceed the current CDC data based on industry.
In case the CDC data provided by the landowner could not be verified, DAR and LBP should secure
the said data from concerned agency/ies or, in the absence thereof, should establish the same.
However, the resulting land value should not exceed the value of productive land similar in terms of
crop and plant density within the estate under consideration or within the same barangay or municipality
(in that order) approved by LBP within one (1) year from receipt of CF (DAR Admin. O. No. 5 [1998]).
Lands with permanent but not yet productive crops introduced by farmer-beneficiaries
When the permanent but not yet fruit-bearing crops are introduced by the farmer-beneficiaries, the
land valuation formula used is the same as if only the MV is available provided the MV used is the
applicable UMV classification of idle land. In equation form:
LV = MV x 2
In any case, the resulting land value should not exceed the value of productive land similar in terms
of crop and plant density within the estate under consideration or within the same barangay or
municipality (in that order) approved by LBP within one (1) year from receipt of CF. And in case the CS is
relevant or applicable, the land value is computed in accordance with the general formula where MV is
based on the applicable classification of the land (DAR Admin. O. No. 5 [1998]).
Use of Salvage Value on valuation of lands planted to permanent but no longer
productive or ready for cutting crops
When lands being valued are planted to permanent but no longer productive or the crops are ready
for cutting, the computation considers the applicable UMV classification of idle land plus the salvage
value of the standing trees at the time of the FI. In equation form:
LV = (MV x 2) + Salvage Value
But the resulting land value should not exceed the value of productive land similar in terms of crop
and plant density within the estate under consideration or within the same barangay or municipality (in
that order) approved by LBP within one (1) year from receipt of CF. In case where CS is relevant or
applicable, the land value is computed in accordance with the general formula where MV is based on the
lowest productivity classification of the land (DAR Admin. O. No. 5 [1998]).
Land value under Voluntary Offer to Sell
In VOS, the computed value using the applicable formula should not exceed the landowner's offer.
The landowner's offer is grossed up from the date of the offer up to the date of receipt of CF by LBP from
DAR for processing. The date of receipt of CF by LBP from DAR means the date when the CF is
determined by the LBP-LVLCO to be complete with all the required documents and valuation inputs duly
verified and validated, and ready for final computation/processing.
Factors of Land Value
Computation of Capitalized Net Income
Capitalized Net Income refers to the difference between the product of the gross sales and selling
prices (AGP x SP) and total cost of operations (CO) capitalized at 12%.
Expressed in equation form:

(AGP x SP) - CO

the most recent transactions shall be considered. The same rule applies at the
provincial level when no STs are available at the municipal level. In all cases, the
combination of STs sourced from the barangay, municipality and province should
not exceed three transactions.

CNI =
0.12

b)
The land subject of acquisition as well as those subject of comparable
sales transactions should be similar in topography, land use, i.e., planted to the
same crop. Furthermore, in case of permanent crops, the subject properties
should be more or less comparable in terms of their stages of productivity and
plant density.

Where: CNI = Capitalized Net Income

AGP = Annual Gross Production corresponding to the latest available 12-months'
gross production immediately preceding the date of FI.
SP = (selling prices) The average of the latest available 12-months' selling prices
prior to the date of receipt of the CF 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 is gathered from the barangay or municipality where the property is
located. In the absence thereof, selling prices may be secured within the province
or region.
CO = Cost of Operations
Whenever the cost of operations could not be obtained or verified, an assumed net income rate
(NIR) of 20% is used. Landholdings planted to coconut which are productive at the time of FI will
continue to use the assumed NIR of 70%. DAR and LBP will continue to conduct joint industry studies to
establish the applicable NIR for each crop covered under CARP.
0.12 = Capitalization Rate
(DAR Admin. O. No. 5 [1998])
To illustrate the computation of capitalized net income:
Number of coconut trees : 95 trees/hectare
Selling Prices : P6.74/kg.
Hence:
AGP = 95 trees/ha. x 30 nuts/tree 4.5 nuts/kg. = 633.33 kg.
CNI =

633.33 kg. x 6.74/kg. x 70% NIR for coconut land

12 %

c)
The comparable sales transactions should have been executed within the
period 1 January 1985 to 15 June 988, and registered within the period 1 January
1985 to 13 September 1988.
d)
STs are grossed up from the date of registration up to the date of receipt
of CF by LBP from DAR for processing.
AC or Acquisition Cost is deemed relevant when the property subject of acquisition was acquired
through purchase or exchange with another property within the period 1 January 1985 to 15 June 1988
and registered within the period 1 January 1985 to 13 September 1988, and the condition of said
property is still substantially similar from the date of purchase or exchange to the date of FI.
AC is grossed up from the date of registration of the deed of sale/exchange up to the date of receipt
of CF by LBP from DAR for processing.
MVM or Market Value Based on Mortgage. For MVM to be relevant or applicable, the property subject
of acquisition should have been mortgaged as of 15 June 1988 and the condition of the property is still
substantially similar up to the date of FI. MVM refers to the latest available appraised value of the
property (DAR Admin. O. No. 5 [1998]).
Market Value
MV or Market Value per Tax Declaration is the latest Tax Declaration (TD) and Schedule of Unit
Market Value (SUMV) issued prior to receipt of CF by LBP. The Unit Market Value (UMV) is grossed-up
from the date of its effectivity up to the date of receipt of CF by LBP from DAR processing.
Formula in Grossing-Up of Valuation Inputs
The basic formula in the grossing-up of valuation inputs such as LO's Offer, Sales Transaction (ST),
Acquisition Cost (AC), Market Value Based on Mortgage (MVM) and Market Value per Tax Declaration
(MV) is:

= P24,900.56/hectare

Grossed-up

Comparable Sales

Valuation Input = Valuation Input x Regional Consumer

Comparable sales refers to any one or the average of all the applicable sub-factors, namely sales
transactions (ST), acquisition cost (AC) and market value based on mortgage (MVM):
Where: ST = (Peso Value of Sales Transactions)
The criteria in the selection of the comparable sales transaction (ST) shall be as follows:
a)
When the required number of STs is not available at the barangay level,
additional STs may be secured from the municipality where the land being
offered/covered is situated to complete the required three comparable STs. In
case there are more STs available than what is required at the municipal level,

Price Index (RCPI) Adjustment Factor

The various valuation inputs are multiplied with the RCPI Adjustment Factor. The RCPI
Adjustment Factor refers to the ratio of the most recent available RCPI for the month issued by the
National Statistics Office as of the date when the CF was received by LBP from DAR for
processing and the RCPI for the month as of the date/effectivity/registration of the valuation input.
Expressed in equation form:
Most Recent RCPI for the Month as of the Date
of Receipt of CF by LBP from DAR

RCPI Adjustment Factor =

RCPI for the Month Issued as of the Date/
Effectivity/Registration of the Valuation Input
(DAR Admin. O. No. 5 [1998])
Valuation of deferred commercial farms
The formulae provided under DAR AO 5 (1998) are used in the computation of valuation for deferred
commercial farms (DAR Adm. O. No. 9 [1998]).
Valuation of lands of corporate farms
Agricultural lands owned by corporate farms are valued by considering the following factors:
a)

factors for the determination of just compensation; and

b)
factors needed to stimulate the growth of cooperatives and participation
of worker-beneficiaries (Rep. Act No. 6657[1988], sec. 17 in relation to DAR Adm.
O. No. 5 [1998])
Valuation of lands planted to sugarcane

productivity of the trees change), the valuation should be made on the basis of the age and productivity
of the trees at the time of recomputation (Joint DAR-LBP Memo. Circ. No. 8, [1999]).
Compensation for Mt. Pinatubo areas
Under Joint DAR-LBP AO 3 (1994), agricultural lands affected by the Mt. Pinatubo eruptions have
been classified into three categories based on the NEDA Region III Geographic Information System
Database, to wit:
Under the Category I, are those areas actually affected by the lahar and pyroclastic deposits,
including those areas which have become silted, eroded or continuously flooded for an indefinite period
of time.
Under the Category II, are those areas not yet affected but have the possibility of being actually
affected.
Under the Category III, are those areas actually covered or affected by ashfall but which remain
productive.
The general rule is, lands under Category III shall be acquired and landowners shall be
compensated. While compensation of lands under Categories I and II shall be effected under the
following conditions:
a)

There is a different computation for valuation of lands planted to sugarcane because of the so-called
"ratooning". In the valuation of lands planted to sugar, the effects of ratooning are considered. Ratooning
is the cutting of the straw close to the ground at harvesting time after all the standing water has been
drained out to allow the young tillers to sprout out of the rootstocks and develop into mature normal
bearing plants in three or four months with the aid of fertilizer, manure or compost (Rep. Act No.
1199 [1954], sec. 5, par. [g-2]).

Claims have been approved by the LBP and:

Landowner has executed a Deed of Assignment,

Warranty and Undertaking on or before the issuance of
the Joint DAR-LBP Administrative Order No. 3, Series of
1994; or

Transfer Certificate of Title was already registered

in the name of RP on or before the issuance of the same
administrative order; or

The method of ratooning affects land valuation of the property. Majority of sugar planters practice at
least up to two (2) ratoons. This method reduces the cost of production for sugar planters. Hence, the
computation of the land value is adjusted.

The applicable guideline in the valuation of lands planted to sugarcane is the Joint DAR-LBP MC 15
(1999).

b)
Emancipation Patents/Certificates of Land Ownership Award have been
registered on or before 12 June 1991 regardless of whether or not the claimfolder
is with the LBP.

Valuation of rubber plantations

Valuation of rubber plantations are governed by Joint DAR-LBP MC 7 and 8 (1999).
Under the old rubber land valuation guideline or the Land Valuation Guidelines No. 6 (1990), the
recognized income of rubber plantations is based on processed crumb rubber. Under one of the latest
guidelines, the standard income approach to valuation, measures the net income or productivity of the
land based on the farm produce (in their raw forms) and not on the entire agri-business income
enhanced by the added value of farm products due to processing. It appropriately determines the
Capitalized Net Income of rubber plantations based on the actual yield and farm gate prices of raw
products (field latex and cuplump) and the corresponding cost of production.
Furthermore, the growing market for old rubber trees which was not considered in the old LVG is now
considered.
There are also other several situations which are considered in the computation of just compensation
for rubber plantations. There are rubber claims pending with the Department of Agrarian Reform
Adjudication Board (DARAB) for reasons such as landowner's rejection of the valuation but the
plantation remains under the management of the landowner. Due to the time gap between the original
date of FI and the date of DARAB's order to recompute the property (during which period, the age and

Partial payment was already effected.

Summary Administrative Proceedings

Land Bank of the Philippines
The Land Bank of the Philippines is primarily responsible for the determination of the land valuation
and compensation for all private lands suitable for agriculture under either the voluntary offer to sell or
compulsory acquisition arrangement as governed by RA 6657. The DAR makes use of the determination
of the land valuation and compensation by the LBP, in the performance of its functions (Exec. Order. No.
405 [1990], sec. 1).
Public participation
There are several provisions of laws which encourage public participation in the determination of land
valuation, namely:
a)

Sec. 3 of EO 129-A states:

. . . partnership between government and organization of farmers and farmworkers in agrarian reform
policy formulation, program implementation and evaluation shall be institutionalized . . .

b)

Sec. 18 of RA 6657 provides:

The LBP shall compensate the landowners in such amount as may be agreed upon by the landowner
and the DAR and the LBP . . .
c) DAR AO 14 (1990) emphasizes Sec. 47 of RA
6657 on BARC's assistance in the initial determination
of the value of the land.
Preliminary determination of just compensation cases
The summary administrative proceeding is conducted before the Provincial Agrarian Reform
Adjudicator if the compensation offered does not exceed two (2) million pesos; or before the Regional
Agrarian Reform Adjudicator if the government's offer is more than two (2) million pesos but does not
exceed five (5) million pesos; or before the Department of Agrarian reform Adjudication Board if the offer
is more than five (5) million pesos (DAR Adm. Order No. 8 [1993]).
Under DAR MC 1 (1995), valuation cases involving PD 27 lands are cognizable only by the Secretary
of DAR (reiterating Sec. 12 of PD 946 [1976]). But in the recent case of Land Bank of the Phils. vs.
CA, G.R. No. 128557, 29 December 1999, the Supreme Court declared that it was an error for the
Secretary of Agrarian Reform to issue DAR MC 1 (1995) directing the DARAB to refrain from hearing
valuation cases involving PD 27 lands. It is the DARAB which has the authority to determine the initial
valuation of lands involving agrarian reform pursuant to Sec 1 (b), Rule II, 1994 Revised Rule of the
DARAB although such valuation may only be considered preliminary as the final determination of just
compensation is vested in the courts.
The PARAD's, RARAD's, or DARAB's summary administrative proceeding is merely a preliminary
determination of the just compensation due to the landowner. The landowner has the right to question
such preliminary determination of the Adjudication Board before the Special Agrarian Courts.
"The determination made by the DAR is only preliminary unless accepted by all parties concerned.
Otherwise, the courts of justice will still have the right to review with finality the said determination in the
exercise of what is admittedly a judicial function" (Association of Small Landowners in the Philippines,
Inc. vs. Secretary of Agrarian Reform, 175 SCRA 345 [1989], at p. 382).
The Regional Trial Courts have not been completely divested of jurisdiction over agrarian reform
matters. Section 56 of RA 6657, on the other hand, confers "special jurisdiction" on "Special Agrarian
Courts", which are Regional Trial Courts designated by the Supreme Court at least one (1) branch
within each province to act as such. These Regional Trial Courtsqua Special Agrarian Courts have,
according to Section 57 of the same law, original and exclusive jurisdiction over: 1) "all petitions for the
determination of just compensation to land-owners," and 2) "the prosecution of all criminal offenses
under . . . (the) Act (at 890). Vda. de Tangub vs. CA, 191 SCRA 885 (1990)
Although the proceedings are described as summary, the landowner and other interested parties are
nevertheless allowed an opportunity to submit evidence on the real value of the property. But more
importantly, such determination of just compensation by the DAR, as earlier stated is by no means final
and conclusive upon the landowner or any other interested party for Section 16 (f) clearly provides: "Any
party who disagrees with the decision may bring the matter to the court of proper jurisdiction for final
determination of just compensation" Magana vs. Estrella, 201 SCRA 536 (1991).
In Phil. Veterans Bank vs. Court of Appeals, G.R. No. 132767, 18 January 2000, petitioner Bank
argued that the DAR Adjudicators have no jurisdiction to determine just compensation for the taking of
lands under CARP because such jurisdiction is vested in Regional Trial Courts designated as Special
Agrarian Courts. Hence, Petitioner could file its petition with the RTC beyond the 15-day period of appeal
from the decision of the DAR Adjudicator. The RTC dismissed the petition of Petitioner for being filed

beyond the 15-day period for appeal. The Supreme Court reiterated its ruling in Republic vs. Court of
Appeals, supra, and said:
. . . this rule is an acknowledgment by the DARAB that the power to decide just compensation cases for
the taking of lands under R.A. No. 6657 is vested in the courts. It is error to think that, because of Rule
XIII, S 11, the original and exclusive jurisdiction given to the courts to decide petitions for determination
of just compensation has already been transformed into an appellate jurisdiction. It only means that, in
accordance with settled principles of administrative law, primary jurisdiction is vested in the DAR as an
administrative agency to determine in a preliminary manner the reasonable compensation to be paid for
the lands taken under the Comprehensive Agrarian Reform Program, but such determination is subject
to challenge in the courts.
The jurisdiction of the Regional Trial Courts is not any less "original and exclusive" because the question
is first passed upon by the DAR, as the judicial proceedings are not a continuation of the administrative
determination. For the matter, the law may provide that the decision of the DAR is final and
unappealable. Nevertheless, resort to courts cannot be foreclosed on the theory that courts are the
guarantors of the legality of administrative action.
Valuation of PD 27 Lands
Under Sec. 2 of EO 228, land valuation shall be based on the Average Gross Production (AGP) as
determined by the Barangay Committee on Land Production (BCLP). The formula is:
Rice Lands LV = AGP x 2.5 x P 35 *
Corn Lands LV = AGP x 2.5 x P 31**
*
government support price for one cavan of 50 kilos of palay on October
21, 1972
**
government support price for one cavan of 50 kilos of corn on October 21,
1972
Lease rentals paid to the landowner by the farmer-beneficiary after 21 October 1972 shall be
considered as advance payment for the land.
The factor of government support price provided under EO 228 does not undervalue PD 27 lands.
Under DAR AO 13 (1994), an increment of 6% yearly interest compounded annually on lands covered
by PD 27 and EO 228 is granted. The formula is:
(Computed land value using the original formula) x (1.06)n
where : n = number of years from date of tenancy up to effectivity date
The landowners qualified to receive the compensation based on the increment formula are:
a)
Those whose lands are actually tenanted as of October 21, 1972 or
thereafter and Operation Land Transfer (OLT) covered;
b)
Those who opted for government financing thru LBP as the mode of
compensation; and
c)

Those who have not yet been paid for the value of the land.

For those who were partially paid, the yearly increment of 6% compounded annually shall only be
applied to the unpaid balance. According to the above mentioned administrative issuance, the said grant
of increment is reckoned from the effectivity date of PD 27or date when the land was actually tenanted
up to the effectivity date of DAR AO 13 (1994) or up to 27 October 1994 only. It seems the grant of

increment cannot be applied after this effectivity date even if the actual payment can be had after 27
October 1994.

unreasonable because payment is made in shares of stock, LBP bonds, other

properties or assets, tax credits, and other things of value equivalent to the
amount of just compensation.

In the case of Benosa vs. CA, G.R. No. 122231, 27 November 1995, on the issue of granting interest
to the landowner, it was held:
It is settled that the landowners are entitled to legal interest on the amount
payable from the time the property was taken until full payment is made (National
Power Corporation vs. Angas, 208 SCRA 542; Commissioner of Public Highways
vs. Burgos, supra; Ortula vs. Republic, 22 SCRA 477; Republic vs. Delente,
supra). DAR Administrative Order No. 13, series of 1994 which grants increment
of 6% yearly interest compounded annually on lands covered by P.D. No. 27 and
E.O. No. 228, squarely recognizes the above rule and thus applies to the private
respondents.

The recognized rule indeed, is that title to the property expropriated shall pass
from the owner to the expropriator only upon full payment of the just
compensation. Jurisprudence on this settled principle is consistent both here and
in other democratic jurisdictions" (at 386, 388 and 389).
Cash Payment
Under Sec. 18 of RA 6657, the proportion of payment in cash, dependent on the area/hectarage of
the land valued is subject to the following:

In LBP vs. CA, supra, the Supreme Court decided not to apply the 6% increment to the valuation
because the Court of Appeals affirmed the PARAD's use of the 1992 Gross Selling Price in the valuation
of the private respondent's land (following the ruling in the Court of Appeals case of Galeon vs. Pastoral,
CA-G.R. No. 23168; Rollo, p. 36)
Mode of Compensation
Landowners may be paid in cash or in kind. Payment in kind is justified in the case of Association of
Small Landowners of the Philippines, Inc. vs. Secretary of Agrarian Reform, 175 SCRA 343 (1989) as
follows:
It cannot be denied from these cases that the traditional medium for the payment
of just compensation is money and no other. And so, conformably, has just
compensation been paid in the past solely in that medium. However, we do not
deal here with the traditional exercise of the power of eminent domain. This is not
an ordinary expropriation where only a specific property of relatively limited area
is sought to be taken by the State from its owner for a specific and perhaps local
purpose. What we deal with here is a revolutionary kind of expropriation.
The expropriation before us affects all private agricultural lands wherever found
and of whatever kind as long as they are in excess of the maximum retention
limits allowed their owners. This kind of expropriation is intended for the benefit
not only of a particular community or of a small segment of the population but of
the entire Filipino nation, from all levels of our society, from the impoverished
farmer to the land-glutted owner. Its purpose does not cover only the whole
territory of this country but goes beyond in time to the foreseeable future, which it
hopes to secure and edify with the vision and the sacrifice of the present
generation of Filipinos. Generations yet to come are as involved in this program
as we are today, . . . .
Accepting the theory that payment of the just compensation is not always
required to be made fully in money, we find further that the proportion of cash
payment to the other things of value constituting the total payment, as
determined on the basis of the areas of the lands expropriated, is not unduly
oppressive upon the landowner. It is noted that the smaller the land, the bigger
the payment in money, primarily because the small landowner will be needing it
more than the big landowners, who can afford a bigger balance in bonds and
other things of value. No less importantly, the government financial instruments
making up the balance of the payment are "negotiable at any time". The other
modes, which are likewise available to the landowner at his option, are also not

a)
cash

above 50 hectares, insofar as the excess hectarage is concerned = 25%

b)

above 24 hectares and up to 50 hectares = 30% cash

c)

24 hectares and below = 35% cash

For voluntary offer to sell, the cash portion is increased by 5%.

Payment in kind
Landowners may be paid with:
a)
Shares of stock in government owned or controlled corporation, LBP
preferred shares, physical assets or other qualified investments.
b)

Tax credits; or

c)

LBP bonds

Features of LBP bonds

The new ten (10)-year LBP bonds have attractive features which are more acceptable and
marketable than the other investment instruments. As provided under Sec. 18 of RA 6657, these
features are:
1)
Its market interest rates are aligned with 91-day treasury bill rates, net of
applicable final withholding tax, payable twice a year six months from date of
issue and every six months thereafter.
2)
One-tenth of the bond's face value matures every year from date of issue
up to the tenth year.
3)

The bond is fully guaranteed by the national government.

4)
The bond is non-denominated. Upon request, it can be split according to
amounts desired by the bondholder.
5)
The bonds are highly transferable and negotiable. Such LBP bonds may
be used by the landowner, his successors in interest or his assigns, up to the
amount of their face value, for any of the following:
a)
Acquisition of land or other real properties of the government, including
assets under the Asset Privatization Program and other assets foreclosed by
government financial institutions in the same province or region where the lands
for which the bonds were paid are situated;

b)
Acquisition of shares of stock of government-owned or controlled
corporations or shares of stock owned by the government in private corporations;
c)
Substitution for surety or bail bonds for the provisional release of accused
persons, or performance bonds;
d)
Security for loans with any government financial institution, provided the
proceeds of the loans shall be invested in an economic enterprise, preferably in a
small-and medium-scale industry, in the same province or region as the land for
which the bonds are paid;
e)
Payment for various taxes and fees to government; Provided, That the
use of these bonds for these purposes will be limited to a certain percentage of
the outstanding balance of the financial instruments: Provided, further, That the
PARC shall determine the percentage mentioned above;
f)
Payment for tuition fees of the immediate family of the original bondholder
in government universities, colleges, trade schools, and other institutions;
g)
Payment for fees of the immediate family of the original bondholder in
government hospitals; and
h)

Such other uses as the PARC may from time to time allow.

The 100% face value and negotiability of LBP bonds are well described in the case of Gonzales vs.
GSIS, 107 SCRA 492 (1981). Petitioner filed a petition for mandamus to compel the respondent
Government Service Insurance System (GSIS) to accept 6% interest-bearing bonds issued by the Land
Bank of the Philippines at their par or face value as payment for petitioners' outstanding housing loan.
The act of the GSIS in discounting the LBP bonds was found invalid. The Court ruled:
Land Bank bonds are certificates of indebtedness, approved by the Monetary
Board of the Central Bank, fully tax-exempt both as to principal and income, and
bear interest at the rate of 6% per annum redeemable at the option of the Land
Bank at or before maturity, which in no case shall exceed 25 years. They are fully
negotiable and unconditionally guaranteed by the Government of the Republic of
the Philippines. These bonds are deemed contracts and the obligations resulting
therefrom fall within the purview of the non-impairment clause of the Constitution,
and any impairment thereof may take any encroachment in any respect upon the
obligation and cannot be permitted. Thus, the value of these bonds cannot be
diminished by any direct or indirect act, particularly, since said bonds are fully
guaranteed by the Government of the Republic of the Philippines. They are
issued not in the open market nor for the captive market of landowners and to
facilitate the speedy transfer of lands to the tenant-farmers in support of the land
reform program of the Government. They are not ordinary commercial paper in
that sense subject to discounting (at 498, 499 and 502).
Mode of Payment for PD 27 Landowners
The landowners shall be paid in any of the following modes, at their option (Exec. Order No.
228 [1987], sec. 3):
a)
Bond payment over ten (10) years, with ten percent (10%) of the value of
the land payable immediately in cash, and the balance in the form of LBP bonds
bearing market rates of interest that are aligned with 90-day treasury bills rates,
net of applicable final withholding tax. One-tenth of the face value of the bonds
shall mature every year from the date of issuance until the tenth year.

The LBP bonds issued hereunder shall be eligible for the purchase of government assets to be
privatized.
b)
Direct payment in cash or in kind by the farmer-beneficiaries with the
terms to be mutually agreed upon by the beneficiaries and landowners and
subject to the approval of the DAR; and
c)
Other modes of payment as may be prescribed or approved by the
PARC.
Under Sec. 9 of EO 229, landowners who voluntarily offer to sell their lands are given the same
incentive given to PD 27landowners under EO 228, which is the exemption from the payment of capital
gains tax and other taxes and fees.
CHAPTER 5
Land Redistribution
Qualified Agrarian Reform Beneficiaries Under CARP
Section 22 of RA 6657 enumerates the groups of farmers and tillers who are qualified to become
beneficiaries of the Comprehensive Agrarian Reform Program. They are the following:
(a)

Children of landowners, who qualify under Section 6 of R.A. 6657;

(b)

Agricultural lessees and share tenants;

(c)

Regular farmworkers;

(d)

Seasonal farmworkers;

(e)

Other farmworkers;

(f)

Actual tillers or occupants of public lands;

(g)

Collectives or cooperatives of the above beneficiaries; and

(h)

Others directly working on the land.

Section 22 also provides that "[t]he lands covered by the 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", following the order of priority quoted above.
Qualifications of Agrarian Reform Beneficiary
According to Section 22 of RA 6657, to qualify as an agrarian reform beneficiary, one must:
(a)

be landless;

(b)
be at least 15 years old or head of a 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.
The requirements enumerated in Section 22 are the minimum or basic qualifications for a farmer to
become a beneficiary of land under the agrarian reform program.
Qualifications of landowner's children as preferred beneficiaries
As provided in Section 6, three (3) hectares of agricultural land may be awarded to each child of the
landowner, on the condition that he is at least 15 years of age at the time of the award, and that he is

actually tilling the land or directly managing the farm. "Directly managing the farm" refers to the
cultivation of the land through personal supervision under the system of labor administration.
Children of landowners are classified as preferred beneficiaries, and the land awarded to them does
not form part of the retention right of the parent-landowners. The transfer of the land to them is effected
by the issuance of CLOAs.
The rules on payment for the value of the land by the Land Bank and the payment of amortizations by
the beneficiary do not apply in the case of preferred beneficiaries, unless there has been a tenancy
relationship between the parent-landowners and the children. In the latter case, the Land Bank shall
finance the acquisition of the property.
The rights and obligations of landowners' children as preferred beneficiaries are governed
by Memorandum Circular No. 4, Series of 1994.
"Landless Persons" Under CARL
Section 25 of RA 6657 provides that a landless person is one who owns less than three (3) hectares
of agricultural land. Section 7 also provides that an owner-tiller may still be awarded another parcel of
agricultural land under the program, provided that he is actually cultivating that land, and only to the
extent of the difference between the area of the land he owns and the award ceiling of three (3)
hectares. A tenant who owns one hectare of agricultural land may still qualify as a beneficiary for two
more hectares.

(c)
Material misrepresentation of the beneficiary's basic qualifications as
provided under Section 22 of R.A. No. 6657, P.D. No. 27, and other agrarian
reform laws;
(d)
Sale, transfer, lease, or other forms of conveyance by the beneficiary of
rights over the land, in circumvention or R.A. No. 6657, P.D. No. 27, and other
agrarian reform laws;
(e)
Continuous neglect or abandonment of the awarded land over a period of
two calendar years as determined by the Secretary or his authorized
representative;
(f)
Failure to pay an aggregate of three (3) consecutive amortizations to the
Land Bank or to the landowner, except in cases of fortuitous events;
(g)

Illegal conversion of the land by the beneficiary;

(h)

Waiver of rights to awarded lands;

(i)
Beneficiary's surrender of awarded land to landowner or other nonbeneficiary; and
(j)
Other acts or omissions that circumvent laws related to the
implementation of the agrarian reform program.

Persons Disqualified as Agrarian Reform Beneficiaries

A separate chapter on prohibited acts, supra., discusses these violations in detail.

The following persons are disqualified from becoming agrarian reform beneficiaries:

Squatters disqualified to become CARP beneficiaries

a)

Those who are not included in the enumeration in Section 22;

b)

Those who fail to meet the qualifications prescribed under Section 22;

c)
Those who have culpably sold, disposed of, or abandoned their land
received under CARP or P.D. 27;
d)
Those whose land has been foreclosed by the Land Bank, or
repossessed by the landowner in case of Voluntary Land Transfer/Direct
Payment Scheme, for non-payment of an aggregate of three annual
amortizations;
e)
Those who have converted their land to non-agricultural use without prior
approval by DAR; and
f)
Those guilty of negligence or misuse of the land or any support extended
to him (Sec. 22).
Grounds for disqualification of beneficiary
Under DAR Memorandum Circular No. 19 (1996), the following violations will result in the
disqualification of a farmer from being a beneficiary or from continuing as such under the agrarian reform
program:
(a)
Misuse or diversion of financial and support services extended to the
beneficiary;
(b)

Misuse of the land;

In the case Central Mindanao University vs. DARAB, G.R. No. 100091, October 22, 1992, the
university entered into a contract with members of the faculty and staff for an experimental rice project,
under which the latter were given tracts of land for cultivation. It was expressly stipulated in the contract
that no landlord-tenant relationship arose between the parties. After the term of the project has expired,
the university served notices to vacate on the occupants of the land. The occupants refused to vacate
the land, claiming that they are now entitled to be awarded the land they are tilling pursuant to the land
reform program.
The Supreme Court held that squatters are disqualified from becoming CARP beneficiaries because
they are "guilty of committing prohibited acts of forcible entry or illegal detainer, [and therefore] do not
qualify as beneficiaries of and may not avail themselves of the rights and benefits of agrarian reform".
The Supreme Court also ruled that "a person entering upon the lands of another, not claiming in good
faith the right to do so by virtue of any title of his own, or by virtue of some agreement with the owner or
with one whom he believes holds title to the land, is a squatter. Squatters cannot enter the land of
another surreptitiously or by stealth, and under the umbrella of the CARP, claim rights to said property as
landless peasants." (Emphasis supplied.)
Selection of Beneficiaries
The Municipal Agrarian Reform Officer or the Agrarian Reform Program Technologist, with the
participation of the BARC, screens the beneficiaries.
A farmer who claims priority over those who have been identified by the MARO as beneficiaries
should file a written protest with the MARO or the PARO who is processing the claim folder. Once the
protest is filed, the MARO/PARO shall comment on the 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 appeal to the Secretary.

Landowner not entitled to select beneficiaries

It is not the landowner who distributes his land, so he does not have the right to select who the
transferees. Land acquisition and land distribution are two different transactions. It is the government
which buys the land from the landowner and then sells it to the beneficiaries. It is not a direct transaction
between the landowner and the beneficiaries.
This rule also applies to voluntary land transfer/direct payment scheme. Even under this scheme, it is
not the landowner who determines who will be the beneficiaries. The beneficiaries must qualify under the
law, and it is still the MARO and the BARC who do the screening.
Farmworker defined
A farmworker is defined by Section 3 (g), R.A. 6657 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 companion
is paid on a daily, weekly, monthly, or "pakyaw" basis. The term includes an individual whose work has
ceased because of a pending agrarian dispute and who has not obtained a substantially equivalent and
regular farm employment.
Special qualifications for farmworkers in commercial farms
Aside from the minimum qualifications in Section 22 of R.A. 6657, Section 4 of Administrative Order
No. 9, Series of 1998, provides for special qualifications for farmworkers in commercial farms, which are
as follows:
(a)
they must be at least 18 years old upon filing of application as agrarian
reform beneficiary;
(b)
they must have the willingness, aptitude, and ability to cultivate and make
the land productive; and
(c)
they must have been employed in the commercial farm between June 15,
1988 and June 15, 1998 or upon expiration or termination of the deferment.
Farmworkers who have worked longest on the land continuously shall be given priority.
Specific disqualifications for commercial farmworkers
Section 5 of Administrative Order No. 9, Series of 1998, provides that the following shall be grounds
for the disqualification of potential beneficiaries:
a)

Mandatory retirement;

b)
Optional retirement or resignation, provided that the farmworker has not
filed any case questioning such retirement or resignation;
c)

Dismissal for cause by final judgment;

d)

Waiver or refusal to be a beneficiary; and

e)
Violation of agrarian reform laws and regulations as determined with
finality by the proper tribunal or agency.
Questions have been raised on whether dismissal for cause distinguishes between just and
authorized causes as these two categories are defined in Presidential Decree No. 442, otherwise known
as the Labor Code of the Philippines.
"Just cause" may consist in serious misconduct, willful disobedience of reasonable and lawful orders
of the employer, gross neglect and abandonment of duties, dishonesty and loss of confidence of the

employer in the employee, commission of crime or offense by the employee against the person or
immediate family of the employer, and analogous cases (see LABOR CODE, Article 282).
"Authorized cause", on the other hand, may be one of the following: introduction of labor-saving
devices, redundancy, retrenchment due to legitimate business losses, closure of business, and ailment
or disease of the employee (see LABOR CODE, Article 283).
Just cause is distinguished from authorized cause in the Labor Code because while just causes have
something to do with the moral depravity and fault of the employee, termination for authorized causes is
due to circumstances beyond the control of the employee.
It is evident from the history of the provision of the administrative issuances on qualified farmworkers
that the intention is to distinguish between just and authorized causes. For one, the list of qualifications
in Section 4, Administrative Order No. 9, Series of 1998 provides that the potential beneficiary "must
have been employed in the commercial farm between June 15, 1988 and June 15, 1998 or upon
expiration or termination of the deferment". This new provision makes the qualifications encompass even
those whose services have been terminated by the commercial farm as of the time the deferment period
expires.
Secondly, the original rules governing the acquisition of commercial farms, Administrative Order No.
6, Series of 1998, in item (b), no. 2, letter M, Part IV thereof, provides for dismissal from service for
cause as a ground for disqualification. Retrenchment as a ground for disqualification is listed as a
separate item, namely, item (d). This shows that item (b) refers only to dismissal for just causes, and
does not include dismissal for authorized causes.
Administrative Order No. 6, Series of 1998 was eventually superseded by Administrative Order No. 9,
Series of 1998. The latter administrative order removed retrenchment as a ground for disqualification.
Only dismissal for cause (meaning just cause) has been retained.
Thirdly, Administrative Order No. 9, Series of 1998, item (h), Section 6, Article II, which provides for
the prioritization of beneficiaries, still includes retrenched workers among the potential beneficiaries. The
provision states:
The Beneficiary Screening Committee shall prioritize the potential ARBs pursuant to Section 22
of R.A. 6657. They shall be ranked according to the length of their continuous service in the commercial
farm reckoned from June 15, 1988 up to the expiration of the deferment period; residency, i.e. whether
residing in the same barangay or municipality; whether they have been validly retrenched, i.e. with
approval of the Dept. of Labor and Employment; the nature of their work, i.e. whether directly related to
farm activities, and such other factors as the Committee may deem appropriate. (Underscoring
supplied.)
Different Categories of Farmworkers
Section 3, R.A. 6657 identifies these categories as follows:
(a)
Regular farmworker is a natural person who is employed on a permanent
basis by an agricultural enterprise or farm.
(b)
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" and "sacada".
(c)
Other farmworker is a farmworker who is neither a regular nor a seasonal
farmworker, such as a farmworker who performs farm activities but is not paid for
his or her labor.
DAR A.O. No. 9, Series of 1998, on the other hand, identifies two more categories:

(a)
Technical farmworker is a natural person employed by an agricultural enterprise or farm, who is
highly educated and trained and performs functions in scientific, engineering, medical, teaching, and
other fields, but who is not vested with managerial or supervisory functions, such as chemists,
agronomists, veterinarians, and soil analysts.
(b)
Managerial or supervisory farmworker is a natural person who is employed by an agricultural
enterprise or farm vested with powers and 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.
Categories of farmworkers qualified to become beneficiaries under CARP
Farmworkers who are directly working on the land at the time DAR conducts actual investigation and
documentation of the agricultural enterprise, whether as regular, seasonal, or other farmworkers are
qualified beneficiaries. Under A.O. No. 9, Series of 1998, however, other farmworkers who are directly
employed by the agri-business enterprise or corporation may be considered as beneficiaries, provided
they meet the basic qualifications prescribed in Section 22.
Selection of Beneficiaries of Commercial Farms
Under A.O. No. 9, Series of 1998, there is a Beneficiary Screening Committee responsible for the
qualification, identification, and selection of agrarian reform beneficiaries for acquired commercial farms.
The Committee is composed of the following:
(1)

The Provincial Agrarian Reform Officer, as Chairman;

(2)

The Municipal Agrarian Reform Officer;

(3)
The Provincial Agrarian Reform Coordinating Committee (PARCCOM)
Chairman or his duly authorized representative;
(4)
The Barangay Agrarian Reform Council (BARC) Chairman or his duly
authorized representative from each of the barangays where the subject
commercial farm is situated; and
(5)
The Barangay Chairman or his duly-authorized representative, from each
of the barangays where the subject commercial plantation is situated; as
members.
The Committee comes up with a master list of qualified beneficiaries, and a waiting list of those who
possess the minimum qualifications and none of the disqualifications, but who could not otherwise be
accommodated in the updated master list.
Remedy of farmworker excluded from master list
A farmworker who is excluded from the masterlist may file a written protest with the Beneficiary
Screening Committee. The Committee Chairman shall furnish a copy of the protest to the beneficiaries
whose inclusion in the list is being questioned. The protestees shall file their answer or comment on the
protest, and the Chairman shall transmit the records to the Regional Director for the latter's decision. The
Regional Director shall resolve the protest based on substantial evidence showing the qualification or
disqualification of the beneficiary subject of the protest. No motion for reconsideration of the decision of
the Regional Director shall be allowed, but such decision may be appealed to the Office of the
Undersecretary for Field Operations and Support Services, whose decision shall be final and executory.
Notwithstanding the appeal, the decision of the Regional Director shall not be stayed.
Managerial and supervisory farmworkers

Managerial and supervisory farmworkers may qualify as CARP beneficiaries provided that they have
been identified as qualified beneficiaries prior to their promotion, and that they give up their managerial
or supervisory positions (see A.O. No. 9, Series of 1998). In the case, however, of supervisory or
managerial employees whose responsibilities do not actually conform to the definition of supervisory or
managerial farmworkers, there are two views on the matter. One holds that supervisory and managerial
employees of commercial farms are disqualified from becoming beneficiaries since the laws and
regulations specify the rank and not the job description. The other view is that they are qualified so long
as they are directly working on the land, and possess all the qualifications and none of the
disqualifications for becoming an agrarian reform beneficiary.
It is our opinion that these so called "supervisory or managerial" employees can qualify as
beneficiaries. The definition of supervisory or managerial farmworkers in A.O. No. 9, Series of 1998,
provides that to be considered a supervisor or a manager, the farmworker must be vested with the power
to formulate and implement management policies; to hire, fire, assign, and discipline employees; and/or
to effectively recommend such managerial actions.
Jurisprudence supports the view that this power is essential before an employee may be considered
as supervisory or managerial. InFranklin Baker Company vs. Trajano, G.R. No. 75039, January 28,
1988, it was held:
To make one a supervisor, the power to recommend must not be merely routinary
or clerical in nature but requires the use of independent judgment. In other words,
the recommendation is (1) discretionary or judgmental, not clerical; (2)
independent, not a dictation of someone else; and (3) effectively considered in
the management decision. If these qualities are lacking or, worse, if the power to
recommend is absent, then the person is not really a supervisor but a rank-andfile employee.
There are instances when the position of a farmworker is denominated
"managerial" or "supervisory" even when he is not performing the functions
enumerated in the definition. Hence, it is our view that the functions performed,
rather than the rank, should be determinative of the status of the farmworker.
They should still qualify as beneficiaries, provided they meet all the qualifications
and possess none of the disqualifications, subject to the rules on prioritization set
down under the law.
Seasonal farmworkers
Section 22 includes seasonal farmworkers among the beneficiaries qualified to receive land
under R.A. 6657, following the order of priority set forth in the law.
There is a view that seasonal farmworkers are entitled "only to a just share of the fruits of the land",
but not to own land. This view finds support in Fortich vs. Corona, G.R. No. 131457, August 19,
1999, wherein the Supreme Court said:
Again, as expressed in the opinion of Mr. Martin, intervenors, who are admittedly
not regular but seasonal farmworkers, have no legal or actual and substantive
interest over the subject land inasmuch as they have no right to own land.
Rather, their right is limited only to a just share of the fruits of the land.
The Court based its observation on Article XIII, Section 4 of the Constitution, which provides:
The State shall, by law, undertake an agrarian reform program founded on the
rights 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.

It is our view, however, that the fact that seasonal farmworkers may not have been given a
constitutional right does not mean that they do not have a statutory right. Congress, in interpreting and
implementing Article XIII, Section 4 of the Constitution enacted Section 22 of RA 6657 which explicitly
includes seasonal farmworkers among the qualified beneficiaries. Moreover, the observation made by
the Supreme Court is only an obiter dictum and cannot be made the basis for the loss or acquisition of
legal rights. Moreover, even a collective or cooperative of, among others, "seasonal farmworkers" and
"other farmworkers" may be awarded lands under the agrarian reform program.
Collectives or Cooperatives as Qualified Beneficiaries
A collective or cooperative composed of the beneficiaries listed in Sec. 22 (a) to (e) of R.A. 6657, to
wit: agricultural lessees and share tenants, regular farmworkers, seasonal farmworkers, other
farmworkers, and actual tillers or occupants of public lands, can, by itself, be an awardee of land under
CARP. Sec. 25 of R.A. 6657, in fact, provides that "(t)he beneficiaries may opt for collective ownership,
such as co-ownership or farmers cooperative or some other form of collective organization".
Cooperatives refer to "organizations composed primarily of small agricultural producers, farmers,
farmworkers, or other agrarian reform beneficiaries who voluntarily organize themselves for the purpose
of pooling land, human, technological, financial, or other economic resources, and operated on the
principle of one member, one vote. A juridical person may be a member of a cooperative, with the same
rights and duties as a natural person." (Section 3 [k] of R.A 6657).
The aggregate size of land that may be awarded to an association or a cooperative shall not exceed
the total number of members multiplied by the award ceiling of three hectares, except where the
Presidential Agrarian Reform Council (PARC) approves the award of an area exceeding this limit. Thus,
a cooperative composed of 25 members, for instance, can receive a maximum award of 75 hectares.
(see Sec. 25, R.A 6657)
Inclusion of names of members of collective or cooperative not mandatory
Memorandum Circular No. 24, Series of 1996, Memorandum Circular No. 14, Series of 1994,
and Administrative Order No. 3, Series of 1993, governing the issuance of collective CLOAs, expressly
require the listing of the names of all members in the CLOA issued to a collective or cooperative. The
purpose of this requirement is to "protect a farmer-member from possible summary and unjust
separation by the cooperative or association" (Part IV-A-1).
It is our view that inclusion in the CLOA of the names of all the members of a collective or
cooperative is not necessary in all cases. Where the CLOA is under co-ownership, the names of all the
co-owners (i.e. individual farmer-beneficiaries) should be listed in the collective CLOA. However, where
the CLOA is awarded in the name of the association or cooperative, there is no need to include the
names of the individual members thereof in the collective CLOA. Sec. 25 of R.A. 6657, in fact, provides
that "(t)itle to the property shall be issued in the name of the co-owners or the cooperative or collective
organization as the case may be." (Underscoring supplied)
Women as Beneficiaries under CARP
Women are qualified to become agrarian reform beneficiaries in their own right, not only as spouses
of agrarian reform beneficiaries. For as long as a female farmer's rights have vested and have been
established separately from her husband's or her father's, she is entitled to receive land under the
program.
The term "vested right" has been defined in the case of Balboa vs. Farrales, G.R. No. 27059,
February 14, 1928, as some right or interest in property which has become fixed and established and is
no longer open to doubt or controversy". The Supreme Court, citing American cases, explained that
"rights are vested when the right to enjoyment, present or prospective, has become the property of some
particular person or persons as a present interest".

Involved in the Balboa case was an application for homestead patent. During the pendency of his
application, however, the law granting him the right to such patent was repealed. The Supreme Court
upheld his claim, stating that at the time the law was repealed, the applicant has complied with all the
requirements for the issuance of a patent, hence, his right to the patent has vested. "At least on that
date," said the Court, "his right to the land, as owner, ripened into a vested right. It was no longer
expectant as depending on some events or the performance of some conditions."
Other rights as beneficiaries have been granted to women through other DAR administrative
issuances. Under Memorandum Circular No. 10, Series of 1986, support services in terms of loan
assistance in an amount not to exceed three thousand pesos (P3,000.00) has been guaranteed for
qualified rural women's pre-cooperative groups. Under Memorandum Circular No. 4, Series of 1992, a
budget has been allocated for support services that will empower women beneficiaries.
Under Part II.D of Administrative Order No. 2, Series of 1993, farmworkers who are husband and wife
may be separately entitled to three (3) hectares each provided that their vested rights to the land have
been duly established. Each of the spouses shall be issued a separate CLOA.
Requirement for separate cultivation by spouses of beneficiaries
Under Memorandum Circular No. 18, Series of 1996, women who are spouses of agrarian reform
beneficiaries are required to also cultivate the land, aside from the cultivation undertaken by her
husband. We are of the opinion that separate cultivation must be required of women only where they are
recipients of land in their own right, and should no longer be required of women whose spouses receive
land under the program.
To require separate cultivation by spouses of male agrarian reform beneficiaries would work against,
rather than protect, the interests of women. This requirement fails to recognize the role of women in the
rural household, particularly in agrarian areas. Women are usually given reproductive tasks, such as
upbringing of children, household chores, and other work having to do with the maintenance of the
home. An additional burden of cultivating the land would be harshly onerous upon women who are
spouses of beneficiaries.
The Civil Code and the Family Code recognize that the role of women in traditional families is the
maintenance of the household. In both Codes, maintenance of the home is recognized as the wife's
contribution to the conjugal partnership of gains or to the absolute community of property as to entitle her
to one-half share of the marital partnership property. As long as the wife works in the home, all properties
received or acquired during the subsistence of the marriage is considered part of the conjugal
partnership of gains or of the absolute community of property. There is no reason for R.A. 6657 to be
given a different interpretation as regards the rights of women to land awarded to their spouses under
the Comprehensive Agrarian Reform Program.
Modes of Distribution: Individual vs. Collective Ownership
It is the policy of the CARP to establish owner-cultivatorship of economic-sized farms as basis
of Philippine agriculture. In line with this is the award of three hectares to the individual beneficiaries as
the distribution limit. With a view of equitable land distribution and ownership, DAR is mandated to
distribute agricultural lands to as many tenants and farmworkers as possible. Furthermore, the
distribution of land shall be made directly to individual beneficiaries.
In general, lands shall be distributed directly to the individual worker beneficiaries. In case it is not
economically feasible and sound to divide the land then it shall be collectively owned by the worker
beneficiaries who shall form into a worker cooperative or association which will deal with the corporation
or business association. [Rep. Act No. 6657 (1988) Sec. 29; DAR A.O. No. 10 (1990), II (B)]
The beneficiaries may opt for collective ownership such as co-ownership or farmer's cooperative or
some other form of collective organization. The total area that may be awarded under a collective CLOA

shall not exceed the total number of co-owners or members of the cooperative or collective organization
multiplied by the award limit of three hectares except in meritorious cases as determined by the PARC,
pursuant to Section 25 of R.A. No. 6657. Collective co-ownership CLOAs may be issued to cover any
CARPable lands whether private lands or public lands within proclaimed DAR settlement projects or
public lands turned over to the DAR by other government agencies and institutions pursuant to E.O. No.
407 as amended. [Rep. Act No. 6657 (1988), sec. 25.]
Lands covered by collective CLOAs on a co-ownership basis shall be subdivided in accordance with the
actual occupancy of the ARBs, provided it does not exceed three (3) hectares. Landholding covered by
CLOAs in the name of cooperative or farmer's organization, may, at the option of the organization, also
be subdivided based on the share of each member provided that the subdivision as determined by the
DAR shall be economically feasible. [DAR A. O. No. 03 (1993), III (E).] Subdivision of lands under
collective CLOA is governed by A.O. No. 03, Series of 1993.
Factors Considered in Land Distribution
In the equitable distribution of lands subject of CARP, actual occupancy of a tenant shall be the basis
of the award, provided it does not exceed three hectares. For untenanted lands, all the farmworkers
therein shall be considered as potential beneficiaries in the estate; provided that the proportional share
of each will not exceed three (3) hectares; otherwise, additional ARBS, shall be considered. For
unoccupied lands, each identified ARB may be allowed the award ceiling of three hectares, provided that
there are enough lands for distribution under CARP in the barangay to accommodate others who are
equally qualified but who may not have been considered as awardees in such land under acquisition. In
all cases, the aggregate award to an ARB shall not exceed the limit of three hectares and his total land
ownership as a result of the award shall not exceed three (3) hectares. (DAR A.O. No. 10 [1990], II [D])
Distribution Procedure
The MARO, upon completion of land acquisition, validates the list of qualified beneficiaries who were
identified during the acquisition phase who are still present and qualified to receive the land. Through a
letter or CARP Beneficiary Certificate (CBC), the identified ARBs are formally notified by the MARO that
they have qualified to receive the land. The ARBs are consulted by the MARO as to their preferred mode
of distribution . Thereafter the Land Distribution Folders are prepared and based on the ARBs preference
and submitted to the PARO.
Upon transmittal, the PARO reviews all documents and generates the Certificates of Land Ownership
Award (CLOAs). If the ARBs prefer individual parcels, the PARO requests the DENR to conduct
subdivision survey. The PARO then submits the CLOAs to the DAR Regional Office which causes them
to be signed by the Secretary. Lastly, the PARO registers the CLOAs with the Register of Deeds and
forwards the same to the MARO for distribution. (DAR A.O. No. 19 [1990]).
A compelling issue in respect to land distribution is the matter of physical possession by DAR as a
necessary prerequisite to its distribution to the ARBs. It is submitted that physical possession is not
necessary for land to be distributed. Nothing in R.A. No. 6657requires DAR to take physical possession
as a precondition for redistributing lands subject of acquisition. What is required is "immediate
possession" under Section 16 or "actual possession" under Section 24. Actual possession of the land
consists in the manifestation of acts of dominion over it of such a nature as a party would naturally
exercise over his own property. (Ramos vs. Dir. of Lands [39 Phil 175 [1918]). In issuing the CLOA, the
Republic of the Philippines, which became the registered owner of subject property, acting through DAR,
exercised an act of dominion over the landholding as redistribution involves disposition or alienation.
Having manifested its dominion over the land, the Republic of the Philippines through DAR, is deemed to
be, for all legal intents and purposes, in actual possession thereof. Redistribution is not limited to the
installation of farmers in the landholding. The generation and distribution of CLOAs is embraced within
the concept of redistribution.

Distribution of Homelots
A homelot refers to a parcel of agricultural land used by the ARB as the site of his permanent dwelling
including the area utilized for raising vegetables, poultry, pigs and other animals and engaging in minor
industries. The area of the homelot may not exceed 1,000 square meters. It is an integral part of the
farm and an indispensable factor in farm operations. The procedure for the acquisition and distribution of
farmlots likewise apply to homelots. If the homelot of a tenant-beneficiary falls within the retained area of
the landowner, the beneficiary may be made to transfer his dwelling to his farmlot or other area to be
designated for his homelot which shall be mutually agreed upon by the parties. Provided that the
landowner shoulders the cost of the transfer of his dwelling and the agreed cost of other improvements
introduced by the tenant-beneficiary on said homelot. [DAR A.O. No. 12 [1991], II [C])
Distribution of Commercial Farms and Facilities
Commercial farms may be distributed collectively or individually. Qualified beneficiaries shall be
awarded a maximum of three (3) hectares or a minimum of one (1) hectare each in case the land is not
sufficient to accommodate them.
To expedite the acquisition, the commercial farms shall be initially distributed collectively or under coownership. In the case the beneficiaries desire to partition the land, DAR shall first determine whether it
is economically feasible to divide the land, in coordination with the Department of Agriculture and other
concerned agencies. Thereafter, the beneficiaries may, by majority vote, decide whether to proceed with
the partition or not. In the event the beneficiaries decide to partition, the land shall be allocated to the
individual beneficiaries by drawing lots in the presence of DAR Representatives. (Section 17 DAR A.O.
No. 2-1998)
Facilities and improvements acquired shall be distributed collectively, through a Deed of Transfer
which shall specify the names of the ARBs and duly annotated in the CLOAs generated over the subject
landholding where said facilities and improvements are found. Areas where the facilities and
landholdings are found are deemed common areas and shall not be partitioned individually. (Section
28DAR A.O. No. 02-98)
Collective CLOAS shall be generated within thirty (30) days upon receipt by the PARO of the certified
copy of the certificate of title in the name of the Republic of the Philippines.
In individual CLOAs shall be generated within thirty (30) days upon receipt of the approved
Segregation Plan (ASP). However in the case of individual distribution and considering the time and
financial constraints particularly in the conduct of individual surveys, a collective CLOA may be
generated in the interim over the subject landholding (Section 18, DAR A.O. No. 02-1998)
CLOAs shall be registered immediately upon generation. (Section 20 DAR A.O. No. 02-98)
Distribution of Corporate Farms
The general rule is that corporate farms are distributed directly to the individual worker-beneficiaries.
However, in case it is not economically feasible and sound to divide the land, corporate farms shall be
owned collectively by the worker-beneficiaries who shall form a cooperative or association which will
deal with the corporation or business association. In the latter case, the individual members of the
cooperatives or corporations shall have homelots and small farmlots for family use, to be taken from the
land owned by the cooperative or corporation. (Rep. Act No. 6657 [1988], sec. 29).
Corporate farms owning or operating under lease or management contract
Pending final land transfer, corporate farms that own or operate under lease or management contract
and realize gross sales in excess of P5 million are mandated to execute a production and profit sharing
(PPS) plan provided under DAR AO No. 8 (1988). The PPS plan is imposed in order to allow the

farmworkers in corporate farms to realize an improvement in their farm income pending final transfer of
the farm.
All farmworkers in a corporate farm, whether classified as regular, seasonal, technical or other
farmworkers are entitled to PPS. On the other hand, managerial and supervisory employees are
excluded from entitlement to PPS. (DAR Adm. O. No. 8 [1988])
PPS are distributed to farmworkers, over and above the compensation they are currently receiving,
based on the following schedules:
1.
Three (3%) 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 100% of the regular annual
compensation of the farmworker-beneficiaries;
2.
In addition, 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.
(DAR Adm. O. No. [1988])
To ensure that corporate farm employers comply with the PPS provisions, the Secretary of DAR or
his authorized representatives shall have the power to order and administer compliance with the PPS
provisions and to require submission of reports, compel the production of books and documents, compel
answers to interrogatories, issue subpoena and subpoena duces tecum, and enforce its writs through
Sheriffs or other duly deputized officers. Moreover, Sections 73 and 74 of RA 6657 regarding prohibited
acts and omissions and the penalties therefor, are applicable to any person or entity found to be violating
any PPS provision. (DAR Adm. O. No. 8 [1988])
Proof of Ownership of Awarded Lands
The Certificate of Land Ownership Award evidences the ARB's ownership in respect to private
agricultural lands covered underR.A. No. 6657 (Rep. Act No. 6657 [1988], sec. 24). Ownership of public
lands, upon the other hand, are evidenced by Free Patents. Emancipation Patents is the ARBs proof of
ownership of lands awarded under Operation Land Transfer. Discussing the nature of an Emancipation
Patent, the Supreme Court ruled in the case of Vinzons-Magana vs. Estrella (201 SCRA 536 [1991]) that
it is only compliance with the prescribed conditions which entitles the farmer/grantee to an emancipation
patent by which he acquires the vested right of absolute ownership in the landholding a right which
has become fixed and established and is no longer open to doubt and controversy.
The pronouncement of the court respecting the impregnable character of an Emancipation Patent
should be qualified. The mere issuance of an Emancipation Patent does not put the ownership of the
ARB beyond attack and scrutiny. It must be noted that P.D. No. 946 vests the Court of Agrarian Relations
(now the DAR Adjudication Board) jurisdiction over cases involving the cancellation of emancipation
patents issued under P.D. No. 266 (Pres. Decree [1976], sec. 12 [g]). This only goes to show that
ownership of awarded lands covered by Emancipation Patents may be challenged. The aforecited
Supreme Court ruling presupposes that the issuance of emancipation patents to the ARB is not tainted
with any irregularity such that it acquires the character of indefeasiblity. The Vinzons- Magana ruling
must be appreciated in this context.
Rights and Obligations of Beneficiaries
Once a Certificate of Land Ownership Award has been issued to a beneficiary and registered in his
name, it serves as an evidence of title to the land, entitling the beneficiary to occupy the land, cultivate it,
and maintain possession of the same. cSIADH

An agrarian reform beneficiary is obliged to exercise the diligence of a good father of a family in the
use, cultivation, and preservation of the land and the improvements thereon. His rights to the land, as
well as to support services to which he may be entitled as a beneficiary shall be forfeited in the event
that he neglects, abandons, misuses, or sells the land.
The beneficiary is also obliged to keep the land awarded to him intact, and he may not subdivide the
land in favor of his children or heirs. The three hectares have been identified as an economic-sized
family farm which must be preserved as a single operating unit to promote the farm's economic viability.
Even if the beneficiary dies, his heirs are not allowed to divide the land into smaller units.
However, such heirs are entitled to receive the land by way of hereditary succession. This means that
the land may be transferred either to the spouse of the beneficiary, or in his or her absence or incapacity,
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 to
the land is under obligation to pay the other heirs their legal shares in the property of the deceased
beneficiary. In the absence of qualified heirs or children, he land shall revert to the DAR, which shall
identify a new beneficiary the land.
A beneficiary is likewise obliged to comply with the provisions of R.A. 6657. Memorandum Circular No.
19, Series of 1996,supra., provides for the grounds for perpetual disqualification of agrarian reform
beneficiaries. The grounds enumerated in this Memorandum Circular are violations of various provisions
of R.A. 6657 and administrative rules and regulations issued pursuant to this law.
Protection of Rights of Member-Beneficiaries
The protection of rights of member-beneficiaries may be ensured in the articles of incorporation and
in the by-laws of the organization, which the member-beneficiaries themselves enact and approve.
Restrictions in the transfer of shares or membership rights, by providing that such transfer shall be valid
only if made in favor of another qualified beneficiary, may be adopted. The contract of membership may
likewise contain provisions ensuring that the rights of member-beneficiaries to ownership or other
privileges as members are protected.
The interests of farmer-members may also be adequately protected according to the exit provisions
in Republic Act No. 6938, otherwise known as the Cooperative Code. Articles 31 and 32 of the Code
provides:
Art. 31.
Termination of Membership. (1) A member of a cooperative may,
for any reason, withdraw his membership from the cooperative by giving a sixty
(60)-day notice to the board of directors. The withdrawing member shall be
entitled to a refund of his share capital contribution and all other interests in the
cooperative: Provided, That such refund shall not be made if upon such payment
the value of the assets of the cooperative would be less than the aggregate
amount of its debts and liabilities exclusive of his share capital contribution.
(2) The death, insanity, insolvency or dissolution of a member shall be
considered an automatic termination of membership.
(3) A member may be terminated by a vote of the majority of all the members
of the board of directors for any of the following causes:
(a)

When a
member
has not
patroniz
ed the
services

of the
cooperat
ive for
an
unreaso
nable
period of
time as
may be
fixed by
the
board of
directors
;
(b)

(c)

(d)

When a
member
has
continuo
usly
failed to
comply
with his
obligatio
ns;
When a
member
has
acted in
violation
of the
by-laws
and the
rules of
the
cooperat
ive; and
For any act
or
omission
injurious
or
prejudici
al to the
interest
or the
welfare
of the
cooperat
ive.

A member whose membership the board of directors may wish to terminate shall
be informed of such intended action in writing and shall be given an opportunity
to be heard before the said board makes its decision. The decision of the board
shall be in writing and shall be communicated in person or by registered mail to
the member and shall be appealable, within thirty (30) days after the decision is
promulgated, to the general assembly whose decision therein, whether in a
general or special session, shall be final. Pending a decision by the general
assembly, the membership remains in force.
Art. 32.
Refund of Interests. All sums computed in accordance with the
bylaws to be due from a cooperative to a former member shall be paid to him
either by the cooperative or by the approved transferee, as the case may be, in
accordance with this Code.
Transferability of Awarded Lands
Section 27 prohibits the sale, transfer, or conveyance of lands acquired by beneficiaries under R.A.
6657 within ten (10) years from the date of award. This restriction on the transferability of the land is
annotated on the certificate of title in the Register of Deeds. Lands awarded pursuant to E.O.
228 and P.D. No. 27 may be alienated only upon full payment of amortizations on the purchase price.
However, the lands acquired under CARP may be alienated through hereditary succession, or in
favor of the government, the Land Bank, or other qualified beneficiaries even before the expiration of the
ten-year period. This provision presumes that the land to be alienated has been fully paid for by the
beneficiaries.
If the land has not yet been fully paid for, only the rights to the land may be sold, transferred, or
conveyed, and with prior approval of the DAR, and only to the heirs of the beneficiary or to another
beneficiary.
The buyer of agricultural land alienated under this section is still subject to the aggregate ownership
ceiling of five (5) hectares.
Mortgage of awarded land not equivalent to sale, disposition, or conveyance
Mortgage is a land transaction allowed by the law, and hence is not a sale, disposition, or
conveyance contemplated by the prohibition. The governing administrative issuance on land
transactions is DAR Administrative Order No. 1, Series of 1989. Section II.3.d provides:
The following are not prohibited transactions and may be registered by the
Register of Deeds without prior clearance from DAR:
d.

Deed of real estate mortgage executed by the . . . beneficiary.

Since mortgage is not a prohibited transaction, it follows that it is not tantamount to selling, disposing
of, or conveying the awarded land, which are prohibited transactions. Moreover, the framers of the law,
in not expressly prohibiting mortgage, may have anticipated circumstances in which the farmerbeneficiary is left with no alternative but to mortgage his land in order to respond to emergency situations
such as sickness in the family (see Torres vs. Ventura, 187 SCRA 96, at 103).
Farmer-beneficiary may alienate even without complete payment of amortizations
The second paragraph of Section 27 of R.A. 6657 allows a farmer-beneficiary to transfer or convey
his rights to the land, provided that prior approval of the DAR has been obtained, to any qualified heir of
the beneficiary or to any other beneficiary. An essential condition of such transfer or conveyance is that
the transferee shall cultivate the land himself and maintain its productivity as agricultural land. The failure

to comply with this condition shall result in the availability of the land for distribution to another qualified
agrarian reform beneficiary.
Disqualification of beneficiary who sold or transferred right to awarded land
Section 73 (f) provides that the sale, transfer, or conveyance by a farmer-beneficiary of the right to use
or any usufructuary right over the land must be made "in order to circumvent the provisions" of R.A.
6657. This must be harmonized with Section 27, which allows the farmer-beneficiary to transfer or
convey the land or his rights to the land, provided that it is with the prior approval of DAR.Administrative
Order No. 8, Series of 1995, governs the procedure for obtaining this consent.
Administrative Order No. 10, Series of 1989 provides that beneficiaries who have sold the land they
received under R.A. 6657 orP.D. 27 are no longer qualified to receive land under R.A. 6657, without any
qualification on the manner of disposition.
We believe, however, that the law intends to preserve the land in the hands of the beneficiary and to
make him benefit from the land for as long a time as feasible. The administrative issuances regarding
the obtention of consent to convey the land merely exempt the vendor from criminal prosecution for
circumventing R.A. 6657, and cannot be construed to give the farmer-beneficiary license to convey the
land without forfeiting his right to become a beneficiary again.
Manner of Payment by Beneficiaries
For lands acquired by DAR through the compulsory acquisition scheme or through voluntary offer to
sell, Section 26 provides that lands awarded to beneficiaries shall be paid for by the farmers in thirty (30)
annual amortizations at six per cent (6%) interest per annum. These are regular annual amortizations,
payable to the Land Bank of the Philippines.
For lands acquired under the VLT/DPS scheme, Section 21 provides that payment shall be made
directly by the farmer-beneficiaries to the landowner under the terms and conditions mutually agreed
upon by the parties. Such terms and conditions shall be subject to the approval by the DAR.
Pursuant to Section 20, the DAR is mandated to ensure that these terms and conditions are not less
favorable to the farmer-beneficiary than those which would have prevailed had the DAR acquired the
land under the compulsory acquisition scheme.
If the landowner and the farmer cannot agree on the price of the land, Section 21 provides that the
land shall be subject to compulsory acquisition, following the procedure under Section 16.
Payment by the beneficiaries, in any case, shall start one year from the date of the registration of the
CLOA with the Register of Deeds. Joint DAR-LBP Memorandum Circular No. 30, Series of 1997 states
that in case occupancy of the land occurred before the date the CLOA is registered, then the basis for
the amortization schedule would be the date of CLOA registration. If the occupancy date occurred after
the date of CLOA registration, then the occupancy date would be the basis for the amortization schedule.
Computation of amount of amortizations
Under Administrative Order No. 2, Series of 1998, the basis of computation shall be the cost of the
land and the permanent improvements thereon.
Pursuant to the mandate of the law that the payments shall be made affordable to the beneficiaries,
however, Administrative Order No. 2, Series of 1998 provides that the amortizations may be reduced to:
(1)

2.5% of annual gross production (AGP) for the first three years

(2)

5% of the AGP for the fourth and fifth years

(3)
10% of the AGP for the sixth to thirtieth years, if this amortization ceiling is
lower than the regular amortization.
The annual gross production is defined as the peso value of the annual yield/produce per hectare of
the land awarded to farmer-beneficiaries, which is reflected in the valuation portion of the Claim
Valuation and Processing Form.
In the case of VLT/DPS, for the purposes of computing the regular amortization, the AGP shall be that
agreed upon by the parties during the proceedings for the determination of just compensation, and shall
not be changed throughout the period for payment of the value of the land.
The ceiling on the payments for lands voluntarily offered or compulsorily acquired shall be the same.
This is pursuant to the provision that, although the terms and conditions of the VLT/DPS shall be
mutually agreed upon by the landowners and the farmer-beneficiaries, these should not be less
favorable to the ARB that those that would prevail had the land been acquired by the government
compulsorily (see Section 20 [b], R.A. 6657).
Effect of default in payment by beneficiary
In the case of land acquired under the VLT/DPS scheme, the land may be repossessed in case the
beneficiary fails to pay an aggregate of three (3) consecutive annual amortizations from the date of
receipt of the amortization schedule, except if loss of crops occurs due to fortuitous event or force
majeure. Section 19 (c) provides that the voluntary agreement entered into by the landowners and the
beneficiaries under VLT/DPS shall include sanctions for non-compliance by either party, subject to the
approval by the DAR.
In the case of land voluntarily offered for sale or compulsorily acquired, the failure of the beneficiary
to pay at least three (3) annual amortizations to the Land Bank gives the bank the right to foreclose the
land, with the exception of loss of crops due to force majeure. In both cases, the beneficiary shall be
permanently disqualified from becoming a beneficiary again.
Failure to pay due to fortuitous event
If the default is occasioned by natural calamity and/or force majeure, or any other instance when the
failure to produce is not due to the fault of the farmer, the scheduled amortization payment is limited to
the maximum amount of 10% of the annual gross production (see Section IV, A.O. No. 2, Series of
1992). The default due to fortuitous event shall not result in the permanent disqualification of the
beneficiary.
Effect of higher valuation
The amount of regular annual amortization is not affected in case the landowner is granted by the
courts a higher valuation than that pegged by the DAR/LBP/BARC during the valuation process. The
only effect of this change is to increase government assistance or subsidy.
Repossessed land does not revert to former landowner
In case awarded land is repossessed by the government, the DAR shall cancel the CLOA issued to
the beneficiary, and transfer the land to either of the following:
a)
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.
Beneficiary in default will not forfeit payments

If the land is sold to a new beneficiary other than an heir of the former beneficiary, the landowner shall
refund the payments to the latter, in one lump sum or in installments, and shall pay for the improvements
made by the former beneficiary, less the lease rentals for the duration of his use of the land and other
charges allowed by law.
Assistance to farmer-beneficiaries in making payments
Administrative Order No. 2, Series of 1998 defines "assistance to farmers" as follows:
(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 (5) years after the award of the land to the ARBs
where the affordable amount is lower that the regular amortization;
(b)
The difference between the regular annual amortization and ten percent
(10%) of the AGP during the 6th to 30th year, whenever such 10% AGP is lower
that the regular amortization; and
(c)

2)
In addition, 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.
[AO 8 (1988)]
Existing production and profit-sharing granted prior to the effectivity of CARP shall be credited as
compliance with the mandated production and profit-sharing plan. However, where the benefits received
are less than what is provided under RA 6657, covered employers shall pay the difference to the
farmworkers.
Non-compliance with the provisions on production and profit-sharing is a violation covered by the
provisions on prohibited acts and omissions and the penalties therein under Sections 73 and 74 of RA
6657.
The enforce the above mandate, DAR through its Secretary or authorized representatives has the
following powers:
1)
To order and administer compliance with the Production and ProfitSharing provisions of RA 6657;

Rebate of 2% of interest in case the beneficiary makes an early payment.

Production and Profit Sharing

2)
To require covered employers to submit report on the distributed
production and profit shares;

Under Sections 13 and 32 of RA 6657, individuals or entities owning agricultural lands and operating
under lease or management contract are required 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. The provisions under AO 8 (1988) governs production and profit sharing
plan under RA 6657.

3)
To compel the production of books and other relevant documents of
covered employers;
4)
To compel answers to questions needing clarifications to shed light on
problems encountered in the implementation of the plan;

A production and profit-sharing plan is required in order to improve the income of farmworkers
pending final land transfer or stock distribution or full control in the case of deferred commercial farms
and lease-back arrangements.
The following employers are required to execute production and profit-sharing plan provided that their
annual gross sales exceed P5 million:

5)

To issue subpoena; and

6)

To enforce its writs through sheriffs or other duly deputized officers.

Tax Exemption

1)
Any enterprise owning or operating agricultural lands under lease,
management contract, production venture or other similar arrangement;

Transfers of ownership under R.A. No. 6657 are tax exempt as provided in Section 66 thereof, as
follows:

2)

Transactions under this Act involving transfer of ownership, whether from natural or juridical person,
shall be exempted from taxes arising form capital gains. These transactions shall also be exempted from
the payment of registration fees, and all other taxes and fees for the conveyance or transfer thereof;
Provided, That all arrearages in real property taxes, without penalty or interest, shall be deductible from
the compensation to which the owner may be entitled.

Multinational corporations engaged in agricultural activities; and

3)
Commercial farms devoted to aquaculture including salt beds, fishponds
and prawn ponds, fruit farms, orchards, vegetable and cut-flower farms, and
cacao, coffee and rubber plantation.
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. To qualify, however, said employees
must not own more than three (3) hectares of agricultural land.
Covered employers are required to pay the following, over and above the compensation currently
received by the farmworkers:
1)
Three (3%) 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 100% of the regular annual
compensation of the farmworker-beneficiaries.

It is submitted that tax-exempt transactions contemplated in the above-quoted provision only involve
lands placed under the coverage of the CARP and acquired through any of the modes of acquisition
provided under the law, i.e., compulsory acquisition, voluntary offer to sell, voluntary land transfer or
direct payment scheme for the purposes of transferring these to the beneficiaries. Hence, transfer of
homelots to farmers as disturbance compensation in the case of lands already exempted from CARP
coverage is taxable. This is so since the farmer-transferees in this case did not acquire the land as
agrarian reform beneficiaries within the context of R.A. No. 6657. It must be emphasized that tax
exemptions are to be strictly construed against the taxpayer. Therefore, any transaction not expressly
enumerated in Section 66 of R.A. No. 6657 should be construed as not included in the tax-exempt
provision of the law. (Memorandum of Asst. Sec. Peaflor for the Secretary, 06 April 2000)
Standing Crops

Section 28 provides that the landowner is entitled to retain his or her share in the standing crops
unharvested at the time the DAR shall take possession of the land under the compulsory acquisition
scheme, and shall be given reasonable time to harvest the same to the extent of the share pertaining to
him/her.
Standing crops refer only to those crops existing at the time DAR takes possession of the land.
In the case of sugarlands, the term shall include the original crop only, excluding future harvests from
ratoons, if what is existing at the time the DAR takes possession of the land is the original crop. If what is
existing at the time of possession is already the first or second crop, the landowner shall be entitled to
harvest his/her share in that ratoon crop.
Support Services
Agrarian reform involves not only land redistribution, but also the totality of factors and support
services designed to uplift the economic status of the beneficiaries and all other arrangements which will
allow the beneficiaries to receive a just share of the fruits of the lands they work. (Section 3 (a) R.A. No.
6657). To address the latter, the Office of Support Services was created to provide general support and
coordinative services in the implementation of the program. (Section 35, R.A. No. 6657).
Notwithstanding the enactment of R.A. No. 7905 otherwise known as "An Act to Strengthen the
Implementation of the Comprehensive Agrarian Program and for other Purposes" support services by
the government remained limited because of fiscal constraints. Only 370,000 beneficiaries within the
Agrarian Reform Communities (ARCs) out of 3.34 million as of 1998 are reached by such services.
(CARP Annual Report, 1998, PARC Secretariat). Thus, the Department saw the need to mobilize the
private sector to ensure adequate support services. It is within this framework that Joint Economic
Enterprises was conceived. Joint Economic Enterprises refer to partnerships or arrangements between
beneficiaries and investors to implement an agribusiness enterprise in agrarian reform areas. The
arrangement finds legal basis in Section 35 and 44 of R.A. No. 6657, as amended by R.A. No 7905, as
follows:
There is hereby created the Office of Support Services under the DAR to be
headed by an Undersecretary. . . . This Office shall provide general support and
coordinative services in the implementation of the program. Particularly in
carrying out the provisions of the following services to farmer beneficiaries and
affected landowners: . . . (2) Infrastructure development and public works
projects in areas and settlements that come under agrarian reform . . . . For the
purpose of providing the aforecited infrastructure and facilities, the DAR is
authorized to enter into contracts with interested private parties on long term
basis or through joint venture agreements or build-operate-transfer schemes, . . .
(10) Assistance in the identification of ready markets for agricultural produce and
training in other various aspects of marketing . . .
The PARCCOM shall coordinate and monitor the implementation of the CARP in
the province . . ., in addition, it shall recommend to the PARC the following: . . . 3)
continuous processing of applications for lease back agreements, joint venture
agreements and other schemes that will optimize the operating size for
agricultural production and also promote both security of income to farmer
beneficiaries; Provided that lease back arrangements should be the last resort.
(Underscoring supplied)
Joint Economic Enterprises
The parties to a joint economic enterprise are the agrarian reform beneficiaries and investors who
may either be private individuals, partnerships or corporations; non-government organizations;
cooperatives or associations of beneficiaries; government-owned or controlled corporations and other

entities (Section 6 DAR A. O. No. 2-1999) It must be noted that the beneficiaries referred to include
holders of Emancipation Patents (EPs) of Certificates of Land Ownership Awards (CLOAs). Qualified
beneficiaries of agricultural lands for distribution under the agrarian reform program may also avail of the
same provided that the land is distributed to the beneficiaries before an agribusiness agreement is
executed. Small landowners may engage in joint economic enterprises involving their retained areas.
(Section 4, DAR A.O. No. 2-1999)
In a joint economic enterprise, ownership of land remains with the beneficiaries. Only the use thereof,
where necessary, is conveyed. The purposes for which a joint economic enterprise is to be established
are production, processing and marketing of products, or introduction, maintenance, rehabilitation or
upgrading of agricultural capital assets, infrastructure or facilities, or provision of management expertise,
technology, equipment and other services to beneficiaries. The equity and interest of the parties to a joint
economic enterprise depend on the nature of enterprise and extent of participation. Parties hall exercise
shared responsibility and co-determination on matters affecting the viability of land and income of
beneficiaries. The parties shall agree on the period and cause the annotation of the agreement on the
titles of the properties. (Section 6, DAR A.O. No. 2-99)
Types of Joint Economic Enterprises
Joint Venture
In a joint venture, the beneficiaries contribute use of the land together with the facilities and
improvement while the investor provides capital and technology for production, processing and
marketing of goods, or for construction, rehabilitation, upgrading of agricultural capital assets,
infrastructure and facilities. The joint venture has a personality separate and distinct from the parties.
The equity of beneficiaries in a joint venture depends on the value of use of land and improvements at
the minimum, equal to lease rental. The equity of the beneficiaries is not subject to dilution. The joint
venture is to be managed jointly by the investors and the ARBs. The beneficiaries are given a fixed
number of seats in its board of directors corresponding to their equity interest. The beneficiaries and/or
their dependents are to be given preference for employment in the joint venture.
Production, Processing and Marketing Agreement
In a production, processing and marketing agreement, the beneficiaries engage in production and
processing of agricultural products and directly sell them to the investor who provides loans and
technology. Incorporated in said agreement is a price review mechanism taking into consideration
industry practice, prevailing market prices and other appropriate factors.
Build Operate Transfer Scheme
In a build-operate-transfer scheme, the investor builds or rehabilitates facilities and improvements
necessary to make the lands productive and directly operates the same for a certain period. The facilities
and improvements are constructed at the investor's own expense, and he shall not be allowed to access,
for this purpose, government funds that would, otherwise be available as financing or capital for
beneficiaries. In said scheme, the beneficiaries receive reasonable rent for the use of land. Upon
expiration of the agreed period, ownership of the facilities and other improvements is consolidated in the
name of the beneficiaries.
Management Contract
In a management contract beneficiaries hire the services of a contractor with managerial skills and
capability to manage and operate the farm in exchange for a fixed wage and/or commission. The
beneficiaries, in turn provide labor. All income from the operation of the farm accrue exclusively to the
ARBs. In this arrangement, a human resource development program for the members of the
cooperative, association or federation is to be implemented to facilitate transfer of technology and
management techniques to enable them to directly manage and operate the farm.

Service Contract
In a service contract, beneficiaries engage for a fee the services of a contractor for mechanized land
preparation, cultivation, harvesting, post-harvest operations and other activities. The service contractors
may include other ARBs with necessary equipment and facilities for mechanized farm operations.
Beneficiaries who wish to engage in service contracting but with limited financial capability may avail of
loan facilities or credits pursuant to Section 35 of R.A. No. 6657 as amended.
Lease Contract
In a lease contract, beneficiaries bind themselves to give investor enjoyment or use of their land for a
price certain and for a definite period. In this arrangement, the investor provides capital to operate the
farm, construct facilities and other improvements, process and market agricultural products. The lessee
may either be a former landowner or other investors. However, under Section 44 of R.A. No. 6657, as
amended by R.A. No. 7905, leaseback arrangements should be the last resort. This means that the
ARBs and the investor (former landowner) must first consider other types of agribusiness arrangements
before deciding on a lease. The lessee/investor is to give priority to qualified and willing ARBs and their
dependents for employment in the enterprise. In such cases, the ARBs are to be treated as employees
of the lessee/investor and are entitled to the mandated minimum wage and other economic benefits
granted under the Labor Code and other existing laws.

Any restraining order or injunction issued by courts against DAR pursuant to the implementation of
CARP is null and void as it violates the express provisions of Sec. 55 and 68 of RA 6657. Sec. 55
provides that no court in the Philippines shall have jurisdiction to issue any restraining order or writ of
preliminary injunction against the PARC or any of its duly authorized or designated agencies in any case,
dispute or controversy arising from, necessary to, or in connection with the application, implementation,
enforcement, or interpretation of agrarian laws. On the other hand, Sec. 68 states that no injunction,
restraining order, prohibition or mandamus shall be issued by the lower courts against DAR, DA, DENR
and DOJ in their implementation of CARP.
ALI Cases
Under DAR AO 6 (2000), ALI cases refer to those agrarian cases falling under the exclusive
jurisdiction of the DAR Secretary. These cases strictly involve the administrative implementation of RA
6657 and other agrarian laws, rules and regulations. These cases include the following:
a)
Classification and identification of landholdings for coverage under CARP,
including protests or oppositions thereto and petitions for lifting of coverage;
b)
Identification, qualification or disqualification of potential farmerbeneficiaries;
c)

Combinations or Phased Arrangements

Combinations or phased arrangements combine the features of any or all of the preceding forms of
agribusiness enterprises, or provide for a phased implementation thereof. For instance, production and
processing of agricultural corps may be covered by contract growing, while marketing may be under a
joint venture. Small growers may engage production, while a corporation may undertake processing and
marketing. Initially, the arrangement may provide for leaseback, followed by a contract growing, and
finally, joint venture.
Other Schemes
Other schemes refer to other agribusiness arrangements or schemes that optimize the operating size
of distributed lands for agricultural production consistent with existing laws and regulations. (Section
7, DAR A.O. No. 2-99)
CHAPTER 6
Adjudication of Agrarian Reform Matters
Jurisdiction of DAR
Sec. 50 of RA 6657 provides that the DAR is vested with primary jurisdiction to determine and
adjudicate agrarian reform matters and shall have exclusive jurisdiction over all matters involving the
implementation of agrarian reform, except those falling under the exclusive jurisdiction of the DA and the
DENR. In the exercise of its jurisdiction, DAR shall not be bound by technical rules of procedure and
evidence but shall proceed to hear and decide all cases, disputes or controversies in a more expeditious
manner, employing all reasonable means to ascertain the facts of every case in accordance with justice
and equity and the merits of the case.
Adjudication of agrarian reform matters involves the exercise by the DAR Secretary of its exclusive
jurisdiction over agrarian law implementation (ALI) cases or the exercise by the DAR Adjudication Board
(DARAB) of its jurisdiction under the 1994 DARAB Revised Rules of Procedure. Petitions for the
determination of just compensation to landowners and the prosecution of all criminal offenses under RA
6657 falls within the original and exclusive jurisdiction of the Special Agrarian Courts (SACs).
Restraining orders or injunctions issued by regular courts

Subdivision surveys of lands under CARP;

d)
Issuance, recall or cancellation of Certificates of Land Transfer (CLTs)
and CARP Beneficiary Certificates (CBCs) in cases outside the purview of PD
816, including the issuance, recall or cancellation of EPs or CLOAs not yet
registered with the Register of Deeds;
e)

Exercise of the right of retention by the landowner;

f)
Application for exemption under Section 10 of RA 6657 as implemented
by DAR AO 13 (1990);
g)
Application for exemption pursuant to DOJ Opinion No. 44 (1990) as
implemented by DAR AO 6 (1994);
h)

Application for exemption under DAR AO No. 9 (1993);

i)
Application for exemption under Section 1 of RA 7881 as implemented
by DAR AO 3 (1995);
j)
Issuance of certificate of exemption for lands subject of VOS and CA
found unsuitable for agricultural purposes pursuant to DAR MC 34 (1997);
k)
Application for conversion of agricultural lands to residential, commercial,
industrial or other non-agricultural uses including protests or opposition thereto;
l)

Right of the ARBs to homelots;

m)

Disposition of excess area of the FBs landholdings;

n)
Transfer, surrender or abandonment by the FBs of his farmholding and its
disposition;
o)

Increase of awarded area awarded by the farmer-beneficiary;

p)

Conflict of claims in landed estates and settlements; and

q)
Such other matters not mentioned above but strictly involving the
administrative implementation of RA 6657 and other agrarian laws, rules and
regulations as determined by the Secretary. (DAR Adm. O. No. 6 [2000], sec. 2).
In the adjudication of ALI cases, the Secretary or his authorized representative may exercise quasijudicial powers granted under Section 50 of RA 6657. He or his authorized representative shall have the
power to summon witnesses, administer oaths, take testimony, require submission of reports, compel
the production of books and documents and answers to interrogatories and issue subpoena, and
subpoena duces tecum and to enforce its writs through sheriffs or other duly deputized officers. He or his
authorized representative shall likewise have the power to punish direct and indirect contempts in the
same manner and subject to the same penalties as provided in the Rules of Court.
Likewise, the Regional Director or the DAR official having jurisdiction over the case, shall, motu
propio or at the instance of a party, have the authority to issue a Cease and Desist Order or Status Quo
Order pending the resolution of the case in the following instances:
a)

where grave or irreparable damage will result to the parties;

b)
where the doing or continuance of certain acts will render the case moot
and academic; or
c)
where there is a need to maintain peace and order and prevent injury or
loss of life or property.
In this regard, the issuing authority may request the assistance of law enforcement agencies to
implement the order. (Sec. 17, DAR Adm. O. 6 [2000])
Moreover, the DAR shall not take cognizance of any agrarian controversy unless a certification from
the BARC has been submitted stating that the dispute underwent mediation and conciliation without any
success of settlement. However, if no certification is issued by the BARC within thirty (30) days after a
matter or issue is submitted to it for mediation or conciliation the case or dispute may be brought before
the PARC. (Rep. Act No. 6657 [1988], sec. 53)
Jurisdiction over ALI Cases
The Secretary shall have exclusive original jurisdiction over all ALI cases. However, this jurisdiction
may be delegated to certain DAR officials in accordance with existing rules and regulations (DAR Adm.
O. No. 6 [2000], sec. 6).
Protest/Petition for Lifting of Notice of Coverage/Application for Exemption or Exclusion
Under Sec. 7 of DAR AO 6 (2000), the Regional Director shall exercise primary jurisdiction over
protests or petitions for lifting of notice of coverage.
The Secretary shall exercise exclusive jurisdiction for application for the issuance of exemption
clearance under DAR AO 6 (1994) involving lands with an area of more than five (5) hectares. For lands
with an area of five (5) hectares and below, the issuance of such clearance is delegated to the Regional
Directors (DAR Adm. O. No. 6 [2000], sec. 8 [a]).
Applications for exemption or exclusion under DAR AO 13 (1990), DAR AO 9 (1993), DAR AO 3
(1995) and DAR MC 34 (1997) and other pertinent rules and regulations, shall be under the jurisdiction
of the concerned DAR officials identified therein, except those involving lands five (5) hectares and
below situated within the provinces of Cavite, Laguna, Batangas, Rizal and Quezon (CALABARZON)
which are now delegated to the concerned Regional Director. 1
Conversion

Jurisdiction over applications for conversion shall pertain to the DAR officials authorized to approve or
disapprove applications for conversion of agricultural lands to non-agricultural uses pursuant to Sec. 22
of DAR AO 1 (1999) (DAR Adm. O. No. 6 [2000], sec. 9).
Other ALI Cases
The jurisdiction over other ALI cases shall generally pertain to the Regional Directors, except those
cases specifically delegated to other DAR officials under existing rules and regulations, or those that
may subsequently be promulgated by the Secretary (DAR Adm. O. No. 6 [2000], sec. 11).
Flashpoint Cases
Flashpoint cases are ALI cases which fall within the jurisdiction of the Regional Director or the
Director of the Bureau of Agrarian Legal Assistance (BALA) and determined or certified by the Secretary
or the Head Executive Assistant which (a) threatens to disrupt the status quo in a particular area and
endanger life and limb as a result of the use of force from either the landowners' side or farmerbeneficiaries' side or other parties; (b) are the subject of massive pickets or which may immediately
result in concerted mass actions either in the DAR Central Office or in the field offices or at the site of the
conflict; or (c) are of such nature that the Secretary may assign for immediate resolution. (DAR Memo.
Circ. No. 13 [1997])
The following are the procedure in the resolution of flashpoint cases:
a)
Once a case has been certified as a flashpoint case by the HEA or the
Secretary, the Director of the Special Concerns Staff (SCS) shall issue an Order
directing the Head of Office/Unit concerned where the case is pending to transmit
the entire case records, together with his comments or recommendations, to the
Office of the SCS Director within 48 hours from notice of the directive.
b)
Within 24 hours from receipt of the case records, the SCS Director shall
issue a directive to all concerned parties to submit their respective position
papers and such other documentary evidence within ten (10) days from notice. A
clarificatory hearing, dialogue/conciliation/mediation or ocular inspection may be
conducted when appropriate.
c)
Within five (5) working days from the conclusion of the
investigation/review/evaluation, the SCS Director shall rule on the case or submit
his recommendation for the resolution of the case.
d)
An aggrieved party may file a notice of appeal, together with the appeal
memorandum, to the Assistant Secretary for Policy, Planning and Legal Affairs
Office (PPLAO). The latter office shall forward the records, together with the
evaluation on appeal made and proposed resolution, to the Office of the
Secretary.
e)
The Secretary shall have five (5) working days to decide on the appeal.
The decision rendered by the Secretary shall be immediately executory
notwithstanding any duly perfected appeal. (DAR Memo. Circ. No. 13 [1997])
However, a certification that a case is considered flashpoint shall merely serve to accord utmost
priority to the resolution thereof but shall not divest the concerned DAR official of the authority to resolve
such cases, unless specifically directed in the national interest, or the Secretary himself has assumed
jurisdiction over the case. (Adm. O. No. 6 [2000], sec. 11)
Resolution of Disputes in Joint Economic Enterprises (JEE)
The following are the hierarchy of dispute resolution methods involving joint economic enterprises:

1)

voluntary methods;

2)

mediation or conciliation by trained mediators or conciliators;

3)

arbitration; and

4)

To any of the following depending on the principal cause of action:

Deposit (COD) shall not be issued to the PARO until the application, protest or
petition is finally resolved.
Period in filing actions

a)
DAR Adjudication Board (DARAB) if it involves
interpretation of an agribusiness agreement or an
agrarian dispute as defined in Sec. 3 (d) of RA 6657;
b)
Securities and Exchange Commission (SEC) if it
involves an intra-corporate dispute;

Under Sec. 13 of DAR AO 6 (2000), petitions for lifting of notice of coverage shall be filed within thirty
(30) days from receipt of the Notice of Coverage by the affected party. Failure by the affected party to file
the protest or petition within the prescribed period shall be deemed a waiver of his right thereto. If the
action is filed after the expiration of the thirty (30)-day period, the protest or petition shall no longer be
entertained or shall be summarily dismissed by the MARO or the PARO, except in the following
instances:
a)
the protest or petition is based on allegations that subject landholding is
exempted from CARP coverage under DAR AO 6 (1994); or

c)
Cooperative Development Authority (CDA) if it
involves an intra-cooperative dispute; or

b)
upon evaluation of pertinent documents and based on the physical
conditions obtaining in the property, it is determined by DAR that the subject
landholding is exempted from CARP coverage pursuant to DAR AO 13
(1990), DAR AO 9 (1993),DAR AO 3 (1995) and DAR MC 34
(1997) notwithstanding the issuance of the Notice of Coverage.

d)
National Labor Relations Commission (NLRC) if it
involves employer-employee relations. (DAR Adm. O. No.
2 [1999])
In this regard, the Secretary may issue such writs or orders, as may be appropriate, to maintain the
status quo and preserve peace and order in the farm subject of a JEE, in the following cases:
a)
where there is clear and imminent threat to life or
property;
b)
where the dispute will cause serious and
irreparable damage to either party or to the agribusiness
enterprise; or
c)
where, in his judgment, there is an urgent need to
protect the national interest. (DAR Adm. O. No. 2 [1999])
Sec. 14 of DAR AO 6 (2000) provides that the filing of an application for exemption, exclusion,
conversion, retention or protest against coverage shall have the following effects in so far as land
acquisition and distribution are concerned:
a)
If the application or petition is filed before the issuance of the notice of
coverage, the notice of coverage shall not be issued until the application or
petition is finally resolved;
b)
If the application, protest or petition is filed after issuance of the notice of
coverage, the DAR may proceed with the processing of the claimfolder
notwithstanding the pendency of the application, protest or petition in accordance
with the activities outlined under DAR AO 2 (1996), as amended. The processing
of the claimfolder may be suspended by the PARO if upon proper review and
evaluation of the Field Investigation Report (FIR) submitted by the MARO, and
upon personal verification of the allegations in the application, protest or petition,
it is determined that the subject landholding is in fact exempted or excluded from
CARP coverage. Otherwise, the PARO may forward the claimfolder to the LBP
for further processing.
c)
In case the application, protest or petition is filed while the claimfolder is
pending with LBP, or where the claimfolder has been forwarded by the PARO
notwithstanding such application, protest or petition, the LBP shall continue with
the processing of the land compensation claim, except that the Certification of

DARAB Cases
DAR Adjudication Board (DARAB)
The creation of DARAB was mandated under EO 129-A (1987) which aims at reorganizing and
strengthening the DAR. The DARAB was created under the Office of the Secretary of the DAR and is
given the powers and functions to adjudicate specific agrarian reform cases.
Before the creation of the DARAB, the Courts of Agrarian Relations (CAR) had the original and
exclusive jurisdiction over agrarian reform matters. PD 946 (1976) entitled "Reorganizing the Courts of
Agrarian Relations, Streamlining their Procedures and for Other Purposes," gave the CARs original and
exclusive jurisdiction over agrarian reform matters, except those that fall under the jurisdiction of the
Secretary of the DAR. With the passage of BP 129 (1980) or the Judiciary Reorganization Act, the CARs
were integrated into the RTCs and the jurisdiction of the former was vested in the latter courts. However,
with the promulgation of EO 229(1987), entitled "Providing the Mechanisms for the Implementation of
the Comprehensive Agrarian Reform Program (CARP)," the RTCs were divested of their special
jurisdiction to try agrarian reform matters.
Under EO 229 (1987), the DAR is vested with primary jurisdiction to determine and adjudicate
agrarian reform matters and has the exclusive jurisdiction over all matters involving the implementation
of agrarian reform, except those that fall under the exclusive jurisdiction of the DA and the DENR. This is
also clearly provided in Sec. 50 of RA 6657.
In Machete vs. Court of Appeals 250 SCRA 176 (1995), private respondent Celestino Villalon filed a
complaint for collection of back rentals and damages before the Regional Trial Court against the
petitioners. The complaint alleged that the parties entered into a leasehold agreement with respect to the
private respondent's landholdings in Bohol. Petitioners moved to dismiss the complaint on the ground of
lack of jurisdiction of RTC over the subject matter. Petitioners alleged that the subject matter of the
complaint falls squarely within the jurisdiction of the DAR in the exercise of its quasi-judicial powers. The
Supreme Court declared the dispute to be agrarian in nature and therefore outside the jurisdiction of the
RTC. The Supreme Court held that:
Section 17 of EO 229 vested the DAR with quasi-judicial powers to determine and adjudicate
agrarian reform matters as well as exclusive original jurisdiction over all matters involving
implementation of agrarian reform except those falling under the exclusive original jurisdiction of the

Department of Agriculture and the Department of Environment and Natural Resources in accordance
with law. Executive Order 129-A, while in the process of reorganizing and strengthening the DAR,
created the Department of Agrarian Reform Adjudication Board (DARAB) to assume the powers and
functions with respect to the adjudication of agrarian reform cases" (at 179, 180).
In an earlier case, Quismundo vs. CA, 201 SCRA 609 (1991), the Supreme Court explained in detail the
purpose for the creation of the quasi-judicial body, to wit:
Executive Order No. 229, which provides for the mechanism for the
implementation of the Comprehensive Agrarian Reform Program instituted by
Proclamation No. 131, dated July 22, 1987, vests in the Department of Agrarian
Reform quasi-judicial powers to determine and adjudicate agrarian reform
matters.
However, with the enactment of Executive Order No. 229, which took effect on
August 29, 1987, fifteen (15) days after its release for publication in the Official
Gazette, the regional trial courts were divested of their general jurisdiction to try
agrarian reform matters. The said jurisdiction is now vested in the Department of
Agrarian Reform.
The foregoing holding is further sustained by the passage of Republic Act No.
6657, the Comprehensive Agrarian Reform Law, which took effect on June 15,
1988. The said law contains provisions which evince and support the intention of
the legislature to vest in the Department of Agrarian Reform exclusive jurisdiction
over all agrarian reform matters.
The resolution by the DAR is to the best advantage of the parties since it is in a
better position to resolve agrarian disputes, being the administrative agency
presumably possessing the necessary expertise on the matter. Further, the
proceedings therein are summary in nature and the department is not bound by
the technical rules of procedure and evidence, to the end that agrarian reform
disputes and other issues will be adjudicated in a just, expeditious and
inexpensive proceeding" (at 613, 614, 615).
Powers and Functions of DARAB
DARAB is composed of seven (7) members with the DAR Secretary as its Chairman. The members
are: two (2) Undersecretaries designated by the Secretary, the Assistant Secretary for Legal Affairs, and
three (3) Assistant Secretaries appointed by the President upon the recommendation of the Secretary. A
Secretariat is also constituted to support the Board (Exec. Order No. 129-A [1987], sec. 13).
Under Sec. 13 of EO 129-A (1987), the Board is empowered to delegate its powers and functions to
the regional offices of the Department in accordance with the rules and regulations it has promulgated.
With the implementing authority of the Secretary under Sec. 34 of the same EO and Sec. 49 of RA 6657,
the Board promulgated the present Rules and Procedures of DARAB whereby adjudicators are
specifically designated to adjudicate agrarian reform cases in the regions and provinces.
As earlier noted, the DARAB was created under the Office of the Secretary of the Department (Exec.
Order No. 129-A [1987], sec. 13). It was established to strengthen the Department (Exec. Order No.
229 [1987]). However, DARAB has no jurisdiction on matters which strictly involve the administrative
implementation of RA 6657 and other agrarian laws. Those are within the exclusive jurisdiction of the
Secretary of DAR. Under DAR MC 13 (1997), the DAR Secretary has the authority to certify as
flashpoint or urgent case, only ALI cases but not cases within the jurisdiction of DARAB.
With respect to the regular courts, Supreme Court Administrative Circular No. 3 (1992) provides:

The Court reiterates to all court judges the need for a careful consideration of the
proper application of the CARL (RA 6657) to avoid conflict of jurisdiction with the
DARAB. The trial court judges are directed to take note of the rulings in Vda. de
Tangub vs. CA, 191 SCRA 885 and Quismundo vs. CA, 201 SCRA 609.
In Ualat vs. Judge Ramos, 265 SCRA 345 (1996), the respondent judge of MTC was fined
P20,000.00 with stern warning from the Supreme Court for gross ignorance of law for taking cognizance
of an ejectment case despite allegations of tenancy between the parties.

Ualat vs. Judge Ramos

265 SCRA 345 (1996)
Facts:
Complainants filed an administrative case against respondent Judge Ramos for
taking cognizance of the illegal detainer case filed by their landowner against
them. It was shown that the respondent judge had knowledge of a previously filed
DARAB case and the fact that the illegal detainer case falls within the exclusive
jurisdiction of the DAR. Despite the separate affidavits of the complainants
containing allegation of landlord-tenant relationship, the respondent judge took
cognizance of the illegal detainer case.
Issue:
Was the action of Judge Ramos proper?
Held:
The Supreme Court in finding the respondent Judge liable for ignorance of the
law opined: "As can be readily seen from the answer filed by complainants Sabio
and Ualat in the civil case, they alleged the existence of an agrarian tenancy
relationship between themselves and the landowner. Additionally, in the
proceedings before respondent Judge, complainants were even represented by a
lawyer from the DAR. These matters should have been sufficient to put
respondent Judge on notice that complainants were claiming protection under
our agrarian laws. At that point, he ought to have realized that there existed a
genuine issue involving agricultural tenancy among the parties with respect to the
subject property. Knowledge of existing agrarian legislation and prevailing
jurisprudence on the subject, together with an ordinary degree of prudence would
have prompted respondent Judge to refer the case to the DAR for preliminary
determination of the real nature of the parties' relationship, as required by law" (at
357).
However, DARAB has no jurisdiction with respect to agrarian matters involving the prosecution of all
criminal offenses under RA 6657 and the determination of just compensation for landowners (Rep. Act
No. 6657 [1988], sec. 57). Jurisdiction over said matters are lodged with the Special Agrarian Courts
(SACs). The Court of Appeals and Supreme Court maintain their appellate jurisdiction over agrarian
cases decided by DARAB.
In this regard, the Supreme Court in the case of Vda. de Tangub vs. CA, 191 SCRA 885 (1990) held
that:
The Regional Trial Courts have not, however, been completely divested of
jurisdiction over agrarian reform matters. Section 56 of RA 6657, on the other

hand, confers "special jurisdiction" on "Special Agrarian Courts", which are

Regional Trial Courts designated by the Supreme Court at least one (1)
branch within each province to act as such. These Regional Trial
Courts quaSpecial Agrarian Courts have, according to Section 57 of the same
law, original and exclusive jurisdiction over: 1) "all petitions for the determination
of just compensation to land-owners," and 2) "the prosecution of all criminal
offenses under . . . (the) Act" (at 890).
Barangay Agrarian Reform Committee (BARC)
This is originally the Barangay Agrarian Reform Council created under EO 229 (1987). RA
6657 changed the nomenclature of BARC from "council" to "committee" and expanded its scope of
functions. It is through the organization of the BARCs that the implementation of CARP is envisioned to
be truly community based where the public can participate in decision-making and resolution of agrarian
reform disputes.
This committee is composed of the following:
a)

Representative/s of farmer and farmworker beneficiaries;

b)

Representative/s of farmer and farmworker non-beneficiaries;

c)

Representative/s of agricultural cooperatives;

d)

Representative/s of other farmer organizations;

e)

Representative/s of the Barangay Council;

f)

Representative/s of non-government organizations (NGOs);

g)

Representative/s of Landowners;

h)

DA Official assigned to the area;

i)

DENR Official assigned to the area;

j)
DAR Agrarian Reform Technologist assigned to the area who shall act as
the Secretary; and
k)
Land Bank of the Philippines representative (Exec. Order No. 229 [1987],
sec. 19).
Sec. 46 and 47 of RA 6657 defined the BARC functions in addition to those provided under Sec. 19
of EO 229. DAR AO 14 (1990)provides for the guidelines in the formation, organization and
strengthening of the BARCs.
Primary and Exclusive Original and Appellate Jurisdiction of DARAB
Sec. 1, Rule II of the DARAB Revised Rules and Procedures provides that the Board has primary and
exclusive jurisdiction, both original and appellate, to determine and adjudicate all agrarian cases
including but not limited to the following:
a)
All agrarian disputes involving the implementation of the CARP under RA
6657, EOs 228, 229, and 129-A, RA 3844 as amended by RA 6389, PD 27 and
other agrarian laws and their implementing rules and regulations;
b)
Cases involving rights and obligations of persons, whether natural or
juridical, engaged in the management, cultivation and use of all agricultural lands
covered by the CARP and other agrarian laws;

c)
Cases involving the valuation of land, and the 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 LBP;
d)
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;
e)
Cases arising from or connected with membership or representation in
compact farms, farmers' cooperative and other registered farmers' associations
or organizations, related to lands covered by the CARP and other agrarian laws;
f)
Cases involving the sale, alienation, mortgage, foreclosure, preemption
and redemption of agricultural lands under the coverage of the CARP or other
agrarian laws;
g)
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;
h)
Cases previously falling under the original and exclusive jurisdiction of the
defunct Court of Agrarian Relations under Section 12 of PD 946, except subparagraph (Q) thereof and PD 815;
i)
And such other agrarian cases, disputes, matters or concerns referred to it
by the Secretary of the DAR.
DARAB's Jurisdiction over Agrarian Disputes
The Supreme Court, in several cases, had the occasion to explain what is an agrarian dispute case
for DARAB to try and adjudicate.
In the case of Machete vs. CA, 250 SCRA 176 (1995), the private respondents asked for collection of
back rentals and damages before the RTC while the petitioners moved for the dismissal of the case
because of lack of jurisdiction. The Court ordered the transmittal of the case to DARAB and ruled that:
Section 3, par. (d), of RA 6657 defines the term "agrarian dispute" as referring to any controversy
relating to tenurial arrangements, whether leasehold, tenancy, stewardship or otherwise, over lands
devoted to agriculture, including disputes concerning farm workers' associations or representation of
persons in negotiating, fixing, maintaining, changing or seeking to arrange terms or conditions of such
tenurial arrangements (at 182).
In the case of Central Mindanao University vs. DARAB, 215 SCRA 86 (1992), on the issue of
jurisdiction of the DARAB in ordering the petitioner to segregate its 400 hectares land and including it
under the CARP for distribution to qualified beneficiaries, the Court opined:
Under Section 4 and Section 10 of RA 6657, it is crystal clear that the jurisdiction
of the DARAB is limited only to matters involving the implementation of CARP.
More specifically, it is restricted to agrarian cases and controversies involving
lands falling within the coverage of the aforementioned program. It does not
include those which are actually, directly and exclusively used and found to be
necessary for, among such purposes, school sites and campuses for setting up
experimental farm stations, research and pilot production centers, etc. (at 99).
Sec. 17 of EO 129-A is merely a repetition of Sec. 50 of RA 6657. There is no
doubt that the DARAB has jurisdiction to try and decide any agrarian dispute in
the implementation of the CARP. An agrarian dispute is defined by the same law

as any controversy relating to tenurial rights whether leasehold, tenancy,

stewardship or otherwise over lands devoted to agriculture (at 100).

b)

c)
because of the complexity and sensitivity of the
case;

In Isidro vs. CA, 228 SCRA 503, one of the issues raised is the jurisdiction of the MTC in taking
cognizance of a case involving an agricultural land. The petitioner refused to vacate the land despite the
demand of the private respondent. The Supreme Court held that there exists no tenurial relations
between the parties, to wit:
An agrarian dispute refers to any controversy relating to tenurial arrangements,
whether leasehold, tenancy, stewardship or otherwise, over lands devoted to
agriculture, including disputes concerning farmworkers associations or
representation of persons in negotiating, fixing, maintaining, changing or seeking
to arrange terms or conditions of such tenurial arrangements. It includes any
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 agrarian reform beneficiaries, whether the disputants stand in
the proximate relation of farm operator and beneficiary, landowner and tenant, or
lessor and lessee (at 510).
Cases under the Court of Agrarian Relations
DARAB has jurisdiction over cases previously falling under the original and exclusive jurisdiction of
the defunct Court of Agrarian Relations under PD 946 (1976), except sub-paragraph (Q) thereof and PD
815 (1975). The sub-paragraph (Q) exception under this cited provision refers only to cases involving
violations of the penal provisions of RA 1199, as amended. Hence, the other provisions of RA 1199, as
amended, still fall within the jurisdiction of DARAB. Included in DARAB's jurisdiction is Section 21 of RA
1199, as amended, which provides that:
Section 21. Ejectment; Violation; Jurisdiction. All cases involving the
dispossession of a tenant by the landholder or by a third party . . . .
The 'third party' mentioned in the said sec. 21 should be construed to mean a person who is neither
landholder or tenant, but who acts for, openly, secretly, or factually for the landholder. For instance, a
sheriff enforcing an execution sale against the landholder; or a purchaser or transferee of the land, or a
mere dummy of the landowner (De Luna v. CA, 221 SCRA 703 [1993]).
Jurisdiction of the Regional Adjudicator (RARAD) and the Provincial Adjudicator
(PARAD)
Sec. 2, Rule II of the DARAB Revised Rules and Procedures provides that the RARAD and the
PARAD has concurrent original jurisdiction with the Board to hear, determine and adjudicate all agrarian
cases and disputes, and incidents in connection therewith, arising with their assigned territorial
jurisdiction.
The RARAD is the Executive Adjudicator in his/her region directly responsible to the Board. He/she
shall:
1)

Direct supervision over the PARADs;

2)
Recommend to the Board the territorial assignments and the disciplinary
measures appropriate to the PARADs;
3)

Adjudicate agrarian disputes and land valuation cases;

4)

Hear and handle other cases which cannot be handled by the PARADs:
a)

by reason of PARADs disqualification or inhibition;

PARADs cannot handle the case properly;

d)

delegated just compensation cases;

e)

and those assigned by the Board.

The RARAD has concurrent original jurisdiction with the PARAD.

Appellate Jurisdiction of the Board
Under Sec. 5, Rule II of the DARAB Revised Rules and Procedures, the Board has the jurisdiction to
review all the decisions of the Adjudicators. However, under DAR MC 7 (1991), reiterating Sec. 1, par.
(c) of the Revised DARAB Rules and Procedures, it is emphasized that DARAB has no jurisdiction over
cases involving annulment or cancellation of orders and decisions of the Secretary.
Not all decisions or orders of the PARAD and RARAD are reviewable by the Board. Under DAR AO 8
(1993), the PARADs, RARADs and DARAB has original and exclusive jurisdiction in the preliminary
determination of just compensation cases which are appealable only to the Special Agrarian Courts.
Mediation/Conciliation at Barangay Level
The BARC does not function as an adjudicator at the barangay level. The BARC is mandated to
mediate and conciliate agrarian disputes at the barangay level. In a mediation/conciliation, BARC's
objective is to persuade the contending parties to settle their dispute amicably. The BARC does not act
as an adjudicator.
It is the responsibility of the BARC to promote a speedy and cost-free administration of justice,
prevent a dispute from going out of the barangay level to DARAB level, and help the landowners and
farmer-beneficiaries commit themselves in complying with their agreements. This in turn is envisioned to
help in the efficient and successful implementation of the CARP.
Where the land in dispute straddles two (2) or more barangays or the parties involved reside in
different barangays, the BARC of the barangay where the biggest portion of the property lies, shall have
the authority to conduct the mediation or conciliation proceedings, unless for convenience and
accessibility and upon agreement of parties such proceedings should be held in another barangay within
the municipality or adjacent municipality where the land in dispute is located (DARAB Revised Rules and
Procedures[1994] Rule III, sec. 3)
Under the DARAB Revised Rules and Procedures, DARAB can take cognizance of an agrarian
dispute even without the BARC Certification if:
1)

The dispute does not involve any of the following:

a)
Valuation lands to determine just compensation for
landowners;
b)
One of the parties is a public or private
corporation, partnership, association or juridical person, or
a public officer/employee wherein the dispute relates to
the performance of his official functions;
c)
Issue involved is an administrative implementation
of agrarian laws and policies; and
d)
Cases determined by the Secretary as beyond the
ambit mediation/conciliation or compromise.

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 (DARAB Revised Rules and Procedures [1994], Rule III, secs. 1 and 2).
The lack of a BARC certification is not a ground for dismissal of an action. A complainant is given
every opportunity to secure said certification.
Powers and Duties of DARAB
Under the DARAB Revised Rules and Procedures, the powers and duties of the Adjudicators include
but are not limited to the following:
a)
Personally conduct a hearing, take control of the proceedings, employ
reasonable means to ascertain the facts of the case, determine the real parties in
interest, define and simplify the issues of the case, and thresh out preliminary
matters.
b)
To subpoena, summon witnesses, examine witnesses, may limit the right
of parties/counsels to ask questions to clarify the points of law at issue or of facts
involved, may limit the presentation of evidence to matters relevant to the issues,
and endeavor to settle the case amicably/approve compromise agreements.

On the other hand, Sec. 15 and 20, Book VII of EO 292 (1987) or the Administrative Code of 1987, as
implemented by DAR MC 3 (1994) provides that an appeal from the decision/order issued by DAR shall
be perfected within fifteen (15) days after receipt of a copy of the decision/order complained of by the
party adversely affected. Said appeal shall be perfected by filing with the DAR a notice of appeal,
serving copies thereof upon the prevailing party and the Office of the President and paying the required
fees. The DAR shall upon perfection of the appeal transmit the records of the case to the Office of the
President.
DARAB Decisions
Any decision, order, resolution, award or ruling of DARAB on any agrarian dispute or on any matter
pertaining to the application, implementation, enforcement, interpretation of agrarian reform laws or rules
and regulations promulgated thereunder, may be brought within fifteen (15) days from receipt of a copy
thereof, to the Court of Appeals by certiorari. (Rep. Act No. 6657 [1988], sec. 54;Revised DARAB
Rules [1994], Rule XIV, sec. 1)
Notwithstanding an appeal to the Court of Appeals, the decision of DAR shall be immediately
executory. (Rep. Act No. 6657[1988], sec. 50; Revised DARAB Rules [1994], Rule XIV, sec. 1)
Decisions of Special Agrarian Courts
An appeal may be taken from the decision of the Special Agrarian Courts by filing a petition for review
with the Court of Appeals within fifteen (15) days from receipt of notice of the decision. (Rep. Act No.
6657 [1988], sec. 60)
Note:
1.
The transfer of jurisdiction over applications for CALABARZON areas from the
Center for Land Use Policy, Planning and Implementation (CLUPPI) 2 to the Regional
Director shall take effect upon implementation of the DAR reorganization, or as directed
by the Secretary (DAR Admin. O. No. 6 [2000], sec. 36)

c)
To hold a party in contempt, to issue writs and interlocutory orders, and
may award actual, compensatory, exemplary and moral damages and attorney's
fees.
Special Agrarian Courts (SACs)
Special agrarian courts are Regional Trial Courts within each province designated by the Supreme
Court to exercise special jurisdiction in addition to its regular jurisdiction. The Supreme Court may
designate more branches to constitute such additional SACs as may be necessary to cope with the
number of agrarian cases in each province. (Rep. Act No. 6657 [1988], sec. 56)

CHAPTER 7
Land Use Conversion
Definition

Sec. 57 of RA 6657 provides that the SACs shall have original and exclusive jurisdiction over all
petitions for the determination of just compensation to landowners and the prosecution of all criminal
offenses under RA 6657.

DAR AO 1 (1999), entitled "Revised Rules and Regulations on the Conversion of Agricultural Lands
to Non-agricultural Uses," defines "land use conversion" as "the act or process of changing the current
use of a piece of agricultural land into some other use as approved by DAR." (Sec. 2(k)). Pursuant to the
Memorandum of the President dated 16 April 1999, this administrative order serves as the primary
guidelines on the conversion of agricultural lands to non-agricultural uses.

In Republic vs. Court of Appeals, 758 SCRA 263 (1996), the Supreme Court held that "any effort to
transfer the original and exclusive jurisdiction to the DAR adjudicators and to convert the original
jurisdiction of the RTCs into appellate jurisdiction would be contrary to Section 57 of RA 6657 and
therefore would be void."

RA 8435 (1997), also known as the "Agriculture and Fisheries Modernization Act of 1997," provides
for a similar definition: "agricultural land use conversion refers to the process of changing the use of
agricultural land to non-agricultural uses." (Sec. 4).

Judicial Review
Orders or Decisions of DAR Secretary
The decisions of the DAR Secretary in ALI cases may be appealed to the Office of the President or
the Court of Appeals, at the option of the appellant.
Sec. 54 of RA 6657 states that any decision, order, award or ruling of the DAR on any agrarian
dispute or on any matter pertaining to the application, implementation, enforcement, or interpretation of
this Act and other pertinent laws on agrarian reform may be brought to the Court of Appeals by certiorari.

Conversion versus Reclassification

DAR's conversion authority is most often seen as synonymous with the power of local government
units (LGUs) to reclassify lands within their territorial jurisdiction. This misconception has resulted in a lot
of conflicts and confusion not only between the two agencies but among other concerned sectors.
"Reclassification" refers to the "act of specifying how agricultural lands shall be utilized for nonagricultural uses such as residential, industrial, commercial, as embodied in the land use plan, subject to
the requirements and procedures for conversion. It also includes the reversion of non-agricultural lands
to agricultural use." (Joint HLURB, DAR, DA, DILG Memo. Circular Prescribing the Guidelines to

Implement MC 54, [1995], sec. 2[2.3]). On the other hand, conversion is defined by the same
Memorandum Circular as the "act of changing the current use of a piece of agricultural land into some
other use." [Id., sec. 2[2.2])
Under section 20 of RA 7160 (1991) or the "Local Government Code of 1991," a city or municipality
may authorize the reclassification of agricultural lands and provide for the manner of their utilization or
disposition under the following circumstances:
a)
when the land ceases to be economically feasible and sound for
agricultural purposes as determined by the DA; or
b)
where the land shall have substantially greater economic value for
residential, commercial, or industrial purposes, as determined by the sanggunian
concerned.
Said Act mandates that the reclassification should be made after conducting public hearing and that it
shall be limited to the following percentage of the total agricultural land area at the time of the passage of
the ordinance: (a) for highly urbanized and independent component cities, fifteen percent (15%); (b) for
component cities and third class municipalities, ten percent (10%); and (c) for fourth to sixth class
municipalities, five percent (5%): Provided, further, that agricultural lands distributed to agrarian reform
beneficiaries pursuant to RA 6657 shall not be affected by the said reclassification and the conversion of
such lands into other purposes shall be governed by Section 65 of said Act. This percentage ceiling on
the land area which the LGUs can reclassify is not absolute. 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 cited above (Rep. Act No.
7160 [1991], sec. 20 [b]).
Also, LGUs are mandated to exercise such authority in accordance with MC 54 (1993) of the Office of
the President entitled "Prescribing the Guidelines Governing Section 20 of RA 7160, otherwise known as
the Local Government Code of 1991, Authorizing Cities and Municipalities to Reclassify Agricultural
Lands Into Non-agricultural Uses." Under these Guidelines, the following types of agricultural lands shall
not be covered:
a)
Agricultural lands distributed to agrarian reform beneficiaries subject to
Sec. 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 AO 20 (1992), as non-negotiable for
conversion.
On the other hand, the power of the DAR to approve or disapprove land use conversion applications
is exclusive (Exec. Order No. 129-A [1982], sec. 5[e]; see OP Memorandum Circular No. 54, Sec. 4,
[1993] Book IV, Title XI, Chapter 1, sec. 3 [13]; RA 6657[1988[, sec. 65). It is distinct from the power of
LGUs to reclassify agricultural land under Section 20 of the Local Government Code.
This is evident in Sec. 20 (e) of RA 7160 which provides: "Nothing in this Section shall be construed
as repealing, amending or modifying in any manner the provisions of RA 6657." In his commentary, Sen.
Aquilino Q. Pimentel, principal author of the Local Government Code of 1991, stated as follows:
Sanggunian Power to Reclassify Not to Convert. This is one section of the Code
which evoked a lot of discussion among the members of the Conference
Committee. The proposal to allow local governments to reclassify land and
provide for the manner of their utilization or disposition was made by
Congressman Pablo Garcia of Cebu, who argued that the central government

has no business dictating to the local governments how to classify land within
their jurisdiction. Some legislators, however, felt that to allow local governments
to reclassify land may open the door to a nationwide frustration of the goals of the
agrarian reform law.
Congressman Garcia disputed the argument by pointing out that the power he
had sought to invest the local governments with was not to convert land for any
purpose contrary to the provisions of the Comprehensive Agrarian Reform Law
but merely to "reclassify" land. (A.Q. Pimentel, Jr., The Local Government Code
of 1991, The Key to National Development 111).
DAR's role in the reclassification process is the issuance of a certification that the lands sought to be
reclassified are not distributed or not covered by a notice of coverage or not voluntarily offered for
coverage under CARP. This certification must be secured by the sanggunian concerned prior to the
enactment of an ordinance reclassifying the agricultural land (OP Memorandum Circular No. 54, [1993],
sec. 2 (b) (2)).
After the reclassification by the LGU, a DAR conversion clearance shall still be required prior to actual
change of use of the land as explicitly provided in OP Memorandum Circular No. 54 (1993), to wit:
"actions on applications for land use conversion shall remain as the
responsibility of DAR". (Sec. 4; Underscoring supplied.)
The case of Fortich, et al. v. Corona, et al., G.R. No. 131457 (19 August 1999) illustrates the
confusion between reclassification and conversion. In said case, a statement was made that LGUs have
authority to convert or reclassify agricultural lands without DAR approval. The Supreme Court resolved
two (2) separate motions for reconsideration filed by respondents and intervenors of the Court's
resolution dated 17 November 1998 as well as their motion to refer the case to the Court en banc. The
Supreme Court stated that "(t)he crux of the controversy is the validity of the "Win-Win" Resolution dated
7 November 1997 of the Office of the President which is "void and of no legal effect considering that the
March 29, 1996 decision of the Office of the President had already become final and executory even
prior to the filing of the motion for reconsideration which became the basis of the said "Win-Win"
Resolution." (at 5).
The DAR clarified its position on this issue through a Memorandum of the DAR Secretary dated 13
October 1999, to wit:
It should be stressed that the motions in Fortich were denied on the ground that
the "win-win" resolution is void and has no legal effect because the decision
approving the conversion has already become final and executory. This is
the ratio decidendi or reason of the decision. The statement that LGUs have
authority to convert or reclassify agricultural lands without DAR approval is
merely a dictum or expression of the individual views of the ponente or writer of
the Resolution of August 19, 1999. It does not embody the Court's determination
and is not binding.
Expropriated Lands Not Subject to DAR Conversion Clearance
Agricultural lands expropriated by LGUs pursuant to the power of eminent domain need not be
subject of DAR conversion clearance prior to change in use. This was the Court's pronouncement
in Province of Camarines Sur vs. CA, 222 SCRA 173 (1993).

Province of Camarines Sur vs. Court of Appeals

222 SCRA 173 (1993)

The opening, adverbial phrase of the provision sends signals that it applies to
lands previously placed under the agrarian reform program as it speaks of "the
lapse of five (5) years from its award."
Facts:

The Governor of Camarines Sur filed two (2) separate cases for expropriation
against Ernesto and Efren San Joaquin pursuant to Sangguniang Panlalawigan
Resolution No. 129 authorizing the Governor to purchase or expropriate
properties owned by the San Joaquins for the establishment of a pilot farm for
non-food and non-traditional agricultural crops and a housing project for
provincial government employees. The San Joaquins moved to dismiss the
complaints on the ground of inadequacy of the price offered. The motion was
denied and a writ of possession was issued in favor of the province. On appeal
with the CA, the San Joaquins asked the appellate court to, among others, nullify
the resolution issued by the Sanggunian. The CA asked the Office of the Solicitor
General to comment to the petition. The Solicitor General stated that the approval
of the Office of the President is not needed but the province must first secure the
approval of the DAR of the plan to expropriate the lands of petitioners. The CA
set aside the order of the trial court allowing the province to take possession and
ordered the suspension of the expropriation proceedings until after the
submission of the DAR approval to convert the property.
Issue:
Is DAR approval still necessary before an LGU can expropriate agricultural lands
for conversion to non-agricultural use?
Held:
It is true that local government units have no inherent power of eminent domain
and can exercise it only when expressly authorized by the legislature (City of
Cincinnati v. Vester, 281 US 439, 74 L.ed. 950, 50 S Ct. 360). It is also true that
in delegating the power to expropriate, the legislature may retain certain control
or impose certain restraints on the exercise thereof by the local governments
(Joslin Mfg. Co. v. Providence, 262 US 668 67 L. ed. 1167, 43 S Ct. 684). While
such delegated power may be a limited authority, it is complete within its limits.
Moreover, the limitations on the exercise of the delegated power must be clearly
expressed, either in the law conferring the power or in other legislation.
Resolution No. 129 [1988] was promulgated pursuant to Section 9 of B.P. Blg.
337, the Local Government Code, which provides: . . .
Section 9 of B.P. Blg. 337 does not intimate in the least that local government
units must first secure the approval of the Department of Land Reform for the
conversion of lands from agricultural to non-agricultural use, before they can
institute the necessary expropriation proceedings. Likewise, there is no provision
in the Comprehensive Agrarian Reform Law which expressly subjects the
expropriation of agricultural lands by local government units to the control of the
Department of Agrarian Reform. The closest provision of law that the Court of
Appeal could cite to justify the intervention of the Department of Agrarian Reform
in expropriation matters is Section 65 of the Comprehensive Agrarian Reform
Law, which reads: . . .

The rules on conversion of agricultural lands found in Section 4 (k) and 5(l) of
Executive Order No. 129-A, Series of 1987, cannot be the source of the authority
of the Department of Agrarian Reform to determine the suitability of a parcel of
agricultural land for the purpose to which it would be devoted by the expropriating
authority. While those rules vest on the Department of Agrarian Reform the
exclusive authority to approve or disapprove conversions of agricultural lands for
residential, commercial or industrial uses, such authority is limited to the
applications for reclassifications submitted by the land owners or tenant
beneficiaries..
Statutes conferring the power of eminent domain to political subdivisions cannot
be broadened or constricted by implication (Schulman v. People, 10 N.Y. 2d. 249,
176 N.E. 2d. 817, 219 NYS 2d. 41).
To sustain the Court of Appeals would mean that the local government units can
no longer expropriate agricultural lands needed for the construction of roads,
bridges, schools, hospitals, etc., without first applying for conversion of the use of
the lands with the Department of Agrarian Reform, because all of these projects
would naturally involve a change in the land use. In effect, it would then be the
Department of Agrarian Reform to scrutinize whether the expropriation is for a
public purpose or public use. (at 179-181; underscoring supplied).
Authority to Approve/Disapprove Conversion
Under Sec. 4 and 5 of EO 129-A (1987), the DAR is mandated to "approve or disapprove the
conversion, restructuring or readjustment of agricultural lands into non-agricultural uses." It authorizes
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." Also, Sec. 4 of OP MC
54 (1993), provides that "action on application for land use conversion on individual landholdings shall
remain as the responsibility of the DAR, . . . , pursuant to RA No. 6657 and EO 129-A."
Moreover, RA 6657 provides:
Section 65. Conversion of Lands. After the lapse of five (5) years from its
award, when the land ceases to be economically feasible and sound for
agricultural purposes, if the locality has become urbanized and the land will have
greater economic value for residential, commercial or industrial purposes, the
DAR upon application of the beneficiary or the landowner, with due notice to the
affected parties, and subject to existing laws, may authorized the reclassification
or conversion of the land and its disposition; Provided, That the beneficiary shall
have fully paid his obligations.
In the case of Roxas v. CA, G.R. No. 127876, 16 December 1999, the authority of the DAR to
approve or disapprove conversion was reiterated by the Court:
Respondent DAR's failure to observe due process in the acquisition of
petitioner's landholdings does not ipso facto give this Court the power to
adjudicate over petitioner's application for conversion of its haciendas from
agricultural to non-agricultural. The agency charged with the mandate of
approving or disapproving applications for conversion is the DAR." (at 4546;underscoring supplied). The Court further stated that, "(t)he DAR's mandate

over applications for conversion was first laid down in Section 4 (j) and Section 5
(l) of Executive Order No. 129-A, Series of 1987 and reiterated in the CARL and
Memorandum Circular No. 54, Series of 1993 of the Office of the President. (at
46).
DAR's authority to allow conversion is not limited only to lands awarded under CARP. As stated
in DOJ Opinion No. 44 (1990):
Being vested with exclusive original jurisdiction over all matters involving the
implementation of agrarian reform, it is believed to be the agrarian reform law's
intention that any conversion of a private agricultural land to non-agricultural uses
should be cleared before hand by the DAR. True, the DAR's express power over
land use conversion is limited to cases in which agricultural lands already
awarded have, after five years, ceased to be economically feasible and sound for
agricultural purposes, or the locality has become urbanized and the land will have
a greater economic value for residential, commercial or industrial purposes. But
to suggest that these are the only instances when the DAR can require
conversion clearances would open a loophole in R.A. No. 6657, which every
landowner may use to evade compliance with the agrarian reform program.
Hence, it should logically follow from the said department's express duty and
function to execute and enforce the said statute that any commercial or industrial
property should first be cleared by the DAR.
xxx
xxx

xxx

Based on the foregoing premises, we reiterate the view that with respect to
conversions of agricultural lands covered by RA No. 6657 to non-agricultural
uses, the authority of DAR to approve such conversion may be exercised from
the date of the law's effectivity on June 15, 1988.This conclusion is based on a
liberal interpretation of R.A. No. 6657 in the light of DAR's mandate and the
extensive coverage of the agrarian reform program. (Underscoring supplied.)
DAR Officials Authorized to Issue Conversion Orders
Under Sec. 22 (a) of DAR AO 1 (1999), the following DAR officials shall approve or disapprove
applications for land use conversion:
a)

The Regional Director for areas of not more than five (5) hectares;

b)
The duly authorized Undersecretary for areas above five (5) hectares but
not more than fifty (50) hectares;
c)
The Secretary for areas of more than fifty (50) hectares, except for those
highly restricted from conversion which shall be subject to his approval
regardless of the area.
For purposes of determining the appropriate approving authority, the total area for conversion shall
refer to the aggregate area of all applications regardless of the number of applications and the nature of
the proposed project where (a) the properties are owned by the same person or entity or the owners of
which are represented by the same person or entity; and (b) the properties are located in the same
barangay or adjacent barangays within the same municipality/ies or city/ies. In case the subject land is
adjacent to an area previously issued with conversion order, the foregoing test shall be applied to
determine the appropriate approving authority (DAR Adm. O. No. 1 [1999], sec. 22 [b] and [c]).
Scope of Land Use Conversion

Under DAR AO 1 (1999), the following agricultural lands are subject to DAR's conversion authority:
a)
Those to be converted to residential, commercial, industrial, institutional
and other non-agricultural purposes;
b)
Those to be devoted to another type of agricultural activity such as
livestock, poultry, and fishpond the effect of which is to exempt the land from
CARP coverage;
c)
Those to be converted to non-agricultural use other than that previously
authorized; and
d)
Those reclassified to residential, commercial, industrial, or other nonagricultural uses on or after the effectivity of RA 6657 on June 15, 1988 pursuant
to the Local Government Code.
Sec. 3 (b) of DAR AO 1 (1999) states that the change in use of land from one agricultural activity to
another use which would exempt the land from CARP coverage under Sec. 10 of RA 6657 and DOJ
Opinion No. 44 [1990] requires conversion clearance. Hence, landowners of agricultural lands devoted
to coconuts must first secure a conversion clearance from DAR if they want to convert the same to
poultry farm or fishpond.
Also, DAR AO 1 (1990) requires landowners to secure another conversion clearance if the change
that will be undertaken is not what has been authorized in a previous conversion order. In short, if DAR
issues a conversion order authorizing the landowner to change the use of the property from agricultural
use, e.g. coconut plantation to a memorial park, the owner cannot develop the property into a residential
subdivision without getting another conversion clearance specifically allowing the residential use of the
land.
Agricultural lands outside DAR's conversion authority
The following lands do not require DAR conversion clearance or are not subject to conversion:
a)
Agricultural lands reclassified to non-agricultural uses prior to 15 June
1988 (DAR Adm. O. No. 1 [1999], sec. 3 (d) andDOJ Opinion No. 44, [1990]).
(These lands are subject to DAR exemption clearance);
b)
Agricultural lands considered non-negotiable for conversion (DAR Adm.
O. No. 1 [1999], sec. 4);
c)
Lands within the Strategic Agriculture and Fisheries Development Zones
(SAFDZs) which are subject to the five (5) year moratorium period beginning 10
February 1998 up to 9 February 2003 (Rep. Act No. 8435 [1997], sec. 9; DA
Adm. O. No. 6 [1998], rule 9). (Except as to 5% thereof).
Areas highly restricted from conversion
Under Sec. 2 (b) and 5 of DAR AO 1 (1999), areas highly restricted from conversion refer to the
following:
a)
Irrigable lands not covered by irrigation projects with firm funding
commitment;
b)
Agro-industrial croplands, or lands presently planted to industrial crops
that support the economic viability of existing agricultural infrastructure and agrobased enterprises;

c)
Highlands or areas located in elevations of 500 meters or above and have
the potential for growing semi-temperate and usually high-value crops;
d)
Lands issued with notice of land valuation and acquisition, or subject of a
perfected agreement between the landowner and the beneficiaries under the
voluntary land transfer/direct payment scheme;
e)
Environmentally critical areas as determined by the DENR in accordance
with law.
The conversion of these areas, if at all, shall undergo a more stringent process and the applicant
must clearly show that conversion is far more beneficial to the community and the public at large.
Applications involving areas highly restricted from conversion are deliberated upon by the PARC Land
Use Technical Committee and subject to the Secretary's approval regardless of the area. The applicant
is also required to submit the following additional requirements: (a) a project feasibility study; and (b)
environmental compliance certificate, if within environmentally critical area.

Upon expiration of the moratorium, conversion may be allowed, if at all, on a case to case basis,
subject to existing laws, rules and regulations on land use conversion (DAR Adm. O. No. 1 [1999], sec. 7
[d]).
Lands within SAFDZs
SAFDZs refer to Strategic Agriculture and Fisheries Development Zones. They are areas within the
Network of Protected Areas for Agricultural and Agro-industrial Development (NPAAAD) identified for
production, agro-processing and marketing activities to help develop and modernize, with the support of
the government, the agriculture and fisheries sectors in an environmentally and socio-culturally sound
manner (Rep. Act No. 8435 [1997], sec. 4). Lands within SAFDZs shall be identified by the DA on the
basis of the criteria prescribed in RA 8435.
Priority development areas for conversion
Under Sec. 6 of DAR AO 1 (1999), the following are priority development areas for conversion:
a)
Specific sites in regional agri-industrial centers/regional industrial centers
identified by the Department of Trade and Industry and the DA;

Lands non-negotiable for conversion

Under Sec. 4 of DAR AO 1 (1999), areas non-negotiable for conversion are not eligible for
conversion. Applications for conversion involving these areas shall not be given due course, regardless
of whether all or some portions thereof are within areas highly restricted from conversion or within
priority development areas for conversion. These lands include the following:

b)
Tourism development areas identified by the Department of Tourism as
indicated in the current Medium Term Philippine Development Plan;
c)
Sites identified and proposed to be developed by LGUs into socialized
housing projects which are presently used for agricultural purposes;

a)
Agricultural lands within protected areas designated as such under the
National Integrated Protected Areas System including watershed and recharged
acquifers, as determined by the DENR;
b)
All irrigated lands, as delineated by the DA and/or NIA, where water is
available to support rice and other crop production;
c)
All irrigated lands where water is not available for rice and other crop
production but are within areas programmed for irrigation facility rehabilitation by
the DA and/or NIA; and
d)
All agricultural lands with irrigation facilities operated by private
organizations.
Conversion moratorium under RA 8435
Under RA 8435, the following lands within the SAFDZs are not eligible for conversion for a period of
five (5) years starting on 10 February 1998 until 9 February 2003:
a)

All irrigated lands;

b)
Irrigable lands already covered by irrigation projects with firm funding
commitments; and
c)

Lands with existing or having the potential for growing high-value crops.

The 5-year conversion moratorium is not absolute. Five percent (5%) of said lands within SAFDZs
may be converted upon compliance with existing laws, rules and regulations. DAR and DA, upon the
recommendation of the Regional and National SAFDZ Committees, shall jointly determine the maximum
5% equivalent to the total area of land eligible for conversion. (DAR Adm. O. No. 1 [1999], sec. 7 (b),
(c ); DA Adm. O. No. 6, [1998], rule 9.5.2).

d)
Sites intended for socialized housing projects under EO 184, series of
1994;
e)

Agricultural areas intended for ECOZONE projects pursuant to RA 7916.

Conversion of agricultural lands within priority development areas requires DAR clearance. However,
the period within which to process and evaluate applications involving lands within these areas is
shorter. Processing of applications is conducted within 13 days from submission of complete set of
documentary requirements. Also, an environmental compliance certificate is not a pre-condition to the
approval of the conversion application; instead, it forms part of the conditions of the order of conversion
where applicable.
SHOPC
Under present guidelines, socialized housing projects are considered priority development areas.
(DAR Memo. Circular No. 9 [1999], sec. 1 [1.6].)
Under DAR AO 2 (2000), Mass Housing Desks shall be created at the CLUPPI which shall be
responsible for the receipt, processing and disposition of all applications for conversion for socialized
and low-cost housing projects.
Applicants for conversion involving socialized and low-cost housing projects are exempt from the
posting of cash bond, submission of Certification of Eligibility for Conversion from DA and Environmental
Compliance Certificate from DENR. (DAR Adm. O. No. 2 [2000], sec. 3)
Likewise, applications for conversion involving socialized and low-cost housing projects shall be
processed for a period of thirteen (13) working days upon receipt of the completed application pursuant
to Sec. 1 of EO 258 (2000). (DAR Adm. O. No. 2 [2000], sec. 4)
Criteria for Conversion
Under Sec. 8 of DAR AO 1 (1999), the following criteria shall guide the resolution of applications for
conversion:

1)
Conversion may be allowed if the land subject of application is not among
those considered non-negotiable for conversion;
2)
Conversion may be allowed under the following cases, in accordance with
Section 65 of RA 6657:
a)
when the land has ceased to be economically
feasible and sound for agricultural purposes; or
b)
the locality has become urbanized and the land
will have greater economic value for residential,
commercial, industrial or other non-agricultural purposes.
3)
Conversion of lands within SAFDZs shall take into consideration the
following factors:
a)
The conversion is consistent with the natural
expansion of the municipality or locality, as contained in
the approved physical framework and land use plan;
b)
The area to be converted is not the only remaining
food production area of the community;
c)
The conversion shall not hamper the availability of
irrigation to nearby farmlands;
d)
Areas with low productivity will be accorded
priority for conversion; and
e)
Sufficient disturbance compensation shall be
given to the farmers whose livelihoods are negatively
affected by the conversion.
4)
Conversion may be allowed when the environmental impact assessment
or initial environmental examination, as may be appropriate, shall have
determined that it shall not adversely affect air and water quality and the
ecological stability of the area.
Under the previous guidelines, conversion may be allowed if the land has been reclassified by the
LGUs to non-agricultural uses, but said criterion has been deleted under the present guidelines. That the
land has been reclassified to non-agricultural use as per zoning certification remains one of the factors to
consider in resolving whether to approve or disapprove an application for conversion. It is not an
indispensable condition, however, for the approval of the application. Thus, conversion may be allowed
even if the property has not yet been reclassified to non-agricultural use if the conditions under RA
6657 or RA 8435 warrant the same.
It is evident that the thrust of DAR conversion guidelines is to give the department sole and exclusive
prerogative to decide on conversion applications. Certifications issued by other agencies are given
persuasive effect but the final determination belongs to the DAR.
Bonds and Disturbance Compensation
Under the present guidelines, applicants are required to post two (2) kinds of bonds: cash bond and
performance bond. They are also required to pay disturbance compensation in appropriate cases.
Cash Bond

Cash bond is posted by the applicant upon filing of the application equivalent to two point five percent
(2.5%) of the total zonal value of the land. It is refundable upon issuance of the order of conversion or
convertible into performance bond at the option of the applicant (DAR Adm. O. No. 1 [1999], sec. 15).
The cash bond is forfeited in favor of the government in the event actual conversion activities are
undertaken by the applicant prior to approval of the application for conversion (DAR Adm. O. No. 1
[1999], sec. 15).
Performance Bond
Performance bond is posted in favor of DAR to guarantee the payment of the amount of security as
penalty in the event it is established that the applicant/developer is in default of their obligations under
the order of conversion. It shall be effective for the duration of the project approved under the conversion
order. The performance bond shall be in the form of either of the following:
a)
Cash, manager's check, cashier's check, irrevocable letter of credit, bank
draft equivalent to 2.5% of the total zonal value of the land; or
b)

Bank guarantee equivalent to 5% of the total zonal value of the land; or

c)
Surety equivalent to 15% of the total zonal value of the land (DAR Adm.
O. No. 1 [1999], sec. 15 [c).
The performance bond shall be forfeited in favor of the government in case of violation of the
conditions of the conversion order such as non-payment of disturbance compensation, failure to develop
or complete the project within the period prescribed, etc. (DAR Adm. O. No. 1 [1999], sec. 15, last par.)
Disturbance Compensation
Under RA 3844, disturbance compensation is given only to de jure tenants. However, under the
present conversion guidelines, tenants, farmworkers, or bona fide occupants who will be affected by the
conversion of the property to non-agricultural uses are all entitled to disturbance compensation (DAR
Adm. O. No. 1 [1999], sec. 15 [a]).
Disturbance compensation, in cash or in kind or both, shall be paid by the landowner or developer, as
may be appropriate, in such amounts or under such terms as may be mutually agreed upon between the
affected tenants, farmworkers or occupants and the landowner or developer but it should not be less
than five (5) times the average of the gross harvests on their landholding during the last five (5)
preceding calendar years. Any agreement for the payment between them shall be subject to DAR's
approval and compliance monitoring (DAR Adm. O. No. 1 [1999], sec. 15 (a)).
Payment of disturbance compensation or compliance with the terms and conditions of the approved
agreement must be made within sixty (60) days from the date of approval of the application for
conversion (DAR Adm. O. No. 1 [1999], sec. 15 [b]).
In case of disagreement between the parties, the issue on disturbance compensation may be brought
by either of them before the DAR Adjudication Board for resolution (DAR Adm. O. No. 1 [1999], sec. 15
[c]).
Protests and Oppositions
Sec. 21 of DAR AO 1 (1999) states that the DAR admits protest or opposition against any application
for conversion which is resolved by the approving authority simultaneously with the application. It may be
filed by any person who will be displaced or directly affected by the proposed land use conversion such
as occupants, tenants, farmworkers, identified beneficiaries, bona fide residents of adjoining properties
or communities against the application with the DAR Regional Office or Central Office, as appropriate
(DAR Adm. O. No. 1 [1999], sec. 18 and 19).

The protest must be in writing and filed within fifteen (15) days from the date of posting of the Notice
of Application. However, if the oppositor is an identified beneficiary under the agrarian reform program of
the land applied for and who failed to file a written protest within the said period due to fraud, accident,
mistake or excusable neglect, he shall have the right to intervene at any time during the pendency of the
application.
Protests or oppositions may be filed on the following grounds:
a)

The area applied for is non-negotiable for conversion;

b)
The adverse effects or the displacement to be caused by the proposed
conversion far outweigh the social and economic benefits to the affected
communities;
c)

Misrepresentation or concealment of material facts;

d)

Illegal/premature conversion;

e)
Existence of proof that conversion was resorted to as a means to evade
CARP coverage and to dispossess the tenant farmers of the land tilled by them.
(DAR Adm. O. No. 1 [1999], sec. 20)
Effects of Approval of Conversion Application
An order of conversion is generally subject to the following conditions:

Sixth, the order is without prejudice to ancestral domain claims of indigenous peoples pursuant to RA
8371.
Effect on tenants, farmworkers or occupants of property
Upon payment of disturbance compensation or compliance with the terms and conditions of the
agreement for disturbance compensation, the tenants, farmworkers or occupants are expected to give
up all their rights over the land such as possession, tenancy, etc., in favor of the landowner or developer.
In Gonzales v. CA, 174 SCRA 398, it was held that an agricultural leasehold cannot be established on
land which has been converted to residential use.
Grounds for Revocation/Withdrawal/Cancellation of Conversion Order
Under Sec. 35 of DAR AO 1 (1999), a petition for cancellation/revocation/withdrawal of the order of
conversion may be filed at the instance of DAR or any aggrieved party on the following grounds:
a)
Misrepresentation or concealment of facts or circumstances material to
the grant of conversion;
b)

Non-compliance with the conditions of the order of conversion;

c)

Lack of jurisdiction of the approving authority;

d)

Non-compliance with the agreement on disturbance compensation;

a)
Payment of disturbance compensation within 60 days from issuance of
the order;

e)
Conversion to use other than that authorized in the conversion order;
and/or

b)

Posting of a notice of conversion in a conspicuous place;

f)

c)

Development of the land within a specific period;

d)
Withdrawal or cancellation of the order for misrepresentation of facts
integral to its issuance or for violation of the rules and regulations on land use
conversion.
Sec. 23 of DAR AO 1 (1999) also provides for the following effects:
First, the conversion of an agricultural land to non-agricultural uses is limited to the specific use of the
land authorized in the order. In case the landowner decides to use the land for purposes other than that
authorized, a new application must be filed which must go through the process of conversion again.
Otherwise, he may be charged for unauthorized conversion (DAR Adm. O. No. 1 [1999], sec. 40 (d) and
2 [y]).
Second, all conversion orders are subject to the schedule indicated in the detailed site development
plan and work and financial plan submitted by the applicant. The rules, however, require that the period
of development should not extend beyond five (5) years from the issuance of the order except as
authorized by the Secretary or the approving official on meritorious grounds.

The period within which to file the petition varies depending on the ground raised by the petitioner:
a)
The petition must be filed before the approving authority within 90 days
from discovery of facts which would warrant such cancellation but not more than
one year from issuance of the order if the basis is misrepresentation or
concealment, or non-compliance with the agreement on disturbance
compensation;
b)
The petition must be filed with 90 days from discovery of such facts but
not beyond the period for development stipulated in the order if the basis is noncompliance with the conditions of the order, conversion to use other than that
authorized, or any other violation of relevant rules and regulations of DAR;
c)
Where the ground is lack of jurisdiction, the petition shall be filed with the
Secretary at any time.
In the event the conversion order is cancelled or withdrawn, the land subject thereof shall revert to
the status of agricultural lands and shall be subject to CARP coverage as circumstances may warrant.
(Sec. 37, AO 1 (1999)).

Third, the conditions of the order are binding not only upon the applicant but also upon successors-ininterest of the property.
Fourth, duly authorized representatives of DAR should be allowed free and unhampered access to
the property subject of the conversion order for compliance monitoring purposes.
Fifth, the use authorized in the order of conversion shall be annotated on the title of the subject
property.

Any other violation of relevant rules and regulations of DAR.

CHAPTER 8
Prohibited Acts and Omissions
Preliminary Considerations
RA 6657, RA 8435 and RA 3844 are the primary sources of prohibited acts and omissions under the
agrarian reform program which are criminal in nature and punishable with fine and imprisonment, or

both. As a rule, the prosecution of these acts does not preclude the DAR from pursuing administrative
cases against the offenders for the same acts or on the basis of the same facts.
Other acts and omissions in violation of agrarian laws are also administratively sanctioned. As the
principal agency tasked with the implementation of CARP, the DAR is vested with the power to establish
and promulgate operational policies, rules and regulations for agrarian reform implementation (see Exec.
Order No. 129-A (1987), sec. 4 [c]). Moreover, Sec. 50 of RA 6657 vests DAR with the primary
jurisdiction to determine and adjudicate agrarian reform matters and exclusive original jurisdiction over
all matters involving the implementation of agrarian reform.
Prohibited Acts and Omissions by Landowners under RA 6657
Sec. 73 of RA 6657 enumerates acts and omissions which are criminally punishable. Other provisions
of RA 6657 proscribing certain acts and omissions not included in Sec. 73 are subject to administrative
regulation or sanctions.
1.

Ownership and Possession of Land Beyond Allowable Limits

Sec. 73 (a) of RA 6657 prohibits "The ownership or possession, for the purpose of circumventing the
provisions of this Act, of agricultural lands in excess of the total retention limits or award ceilings by any
person, natural or juridical, except those under collective ownership by farmer-beneficiaries."
Elements:
a)

Offender is any person, natural or juridical;

b)
Person owns or possess agricultural lands in
excess of retention limit or award ceilings, except in the
case of collective ownership by farmer beneficiaries; and

e)
The transaction or the change of the nature of the land was effected after
15 June 1988.
DAR AO 1 (1989) provides for administrative sanctions for the sale, transfer, conveyance of lands
outside urban centers. The elements of the administrative offense is similar to that defined under Sec. 73
(e). Sec. 6 of RA 6657 also provides that the sale, disposition, lease, management contract or transfer of
possession of private lands executed by the original owner in violation of RA 6657 shall be null and void.
The sale or disposition, however, is not totally void. Part I (B) of DAR AO (1989) provides that the sale or
disposition of agricultural land is valid to the extent that the total landholding of the transferee as a result
of the said acquisition does not exceed the landholding ceiling.
3.

Illegal/Premature/Unauthorized Conversions

Illegal Conversion
Sec. 73 (c) of RA 6657 penalizes "The conversion by any landowner of his
agricultural land into any non-agricultural use with intent to avoid the application of this Act
to his landholdings and to dispossess his tenant farmers of the land tilled by them."
Elements:
a)

The land is agricultural land;

b)

The offender is the landowner;

c)
There are acts committed converting the use of the land into nonagricultural use; and
d)

The intent is to:

c)
The purpose of ownership or possession is to
circumvent the provisions of RA 6657;
2)
Prohibited Sale, Transfer, Conveyance or Change in the Nature of the
Land
Sec. 73(e) of RA 6657 also prohibits "The sale, transfer, conveyance or change of the nature of lands
outside urban centers and city limits either in whole or in part after the effectivity of this Act. The date of
the registration of the deed of conveyance in the Register of Deeds with respect to titled lands and the
date of the issuance of the tax declaration to the transferee of the property with respect to unregistered
lands, as the case may be, shall be conclusive for the purpose of this Act." CIHTac
Elements:

i.

avoid the application of RA 6657; and

ii.

to dispossess tenant farmers tilling the land.

DAR AO 1 (1999) provides a more expansive definition of illegal conversion.

Sec. 2 (g) of DAR AO 1 (1999) defines illegal conversion as "the conversion by any
landowner of his agricultural land into any non-agricultural use with intent to avoid the
application of RA 6657 to his landholding and to dispossess his tenant farmers of the land
tilled by them; or the change of the nature of lands outside urban centers and city limits
either in whole or in part after the effectivity of RA 6657, as provided in Sec. 73 (c) and (e)
respectively, of the said Act." Thus, under the administrative rule, there are two (2) ways of
committing illegal conversion.
Elements of the First Type:

a)

The offender is any person;

b)

The person either effects the

a)

b)
He/she converts his/her agricultural land into any
non-agricultural use without authority or DAR clearance;

i.
sale, transfer or
conveyance of the land; or

c)

ii.
change the nature of the
land.
c)

The intention of the conversion is to

i.
avoid the application of RA
6657; and

The land must be outside of urban centers and city limits;

d)
The transaction or the change of the nature of the land may be of the
whole or a portion of the land; and

Offender is the land owner;

ii.
to dispossess the farmers
of the land tilled by them;
Elements of the Second Type:

a)

Offender is the landowner or any other person;

b)
He/she changes the nature of the agricultural
land, in whole or in part;
c)
Land is located outside urban centers and city
limits; and
d)

c)
The person commits the land to a purpose other
than that allowed under the order of conversion.
In addition to the foregoing, Sec. 35 of DAR AO 1 (1999) also provides for administrative sanctions
against certain acts in connection with the grant of conversion application by landowners or their duly
authorized representatives. These include the following:
a)
Misrepresentation or concealment of material
facts in conversion application;

Act was committed after 15 June 1988.

Premature Conversion

b)
Non-compliance with the conditions set forth in the
conversion order; and

Sec. 11 of RA 8435 penalizes ". . . the undertaking of any development activity, the results of which
modify or alter the physical characteristics of the agricultural lands to render them suitable for nonagricultural purposes without an approved order of conversion from the DAR."
Elements:

c)
Non-compliance with the agreement on
disturbance compensation.
Prohibited Acts and Omissions by Beneficiaries under RA 6657

a)

The land is agricultural land;

b)

The offender may be any person;

c)

Actual development activity is undertaken on the land;

d)
The development activity modifies or alters the physical characteristics of
the land;

1.

Sale, Transfer, Conveyance of Rights Acquired as a Beneficiary

Sec. 73 (f) of RA 6657 prohibits "The sale, transfer or conveyance by a beneficiary 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 provisions of this Act."
Elements:
a)

e)
The land development renders the land suitable for non-agricultural
purposes; and
f)

b)
Offender sells, transfers or conveys the right to
use or any other usufructuary right over his land;

There is no approved order of conversion from the DAR.

c)
The subject land was acquired by him/her by
virtue of being a beneficiary; and

Unauthorized conversion
Unlike illegal and premature conversions, unauthorized conversion is not a criminal act but is merely
administratively sanctioned.
Sec. 2 (w) of DAR AO 1 (1999) defines unauthorized conversion as "the act of changing the current
use of the land from agricultural (e.g. riceland) to another agricultural use (e.g. livestock) without an
order of conversion from DAR, or changing the use of the land other than that allowed under the order of
conversion issued by DAR." There are, thus, two (2) ways to commit unauthorized conversion.
Elements of the First Type:
a)
Offender is any person, i.e., landowner, developer
or any other person;
b)
The person changes the current use of an
agricultural land into another agricultural purpose; and
c)
The change of use was done without an order of
conversion from DAR.
Elements of the Second Type:
a)
Offender is any person, i.e., landowner, developer,
or any other person;
b)
The subject land is granted an order of conversion
for its commitment to non-agricultural purposes; and

The offender is an agrarian reform beneficiary;

d)
The act is motivated by the design to circumvent
the provisions of R.A. 6657.
Relatedly, Part I (4) of DAR MC 19 (1996) provides that the "[s]ale, transfer, lease and other forms of
conveyance by beneficiary of the rights to use or any other usufructuary right over the land acquired by
virtue of being a beneficiary, in circumvention of the provisions of Sec. 73 of RA 6657, PD 27 and other
agrarian law" is a prohibited act. However, if the lands has been acquired under PD 27/EO 228,
ownership may be transferred upon full payment of amortization by the beneficiary.
Elements:
a)

The offender is an agrarian reform beneficiary;

b)
He/she sells, transfers or conveys the right to use
or any other usufructuary right over his land without legal
basis;
c)
The subject land was acquired by him/her by
virtue of being a beneficiary under RA 6657 or PD 27/EO
228; Provided that lands acquired under PD 27/EO
228 can be transferred upon full payment of
amortizations. In the case of lands awarded under CARP,
the land can be transferred ten (10) years after the
registration of the CLOA; and

d)
The act is motivated by the design to circumvent
the provisions of RA 6657, PD 27 and other agrarian laws.
2.

Elements:
a)

The beneficiary was granted financial aid and other support services;

b)

The beneficiary either:

c)
5.

misuses the financial aid and support services; or

ii.

diverts such aid or services for other purposes.

The material misrepresentation of qualifications provided under Sec. 22 of RA 6657 and other
agrarian reform laws is administratively sanctioned under Item A (3), Part I of DAR MC 19 (1996).
Elements:

Part III, Item (A) of DAR AO 2 (1994) defines misuse of the land as "any act causing substantial and
unreasonable damage on the land, and causing the deterioration and depletion of the soil fertility and
improvements thereon. It also includes the act of knowingly planting, growing, raising of any plant which
is the source of a dangerous drug, as defined under PD 1683 (1980)." Under the definition, there are two
ways of committing this offense.
Elements of the First Type:
a)

c)
The misrepresented fact was material to the determination of his
qualification to become a beneficiary.
6.

Default and Failure in the Payment of Amortization to Landowner

Part I, item A(1) of DAR MC 19 (1996) provides that "default in the obligation of the ARBs to pay the
aggregate of three (3) consecutive amortizations to the landowner in the case of awarded lands under
voluntary land transfer/direct payment scheme, except in cases of fortuitous events and force majeure"
is administratively sanctioned. The administrative rule is based on Sec. 26, RA 6657which states that a
beneficiary whose land has been foreclosed shall thereafter be permanently disqualified from becoming
a beneficiary.
Elements:

Offender is a grantee of land awarded through CLOA or EP;

a)

b)
The beneficiary acquired the land by virtue of Voluntary Land Transfer or
Direct Payment Scheme;

c)
Such act causes the deterioration and depletion of the soil fertility and
improvements thereon.

c)
The beneficiary fails to pay the landowner amortization for three (3)
consecutive months; and

a)

Offender is a grantee of land awarded through a CLOA or EP; and

b)
He knowingly plants, grows or raises any plant which is the source of
dangerous drug as defined in PD 1683.
Continuous Neglect or Abandonment of Awarded Lands

Sec. 22 of RA 6657 provides that any beneficiary who is guilty of negligence of the land extended to
him shall forfeit his right to continue as such beneficiary. Part I, A (5) of DAR MC 19 (1996) provides that
"continuous neglect or abandonment of the awarded lands over a period of two (2) years as determined
by the Secretary or his authorized representative" is subject to administrative sanctions.
Part III, Item (B) of DAR AO 2 (1994) defines neglect or abandonment as the "willful failure of the
ARB, together with his farm household, to cultivate, till, or develop his land to produce any crop, or to
use the land for any specific economic purpose continuously for a period of two calendar years."
Elements:

Offender is an ARB;

b)
Offender commits acts which cause substantial and unreasonable
damage to the land; and

Elements of the Second Type:

4.

The offender is a beneficiary;

b)
Offender intentionally made false statements respecting a matter of fact
in his application for qualification as an ARB under RA 6657 or any other agrarian
laws; and

Misuse of the Land

Par. 4, Sec. 22 of RA 6657 provides that any beneficiary guilty of negligence or misuse of the land or
any support extended to him shall forfeit his right to continue as such beneficiary. Misuse of the land is
administratively sanctioned under DAR MC 19 (1996).

Such failure or refusal continue for a period of two (2) calendar years.

Material Misrepresentation of Qualifications

a)

i.

The offender is an agrarian reform beneficiary;

b)
The beneficiary willfully fails or refuses to cultivate, till or develop to
produce any crop the land awarded him; and

Misuse or Diversion of Financial Aid and Support Services

Sec. 37 of RA 6657 provides that the "misuse or diversion of the financial and support services
provided the beneficiary shall result in sanction against the beneficiary guilty thereof, including the
forfeiture of the land transferred to him or lesser sanctions as may be provided by the PARC without
prejudice to criminal prosecution." This is reflected in Item A, No. 1 of DAR MC 19 (1996).

3.

a)

d)
7.

Failure is due to reasons other than force majeure or fortuitous events.

Failure to Pay Amortizations to LBP

Similarly, the failure to pay amortizations to LBP is penalized under DAR MC 19 (1996) which states
that "[f]ailure of the ARBs to pay at least three (3) annual amortizations to the LBP in the case of
awarded lands under the Compulsory Acquisition (CA) or Voluntary Offer to Sell (VOS), except in the
case of fortuitous events and force majeure."
Elements:
a)
The beneficiary is an awardee of a land acquired through the Compulsory
Acquisition or Voluntary Offer to Sell;
b)
and

The beneficiary fails to pay the LBP at least three (3) annual amortization;

c)

Failure is due to reasons other than force majeure or fortuitous events.

8.

Waiver of Rights to Awarded Lands

Prohibited Acts by Agricultural Lessees and Lessor under RA 3844

Part I, item A, no. 9 of MC 19 (1996) treats the waiver of rights to awarded lands by a beneficiary as
an administrative offense.

RA 3844 enumerates the criminal acts and omissions by agricultural lessees and lessors.
By Agricultural Lessor

Elements:

9.

a)

Offender is a beneficiary; and

b)

The beneficiary has expressly or impliedly waived his rights over the land.

FB's Surrender of Awarded Lands to Landowner or Other Non ARBs.

The surrender by a beneficiary of his awarded lands to landowner or other non-ARBs is penalized
under part I, item A (10) of MC 19 (1996).

1.
Unlawful Recording of Sale in the Registry of Property Subject to Right of
Redemption
Sec. 13 of RA 3844 states that "[n]o deed of sale of agricultural land under cultivation by an
agricultural lessee or lessees shall be recorded in the Registry of Property unless accompanied by an
affidavit of the vendor that he has given the written notice required in Section eleven of this Chapter or
that the land is not worked by an agricultural lessee." Failure to comply with this provision is criminally
punishable under Sec. 167(1) of RA 3844.
Elements:

Elements:
a)

a)
The offender is the landowner or agricultural lessor, or in case of juridical
persons, the manager or person who has charge of the management or
management of the property or in his default, the person acting in his stead;

Offender is a beneficiary;

b)
Offender surrenders land awarded him to the landowner or other nonbeneficiaries; and
c)

b)
He effects the recording of the sale of the land subject of an agricultural
lease; and

Such surrender is without legal authority or clearance from DAR.

Prohibited Acts and Omissions by Other Persons under RA 6657

1.

Sec. 73 (b) of RA 6657 provides that "The forcible entry or illegal detainer by persons who are not
qualified beneficiaries under this Act to avail themselves of the rights and benefits of the Agrarian Reform
Program" is a prohibited act that is criminally punishable.
Elements:
a)
Offender is any person who is not qualified to become an agrarian reform
beneficiaries;
b)
He/she deprives the owner, or legal representatives or any assigns of the
said owner, the right of possession thereof either through the following acts:

2.

Unlawful Disposition of Lessee

Sec. 31(1) of RA 3844 provides that it shall be unlawful for the agricultural lessor to "dispossess the
agricultural lessee of his landholding except upon authorization by the Court under Section thirty-six.
Should the agricultural lessee be dispossessed of his landholding without authorization from the Court,
the agricultural lessor shall be liable for damages suffered by the agricultural lessee in addition to the
fine or imprisonment prescribed in this Code for unauthorized dispossession." Sec. 167(1) of RA
3844 penalizes the commission by an agricultural lessor of the act defined under Sec. 31 of RA 3844.
Elements:

i.
by entering the land of another by force,
intimidation, threat, strategy, or stealth; or

a)

Offender is an agricultural lessor;

ii.
unlawfully refusing to vacate the land after the
right to hold possession thereof has expired;

b)

Offender dispossess the agricultural lessee of his landholding; and

c)

Dispossession is without authorization from the Court.

c)
The intention of the acts is to avail themselves of the rights and benefits
of the Agrarian Reform Program.
2.

c)
Such recording was effected without the necessary Affidavit by vendor
that he has given prior written notice of the sale to the agricultural lessor as
required by Sec. 7 of RA 3844.

Forcible Entry and Unlawful Detainer

Obstruction and Prevention of CARP Implementation

Sec. 73 (d) of RA 6657 penalized the "[w]illful prevention or obstruction by any association or entity of
the implementation of the CARP."
Elements:
a)
Offender may be a landowner, beneficiary or any other person, natural or
juridical; and
b)
The person commits acts to prevent or obstructs the implementation of
the CARP.

3.

Inducement to Execute or Enter into a Share Tenancy Contract

Sec. 167(2) of RA 3844 provides that "Any person, natural or juridical, who induces another, as
tenant, to execute or enter into a share tenancy contract with himself or with another in violation of this
Code shall be punished by a fine not exceeding five thousand pesos with subsidiary imprisonment in
accordance with the Revised Penal Code: Provided, That the execution of a share tenancy contract shall
be considered prima facie evidence of such inducement as to the owner, civil law lessee, usufructuary or
legal possessor. In case of juridical persons, the manager or the person who has charge of the
management or administration of the property or, in his default, the person acting in his stead, shall be
liable under this Section."
Elements:

a)
Offender is any person, natural or juridical. In case of juridical persons,
the manager or the person who has charge of the management or administration
of the property, or in his default, the person acting in his stead shall be liable; and
b)
Offender induces another person, as tenant, to execute or enter into a
share tenancy contract with himself or another in violation of RA 3844.
4.

Making Untruthful Statements in Affidavit Required under Sec. 13, RA 3844

Sec. 167(2) of RA 3844 provides "Any person who executes an affidavit as required by Section
thirteen of Chapter I, knowing the contents thereof to be false, shall be punished by a fine not exceeding
one thousand pesos or imprisonment of not more than one year, or both, in the discretion of the court."
Sec. 13 of RA 3844 requires that prior to the registration of the sale or transfer of land in the Registry
of Property, the landowner must execute an affidavit that written notice of the sale or transfer was made
to the agricultural lessor as required under Sec. 7 of RA 3844.
Elements:

ii.
the right to engage in concerted activities as
defined under Sec. 41 of RA 3844.
6.

Acts Violative of the Right of Farmworkers to a Minimum Wage

Sec. 167 (5) of RA 3844 provides "Any person who willfully violates the provisions of Section fortytwo of this Code shall, upon conviction thereof, be subject to a fine of not more than two thousand
pesos, or upon second conviction, to imprisonment of not more than one year or both such fine and
imprisonment, in the discretion of the court. If any violation of the provisions of Section forty-two of this
Code is committed by a corporation, partnership or association, the manager or, in his default, the
person acting as such when the violation took place shall be criminally responsible."
Sec. 42 of RA 3844 protects the farmworkers right to a minimum wage and provides that
"[n]otwithstanding any provision of law or contract to the contrary, farm workers in farm enterprises shall
be entitled to at least P3.50 a day for eight hours' work: Provided, That this wage may, however, be
increased by the Minimum Wage Board as provided for in Republic Act Numbered Six hundred and two."
Elements:

a)

Offender is the landowner, agricultural lessor or any person; and

a)

b)
He/she knowingly makes untruthful statements on a material matter in an
affidavit required for the registration of a sale of land subject to right of preemption as required under Sec. 13 of RA 3844.
5.
Acts Violating Farmworker's Rights to Self-Organization and to Engage in Other Concerted
Activities
Sec. 167 (4) of RA 3844 penalizes "Any person who willfully violates the provisions of Sections forty
and forty-one of this Code shall be punished by a fine of not less than one hundred pesos nor more than
one thousand pesos or by imprisonment of not less than one month nor more than one year, or both
such fine and imprisonment, in the discretion of the court. If any violation of Sections forty and forty-one
of this Code is committed by a corporation, partnership or association, the manager or, in his default, the
person acting as such when the violation took place shall be criminally responsible."
Sec. 40 of RA 3844 recognizes the farmworkers' right to self-organization, and provides that "the farm
workers shall have the right to self-organization and to form, join or assist farm workers' organizations of
their own choosing for the purpose of collective bargaining through representatives of their own
choosing: Provided, That this right shall be exercised in a manner as will not unduly interfere with the
normal farm operations. Individuals employed as supervisors shall not be eligible for membership in farm
workers' organizations under their supervision but may form separate organizations of their own."

b)
Offender fails or refuses to pay the farmworker the minimum daily wage
as set in Sec. 43, RA 3844 or determined by the Minimum Wage Board.
By Agricultural Lessees
1.

Cultivation of Another Farmland without Consent of Lessor

Sec. 167 (1) of RA 3844 penalizes the commission by agricultural lessees of the prohibited acts under
Sec. 27 of RA 3844.
Sec. 27 (1) of RA 3844 provides that it shall be unlawful for an agricultural lessee "[t]o contract to work
additional landholdings belonging to a different agricultural lessor or to acquire and personally cultivate
an economic family-size farm, without the knowledge and consent of the agricultural lessor with whom
he had first entered into household, if the first landholding is of sufficient size to make him and the
members of his immediate farm household fully occupied in its cultivation."
Elements:
a)

c)
He contracts to work another landholdings belonging to a different
agricultural lessor or acquires and personally cultivate an economic family-size
farm; and
d)
The cultivation of the other landholding is without the consent of his first
lessor.
2.

a)

Offender is the landowner, agricultural lessor or any person;

b)

Offender commits acts which impair or prevent the exercise of

i.
the right of farmworkers to self-organization under
Sec. 40 of RA 3844; or

Offender is an agricultural lessee;

b)
The land leased by him is of sufficient size to make him and the members
of his immediate farm household fully occupied in its production;

Sec. 41 of RA 3844 likewise recognizes the right of farmworkers to engage in concerted activities, to
wit: "The farm workers shall also have the right to engage in concerted activities for the purpose of
collective bargaining and other mutual aid or protection. For the purpose of this and the preceding
Section, it shall be the duty of the farm employer or manager to allow the farm workers, labor leaders,
organizers, advisers and helpers complete freedom to enter and leave the farm, plantation or compound
at the portion of same where said farm workers live or stay permanently or temporarily."
Elements:

Offender is a landowner or any other person; and

Unlawful Sublease of Leased Land by Lessor

Sec. 27 (b) of RA 3844 declares that it shall be unlawful for an agricultural lessee "[t]o employ a sublessee on his landholding: Provided, however, That in the case of illness or temporary incapacity, he may
employ laborers whose services on his landholdings shall be on his account." This prohibition is
reiterated in Item B(1), part VI of DAR AO 5 (1997).
Elements:

a)

Offender is an agricultural lessee;

(Sec. 167[4], RA 6657)

(Sec. 167 [4], RA 6657).

b)

That he employs as sublessee on his landholdings; and

Acts Violative of the Right

Fine of not more than two thousand pesos, or upon

of Farmworkers to a

second conviction, to imprisonment of not more than

Minimum Wage (Sec.

one year or both such fine and imprisonment, in the

167[5], RA 3844)

discretion of the court (Sec. 167 [5], RA 3844).

c)
The reason for the sub-contracting is other than illness or temporary
incapacity.
Penalties for Violation
The penalties for the prohibited acts and omissions which are criminal in nature are as follows:
Act or Omission

Penalty

Prohibited Acts or Omissions

Imprisonment of not less than one (1) month to not

under RA 6657

more than three (3) years or a fine of not less than one
thousand pesos (1,000.00) and not more than fifteen
thousand pesos (P15,000.00), or both, at the discretion
of the court. (Sec. 74, RA 6657)

Premature Conversion

Imprisonment of two (2) to six (6) years, or a fine

under RA 8435

equivalent to one hundred percent (100%) of the

government's investment cost, or both, at the

Upon the other hand, the penalties for prohibited acts and omissions which are administrative in
nature are as follows:
Acts or Omissions
Administrative Sanction
Under MC 19 (1996)
Cancellation of EPs/CLOAs and perpetual disqualification of
Agrarian Reform Beneficiaries (see MC 19 s. 1996, Part I).
Under AO 1 (1999)
land use conversion;

and 31 (1) of RA 3844

Fine not exceeding one thousand pesos or

imprisonment not exceeding one year or both in the
discretion of the court (RA 3844, Sec. 167 (1).)

Inducement to Execute

Fine not exceeding five thousand pesos with

or Enter into a Share

subsidiary imprisonment in accordance with the

Tenancy Contract

Revised Penal Code (Sec. 167 [2], RA 3844)

(Sec. 167 [2], RA 3844)

Making untruthful statements

Fine not exceeding one thousand pesos or

in affidavit required under

imprisonment of not more than one year, or both, in

Sec. 13, RA 3844

the discretion of the Court (Sec. 167 (3), RA 3844)

(Sec. 167 (3), RA 3844)

Acts Violating Farmworker's

Fine of not less than one hundred pesos nor more than

Rights to Self-organization

one thousand pesos or by imprisonment of not less

and to Engage in Other

than one month nor more than one year, or both such

Concerted Activities

fine and imprisonment, in the discretion of the court

2.

Blacklisting

of

the

3. Automatic disapproval
conversion applications that the offender may file with the DAR;

forfeiture of the land and any improvement thereof.

Violation of Sec. 13, Sec. 27,

Cancellation or withdrawal of the authorization for the

applicant,

developer,

pending

subsequent

or representative;

discretion of the court, and an accessory penalty of

(Sec. 11, RA 8435)

1.

of

4.

Issuance of cease and desist order (CDO); and/or

5.

Forfeiture of cash bond in accordance with Sec. 16

hereof. (A.O. 1 s. 1999, Sec. 49)

Jurisdiction Over Violation of Agrarian Laws
The power and duty to hear and try cases involving the criminal acts enumerated under RA 6657, RA
8435 and RA 3844 and other relevant agrarian laws belongs to the Special Agrarian Courts. HcaATE
With respect to administrative offenses, the DAR shall have jurisdiction over the same by virtue of its
express primary jurisdiction to determine and adjudicate agrarian reform matters and exclusive original
jurisdiction over all matters involving the implementation of agrarian reform.

5.8
Chapter 6

Chapter 1

Field Investigation
:

AGRARIAN REFORM BENEFICIARIES

HANDBOOK FOR CARP IMPLEMENTORS

6.1

Qualification of Beneficiaries

TABLE OF CONTENTS

6.2

Order of Priority

6.3

Farmworker Beneficiaries

6.4

Screening of Beneficiaries

AGRARIAN REFORM CONCEPTS AND PRINCIPLES

1.1

Meaning of Agrarian Reform

1.2

Agrarian Reform Issues:

Chapter 7

LANDOWNER'S RETENTION AND AWARD TO CHILDREN

Land Tenure Improvements vs. Support Services

7.1

Retention Limit

1.3

Big Farms vs. Small Farms

7.2

Land Ownership Ceiling

1.4

Public vs. Private Lands

7.3

Qualifications for the Exercise of the Right of Retention

1.5

Agrarian Reform: Counter-Insurgency Tool?

7.4

Award to Landowner's Children

Chapter 2

COMPREHENSIVE AGRARIAN REFORM PROGRAM

7.5

Selection of Retained Area

Chapter 3

CARP COVERAGE

7.6

Procedures for the Exercise of the Right of Retention and Award to Qualified Children

3.1

CARP Scope

7.7

When to Exercise the Right of Retention

3.2

Implementation Schedule

7.8

Obligations of Landowners and Limits to the Disposition of the Retained Areas

7.9

Tenants in Retained Areas

Exclusions

7.10

Retention Under PD 27

4.1.1.

7.11

Homestead Lands

Chapter 4
4.1

EXEMPTIONS AND EXCLUSIONS

Poultry, Livestock and Swine Raising

4.2

Exemptions

4.3

Procedures
Governing
Under Sec. 10, RA 6657

4.4

Procedures
for
Issuance
Based on DOJ Opinion No. 44

Chapter 5

Exemption
of

LAND ACQUISITION

of

Lands

Exemption

Clearance

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

5.1

Requisities in Land Acquisition

9.4

Summary Administrative Proceedings

5.2

Modes of Acquisition

9.5

Concerned Parties' Involvement in the Land Valuation Process

5.2.1

Compulsory Acquisition

9.6

Modes of Compensation

5.2.2

Voluntary Offer to Sell

9.7

Land Bank Bonds

5.2.3

Voluntary Land Transfer/Direct Payment Scheme

9.8

PD 27 Lands

5.3

Executive Order No. 407 As Amended

9.9

EO 407 Lands

5.4

Procedures in Land Acquisition

9.10

Mt. Pinatubo-Affected Areas

5.5

Prioritization of Lands for Coverage

5.6

Reconstitution of Title

10.1

Basic Principles in Land Distribution

5.7

Untitled Private Properties

10.2

Award Ceiling

Chapter 10

LAND DISTRIBUTION

10.3

Land Distribution Process

16.3

DAR's Legal Mandate

10.4

Individual vs. Collective Distribution

16.4

DAR's Role in Conversion

10.5

Rights and Obligations of Beneficiaries

16.5

Mechanics of Land Use Conversion Application, Approval and Monitoring

16.6

LGU's Authority to Reclassify

Chapter 11

PAYMENT BY BENEFICIARIES

11.1

Payment Under RA 6657

11.2

Payment in OLT Lands

17.1

Laws and Issuances Governing Agricultural Land Transaction

11.3

Payment Under VLT/DPS

17.2

Land Transactions Involving Ago-Tourism Development

11.4

Payment in Lahar-Affected Areas

17.3

Land Transactions After 15 June 1988

SUPPORT SERVICES

17.4

Right of Pre-emption

12.1

Support Services to Landowners

17.5

Right of Redemption

12.2

Support Services to Agrarian Reform Beneficiaries

17.6

Valid Transactions

17.7

Invalid Transactions

Chapter 12

Chapter 13

AGRICULTURAL LEASEHOLD

Chapter 17

Laws and Issuances on Leasehold

13.2

Tenancy Relationship

18.1

Public Alienable and Disposable Lands

13.3

Rights and Responsibilities of Lessee

18.2

Integrated Social Forestry Program

13.4

Rights and Responsibilities of Lessor

18.3

Settlement Areas

13.5

Lease Rental

18.4

Public Agricultural Lands Turned Over by the National Livelihood Support Fund

13.6

Fixing the Lease Rental

13.7

Other Related Laws and Issuances

:

PRODUCTION AND PROFIT SHARING

LAND TRANSACTION

13.1

Chapter 14

Chapter 18

PUBLIC LANDS

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

Lands of the Public Domain Covered by Cancelled or Expired Fishpond Lease

14.1

Coverage

Chapter 19

LANDED ESTATES

14.2

DAR's Authority

Chapter 20

BARANGAY AGRARIAN REFORM COMMITTEE (BARC)

14.3

Main Features

20.1

Laws and Issuances on BARC

14.4

Role of the MARO

20.2

Functions of the BARC

Chapter 15

COMMERCIAL FARM DEFERMENT

20.3

BARC Composition

15.1

Meaning of Commercial Farms and Commercial Farm Deferment

20.4

BARC Officers

15.2

Rationale for Deferment

20.5

Formation of BARC

15.3

Requirements

20.6

Mediation and Conciliation

15.4

Deferment Period

15.5

DAR's Role During Deferment Period

Chapter 16

Chapter 21
21.1

DAR ADJUDICATION BOARD (DARAB)

DARAB Jurisdiction

LAND USE CONVERSION

16.1

Definition

16.2

DAR's Stand on Conversion

HANDBOOK FOR CARP IMPLEMENTORS

CHAPTER 1

AGRARIAN REFORM CONCEPTS AND PRINCIPLES

1.1

MEANING OF AGRARIAN REFORM

What is Agrarian Reform?

Section 3 of RA 6657 has defined agrarian reform as:
"the redistribution of lands, regardless of crops or fruits
produced, to farmers and regular farmworkers who are
landless, irrespective of tenurial arrangement,
to include the totality of factors and support services
designed to lift the economic status of the
beneficiaries,
and all other arrangements alternative to the physical
redistribution of lands, such as production or profitsharing, 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.

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 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;

1.5

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?

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;

Agrarian reform derives its mandate from basic principles enshrined in the Constitution. The
Philippine Constitutions of 1935, 1973 and 1987 all attest to this.

c.
It is in productive private lands, particularly where the necessary
investments have been made, where the beneficiary has greatest chances of
success.

The 1935 Constitution mandated a policy of social justice to insure the well-being and economic
security of the people.

AGRARIAN REFORM: COUNTER-INSURGENCY TOOL?

Will agrarian reform cure all of the country's ills?

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."

These instituted the Comprehensive Agrarian Reform Program (CARP) and provided the mechanism for
its implementation.

Article XII, National Economy and Patrimony, Section 21 "The State shall promote industrialization
and full employment based on sound agricultural development and agrarian reform, . . ."

Republic Act No. 6657: An Act Instituting a Comprehensive Agrarian Reform Program to Promote
Social Justice and Industrialization, Providing the Mechanisms for its Implementation and/or other
Purposes, was subsequently passed by Congress, signed into law on 10 June 1988 and became
effective on 15 June 1988. This is now known as the Comprehensive Agrarian Reform Law (CARL) of
1988. (By tradition, the anniversary of CARP is commemorated on this date).
CHAPTER 3
CARP COVERAGE
3.1

CARP SCOPE

What is the scope of CARP?

The ownership or control of about 10.3 million hectares 1 of agricultural land, representing about onethird of the total land area of the Philippines shall be transferred over a ten-year period to an estimated
3.9 million beneficiaries.

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.

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
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)

idle or abandoned;

voluntarily offered;

foreclosed by government financial institutions (GFIs);

acquired by the Presidential Commission on Good Government (PCGG); and

owned by the Government

Other major issuances on CARP are:

Phase II This also started in 1988 and is programmed to be completed in four years (1988-1992).

Executive Order No. 228 dated 17 July 1987 declared full land ownership to qualified farmerbeneficiaries covered byPresidential 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.

Phase III-A This started on the fourth year and is programmed completed within three years (19921995)

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:

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

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

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

No. To qualify for exclusion, the following requirements must be met:

EXEMPTIONS AND EXCLUSIONS

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.

4.1. EXCLUSIONS

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".

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 underDepartment of Justice Opinion No. 44,
Series of 1990;
c.

those which are exempt pursuant to Sec. 10, RA 6657;

d.
those which are devoted to poultry, swine, or livestock raising as of
June 15, 1988 pursuant to the Supreme Court ruling on Luz Farms vs. The
Honorable Secretary of Agrarian Reform (G.R. No. 86889, 4 December
1990); and
e.
those which are retained by the landowner (not covered insofar as
land acquisition and distribution but covered with respect to other provisions,
particularly leasehold).
4.1.1 POULTRY, LIVESTOCK AND SWINE RAISING
What was the basis of the Supreme Court in ruling that poultry, swine and livestock
farms are not covered by CARP?
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.

Can a landowner now convert his crop land to a poultry farm and then apply for
exclusion from CARP?
No, as stated in AO 03-93, the land must already be devoted to livestock, poultry and
swine raising as of 15 June 1988. Nevertheless, the landowner who wishes to convert his crop
land for this purpose must apply for conversion, the processing of which shall be governed by AO
Nos. 1 and 2, Series of 1990. Among other requirements, there should be:
1.
the consent of agrarian reform beneficiaries and/or their waiver of
rights; and,
2.
certification from the Regional Director of the Department of
Agriculture that the poultry, livestock or swine project is of greater economic
value than the present agricultural use.
Conversion of the crop land without the benefit of conversion approval will be construed
as an intent to avoid application ofRA 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, 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:

Are all agricultural lands devoted to livestock, poultry and swine raising now
automatically excluded from CARP coverage?

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

A parcel of land cultivated by farmers is found to be within a forest reserve. May it be

immediately covered by DAR under CARP?

b.
Lands with eighteen percent (18%) slope and over, except those
already developed as of 15 June 1988. (Sec. 10, RA 6657)

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.

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.

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)
Why are lands with 18% slope and undeveloped exempt from CARP coverage?

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.

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?

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.

1.
DAR Administrative Order No. 10, Series of 1994, "Amending AO No.
13, Series of 1990 entitled Rules and Procedures Governing Exemption of
Lands from CARP Coverage under Section 10 of RA No. 6657, to Authorize
all Regional Directors to Hear and Decide Applications for Exemption for All
Land Sizes"

2.
DAR Administrative Order No. 06, Series of 1994, "Guidelines for the
Issuance of Exemption Clearances based on Sec. 3 (c) RA 6657 and the
department of Justice (DOJ) Opinion No. 44 Series of 1990"
4.3

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.

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.

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

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:
1.
The MARO shall prepare an Application for Land Exemption Folder
(ALEF) which contains the following documents:

a.
duly notarized Special Power of Attorney, if the applicant
is not the landowner himself;

written application

b.
certified true copies of the list of the land which is the
subject of the application;

ownership documents and other muniments of title

c.

current tax declaration covering the property;

evidence to support application

d.

location or vicinity map;

*
copy of proclamation, topographic map, sketch map, area
development plan, affidavit, certification from government agency,
etc.

e.
certification from the Deputized Zoning Administration that
the land has been reclassified to residential, industrial or
commercial use prior to 15 June 1988;

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.

f.
certification from the HLRB that the pertinent zoning
ordinance has been approved by the Board prior to 15 June
1988;

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.

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

4.
The RD reviews and evaluates the ALEF and the findings and
recommendations of the PARO and the MARO. If documents are in order,

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.
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.

d.

private agricultural lands

e.

public lands suitable for agriculture;

f.

lands acquired by PCGG;

g.

lands used by multinational corporations

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.

What are the requisites in land acquisition?

The following requirements must be met for land acquisition to be completed:

CHAPTER 5

a.

LAND ACQUISITION
5.1

b.
That there are beneficiaries willing to take over the ownership of the
land and make it productive;

REQUISITES IN LAND ACQUISITION

c.
That the landowner is paid just compensation; or a trust deposit is
made in his/her name if the value is contested; and

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.

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

Specifically, the following lands may be acquired under CARP:

a.

idle or abandoned lands;

c.

lands foreclosed by private and government financial institutions;

MODES OF ACQUISITION
What are the modes of acquiring lands for distribution under CARP?

rice and corn lands under PD 27/EO 228;

b.

That the land is privately owned and found suitable for agriculture;

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 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?

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. 12, Series of 1989, AO No. 09, Series of 1990,
and AO No. 10, Series of 1991]
c.
Administrative Order No. 12, Series of 1990 Policy Guidelines and
Operating Procedures in the Identification and Acquisition of Idle and
Abandoned Lands.
What lands are covered by compulsory acquisition?
Except in the case of tenanted rice and corn lands under PD 27, which are acquired
following a different set of rules, compulsory acquisition (CA) is done for all private agricultural
lands which become due for coverage following the phasing of implementation earlier discussed.
However, CA is suspended in those cases where the landowners opt for other modes of
compliance, e.g., voluntary land transfer or stock distribution option. CA is resumed once the
negotiations in these other modes fail.
Compulsory acquisition is also done in idle and abandoned lands regardless of their
size and phasing, and in lands whose commercial farm deferment is revoked.
What are idle or abandoned lands?
Idle or abandoned lands refer to agricultural lands not cultivated, tilled or developed to
produce any crop nor devoted to any specific economic purpose continuously for a period of three
(3) years immediately prior to the receipt of notice of acquisition by government as provided
under RA 6657. They do not, however, include the following:
a.
those that have become permanently or regularly devoted to nonagricultural 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.

These Administrative Orders are:

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?

5.2.2 VOLUNTARY OFFER TO SELL (VOS)

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.

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 is the VOS scheme?

A couple owning only 30 hectares died in January 1988 leaving as heirs six children
with ages ranging 25-40. No partition of the property has been done and the children do not own
other agricultural lands. How many hectares may be compulsorily acquired?
None. Even if the title is still in the name of the couple, ownership automatically
transferred to the children upon their parent's death. The six children are already the owners. Thus,
at five hectare retention per landowner, the entire 30 hectares may be retained.
AO-01, Series of 1989 allows the registration of a deed of extra-judicial partition of the
property of a deceased who died prior to 15 June 1988.
Note, however, that if the parents died after 15 June 1988, the land may be entirely
acquired and distributed if the children are neither actual tillers or direct farm managers. If they are,
they will each be entitled to an award of three (3) hectares. Otherwise, they will only be entitled to
the compensation for the land. But the land will be acquired and distributed under CARP.
Moreover, the DAR and the ROD will no longer allow the partition of the property except in favor of
the qualified farmer-beneficiaries. This is in line with the fact that as of 15 June 1988, by operation
of the law, all lands in excess of the retention limit are already covered by CARP.
If in the course of CARP coverage, the owner alleges that the land is exempted under
Sec. 10, RA 6657, what should you do?
Exception under Section 10 of RA 6657 is not automatic. Under AO-13, Series of 1990,
persons or representatives of persons owning, administering or managing lands believed to be
actually, directly and exclusively used and are necessary for any of the purposes under Section 10
should file a written application with DAR. This application should be approved by the Regional
Director.
The MARO should, therefore, check if an application has been filed and if the
application has been duly approved. Otherwise, the MARO should treat the matter as a CARP
protest and let the Regional Director rule on the matter. (AO-09, series of 1994).
If in the course of coverage, the owner alleges that the property is already reclassified
as residential since 1986, what should you do?
The MARO should determine if the property is covered by DOJ Opinion No. 44 and
whether an application for exemption has been filed by the landowner. He should also investigate
the actual land use and whether the land is irrigated, irrigable or is programmed for irrigation. He
should also check the zoning plan or municipal/city ordinance approved by the HLURB. Only if it is
clear that the said landholding does not fall within any of the above, should the MARO proceed
with the acquisition of the property.
If in the course of coverage, the owner alleges that about one year before the notice of
acquisition, he has filed an application for conversion, what should you do?
The MARO should check the allegation, i.e., whether there really was an application for
conversion filed a year ago. If there is none, conversion is not possible because the notice of
acquisition has already been issued. If there is, the issue of conversion should first be resolved.

What are the existing policy guidelines governing VOS?

The implementing policy guidelines on VOS are:
a.
Administrative Order No. 11, Series of 1994 Revising the Rules
and Regulations Covering the Valuation of Lands Voluntarily Offered or
Compulsorily Acquired as Embodied in Administrative Order No. 06 Series of
1992;
b.
Administrative Order No. 01, Series of 1993 An Order Amending
Certain Provisions of Administrative Order No. 09, Series of 1990 Entitled
"Revised Rules Governing the Acquisition of Agricultural Lands Subject to
Voluntary Offer to Sell and Compulsory Acquisition Pursuant to RA 6657";
[This AO supersedes AO No. 03, Series of 1989, AO No. 14-A and AO No.
19, Series of 1989, AO No. 09, Series of 1990, and AO No. 10, Series of
1991]
c.
Administrative Order No. 05, Series of 1992 Clarificatory
Guidelines and Amendments to AO No. 09, Series of 1990.
Where should the landowner file the application for VOS?

Application for VOS can be filed either at the Central Office, or at any field office of
DAR. However, the receiving office should forward the application to the MARO of the municipality
where the land is located.
What incentives are given to landowners who offer their lands under VOS?
The cash portion of the compensation to the landowner is increased by five percent
(5%), while the LBP bond portion is correspondingly decreased by five percent. However, this
incentive is not available to banks and other financial institutions.
It should be noted that the total compensation is not increased, only the proportion of
the cash component.

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 an agricultural land which has been mortgaged also be voluntarily offered under

May a landowner unilaterally decide to distribute his land through the VLT/DPS

CARP?

scheme?

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.

No. An agreement between the landowner and the qualified ARBs as approved by the
DAR is necessary.

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 siteto address a calamity situation. It should
be noted that this case is limited to calamity situations. Further, the approval
of the withdrawal of the VOS does not automatically authorize the land use
conversion of the land. The owner must still apply for conversion.
What are the instances in which the DAR may reject a VOS application?
The DAR may reject a voluntary offer to sell in the following instances:
a.
If the land is not suitable for agriculture, or has more than 18% slope
and is underdeveloped;
b.
If there are no takers or beneficiaries of the land for valid reasons
(e.g., peace and order situation) without prejudice to future coverage of the
area under CARP; and
c.
If the only identified agrarian reform beneficiaries (ARBs) are the
qualified children of the landowner.

What is the basic requirement in VLT/DPS?

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

May an agricultural land mortgaged to a bank be the subject of a VLT/DPS?

No. Land titles with existing liens and encumbrances shall not be covered under the
VLT/DPS scheme. This is a ruling made by DAR to simplify VLT/DPS transactions, particularly to
facilitate the immediate transfer of title to the ARBs.
5.3 EXECUTIVE ORDER NO. 407 AS AMENDED
What is the significance of EO 407?
Executive Order No. 407 dated 14 June 1990, entitled "Accelerating the Acquisition and
Distribution of Agricultural Lands, Pasture Lands, Fishponds, Agro-Forestry Lands and Other
Lands of the Public Domain Suitable for Agriculture" directs all government instrumentalities,
including government financial institutions (GFIs) and government-owned or controlled
corporations (GOCCs) to immediately transfer to DAR all their landholdings suitable for agriculture
for immediate distribution to qualified beneficiaries under CARP.
EO 407 is a concrete act of the Government to divest itself of its agricultural
landholdings as an example for private landowners to follow. Moreover, inasmuch as the
landowners involved are also Government agencies, EO 407 has facilitated the acquisition by the
DAR of thousands of hectares of agricultural lands for distribution under CARP.

a.
Identification and documentation of the landholdings, landowners and
beneficiaries;

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;
*
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?

b.

Land survey;

c.

Review and completion of data/documents;

d.

Land valuation and compensation; and

e.

Transfer of title from the landowner to the Republic of the Philippines.

What are the changes in procedures for land acquisition contained in AO-01, Series of
1993?
a.
The number of steps has been reduced by transferring from the DAR
Regional Office to the Provincial Office the review and completion of
documents before submission of the claim folder to the Land Bank of the
Philippines.
b.
The conduct of the field investigation can proceed even if the LBP
representative is unavailable. This was made possible by dividing the Field
Investigation Report into two parts. Part I contains data on the landholding
and its suitability to agriculture. Part II, on the other hand, provides data
inputs for the determination of the land valuation. Part I can be accomplished
even without the presence of the LBP representative although the data are
subject to review by LBP.
c.
The conduct of public hearing was deleted. In lieu thereof, the Notice
of Coverage, Field Investigation Report and the Notice of Land Acquisition
and Valuation shall be posted for a period of one week on the bulletin boards
of the barangay/municipal/provincial halls where the property is located.
d.

CARP forms were simplified and reduced in number.

e.
The acquisition process has been facilitated by requiring the LBP to
immediately open a trust account in the name of the landowner, whether the
landowner accepts or rejects the land valuation. Actual release, however,

shall be effected only after the landowner's compliance of all the

requirements.
What is the first step in land acquisition?
Land acquisition, regardless of the mode, begins with the identification of landowners,
landholdings and beneficiaries covered by CARP.
Under the Land Acquisition and Distribution Tracking System (LADTRACKS) and the
CARP Scope Validation project, field offices have been tasked to prepare a master list or inventory
of landholdings in their area of coverage. This inventory is derived from the LISTASAKA
statements, as verified or complemented by the records of the Register of Deeds and Assessor's
Offices, review of the municipal town plan and zoning ordinances, field surveys, interview and
community consultations, and general knowledge of the land ownership pattern in the barangays
or municipalities.
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 peoplecentered development thrust of the DAR, the higher the level of organization
of farmers, the greater should be the priority. This will not only facilitate the
land acquisition and distribution process but also hasten the development of
viable agrarian reform communities in the area;
c.
Incidence of agrarian unrest The greater the incidence of unrest,
the higher should be the priority to promote the resolution of the agrarian
disputes. Utmost care should however, be made to ensure that the
landholding is indeed covered by CARP;
d.
Number of farmers to be benefitted The higher the number, the
greater should be the priority, again in line with people-centered
development;
e.
Size of the landholding Inasmuch as nearly the same efforts will
have to be expended for either big or small landholdings, it makes sense to
put higher priority on the larger landholding;
f.
Presence of support factors Areas with cooperative landowners,
supportive community leaders and local government executives, active
BARCs and POs/NGOs, etc. should receive higher priority because it is in
these areas where agrarian reform implementation will have greater chances
of success;

g.
Presence of a title over the property Titled properties are easier to
acquire because, as it is the norm under our Torren's Title System, the title is
the strongest proof of the land ownership. Untitled properties require much
more difficult documentation to ensure that the land actually exists and that
the current landowner is being addressed. Thus, all other considerations
being equal, titled properties should receive higher priority.
5.6 RECONSTITUTION OF TITLE
What can be done in case the original title of the land got lost or was destroyed due to
fire, flood or force majeure in the register of deeds?
In general, lost or destroyed original copies of certificates of title are reconstituted
through judicial proceedings pursuant to Section 110 of the Property Registration Decree (PD No.
1529). The procedure is prescribed in Republic Act No. 26 and implemented in LRA Circular No. 35
dated 13 June 1983.
However, RA 6732 as implemented by LRA Circular No. 13 dated 26 July 1989, allows
for administrative reconstitutionwhen 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 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 1994which provides that the duly authorized DAR
lawyer can file the petition in the Regional Trial Court in case of judicial reconstitution, or with the
Register of Deeds concerned in case of administrative reconstitution, provided that a Notice of
Coverage has already been issued covering the property. However, the DAR shall endeavor to
secure a written permission from the registered owner/s of lost or destroyed titles.
What are the procedures for judicial reconstitution?
1.
The petition is filed with the Clerk of Court of the Regional Trial Court
which has jurisdiction over the property. Such petition is accompanied by a
plan and technical description of the subject land, and a certification from the
ROD that the original copy of the title was burned, lost, mutilated, etc.
Photocopies of the Notice of Coverage shall also be submitted if the DAR is
the petitioner.

2.
The Office of the Solicitor General, Office of the Prosecutor for the
City or Province, DENR-LMB, LRA, and ROD concerned are furnished with
copies of the petition.
3.
Publication (twice) in the Official Gazette and posting in the bulletin
boards of the respective municipality of the notice of initial hearing. Adjoining
owners and interested parties are also furnished copies of the notice.
4.

Processing in the Land Registration Authority.

5.

Court proceedings and court decision.

6.

Surrender of the owner's duplicate Certificate of Title to the ROD.

7.
Reconstitution proper of a new Original and Owner's Duplicate
Certificate of Title by the ROD.
What are the procedures for administrative reconstitution?
1.
The petition accompanied by three (3) photocopies of the owner's
authenticated duplicate certificate of title; latest tax declaration and Notice of
Coverage (if DAR is the petitioner) and an affidavit regarding circumstances
of the property are filed with the ROD concerned;
2.

Publication and posting requirements;

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;

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;
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;

6.
Surrender of the Owner's or Co-Owner's duplicate Certificate of Title
to the ROD; and

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;

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.

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

Who will shoulder the cost of the reconstitution proceedings?

Administrative reconstitution normally does not cost anything, except for incidental costs
like photocopies. However, judicial reconstitution requires publication which could be substantial
(around P1,500 at 1993 prices). If the petition was filed by DAR, then it shall shoulder this cost
chargeable against CARP funds. Otherwise, it will have to be borne by the farmer-beneficiary or
the cooperative or farmers association.
5.7 UNTITLED PRIVATE PROPERTIES
Can untitled private properties be placed under CARP?
DAR's petition on the issue of placing untitled or unregistered private agricultural lands
under CARP is that if there is no adverse claimant over the subject landholding (e.g., there is no
court case), then submission of documentary and/or testimonial evidence shall be conclusive proof
of ownership. The landholding may be acquired under CARP and the landowner entitled to
payment in accordance with pertinent laws and DAR rules and regulations as resolved under DOJ
Opinion No. 176, Series of 1992.

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

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

What are the qualifications of an agrarian reform beneficiary?

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

be landless;

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

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.

d.
Beneficiaries who have converted their land to non-agricultural use
without prior approval by DAR.
6.2 ORDER OF PRIORITY
What is the order of priority among the possible beneficiaries?
Section 22 of RA 6657 provides that lands covered by CARP shall be distributed as
much as possible to landless residents of the same barangay or, in the absence thereof, landless
residents of the same municipality.
The order of priority then starts with:
a.
Qualified children. The qualified children of the landowner are the
first group entitled to be beneficiaries of the land. They are entitled to receive
three hectares each.
b.
Tenants and Lessees. The next group is composed of the agricultural
lessees and share tenants. These farmers are entitled to receive the area of
their tillage but not to exceed three (3) hectares, he or she may be awarded
an additional area representing the difference, subject to the availability of
land.
c.

The order of priority then goes down as follows:

*

regular farmworkers;

seasonal farmworkers;

other farmworkers;

actual tillers or occupants of public lands;

collectives or cooperatives of the beneficiaries; and

others directly working on the land.

Given such order of priority, must all farmers in a class be allocated three hectares
each before anyone in the next class can be identified as also a beneficiary of the land? For
example, all regular farmworkers must first be allocated three hectares before any seasonal
farmworker can be identified?
Strictly speaking, that would be a correct interpretation.
The CARP, however, seeks to help as many farmers as possible and make them
beneficiaries of the program. Thus, a more liberal interpretation is often better, provided the

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

What can be done in case the tenants or tillers refuse to be interviewed and identified
as beneficiaries?

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).

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 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?

What can be done in case the occupants of an idle and abandoned agricultural land are
found to have prematurely entered the landholding?

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.

Premature entry is strongly discouraged. Should it happen, however, the first

consideration should be whether the occupants are the qualified beneficiaries of the land, or some
other persons have superior rights to receive the land. In the latter case, the occupants should be
ejected from the land and disqualified to be beneficiaries thereof.

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.

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.

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?

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?

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.

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)

It is the Municipal Agrarian Reform Officer (or the Agrarian Reform Program
Technologist), together with the BARC who screens the beneficiaries.

7.1 RETENTION LIMIT

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)

CHAPTER 7
LANDOWNERS' RETENTION AND AWARD TO CHILDREN

What is the retention right of landowners under the CARP?

No less than the Constitution grants landowners the right to retain a portion of their
lands covered by agrarian reform. Under the CARP, this retention right is limited to a maximum of
five hectares per landowner. The only exceptions are as follows:
a.
Landowners whose lands have been covered by PD 27 are allowed
to keep the area they originally retained thereunder. Thus, if a landowner
retained seven hectares 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.

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.

May a corporation also retain five hectares?

Yes. The law grants both natural and juridical persons the right of retention. Note that
juridical persons include corporations, partnerships, cooperatives, or other bodies with separate
legal personality.
Note also that a corporation is a person separate and distinct from its stockholders and
incorporators. Thus, a corporation may retain only five hectares and not five hectares for each
incorporator.
Are co-owners allowed to retain five hectares only?
Persons owning an agricultural land under a co-ownership may retain five hectares
each. This is because the co-owners remain as separate persons each entitled to retain five
hectares.
Thus, in the earlier case of a 30-hectare property owned by a couple who died before
15 June 1988, the six children were the co-owners of the land upon the effectivity of RA 6657.
Even if the title has not been transferred to their names, the six children are entitled to retain the 30
hectares at five hectares each.
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.

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

Where should the landowner file the application for retention and award to qualified
children?
The landowner should file the application using DAR's Retention Form No. 1 in any
DAR office, whether at the Central, Regional, Provincial or Municipal Office. If filed in an office
other than the MARO where the landholding is located, the receiving office should forward the
application to the MARO concerned.
What are the requirements in applying for retention or award to children?
The landowner should execute an affidavit as to the total area of his/her landholding. If
applying for award to qualified children, the landowner should submit a list of his/her children who
were at least fifteen (15) years old as of 15 June 1988 and who have been actually cultivating or
directly managing the farm.
What happens after the MARO receives the application for retention or award?
The MARO, with the assistance of the BARC shall conduct a field verification and
investigation to:
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?

1.
determine total landholding in relation to the retention and award
applied for;

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.

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;

What if the child meets the qualifications above but already owns ten hectares? Must
he or she still be awarded three hectares?

3.
determine qualifications of the applicants and their children applying
for retention and/or award; and

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.

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.

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 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

The MARO then prepares the Retention Folder containing the documentation of the
field investigation and the findings and recommendations. The folder is then submitted to the
PARO for review.
Who approves the application?
The Regional Director approves or disapproves the application after reviewing and
evaluating the report and recommendations submitted by the Provincial Agrarian Reform Officer
(PARO).
What happens after the Regional Director has approved the application for retention?
1.
If the application for retention is approved, the Regional Director shall
issue Certificate of Retention (Retention Form No. 3) and forward this,
together with the retention folder to the PARO.
2.
The PARO, in coordination with the Land Management Bureau of the
DENR, shall segregate the appropriate retained area.
3.
The DENR shall furnish the DAR Regional Office four copies of the
approved segregation plan and technical description.
4.
On the basis of the owner's duplicate copy of the title, the approved
segregation plan and technical description, the PARO shall request the

Register of Deeds to prepare two separate titles all in the name of the
landowner:
a.
for the landholding covered by compulsory acquisition,
voluntary offer to sell or voluntary land transfer/direct payment
scheme; and
b.

the landowner's retained area

What is the recourse of the landowner whose application for retention is disapproved?

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 landowner should make an appeal to the DAR Secretary within fifteen (15) days
upon receipt of the decision. Otherwise, the decision by the Regional Director disapproving the
application for retention becomes final.
7.7 WHEN TO EXERCISE THE RIGHT OF RETENTION
When may the right of retention be exercised?
A landowner whose agricultural land is covered by CARP may exercise his or her right
of retention anytime before the land is compulsorily acquired.
If the land is already the subject of compulsory acquisition, the landowner must apply
for retention within sixty (60) days from the date of receipt of the Notice of Coverage. If the
landowner does not respond despite due notice, he or she will be deemed to have waived the right
to choose the retained area and the DAR shall be the one to choose.
Note that the waiver is on the right to choose; the landowner still has the right to retain.
If the land is voluntarily offered for sale, the landowner may exercise right of retention at
the time of the voluntary offer.
When may qualified children apply for an award of not more than three hectares each?
The application must be filed within a period of thirty (30) days from date of receipt by
the landowner of the Notice of Coverage or from the date of the Voluntary Offer to Sell.
However, for those areas for which notices of coverage have already been sent to the
landowners, qualified children have at least one (1) year to file an application reckoned from 31
March 1994 (date of effectivity of DAR Memo Circular No. 04, Series of 1994). In case of failure of
the children to file their application within the specific period, the property shall be distributed to
qualified beneficiaries pursuant to Section 22 of RA 6657.
7.8

OBLIGATIONS OF LANDOWNERS AND LIMITS TO THE DISPOSITION OF THE

RETAINED AREAS
What is the obligation of the landowner with respect to his or her retained area?

The landowner has the obligation to cultivate the retained area directly or through labor
administration in order to make it productive. This is in line with the CARP principle that land has a
social function and land ownership has a social responsibility. (AO No. 11, Series of 1990)
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.

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

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:

Who among the OLT landowners are still entitled to the seven-hectare retention?

1.
The original homestead grantee or his/her direct compulsory heirs
still own the land on 15 June 1988; and

1.
Landowners who complied with the requirements of either LOI
41, 45 or 52.

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.

2.
Those who filed their applications before the deadline set (27 August
1985), whether or not they complied with Letter of Instruction (LOI) Nos.
41, 45, and 52.
3.
Those who filed their applications after the deadline but complied
with the requirements of the LOI cited above.
4.
Heirs of a deceased landowner who manifested while still alive the
intention to exercise the right of retention prior to 23 August 1990 (the finality
of the Supreme Court decision on the Association of Small Landowners vs.
The Honorable Secretary of DAR). Heirs must show proof of the original
landowner's intention. (AO No. 04, Series of 1991)
A landowner who retained seven hectares of rice land under PD 27 now wants to retain
an additional five hectares of coconut land under RA 6657. Should the landowner's claim be
granted?

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.

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.

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;

If two contracting parties with unequal powers are allowed to determine and agree on the value of
the land in the open market, the party with less power would tend to be on the losing end.
For properties covered by CARP, however, just compensation cannot be an absolute
amount disregarding particularities of productivity, distance to the market place, etc. Hence, land
valuation is not an exact science but an exercise fraught with inexact estimates. This requires
integrity, conscientiousness and prudence on the part of those responsible for determining its
value. What is important ultimately is that the land value approximates as closely as possible, what
is broadly considered by the community to be just. (AO 06, Series of 1992)
Does full payment mean payment in cash directly to the landowner?
No. Full payment need not all be in cash directly to the landowner. Payment can be
partly in cash and partly in bonds. Also for those cases where the landowner contests the valuation
of the property, Section 16, RA 6657 and AO 01-93 provide that full payment of just compensation
may be considered achieved upon the Land Bank's deposit of the value of the land in a trust
account in the name of the landowner. Once this deposit is made, the title can be transferred in the
name of the Republic of the Philippines.

6.
Surveyed by administration but not submitted in spite of request to
submit the survey; and

9.2 LAND VALUATION FACTORS

7.

What does the law provide as the factors to be considered in the valuation of lands
under CARP?

Other defects.
CHAPTER 9

LAND VALUATION AND LANDOWNERS' COMPENSATION

Section 17, RA 6657 enumerates ten (10) factors to be considered in the determination
of just compensation:

What is the basic requirement in the acquisition of private agricultural lands?

a.

cost of acquisition

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.

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
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.

What Administrative Orders govern land valuation under CARP?

AO No. 11, Series of 1994, "Revising the Rules and Regulations Covering the Valuation
of Lands Voluntarily Offered or Compulsorily Acquired as Embodied in AO No. 06, Series of 1992";
and
AO No. 06, Series of 1992, "Rules and Regulations Amending the Valuation of Lands
Voluntarily Offered and Compulsorily Acquired as Provided for Under AO 17, Series of 1989 as
Amended, Issued Pursuant to RA 6657".

AO 06-92 supersedes AO No. 05, Series of 1988; AO No. 06, Series of 1989, AO No.
17, Series of 1989, and AO No. 03, Series of 1991.

When the CNI factor is not present, and CS and MV are applicable, the formula shall
be:

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. 0692 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
__________________

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.
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.

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

9.4 SUMMARY ADMINISTRATIVE PROCEEDINGS

Is the land valuation done by Land Bank final?

The final determination of just compensation is a judicial function. The Land Bank
merely conducts administrative valuation which may be contested in the court of proper
jurisdiction. (Magana vs. Paitan, G.R. No. 60269 dated 13 September 1990)
If the landowner accepts the value offered by Government, then the administrative
valuation is final and serves as the basis of the landowner's compensation. However, if the
landowner rejects or does not respond to the Government's offer, the DAR itself will advise the
DAR Adjudication Board, through the Provincial Adjudicator, to conduct summary administrative
proceedings to determine the value of the land. The value determined in these proceedings are
then re-offered to the landowner. The landowner may still reject or not respond to this offer and
instead file a case before the Special Agrarian Courts.
In the meantime that the landowner is contesting the valuation of the land or is not
responding to the Government's offer, the Government may proceed to distribute the property upon
deposit in a trust account of the initial value offered.
Where will the summary administrative proceedings be conducted? Will a landowner
residing in Mindanao be required to go to the central office?
Not necessarily. It would depend on the total amount of compensation in question. If the
government's offer does not exceed two million pesos (P2,000,000), the proceedings shall be
conducted by the Provincial Agrarian Reform Adjudicator concerned. If the compensation offered is
more than two million pesos but does not exceed five million (P5,000,000) then the case will be
handled by the Regional Agrarian Reform Adjudicator (RARAD). But if the amount in question
exceeds five million pesos, then the proceedings shall be conducted by the DAR Adjudication
Board (DARAB). (AO No. 08, Series of 1993)
Is the Adjudication Board's decision final and executory?
Although the final determination of the value of the land is a judicial function, unless the
landowner or any party-in-interest files a case with the Special Agrarian Court within fifteen (15)
days from receipt of the decision, then the decision of the adjudicator/s becomes final and
executory.
9.5

CONCERNED PARTIES' INVOLVEMENT IN THE LAND VALUATION PROCESS

Are landowners and agrarian reform beneficiaries involved in the process of valuation?

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

Under Voluntary Land Transfer, the landowner will be paid directly in cash or in kind by
the farmer-beneficiary under terms mutually agreed upon by them subject to DAR approval.
Under Compulsory Acquisition, the Land Bank of the Philippines shall compensate the
landowner in the following mode:
a.

Cash payment which shall vary according to land size;

b.

LBP bonds or other government financial instruments.

Under Voluntary Offer to Sell, the landowner will be paid under the same mode as CA
except that the cash portion is higher by five percent (5%).
What proportion of the total compensation is in cash?
Cash portion shall vary according to the size of the landholdings. The larger the
landholding, the smaller the cash portion. The underlying principle is that small landowners are
presumed to have greater need for cash to aid them in their bid to shift their capital from agriculture
to industry.
Payment shall be under the following terms and conditions:
a.

Lands above 50 has. 25% cash; 75% bonds

b.

Lands above 24-50 has. 30% cash; 70% bonds

c.

Lands 24 has. & below 35% cash; 65% bonds

Cash portion is increased by 5% for VOS.

Why not pay the landowners the full amount in cash?
The compensation package under CARP is already much improved compared to the
compensation schemes of past land reform programs. This is so, precisely to make the program
more acceptable to landowners and facilitate the shift of their capital from agriculture to industry.
Full payment in cash is not feasible. This will tremendously increase the current funding
requirements for CARP which the government can ill afford at present. Furthermore, this will infuse
a large amount of money into the economy which could result in inflation.
9.7 LAND BANK BONDS
What are the features of the new LBP-bonds?
Compared with previous LBP bonds, the present bonds are definitely more attractive.
a.
Past LBP bonds have a maturity of 25 years. This means, bond
holders can only get the principal at the end of 25 years. On the other hand,
the new LBP bonds mature in ten years, and one-tenth of the face value of
the new bonds matures every year from the date of issue until the tenth year.
b.
The new LBP bonds also bear market rates of interest the same as
those of 91-day treasury bills. Old LBP bonds have a fixed six percent (6%)
interest rate.
c.
Finally, these bonds have alternative uses. They may be used by the
landowner, his successors in interest, or his assignees, for any of the
following:

*
acquisition of land or other real properties of the
government, including assets under the Asset Privatization Trust,
and other assets foreclosed by government financial institutions;
*
acquisition of shares of stock of government owned or
controlled corporations, or shares of stocks owned by the
government in private corporations;
*
substitution for surety or bail bonds for the provisional
release of accused persons, or for performance bonds;
*
security for loans with some government financial
institutions, provided the proceeds are invested in an economic
enterprise, preferably in a small-and-medium scale industry;
*
payment for various taxes and fees to government, up to a
certain percentage of the outstanding balance of the financial
instrument, and provided further that the PARC shall have
determined the allowable percentage mentioned;
*
payment for tuition fees of the immediate family of the
original landholder in government universities, colleges, trade
schools, and other institutions;

To address these problems, the PARC in its resolution dated 25 October 1994,
approved the grant of an increment of six percent (6%) yearly interest compounded annually based
on the land value as determined under existing valuation formula, instead of revising the formula
itself.
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;

payment of bills in public hospitals; and

2.
Landowners who opted for Government financing through Land Bank
of the Philippines as the mode of compensation; and

other uses as the PARC may allow from time to time.

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.

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 27have 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.

What is the reckoning date in computing the interest?

For lands tenanted as of 21 October 1972 and covered under OLT, the date shall be
reckoned from 21 October 1972 up to the date of effectivity of AO 13-94.
For lands tenanted after 21 October 1972 and covered under OLT, the date shall be
reckoned from the date when the land was actually tenanted up to the effectivity date of AO 13-94.
What will happen to the claims of landowner-payees which were previously approved
for payment by Land Bank?
The landowners shall still be entitled to the difference.
What happens to the 25-years LBP bonds under PD 27?
All outstanding LBP bonds that are retained by the original landowner-payee, or by his
heir, shall be paid by the Bank to the extent of their matured portion. One-twenty fifth (1/25) of their
face value times 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 landownerpayee are not entitled to the same right.
9.9 EO 407 LANDS
What are EO 407 lands?
These refer to lands suitable to agriculture owned by all government instrumentalities,
including but not limited to government agencies, government owned and controlled corporations
or financial institutions which have been ordered to be surrendered to the Department of Agrarian
Reform under Executive Order No. 407 issued on 14 June 1990 by then President Corazon C.
Aquino.
Will these lands be covered by the same valuation guidelines as the private lands
covered under CARP?
No, separate valuation guidelines for properties covered by EO 407 have been issued
applicable to claims of government financial institutions which have signed jointly with LBP a
Memorandum of Agreement dated 28 August 1992.
9.10 MT. PINATUBO AFFECTED AREAS
Will landowners in lahar affected areas whose landholdings were originally subject of
acquisition and distribution be compensated?
Joint DAR-LBP Administrative Order No. 03, Series of 1994 provided the policy
guidelines governing the acquisition and distribution of agricultural lands affected by the Mt.
Pinatubo eruptions.

These are agricultural lands actually covered with lahar and pyroclastic deposits,
including those areas which have become silted, eroded or continuously flooded for an indefinite
period of time.
Category II (not yet affected)
These are agricultural lands not falling under Category I but have the possibility of being
actually affected.
Category III (lands covered by ashfall)
These are agricultural lands actually covered or affected by ashfall but which remain to
be productive.
As a general rule, lands under Category III shall be acquired and landowners
compensated. Compensation of lands under Category I and II shall be effected under the following
conditions:
1.

Claims have been approved by LBP and:

a.
Landowner has executed a Deed of Assignment, Warranty
and Undertaking on or before the issuance of the Joint DAR-LBP
AO 03-94; or,
b.
Transfer Certificate of Title was already registered in the
name of RP on or before the issuance of the same AO; or
c.

Partial payment was already effected.

2.
Emancipation Patents/Certificates of Land Ownership Award have
been registered on or before 12 June 1991 regardless of whether or not the
claim folder is with the LBP.
CHAPTER 10
LAND DISTRIBUTION
10.1 BASIC PRINCIPLES IN LAND DISTRIBUTION
What are the basic principles in land distribution?
Land distribution is governed by the following basic principles and policies:
a.
The CARP seeks to promote the establishment of ownercultivatorship of economic-size farms as the basis of Philippine agriculture;

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)

Beneficiaries receive the following titles:

a.

Emancipation Patents (EPs) for OLT lands;

b.
Certificates of Land Ownership Award (CLOAs) for CA, VOS, and
407 lands, resettlement areas and landed estates; and
c.

Free Patents for public lands.

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.
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;

10.2 AWARD CEILING

How many hectares of land can an awardee get?
Individual beneficiaries may each receive the following maximum hectarages:

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?

a.
Three hectares under RA 6657 acquisition modes (CA, VOS,
VLT/DPS, EO 407);
b.
Three hectares for irrigated and five hectares for unirrigated rice and
corn lands covered under the OLT program of PD 27; and
c.

Three hectares for awardees in settlement areas and landed estates.

Potential beneficiaries who own less than three hectares of agricultural land may still
receive land under CARP but only to the extent of the difference between the award limit of three
hectares and their present land ownership. For example:
Award Ceiling

3.0 has.

ARB owns

1.2 has.

Total Area that may be awarded to ARB

1.8 has.

Total Land ownership after the award

3.0 has.

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

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

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.

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.

a.
Reviews all documents and generates the Certificates of Land
Ownership Awards (CLOAs).

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.

PARO

b.
If ARBs prefer individual parcels, then the PARO requests the DENR
to conduct subdivision survey.

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?

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.

PARO
a.
Any of the co-owners shall submit to the PARO, through channel, a
written request for the subdivision of the land.
b.
The PARO shall endorse the request for subdivision to the DARRO
for bidding and award to private contractors or the DAR itself may instead
execute the subdivision survey of the target landholdings.
DARRO
a.
The DARRO shall bid and award the survey to private contractors or
cause the conduct of the survey by DAR survey teams if available.
b.
The survey returns shall be submitted to the DENR for verification
and approval.
c.

The approved subdivision plan shall be submitted to the PARO.

PARO
a.
Prepare a Deed of Partition for the signature of all the co-owners,
specifying the lot number and the exact parcel intended for the co-owner
concerned, based on the approved subdivision plan. The Deed of Partition
shall be duly notarized.
b.
Retrieve the owner's duplicate certificate of title of the collective
CLOA from the ARBs for cancellation by the ROD.
c.
Generate individual TCT-CLOAs for each co-owner based on the
approved subdivision plan and the duly notarized Deed of Partition.
d.
Transmit the CLOAs, the Deed of Partition, and approved subdivision
plan to the Register of Deeds concerned for the registration. The owner's
duplicate certificate of title of the collective CLOA shall be surrendered to the
ROD for cancellation.
e.
Record the registered CLOAs and transmit the same to the MARO
for redistribution to the individual co-owners.
How will this generation of CLOAs be treated in reporting accomplishment?
Landholdings covered by collective CLOAs already reported as accomplishment by the
DAR field office concerned and subsequently subdivided and issued individual TCT-CLOAs to the
owners shall be reported and monitored separately in the monthly reporting of the field offices.
However, the area covered by collective CLOA should not be reported again as hectarage covered
upon the issuance of the individual CLOAs.
Such activities shall be included in the program of the field office concerned for proper
funding.

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;

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?

4.

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).

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?

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;

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.

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;

What happens if the new ARBs fail to cultivate the land themselves?

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);

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).

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;

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.

10.
Other grounds that will circumvent laws related to the implementation
of the agrarian reform program (seeAO No. 02, Series of 1994).

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

Illegal conversion by the ARB's;

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?

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.

Simulation:
Annual Gross Production (AGP) established
during land valuation (AO-06-92):

P15,000.00

Cost of Awarded land covered by VOS/CA:

Will the beneficiaries have to pay the government the same amount that government
paid to the landowner?

Capital Recovery Factor of 6% for 30 years:

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".

Annual Amortization Ceiling:

P22,706.38
0.07265

Annual Regular Amortization: P 22,706.38 x 0.07265 =

1st - 3rd Year

P1,849.57

P15,000 x .025

P375.00

4th - 5th Year

P15,000 x .050

P750.00

6th - 30th Year

P15,000 x .100

P1,500.00

Compare annual regular amortization (P1,849) with the schedule of amortization ceiling
shown earlier. Since the ceiling is lower than the annual regular amortization, the ARB will pay
based only on the ceiling. The difference represents the government's subsidy.
What is the "assistance" to farmers?
Assistance to farmers refers to:
a.
the difference between the regular annual amortization (based on the
amount paid or approved for payment to the landowner) and the affordable
amount during the first five years after the award of the land to the ARBs;
and
b.
the difference between the regular amortization and ten percent
(10%) of the AGP during the 6th to the 30th year whenever such 10% of
AGP is lower than the regular amortization.
After making payments for 30 years, the beneficiary stops paying. The difference
between what the Government paid to the landowner and 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?
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.

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.

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.

Imputed AGP shall be determined using industry data obtained from

government/private entities in the barangay. In the absence thereof, AGP for
the municipality, province or region in that order, shall be considered.

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.

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 happens if the ARB defaults in his or her payments?

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?
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?
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?

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 farmerbeneficiary?
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.

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.

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.

11.4 PAYMENT IN LAHAR AFFECTED AREAS

3.
MARO shall verify from the records whether or not lease rentals paid
by the FB are sufficient to cover the land value. The MARO shall likewise
validate the veracity of the landowner's objection if any and submit a report
and recommendation to the PARO within ten-days from the date service is
completed.

The Joint DAR-LBP Administrative Order No. 03, Series of 1994 provides the policy
guidelines and procedures to be followed under this situation.

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).

Are the farmer-beneficiaries in lands affected by the Mt. Pinatubo eruptions required to
continue paying their amortization?

Payment of amortization shall be deferred if subject landholding falls under Category I

actually affected areas (see Page 78 ) until such time that the land becomes productive again,
without prejudice to the farmer's voluntary payment of amortization. The farmer, however, should
first notify the Land Bank in writing of his/her intention of deferring payment and this must be
approved by Land Bank.
If the landholding falls either under Category II not yet affected or Category III
lands covered by ashfall, the farmer shall continue to pay the amortization.
Will payment also be deferred if the land is under Category I but acquisition was
through voluntary land transfer or direct payment scheme?
Yes, but instead of notifying the Land Bank, the farmer-beneficiary concerned shall
notify the landowner in writing with the assistance of DAR of his/her intention to defer payment.
CHAPTER 12

11.3 PAYMENT UNDER VLT/DPS

Is there also a ceiling on payments under VLT/DPS?
Yes, in effect there is a ceiling since the law provides that although the terms and
conditions of the VLT/DPS shall be mutually agreed upon by the landowner and the ARB, these
should not be less favorable to the ARB than those that would prevail if it were the government
acquiring the land from the landowner and selling it to the beneficiary.
Can lands transferred under VLT/DPS be repossessed if the agrarian reform
beneficiary defaults in his/her payment?
Yes. The VLT/DPS agreement shall contain sanctions for non-compliance by either
party and such shall be duly recorded and its implementation monitored by the DAR.
Should the beneficiary, for reason other than those brought about by force majeure or
fortuitous events default in his/her obligations for three (3) consecutive installments to pay the land
amortization, he/she shall be replaced as beneficiary and be permanently disqualified from being a
beneficiary under CARP. DAR shall cancel the CLOA which had been issued and transfer the land
to either:
a.
Qualified heir of the beneficiary who shall assume the balance of the
value of the land; or
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?

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 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:

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.

DAR Administrative Order No. 05, Series of 1993, "Rules and Procedures Governing
Agricultural Leasehold and the Determination of Lease Rental for Tenanted Lands".
This AO supersedes the following AOs:
AO No. 04, Series of 1989, "Rules and Procedures Governing
Agricultural Leasehold and the Determination of Lease Rental for Tenanted
Lands";
AO No. 09, Series of 1991, "Rules and Procedures on Leasehold
Operations in Tenanted Coconut Lands; and
AO No. 04, Series of 1992, "Rules and Procedures on Leasehold
Operations on Tenanted Sugarcane Lands"
Why is there a need to institute leasehold in the retained areas of landowners?
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.

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:

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.

a.

That the parties are the landholder and the tenant;

b.

That the subject is agricultural land;

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.

e.
That there is personal cultivation or with the help of the immediate
farm household; and

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.
and

leasehold is no longer just an option, it exists by operation of the law;

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?

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;

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.

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?

Does a tenancy relationship exist in cases where squatters are allowed by the
landowner to cultivate the land for free?

The lessee can only employ hired labor if he/she is temporarily incapacitated and has
no immediate family household who will do the cultivation.

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.

Is the agricultural leasehold relation extinguished by the death or permanent incapacity

of any of the parties?

When shall a tenancy relationship cease to exist?

The agricultural leasehold relation is extinguished by any of the following:

No. In case the tenant-lessee dies or is permanently incapacitated, the leasehold

relation shall continue between the agricultural lessor and the member of the lessee's immediate
farm household who can personally cultivate the land. Such person shall be chosen by the lessor
within one month from such death or permanent incapacity from among the following:

a.
abandonment of the landholding without the knowledge of the
agricultural lessor;

a.

the surviving spouse;

b.

the eldest direct descendant by consanguinity; or

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.

the next eldest descendent or descendants in the order of their age.

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;

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 ofRA 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?

b.
He/she planted crops or used the land for a purpose other than what
had been previously agreed upon. AO No. 05-93, however, now allows the
lessee to intercrop or plant secondary crops after the rental has been fixed,
provided he/she shoulders the expenses;

a.

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);

c.

d.
His/her fault or negligence resulted in the substantial damage,
destruction, or unreasonable deterioration of the land or any permanent
improvement thereon;

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;
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;
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:

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

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

To pay the lease rental to the lessor when it falls due.

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;

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?

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?
Section 29 of RA 3844 provides that it shall be the right of the lessor to:

a.
To dispossess the lessee of his/her landholding except upon
authorization by the Court under Section 36, RA 3844;
b.
To require the lessee to assume, directly or indirectly, the payment of
the taxes or part thereof levied by the government on the landholding;
c.
To require the lessee to assume, directly or indirectly any rent or
obligation of the lessor to a third party;

a.
Inspect and observe the extent of compliance with the terms and
conditions of the leasehold contract;

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;

b.
Propose a change in the use of the landholding to other agricultural
purposes, or in the kind of crops planted;

e.
To discourage, directly or indirectly, the formation, maintenance or
growth of unions or organizations of lessees in his/her landholding;

c.
Require the lessee, taking into consideration his/her financial
capacity and the credit facilities available to him/her, to adopt proven farm

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)

*
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.

Is indiscriminate cutting of coconut trees prohibited only in tenanted coconut lands?

No, even in lands cultivated by farmworkers.
Should the landowner execute two (2) separate leasehold contracts with the same
lessee, one for the principal crop and the other for the secondary crop?
No. As a general rule, the landowner and lessee shall only execute one contract for
their leasehold relation. The execution of two contracts is no longer necessary since the lease
rental shall cover the whole farmholding cultivated by the lessee. Hence, secondary crops shall
form part of the leasehold contract.
There are, however, certain qualifications: the secondary crop must have already been
planted as of 15 June 1988 and the area covered is more than half a hectare.
What if there are two or more tenants?
If there are two or more tenants on the same lot, each producing a different crop, they
may decide to have a joint leasehold agreements, whichever is feasible.
What are the liabilities of a lessor if he/she ejects his/her tenant-lessee without the
court's authorization?
A lessor shall be liable for:
a.

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
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.

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.

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.

Can the lessor order the lessee to change crops?

No. Section 29 of RA 3844 provides that the lessor may propose a change in the use of
the landholding to other agricultural purposes, or in the kind of crops to be planted. The change,
however, shall be agreed upon by both the landowner and the lessee. In case of disagreement, the
matter shall be settled by the Provincial Agrarian Reform Adjudicator (PARAD) or in his/her
absence, the Regional Agrarian Reform Adjudicator (RARAD) according to the best interest of the
parties concerned.
13.5 LEASE RENTAL
How much lease rental should the lessees pay?
The lease rental to be paid by all agricultural lessees shall not be more than the
equivalent of twenty-five percent (25%) of the average normal harvest during the three (3)
agricultural years immediately preceding the following dates:
*
10 September 1971 the date of effectivity of RA 6389 for tenanted
rice and corn lands;
*
date the tenant opted to enter into leasehold agreement or as of 15
June 1988, whichever is sooner, for tenanted sugar lands; or

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 shall be
subject to the periodic review of the MARO for purposes of determining compliance.
Can the landowner demand for an increase in the agreed or fixed rental on the ground
that there is an increase in yield or production?
The landowner can only demand for an increase in the fixed or agreed lease rental if
he/she introduced capital improvements on the farm. In such a case, the rental shall be increased
proportionately to the resulting increase in production due to said improvements. The cost of
capital improvement, including the interest thereon, will be determined, and the number of years
shall be fixed within which the increase in rental shall be paid.
What is capital improvement?
Capital improvement refers to any permanent and tangible improvement on the land
that will result to increased productivity. If done with the consent of the lessee, then the lease rental
shall be increased proportionately.
What will happen if there is a decrease in production as a result of large scale
replanting in coconut lands? Can the lease rental be reduced?
Yes, if the lessor initiates large scale replanting and the normal coconut production is
affected, a new lease rental may be computed proportionate to the decrease in production.
What happens to the lease rental should the tenant-lessee suffer crop failure due to a
fortuitous event or force majeure?
The lessee may defer payment of the lease rental due for the agricultural year affected
by a fortuitous event or force majeure causing crop failure to the extent of 75 percent. The lease
rental shall be paid on a staggered basis subject to the agreement of both parties.
Normally, such rental is paid in installments every harvest time beginning the next
agricultural year and to continue until the lessee is fully paid.
13.6 FIXING THE LEASE RENTAL
What is the role of the MARO in the implementation of agricultural leasehold?

With the assistance of the Barangay Agrarian Reform Committee (BARC) and the
POs/NGOs present in the area, the MARO shall:
1.
Identify all landholdings still under share tenancy and list the
landowner and share-tenants thereon;
2.
Together with the PARO, undertake massive information
dissemination on leasehold;
3.
Prioritize areas for leasehold implementation taking into account
presence of strong people's organizations and/or voluntary application by
any lessor or lessee;
4.
Require submission by parties concerned of documents on
production data, normal harvest, and cost of deductible items during the
three immediately preceding agricultural years. If these are not available,
gather production data released by the proper government agency;
5.
Conduct mediation conference (with the assistance of the Barangay
Council, if there is no BARC) between the landowner and the lessee for the
purpose of fixing the lease rental.
If any party fails to attend the conference despite notice, mail notice
at the last known address of the parties and post two successive notices at
seven days apart at the municipal, barangay halls and the place where the
land is located. The MARO shall proceed with the computation of the lease
rental. The second notice should be posted at least ten days prior to the
scheduled conference;
6.
In case of disagreement, accomplish the prescribed leasehold form
in five copies in the language or dialect known to the lessees, explain the
contents and have it signed or thumb marked by the parties or duly
authorized representative before two witnesses;
7.
Register the Leasehold Agreement with the Municipal Treasurer and
furnish each party a copy of the registered agreement. The PARO, on the
other hand, will have the leasehold agreement annotated at the back of the
Transfer Certificate of Title on file with the Register of Deeds.
What if there is no agreement reached during the mediation conference?
If no agreement is reached despite the mediation conferences, the MARO shall fix the
provisional lease rental and prepare the Leasehold Documentation Folder. Copies of the Order for
Provisional Lease Rental shall be sent to the landowner, lessee and the PARO. The Leasehold
Documentation Folder shall then be transmitted to the PARAD.
The PARAD shall review the provisional lease rental within 30 days from the receipt of
the documentation folder and issue the order of lease rental.
Pending the review of the provisional lease rental, the PARAD upon motion of the
landowner shall order the lessee to deposit the provisional lease rental with the nearest LBP Office
in a trust account in the name of the landowner, if the payment is in cash, or in a designated
bonded warehouse if the payment is in kind and give a written notice to the MARO and the
landowner.
What if either or both the parties concerned disagree with the order of lease rental
made by the PARAD?

Any party who disagrees with the Order of Lease Rental issued by the PARAD may
bring the matter to the DARAB within 15 days from receipt thereof. Otherwise, the Order shall
become final and executory.
3.7 OTHER RELATED LAWS AND ISSUANCES
1.
Presidential Decree (PD) No. 152, promulgated on 31 March 1973,
prohibited the employment or use of share-tenants in complying with the
requirements of the law regarding entry, occupation, improvement and
cultivation of public lands.
2.
PD No. 583, promulgated on 10 November 1974, prescribed penalty
for the unlawful ejectment, exclusion, removal or ouster of tenant farmers
from their landholdings.
3.
PD No. 816 promulgated on 21 October 1975, penalized any
agricultural lessee of rice and corn lands underPD 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
What is production and profit sharing?
This is a mandate under Section 16 of EO 229 and Sections 13 and 32 of RA
6657 which requires individuals or entities owning or operating under lease or management
contract, agricultural lands to execute production and profit sharing plan with their farmworkers or
farmworkers' organization, pending final distribution of the land or implementation of the stock
distribution scheme.

What are the existing Administrative Orders governing production and profit sharing?
a.
Administrative Order No. 08, Series of 1988, "Guidelines and
Procedures Implementing Production and Profit Sharing Under RA 6657"
b.
Administrative Order No. 09, Series of 1988, "Guidelines and
Procedures Implementing Production Sharing Under EO 229"
It will be observed that EO 229 mandated only production sharing while RA 6657
included profit sharing on top of the production sharing.
Who are required to execute production and profit sharing plan?
The following employers are required to execute Production and Profit Sharing Plan
with their farmworkers if their annual gross sales exceed Five Million Pesos (P5M):
a.
Any enterprise owning or operating agricultural lands under lease,
management contract, production venture or other similar arrangement;
b.

Multinational Corporations engaged in agricultural activities; and

c.
Commercial farms devoted to aquaculture including salt beds,
fishponds and prawn ponds, fruit farms, orchards, vegetable and cut flower
farms, and cacao, coffee and rubber plantation.
Why are these employers required to execute production and profit sharing plan with
their farmworkers?
Section 2 of RA 6657 declared that agrarian reform program is founded on the right of
the farmers and regular farmworkers, who are 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?

over and above the compensation they currently receive. The employers are not, however,
compelled to pay more than one hundred percent of the regular annual compensation of the
farmworkers.
Regular annual compensation includes all cash remunerations or earnings regularly
paid to an employee by an employer for services rendered within a year, such as salaries, wages,
13th month pay, bonus, allowances, commissions and paid leaves, and other income of similar
nature, whether mandated by law or provided by collective bargaining agreement or established
company practices, but excludes payment arising from the Production and Profit Sharing provided
under EO 229 and RA 6657.
The Plan should cover the period from 29 August 1987 (date of effectivity of EO 229)
and 14 June 1988 (date prior to the effectivity of RA 6657).
Fifty percent (50%) of the Production Share should have been paid not later than 12
February 1989 and the balance on or before 2 April 1989.
RA 6657
They are required to pay the following Production and Profit Shares to be given over
and above the compensation currently received by their farmworkers, which shall be distributed
based on the following schedules:
Amount of Production Share:
Three percent (3.0%) of Annual Gross Sales from 15 June 1988, until final land or
corporate stock transfer to the farmworker-beneficiaries is effected, provided that the employer is
not obligated to pay more than one hundred percent (100%) of the regular annual compensation of
the farmworker-beneficiaries.

The DAR through its Secretary or authorized representatives has the following powers:
1.
To order and administer compliance with the Production Sharing
provisions of EO 229 and Production/Profit Sharing provisions of RA 6657;
2.
To require covered employers to submit report on the distributed
production/profit shares;
3.
To compel the production of books and documents of covered
employers;
4.
To compel answers to questions needing clarifications to shed light
on problems encountered in the implementation;
5.

To issue subpoena; and

6.

To enforce its writs through sheriffs or other duly deputized officers.

14.3 MAIN FEATURES

What are the main features of the mandated plan?
EO 229
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

*
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 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 andRA 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 farmworkerbeneficiaries. 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?
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

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.

Can the MARO compel covered employers to execute production and profit sharing

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.

Yes, as long as they realize gross sales in excess of five million pesos and a net profit
after the tax.

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.

plan?

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 ofRA 6657, respectively).
Violation of the provisions on production and profit sharing is punishable by
imprisonment of not less than one month to not more than three years or a fine of not less than
one thousand pesos (P1,000.00) and not more than fifteen thousand pesos (P15,000.00), or both,
at the discretion of the court.
The MARO may also initiate the cancellation of the Order of Deferment issued by the
DAR Regional Director and subject his land to compulsory acquisition.
What should the MARO do in case of disputes arising from production and profit
sharing?
The MARO, together with the BARC should mediate and conciliate. They should
convince both parties to settle the dispute voluntarily. In case there is no success in settling the
dispute, this shall be forwarded to the PARO and if still unsolved, it shall be submitted to the
PARAD for adjudication.
CHAPTER 15
COMMERCIAL FARM DEFERMENT
15.1 MEANING OF COMMERCIAL FARMS AND COMMERCIAL FARM DEFERMENT
What are commercial farms?

What is commercial farm deferment?

Section 11, RA 6657 as implemented by AO 16-88 provides that the acquisition and
distribution of qualified commercial farms shall be deferred for ten (10) years from 15 June 1988. In
case of new farms, the ten year deferment period shall begin from the first year of commercial
production and operation, as determined by DAR.
15.2 RATIONALE FOR DEFERMENT
Why is coverage of these farms deferred?
The CARP provides for the deferment of the coverage of the farms mentioned earlier, to
allow them to recover their investments and insulate them from possible disruptions in operations
and productivity during land acquisition and distribution. The commercial farm deferment provision
of RA 6657, which runs counter to the general rule of immediate land transfer, particularly of large
estates, reflects the numerous compromises that had to be forged by the legislators in the crafting
of the law.
15.3 REQUIREMENTS
Is the deferment automatic?
No. The farm should already be planted to commercial crops or devoted to commercial
farming operations before 15 June 1988. It should likewise be applied for deferment with the DAR,
which shall approve the application based on whether or not the farm meets the requirements
enumerated in Annex A of AO 16-88. These criteria are on the density of planting (number of plants
or trees per hectare) and infrastructure and facilities of the farm.
When is the deadline for filing of applications for commercial farm deferment?

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

15.5 DAR's ROLE DURING DEFERMENT PERIOD

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

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.

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.

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?

Section 5 of the same EO authorizes the DAR to "have exclusive authority to approve
or disapprove conversion of agricultural land for residential, commercial, industrial, and other land
uses as may be provided for by law".
Section 65 of RA 6657 likewise empowers the DAR to authorize under certain
conditions, the reclassification or conversion and the disposition of lands awarded to agrarian
reform beneficiaries.
Finally, Section 4 of Memorandum Circular No. 54, Series of 1993 of the Office of the
President, provides that "action on application for land use conversion on individual landholdings
shall remain as the responsibility of the DAR, which shall utilize as its primary reference,
documents on the comprehensive land use plans and accompanying ordinances passed upon and
approved by the local government units concerned, together with the National Land Use Policy,
pursuant to RA No. 6657and 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?

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

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 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 toExecutive 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?

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 Malacaang 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.

Aside from being the final approving authority, the DAR basically performs the following
functions:
a.

Evaluate the documents submitted for completeness and veracity;

b.

Determines whether or not the subject land is covered by CARP;

c.
Determines whether or not the application should be approved based
on the criteria set for land use conversion;
d.
Ensures that the potential agrarian reform beneficiaries are consulted
on the proposed land use conversion and are properly given their
disturbance compensation and other benefits;
e.

Monitors approved application for compliance with the requirements;

f.
Together with the DOJ, monitors illegal conversions and
recommends and files criminal cases against landowners and developers
who undertake illegal conversions.
16.5 MECHANICS OF LAND USE CONVERSION: APPLICATION, APPROVAL, MONITORING
Who may apply for land use conversion?
The following may apply for conversion:
a.
Owners of private agricultural lands or other persons duly authorized
by the landowner;
b.
Farmer beneficiaries of the Agrarian Reform Program after the lapse
of five (5) years from award, reckoned from the date of registration of their
landholdings, and who have fully paid their obligations and are qualified, or
persons duly authorized by them.
c.
Government agencies, including government-owned or controlled
corporations.

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

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 andMemo 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.

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;
b.
Failure to implement and complete the land development of the area
within the specified time; and

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.

c.
Any other violation of the rules and regulations which are material to
the grant of the conversion order.

Are farmworkers also entitled to disturbance compensation?

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

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.

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)

1.
The Regional Center for Land Use Policy, Planning and
Implementation (RCLUPPI):
*
receives the application and reviews the required
documents for completeness and compliance with all the
requisites;
*
sends Notice of Land Use Conversion to the DAR
Municipal Office (DARMO) for posting;
*
conducts field investigation and dialogues with affected
parties and validates information in the documents;
*

prepares findings and recommendations;

*
prepares land use conversion folder for every application
attaching all the required documents submitted by the applicant
and endorse it to the Center for Land Use Policy, Planning and
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.

documents or information and conducts field investigation (if

necessary);

Subsequent applications by the same landowners or his representative, however, on a

portion of the same shall be forwarded to CLUPPI for resolution.
2.

DAR Regional Director

*
Approves or disapproves applications covering lands
within the non-agricultural zones with areas of five (5) hectares or
less on an aggregate or project basis;
*
Forwards applications already acted upon to the RCLUPPI
for proper disposition;
*
Submits monthly report on approved or disapproved
applications, including pending applications to the CLUPPI, copy
furnished the DARPO and DARMO.

3.

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

*
reviews and evaluates all land use conversion folders
received from RCLUPPI;

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.

*
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;

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

*
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.
Undersecretary for Policies and Planning:
*
reviews and approves or disapproves application for
conversion of lands not exceeding fifty (50) hectares within five
(5) working days from receipt of the folder from CLUPPI;
*
5.

6.

Center for Land Use Policy, Planning and Implementation (CLUPPI)

*
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;

4.

*
recommends approval or disapproval of applications for
conversion of lands above fifty (50) hectares and forwards the
same to the Secretary for his consideration.

forwards the signed Order to CLUPPI.

PARC Land Use Technical Committee (PLUTC):

*
reviews completeness and consistency of all folders
received from CLUPPI, requires submission of additional

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

Reclassification is the act of specifying how agricultural lands shall be utilized for nonagricultural 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 Malacaang Memo Circular No. 54 dated 08 June
1993 prescribing the guidelines governing Section 20, state that a city or municipality may, through
an ordinance passed by the Sanggunian after conducting public hearings, authorize the
reclassification of agricultural lands and provide for the manner of their utilization or disposition in
the following case:

1.
All irrigated lands where water is available to support rice
and other crop production;
2.
All irrigated lands where water is not available for rice and
other crop production but within areas programmed for irrigation
facility rehabilitation by the Department of Agriculture (DA) and
the National Irrigation Administration (NIA).
3.
All irrigable lands already covered by irrigation projects
with firm funding commitments at the time of the application for
land use conversion or reclassification.
Is the percentage ceiling on the land area which the LGUs can reclassify absolute?
No, the President may, when public interest so requires and upon recommendation of
the National Economic and Development Authority (NEDA) authorize a city or municipality to
reclassify lands in excess of the limits as cited above.
What are the requirements and procedures for reclassification?
a.
The city or municipal development council shall recommend to the
Sangguniang Panglunsod or Sangguniang Bayan, as the case may be, the
reclassification of agricultural lands within its jurisdiction.
b.
Before enacting the ordinance reclassifying agricultural lands, the
Sanggunian concerned must first secure the following certificates:
1.
Certification from DA indicating the total area of existing
agricultural lands in the city or municipality, that such lands are
not classified as non-negotiable for conversion or reclassification;
and that the land has ceased to be economically feasible and
sound for agricultural purposes.

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

for component cities and first to third class municipalities

for fourth to sixth class municipalities

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

15%
10%

2.
the proposed reclassification complies with the limitations
prescribed under Section 1 of Memo Circular No. 54.

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 Malacaang AO No. 20-92 and MC
54 as non-negotiable for conversion:

d.

The Sanggunian shall conduct public hearings for the purpose.

e.
Upon receipt of the required certification from the government
agencies, the Sanggunian concerned may now enact an ordinance
authorizing the reclassification of agricultural lands and providing for the
manner of their utilization or disposition.
After the enactment of the ordinance reclassifying the land, does this mean the
agricultural land can now be converted for non-agricultural uses?

No. Approval of applications for land use conversions remains the responsibility of DAR.
Hence, individual landholders of the affected areas should still file an application for conversion.
DAR shall utilize as its primary reference in deciding on the application, the comprehensive land
use plans, and the ordinance passed upon and approved by the Sanggunian, together with the
National Land Use Policy.
CHAPTER 17
LAND TRANSACTION
17.1 LAWS AND ISSUANCES GOVERNING AGRICULTURAL LAND
TRANSACTIONS
What are the laws governing land transaction?
17.1.1
are the following:

RA 6657 contains several specific provisions on land transactions. They

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

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".
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;

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;

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;
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?

Banks and other financial institutions allowed by law to hold mortgage right or security
interest in agricultural lands may acquire title to those mortgaged properties, regardless of areas,
subject to existing laws on compulsory transfer of foreclosed assets and acquisition as prescribed
under Section 16 of RA 6657.
Can government financing institutions and government-owned or controlled
corporations sell or dispose their lands which are suitable for agriculture directly to private
individuals?
No. Executive Order No. 360, Series of 1989 enjoins them to grant the DAR the right of
first refusal in the sale or disposition of their lands which are suitable for agriculture. This was
further amended by EO 407 which mandates all government instrumentalities to surrender to the
DAR all landholdings suitable for agriculture including all pertinent documents in their custody. In
certain instances, they may avail of the VLT mode of transferring ownership of agricultural lands to
qualified beneficiaries subject to the review and approval of DAR.
17.4 RIGHT OF PRE-EMPTION

1.

Direct lease to the investor/developer under RA 7652;

2.
Lease to a responsible government entity, who in turn may sublease
the property to the investor/developer;
3.
Lease back to the former landowner, who in turn will develop the
area for tourism purposes; or
4.
Joint venture agreement whereby ARB's lease rights shall be
exchanged for shares of stocks, provided the ARBs shall organize into a
farmers cooperative.
17.3 LAND TRANSACTIONS AFTER 15 JUNE 1988
A vendee bought a parcel of agricultural land consisting of fifty (50) hectares prior to 15
June 1988. However, the deed of sale was not registered within the three-month period as
provided for in Section 6 of RA 6657. The vendee now wants to have the transaction registered
and is willing to have the land covered by CARP. Should the ROD register the transaction?
Yes, the transaction should be registered even if beyond the prescribed period. Anyway,
the vendee is willing to have it covered under CARP. To disallow registration and rescind the
contract will result in a 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?

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 preemption?
The right of pre-emption may be exercised within one hundred eighty (180) days from
notice in writing, which shall be served by the owner to all tenants or lessees affected.
17.5 RIGHT OF REDEMPTION
What is the right of redemption?
Under Section 12 of RA 3844, in case the landholding is sold to a third person without
the knowledge of the tenant or agricultural lessee, the latter shall have the right to repurchase said
landholding at a reasonable price and consideration.
If there are two or more tenants or agricultural lessees in the same landholding, how
will they exercise their right of redemption?
If there are two or more tenants or agricultural lessees in the same landholding, each
shall be entitled to said right of redemption only to the extent of the area actually cultivated by
him/her.
What is the prescriptive period imposed by law in order to avail of the right of
redemption?

The right of redemption may be availed of within one hundred eighty (180) days from
notice in writing which shall be served by the buyer on all tenants/lessees affected and the DAR
upon the registration of the sale, and shall have priority over any other right of legal redemption.

What are the transactions that may be registered with the Register of Deeds without
clearance from the DAR?

17.6 VALID TRANSACTIONS

DAR:

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
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.

The following are the transactions that can be registered without clearance from the
a.
Deed of extra-judicial partition of the property of a deceased who
died before 15 June 1988;
b.
Deed of partition of property owned in common by co-owners prior to
15 June 1988;
c.

Subdivision of title without change of ownership; and

d.
Deed of Real Estate Mortgage executed by the original landowner or
beneficiary.
CHAPTER 18
PUBLIC LANDS
18.1 PUBLIC ALIENABLE AND DISPOSABLE LANDS
How are public alienable and disposable lands to be distributed?
In general, all alienable and disposable public lands suitable to agriculture shall be
distributed by the DENR to qualified citizens of the Philippines. Agrarian reform beneficiaries may
be considered by the DENR provided that they are certified by DAR and DENR as still qualified to
acquire public lands pursuant to the Joint DAR-DENR Administrative Order No. 07, Series of 1991.
Areas subject to adverse claims by persons other than the applicant-tillers cannot be
distributed until such claims are settled.
Who are the qualified applicants?
The following are generally qualified to apply for patents to public lands which are
suitable to agricultural purposes and who satisfy additional existing requirements as prescribed by
the Public Land Law (CA 141, as amended):
1.

a Filipino citizen;

2.

occupant-tiller of the land;

3.
does not own other landholdings, the aggregate area of which does
not exceed the limits allowed for the particular type of public land application;
4.

is not an illegal entrant/occupant

What are the procedures followed in the distribution of public A & D lands to qualified
applicants?
1.
Filing of public land application shall be done at the Community
Environment and Natural Resources Office (CENRO) having jurisdiction over
the subject land. (Note: only lands covered by approved surveys may be the
subject of a public land application).
2.
Processing of the application, including verification of qualifications
and compliance with all the requirements of residence, cultivation, payment
of required fees, etc., are done at the CENRO and the Provincial
Environment and Natural Resources Office (PENRO) levels.

3.
Signing of the land patent by the PENRO (up to five hectares for
homestead and free patents), and by the Regional Environment Director
(RED) (up to ten hectares) and by the DENR Secretary, if in excess of ten
hectares.
18.2 INTEGRATED SOCIAL FORESTRY PROGRAM
Are forest lands suitable for agro-forestry also covered by CARP?
Yes, but only under the non-land transfer component of CARP called the "Integrated
Social Forestry Program (ISFP)". Forest lands suitable for agro-forestry may be allocated to forest
occupants under the principle of stewardship. They cannot be distributed for titling to agrarian
reform beneficiaries in order to protect the forest.

expressed provisions in the proclamation authorizing the DAR to dispose of the lands described in
such proclamation.
What rules govern the manner and mode of disposition and titling of lots in the DAR
settlement projects?
a.
Administrative Order No. 09, Series of 1989 entitled "Rules and
Procedures Governing Titling and Distribution of Lots in DAR Settlement
Projects"; and
b.
Administrative Order No. 01, Series of 1992 entitled "Revised Rules
and Procedures Governing the Disposition of Homelots and Other Lots in
Barangay Sites and Residential, Commercial and Industrial Lots in Town
Sites Within DAR Settlement Projects and Similar Other Areas Under DAR
Jurisdiction".
How much should the ARBs pay for lands distributed in DAR settlement areas?
None. All lots (agricultural or non-agricultural) shall be distributed free of cost. No survey
fees or other costs relative to the distribution of the land shall be charged to the beneficiary.
What are the functions of the MARO under these procedures?
1.

Conduct a physical inventory and perform the following:

a.
Review and evaluate the list of allocatees and conduct lot
verification to determine whether the ARB allocatees still occupy
and till the lots covered by the Certificates of Allocation;
b.
Require the occupant/tiller to accomplish the Farmer
Beneficiary Application Form (SP Form No. 01);

2.
Evaluate application forms and recommend appropriate action.
Recommendation shall be based on the following guides:
For applicant with Certificate of Allocation (CA):
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.

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
c.
If not an actual cultivator: Cancel CA and Issue CLOA to
qualified beneficiary

What is the maximum land size which can be availed of by qualified applicants under

d.
If occupying the wrong lot: Issue CLOA for lot actually
occupied and cancel CA for the corresponding lot

Seven (7) hectares shall be the maximum size of land that can be availed of under

e.
If absentee CA holder: Consider land covered by CA
abandoned and apply procedures for cancellation of allocation

ISFP?
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

If applicant has no CA but is a qualified actual

occupant/transferee: Issue CLOA for not more than three hectares of his/her
own choice and preference. Area in excess shall be distributed with
preference to his/her qualified children.

3.
Consolidate SP Form No. 1 and prepare Summary FB Data Sheet
(SP Form No. 02) for those applicants recommended for issuance of CLOA.
This shall constitute the Land Distribution Folder.
4.

Endorse the LDF to PARO for review and CLOA preparation.

5.
Prepare a summary list of vacant and unallocated lots and lots with
certificates of allocation recommended for cancellation.
What are the grounds for cancellation of allocation?
1.
Absence of the settler/allocatee from the settlement for more than six
(6) months without written permission of the DAR;
2.
Transfer of rights by transferor without written consent and approval
of the DAR Regional Director concerned;
3.

Voluntary renunciation or waiver of rights in writing;

4.
Failure to cultivate the lot for a period of more than six (6)
consecutive months from the date of allocation of said lot; and
5.

Death of settler/allocatee if he/she has no qualified heir.

What is the award ceiling for qualified beneficiaries?

The award ceiling shall not be more than three hectares. However, qualified
beneficiaries who have occupied and cultivated the land and established their vested rights prior to
15 June 1988, in accordance with the Public Land Law and other existing laws, shall be awarded
the legal limits allowed by said laws.
Who are the qualified beneficiaries?
1.

landless;

2.

Filipino citizen;

3.
Actual occupant/tiller who is at least 18 years of age or head of the
family at the time of filing of application; and
4.
Has the willingness, ability and aptitude to cultivate and make the
land productive.
Preferential assistance shall be given to:
1.

Qualified women members of the agricultural labor force;

2.

War veterans and veterans of military campaign;

3.

Retirees of AFP and INP;

4.

Returnees/surrenderees; and

5.

Graduates of agricultural school

What other types of lots can be distributed in the settlement areas?

Homelot refers to a parcel of land which is intended for farm residence in a barangay
site.
Residential Lot refers to a parcel of land which is intended for residence in a town site.
Town Site Lot refers to a parcel of land in the town site of a settlement which is intended
either for residential, commercial, or industrial use.
Industrial Lot refers to a parcel of land in the town site intended as a site for processing
of products and for other industrial purposes.
Who are qualified applicants for these lands?
1.

Filipino citizen;

2.
At least 15 years of age or head of the family at the time of filing of
application; and
3.
Applicant or his/her spouse is not the owner-awardee or allocatee of
another homelot, residential, commercial or industrial lot.
What is the award ceiling for such types of lands within settlement areas?
A qualified applicant is entitled to acquire only one homelot or one
residential/commercial or industrial lot with an area not more than one thousand (1,000) square
meters. However, an awardee or allocatee of a homelot or residential lot may still be allowed to
acquire one commercial or industrial lot following the provisions of AO No. 01, Series of 1992.
What are the modes of disposition of homelots and other types of lots?

1.
Homelots and residential, commercial and industrial lots shall be
disposed of by direct sale to qualified actual occupants. If the occupant is not
qualified, the lot may be sold to the qualified members of the family. If there
is none, then the lot shall be considered vacant and shall be disposed of.
2.
Vacant homelots in barangay sites shall be disposed of through
public raffle to qualified applicants.
3.
Vacant residential, commercial and industrial lots shall be disposed
of through public bidding, to the highest qualified bidder. However, no bid
should be less than the appraised value of the lot.
4.
Lots allotted to or intended for public use, whether within barangay
sites or town sites shall be turned over by the DAR to the particular
government entity or agency concerned.
5.
An allocatee occupying the lot allocated or awarded to him/her before
the effectivity of said AO 01-92 shall be issued a CLOA upon payment of the
cost of the land.
6.
An allocatee or awardee occupying a different lot allocated or
awarded to him/her before effectivity of the above mentioned AO shall be
awarded the correct lot and issued a CLOA upon full payment the lot.
7.
Awards/allocations of absentee beneficiaries shall be cancelled and
the lot shall be awarded and titled to the actual occupants.
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.

What rules govern public agricultural lands turned over by the National Livelihood and
Support Fund (NSLF) to the Department of Agrarian Reform for distribution under CARP?
These are governed by Memorandum Circular No. 07, Series of 1993 entitled
"Implementing Guidelines on the Distribution and Titling of the Public Agricultural Lands Turned
Over by the National Livelihood and Support Fund to the Department of Agrarian Reform for
Distribution Under the CARP Pursuant to EO 407, Series of 1990, as Amended by EO 448, Series
of 1991 and as Clarified under Memorandum Order No. 107 of the President of the Philippines
dated 23 March 1993"
Under MO 107, the DAR and the DENR were directed to jointly determine which areas
were classified as alienable and disposable agricultural lands previous to the effectivity
of Proclamation No. 2282 for disposition by the DAR through the issuance of CLOAs to qualified
beneficiaries. DaScHC
Who are the qualified beneficiaries?
1.
In general, the farmer-tiller or actual occupant shall be given
preference in the distribution of the lands occupied by him/her provided that
the area will not exceed three hectares per farmer-beneficiary. Areas in
excess, if any, may be distributed to the qualified children or relatives of the
ARB designated by him/her.
2.
Farmers organization may also be issued collective CLOAs, the total
hectarage covered, however, shall not exceed the number of co-owners or
members of the farmers organization multiplied by three, except in
meritorious cases approved by the PARC.
3.
Cultural communities or indigenous tribal groups located within the A
& D areas with no adverse claims shall be issued collective CLOA in the
name of the community or the tribe concerned, represented by the
acknowledged 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.

18.4 PUBLIC AGRICULTURAL LANDS TURNED OVER BY THE NATIONAL LIVELIHOOD AND
SUPPORT FUND

4.
Lands which have been proclaimed as reservations in favor of other
government agencies or instrumentalities. Portions which are not being used
for the purpose of the reservation or not needed by the agency or
instrumentality concerned may be acquired under separate negotiations
initiated by the DAR.

5.
Poblacions, town sites, barangay sites, and similar sites actually
used for residential or non-agricultural purposes. Their titling shall be
pursued under other government programs under the responsibility of other
government agencies.
6.
All lands utilized as government sites in addition to those lands
specified in Section 10 of RA 6657 (on exemptions).
7.
Lands intended for or devoted to public use such as highways, roads,
railroads, foreshores, public right of way and other similar uses, as well as
lands under bodies of water such as rivers, creeks, lakes, bays, natural
springs, irrigation canals, reservoirs, and similar areas under water.
8.
Lands where the actual occupant or claimant may already be entitled
to a free patent under RA 6940(continuous occupation and cultivation by
himself or through his predecessors-in-interest for at least thirty (30) years
prior to 16 April 1990, among other requirements). The claimant may be
allowed to perfect his/her rights through the DENR. However, occupants or
claimants who prefer to become ARBs instead shall be included in the CARP
if qualified.
9.
All lands that are unclassified or classified as Timberland or Forest
Land, National Parks or Mineral Lands, even if occupied and fully cultivated.
Instead, the occupants shall be referred to the DENR for possible inclusion
in the ISFP program.
Will these lands be paid for by the beneficiaries?
No, except for the payment of the proportionate cadastral survey costs as determined
by the DENR. If such survey cost is not paid by the ARB at the time of the CLOA issuance, this
shall be annotated as a lien on the title.
18.5 LANDS OF THE PUBLIC DOMAIN COVERED BY CANCELLED OR EXPIRED
PASTURE LEASE AGREEMENTS (PLAs) AND TIMBER LICENSE AGREEMENTS
(TLAs) PER EO 407
What rules govern the CARP coverage of lands of the public domain covered by
expired PLAs and TLAs?
Joint DAR-DENR Administrative Order No. 02, Series of 1992 provided the rules and
procedures on the disposition of lands of the public domain covered by cancelled or expired
Pasture Lease Agreements (PLAs) and Timber License Agreements (TLAs), following the
provisions of Executive Order No. 407 dated 14 June 1990.

Are these lands acquired by the DAR?

No, under the Joint Administrative Order, the role of the DAR in lands covered by
expired or cancelled PLAs and TLAs is to screen and identify the ARBs. It is the DENR which, in
coordination with DAR, distributes the land under the ISF program.
How will these lands be allocated to ARBs?
These shall be distributed by the DENR in collaboration with the DAR, either individually
or collectively to ARBs who are duly verified and screened by the DAR.
What are the procedures in the distribution of lands covered by the expired and
cancelled PLAs and TLAs? What are the roles of the DAR and DENR?
1.
DENR Secretary identifies and declares that certain
expired/cancelled leases are available for CARP.
2.
DAR verifies if the actual occupants-cultivators within the subject
area have been registered as prospective and qualified beneficiaries
pursuant to DAR Administrative Order No. 10, Series of 1989. If not, it
conducts an inventory of the occupants/cultivators.
3.
If there are registered prospective and qualified beneficiaries, the
DAR reviews the register and in coordination with DENR, verifies who
among them are actual occupants and prioritizes the allocation giving
preference to actual occupants/cultivators;
4.
The DENR conducts a survey of the parcels allocated to
applicant/beneficiaries;
5.
The applicant, assisted by DAR files the application for Certificate of
Stewardship (CS) in the prescribed form, together with the certification of the

Municipal Agrarian Reform Officer (MARO) at the DENR/CENRO Office

concerned where the area applied for is located; and
6.
The CENRO issues Certificate of Stewardship (CS) for areas up to
three (3) hectares.
Are lands under cancelled or expired PLAs and TLAs subjected to titling under CARP?
No, public lands classified as forest lands are inalienable and are distributed only for
stewardship and not for titling through the DENR-Forest Management Sector (FMS).
What proof of award to agrarian reform beneficiaries will be issued under expired and
cancelled PLAs and TLAs covered by the public domain?
The DENR issues the Certificate of Stewardship Contract (CSC) after a Stewardship
Agreement is signed between the beneficiary and the DENR.
Can ARBs acquire title to lands under cancelled or expired PLAs and TLAs?
No. Under the law, these types of lands are inalienable or non-registrable and therefore
cannot be titled to the agrarian reform beneficiaries. They are however, covered by a long term
twenty-five (25) year lease contract which is renewable for another 25 years.
Can the DENR through the Forest Management Sector (FMS) refuse to allocate
portions of cancelled or expired PLAs and TLAs which are unoccupied and uncultivated to DAR's
selected ARBs?

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

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.

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.

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?

What is the order of priority in the determination of ARBs on lands covered by cancelled
or expired FLAs?

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.

The ARBs are chosen according to the following order of priority specified in Section 22
of RA 6657:

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 DARDA AO No. 05, Series of 1991govern the acquisition of cancelled or expired Fishpond Lease
Agreement for distribution to agrarian reform beneficiaries, either individually or collectively;
and Presidential Decree No. 704 (Fisheries Decree of 1975).

1.

agricultural lessees and share-tenants;

2.

regular farmworkers;

3.

seasonal farmworkers;

4.

other farmworkers;

5.

actual tiller or occupant of public lands;

6.

collective or cooperative of the above beneficiaries; and

7.

others directly working on the land.

Why is the allocation of cancelled or expired FLAs being done by DA-BFAR and not by
DAR?
Section 3 of EO 407 specifically provided that the DA and the DENR, in coordination
with the DAR shall redistribute and award fishponds, pasture lands and other lands of the public
domain suitable for agriculture, subject of cancelled or amended lease agreements, to qualified
agrarian reform beneficiaries identified by the DAR pursuant to Sections 18 and 22 of RA 6657.
Are lands under expired or cancelled FLAs subjected to titling under CARP?

Public lands suitable to agriculture are not subject to titling after 9 November 1972 per
Sections 23 and 24 of PD No. 704because they are disposable only through lease by the DABFAR 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.

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;
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.

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

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 ;
g.
If absentee OA/CLT holder: Cancel OA/CLT and issue
CLOA to qualified actual occupant/tiller.

If actual occupant has no OA/CLT:

2.

a.
and has no other supporting documents: Issue CLOA
provided occupant is qualified and there is no adverse claimant to
the subject lot;

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.

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.

Filipino citizen;

CHAPTER 20
BARANGAY AGRARIAN REFORM COMMITTEE (BARC)
20.1 LAWS AND ISSUANCES ON BARC
What is BARC ?

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.
and

Prepare separate Land Distribution Folders for new beneficiaries;

9.

Endorse LDF to PARO for review and consolidation.

What are the grounds for cancellation of orders of award?

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;

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:
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;

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

7.

Land Bank of the Philippines

8.

Department of Agriculture official assigned in the area

9.

Department of Environment and Natural Resources

official assigned in the area

10.

(1)
(1)
(1)

(1)

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:

5.
Assist qualified beneficiaries in obtaining credit from lending
institutions;

landless workers;

6.
Assist the DAR representative in the preparation of periodic reports
on CARP implementation for submission to the DAR.

share tenants;
agricultural lessees, including ISF beneficiaries; and

20.3 BARC COMPOSITION

amortizing owners.

Who compose the BARC ?

AO No. 14-90 revised the composition of the BARC, following the rule of proportionate
sectoral representation based on the land-to-the-tiller principle. Hence, sectors are defined on the
basis of one's access or lack of access to the land. The BARC is now composed of 13 members
who are representatives of sectors and organizations, as well as government agencies.
Membership is divided into two groups: seven regular voting members and six ex-officio
non-voting members.
Regular Voting Members
1.

farmer and farmworker beneficiaries

(4)

2.

non-beneficiary farmers and farmworkers

(1)

3.

agricultural cooperatives and other farmer organizations

(1)

4.

landowners

(1)

Who compose the non-beneficiary farmer and farmworkers sector?

The non-beneficiary farmers and farmworkers sector is composed of the small ownercultivators who own and till not more than five (5) hectares of agricultural lands, either by personal
cultivation or with the help of the immediate household.
Since membership in the BARC is based on sectoral representation, i.e., land tenure
classification, what sector shall be represented by a farmer leader who is a leaseholder and
farmworker at 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).

The BARC Manual established the following criteria:

1.

High farmers discontent and desire for agrarian reform;

2.

Wide hectarage covered by CARP;

These three officers are elected by the sectoral representatives the regular voting
members. Hence, all BARC officers are residents of the barangay.

3.

Large number of actual and potential beneficiaries; and

The thirteen-member BARC shall form different committees based on need and priority
activities. They shall select the committee heads deemed as appropriate.

4.
Willingness of the ARBs in the community to organize/strengthen the
BARC.
These criteria are very similar to the criteria set for ARC selection. Given the ARC
development thrust of the Department, priority should therefore be given to ARC areas.
When should BARCs be organized?
BARCs are organized or should be reorganized if the community is fully aware of and
feels the need for it. BARCs are formed out of the people's willingness to address agrarian reform
issues and problems. Its formation cannot be forced, otherwise, the spirit of volunteerism will not
be present. If its formation is forced, the people will perceive it as a burden and members will
expect DAR to financially support them as compensation for their work.
Should a BARC be organized even if there are no farmer organizations, associations or
cooperatives in the barangay?
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 ?

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 exofficio 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?
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.

There are four stages in the organization of the BARC. These are:
1.
Pre-Organization Stage. This is the process by which the MARO
prepares the sectors concerned in the organization of BARC. He/she
performs the following functions:
a.

coordinates with the FOs and/or NGOs;

b.

briefs the FOs and/or NGOs about BARC;

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

BARC chairperson or his/her duly authorized representative;

2.

BARC panel; and

3.

BARC en banc.

Who decides on the mechanism to be followed in the settlement of disputes?

The BARC Chairman after evaluating the case may decide at which level settlement will
be initiated.
Who shall compose the panel of mediators/conciliators/arbitrators?

The panel shall be composed of three (3) BARC members designated by the BARC
Chairperson.
Who selects the members of the panel of mediators/conciliators/arbitrators?
Members of the panel of mediators/conciliators/arbitrators are designated by the BARC
chairperson upon recommendation of other members.
What happens if a member of the panel fails to attend the mediation/conciliation
conference?
The presence of two members in any panel constitutes a quorum to do business. The
chairperson may also replace any member who is absent or incapacitated.
What are the procedures to be followed in the settlement of disputes by the BARC ?
Administrative Order No. 08, Series of 1994 spelled out the procedures for the
settlement of agrarian disputes.
1.
A written or verbal complaint shall be lodged with the BARC. Written
complaints shall be in Mediation and Conciliation M/C Form 1 while verbal
complaint shall be reduced in writing by the BARC Chairperson or Secretary.
2.
The BARC Chairperson interviews the complainant regarding vital
information.
3.
The BARC Chairperson issues a Notice of Meeting to both the
complainant and defendant.
4.
The BARC en banc, panel or the Chairperson then endeavors to
have the contending parties agree to an amicable settlement. All agreements
are written down and signed by the contending parties.
How long will the BARC resolve disputes lodged with them?
The BARC shall endeavor to mediate, conciliate and settle agrarian disputes lodged
before it within thirty (30) days from the time it takes cognizance of the dispute.
What will happen if the BARC fails to resolve agrarian disputes within thirty days?
If the BARC fails to settle the dispute within thirty days, it shall issue a certification that
the dispute has not been settled, together with a copy of the proceedings and furnish a copy to the
concerned parties within seven (7) days after the expiration of the 30 day period. This certification
must be attested by the BARC Chairperson and endorsed by the MARO to the PARAD or to the
PARO for appropriate action.
Is the MARO allowed to resolve disputes or problems presented before him/her without
the presence of the BARC chairman and members?
Yes. The MARO can immediately resolve disputes or problems presented before
him/her even in the absence of the BARC Chairperson and its members. Although the BARC
would be the ideal forum for the resolution of disputes and problems, this must not limit or prevent
the MARO from performing his/her duties. Delays in the resolution of cases may result in further
complications.
Does the BARC have any jurisdiction over criminal offenses under RA 6657?

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

6.
Cases involving the issuance, correction and cancellation of
Certificates of Landownership Award (CLOAs) and Emancipation Patents
(EPs) which are registered with the Land Registration Authority;
7.
Cases previously falling under the original and exclusive jurisdiction
of the defunct Court of Agrarian Relations under Section 12 of Presidential
Decree No. 946, except sub-paragraph (2) thereof and Presidential Decree
No. 815; and
8.
Such other agrarian cases, disputes, matters or concerns referred to
it by the DAR Secretary.
However, matters involving strictly the administrative implementation of the CARP and
agrarian laws and regulations, shall be the exclusive prerogative of and cognizable by the DAR
Secretary.
Is the rule that the DARAB cannot take cognizance of any agrarian dispute unless there
is a certification of the BARC where the land is located that the dispute has not been successfully
settled absolute?
No. Rule III of the DARAB Revised Rules of Procedure allows the DARAB to take
cognizance of an agrarian dispute even without the BARC certification if:
1.

The dispute does not fall under any of the exceptions enumerated;

2.
The required certification cannot be complied with for valid reasons
like the non-existence or non-organization of the BARC or the impossibility of
convening it. The PARO shall conduct mediation and conciliation
proceedings and issue a certification to that effect;
3.
It involves resolving and disposing of preliminary incidents related to
the case, such as motion for the issuance of status quo orders, temporary
restraining orders, preliminary injunctions and such similar motions
necessitating immediate action.
1.
Cases involving the rights and obligations of persons engaged in the
management, cultivation and use of all agricultural lands covered by the
CARP and other agrarian laws;
2.
Cases involving the valuation of land and preliminary determination
and payment of just compensation, fixing and collection of lease rentals,
disturbance compensation, amortization payments and similar disputes
concerning the functions of the Land Bank of the Philippines (LBP);
3.
Cases involving the annulment or cancellation of lease contracts or
deeds of sale or their amendments involving lands under the administration
and disposition of the DAR or LBP;
4.
Cases arising from, or connected with membership or representation
in compact farms, farmers' cooperatives and other registered farmers'
associations or organizations, related to lands covered by the CARP and
other agrarian laws;
5.
Cases involving the sale, alienation, mortgage, foreclosure, preemption and redemption of agricultural lands under the coverage of the
CARP or other agrarian laws;

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