Professional Documents
Culture Documents
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Contents
Preface ........................................................................................................................................... 4
Current Status of the Agrarian Reform Program ............................................................ 5
I.
Overview ................................................................................................................................................................................. 5
B.
Land Acquisition and Distribution (LAD) Balance from 2016 Onwards ........................................ 10
C.
D.
E.
F.
B.
C.
D.
E.
F.
Urgent Pending Cases in the Supreme Court/Court of Appeals Affecting DAR and CARP ..... 44
G.
C.
In 2010 ......................................................................................................................................................................... 48
B.
C.
D.
Things To Do .............................................................................................................................................................. 52
Introduction ....................................................................................................................................................................... 53
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B.
C.
D.
B.
C.
D.
E.
B.
C.
B.
B.
C.
D. Agribusiness Venture Arrangements (AVAS): The Need To Get Farmers Consent and
Improve their Bargaining Power ................................................................................................................................. 92
E.
F.
B.
C.
Effect of Gaps in Land Administration on the Agrarian Reform Program .................................... 116
D.
E.
F.
Inappropriate Collective CLOAs And Questionable VLTs Negated Agrarian Reform Goals . 124
G.
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A.
B.
C.
Which Government Agencies Should Provide the Public Goods and Starter Assets? ............. 133
D.
E.
Clear Land Policies and More efficient and Moderized Land Administration ............................ 136
F.
G.
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Preface
Implementing the Philippines agrarian reform program requires one to navigate a complex
mix of laws, regulations and jurisprudence, steer through the bureaucracies and processes of
multiple government agencies and address diverse issues and challenges ranging from land
laws, property rights, surveys, agriculture policy, rural development, production relations,
government procurement, human resource management, stakeholder relations, enterprise
organizing, credit and agri-financing, agri-extension, and, even climate change.
The Comprehensive Agrarian Reform Law (CARL) or Republic Act 6657 mandated the
Department of Agrarian Reform (DAR) as the government lead agency in the implementation
of the Comprehensive Agrarian Reform Program (CARP) to broaden the land ownership base
and provide the required resources and necessary support services to improve the socioeconomic status of the agrarian reform beneficiaries. This makes CARP both a social justice
and a poverty alleviation program.
This End of Term Report is the authors description and analysis of the agrarian reform
program and the economic and agricultural policies related to the CARP, including the
programs and projects that were implemented prior to 2010. The Report gives due
emphasis on the agrarian reform program and its implementation during the period 20102015 based on the established goals in addressing the key challenges and policy program
thrusts of the current administration. The Report elaborates on the critical analysis of
agrarian reform and agriculture policies as these relates to the manner that DAR and CARP
agencies are implementing land tenure improvement, the provision of support services and
legal services toward the end goal of improving land productivity and farm income of the
smallholder farmers. The Report also presents the policy levers and possible measures to
pursue the unfinished business in the agrarian reform program that the next DAR
management may consider in light of the economic policy thrusts of the incoming
administration.
In writing this End of Term report, the author was enriched by discussions and consultation
meetings with agrarian reform beneficiaries and the leaders of their organizations, DAR
officials and employees as well as advocates and experts. A number of published works
related to agrarian reform, land administration and agriculture policy was also consulted.
But the opinions expressed as well as the analysis and conclusions drawn here are the
authors alone.
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This law created the National Resettlement and Rehabilitation Administration or NARRA.
The evolution of the agrarian reform program can be found online in the DAR Legal Information System (DAR
LIS) under History and Evolution of Major Agrarian Reform Laws/Issuances/Programs under the Different
Philippine Leadership. http://www.lis.dar.gov.ph/documents/9300.
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Government-Owned Lands (GOL/KKK). These are (a) land of the public domain
placed by law and other executive issuances under the jurisdiction of DAR and; (b)
land previously proclaimed for various government departments, agencies and
instrumentalities and subsequently turned over to the DAR for distribution under the
CARP pursuant to EO 407, series of 1990, as amended by EO 448 [DAR-DENR Joint
MC 9 series of 1995]. A large portion of these lands are the so-called KKK land.3
Marcos issued Proclamation No. 2282 on March 29, 1983, which reclassified certain portions of the public
domain as agricultural lands and declared these as alienable and disposable lands for agricultural and
resettlement purposes of the KKK Land Resource Management Program of the defunct Ministry of Human
Settlements. These had a total land area of 1.5 million hectares located in various provinces nationwide. On
June 17, 1986, President Corazon Aquino issued Presidential Memorandum Order No. 17 revoking PP 2282 and
ordering that these KKK lands to be turned over to DAR for distribution to beneficiaries in accordance with EO
407 as amended by EO 448 and EO 556. DAR Memorandum Circular No. 17, Series of 1993 defined the
guidelines on the distribution and titling of such lands.
The Landed Estates Program was the first land reform program involving the acquisition of private agricultural
lands for resale to tenant-farmers. The Landed Estate program was piloted in the provinces of Pangasinan,
Bulacan, Nueva Ecija, Pampanga, Tarlac, Occidental Mindoro, Camarines Sur, and Misamis Oriental. A total of
18,247 hectares out of a total scope of 18,377 hectares was acquired and distributed to 7,466 farmer
beneficiaries [BARIE, 2003]. As of 1986, DAR administered a total of 150 landed estates.
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Private agricultural lands acquired through OLT, CA, VOS and EO 407/448 (GFIs) are
referred to as LBP-compensable lands, that is, the landowners are paid just compensation
through the Land Bank of the Philippines and agrarian reform beneficiaries pay amortization
for the land at subsidized rates. Non-private lands and private lands under the VLT/DPS
scheme are referred to as Non-LBP Compensable lands. Government does not pay for the
acquired land though DAR shoulders the costs for documentation, survey and titling of the
awarded lands.
Lands distributed through P.D. No. 27 are awarded to beneficiaries through Emancipation
Patents (EPs) while those distributed through R.A. No. 6657 are awarded through
Certificates of Land Ownership Award (CLOAs). These EPs and CLOAs are registered with
the Registries of Deeds. CLOAs may be individual CLOAs or collective CLOAs.
In general, non-private lands are easier to distribute than private lands (except for those
under the VLT scheme); compensable lands take longer to process for distribution than noncompensable lands; and voluntary modes of acquisition are less contentious than
compulsory modes. Private lands are covered by titles and are subject to the vagaries of an
outmoded, opaque, and complex land administration system. Compensable lands have to
undergo a valuation process and, under current rules, initial payment to landowner must be
made. Voluntary modes of acquisition are less contentious. In compulsory modes of
acquisition, landowners can employ a host of legal and illegal tactics to prevent or, at least
delay, the completion of land distribution. Tenanted lands are less subject to beneficiary-tobeneficiary conflict than plantations with regular, temporary and seasonal farmworkers
because the tillage of tenants are pre-defined while those of farmworkers are not. Thus, the
easiest and least contentious to distribute are GOL/KKK, settlements and VLT lands while the
hardest, most time-consuming and most contentious are private lands subject to compulsory
acquisition, especially compulsory acquisition of lands that have farmworkers instead of
tenants. (See Figure 1)
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COMPULSORY ACQUISITION
*Beneficiary identification in GOL only involves determining actual tillers; beneficiaries need not execute an APFU nor take an oath
VOLUNTARY LAND TRANSFER
Figure 1: Comparative LAD Processes for Different Land Types and Modes of Acquisition
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This is an estimate from the EP/CLOA IS, the database of all EPs and CLOAs reported to have been issued and
registered by the DAR Provincial Offices. The EP/CLOA IS has limitations. One, it is the database of EPs and
CLOAs, not beneficiaries. Note that a beneficiary may be issued more than one CLOA if, for example, his/her
farmlot is traversed by a road. On the other hand, there are collective CLOAs where only one name appears
appended with et. al., meaning, there are several beneficiaries. To correct this, the current database (the webbased OpTool made operational in 2014) requires the list of the names of beneficiaries which can then be put
into a searchable library of names. Second, some field offices fail to diligently send updates to the EP/CLOA IS.
The MISS is currently determining the unique count of beneficiaries which is a tedious process due to, among
others, misspellings.
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Figure 3: LAD Balance by Mode of Acquisition/Land Type as of January 2016 (area in hectares)
Thus, like the outgoing administration, the new administration will be faced with the
challenge of distributing a LAD balance that will take longer to acquire and distribute, are
more tedious to document, and are more contentious and faced with technical and other
problems.
Figure 4: LAD Balance by Land Size (Private Agricultural Land only) as of January 2016 (area in hectares)
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collective CLOAs were left for some future time since, anyway, these had already been
distributed to the beneficiaries.
250,000
225,000
200,000
175,000
150,000
125,000
100,000
75,000
50,000
25,000
CA
VOS
VLT/DPS
Settlement
KKK/GOL
Figure 5: Collective CLOAs Issued by Year and Land Type/Mode of Acquisition, in hectares
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2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
Figure 6: Collective CLOAs Issued vs. Total Land Distributed, 1972-2016 (in hectares)
GOL/KKK lands constitute the single biggest land type issued collective CLOAs: 53,339
landholdings covering 708,565 hectares which is 32.68% % of total area of collective
CLOA issued. The next largest contributors of collective CLOAs are those issued to VLT
lands and those distributed through VOS (19.96% and 18.72%, respectively, of total area
of collective CLOAs issued). (See Table 6)
3. SUBDIVISION OF COLLECTIVE CLOAS
As of January 1, 2016, less than half (1,064,746 hectares) of the collective CLOAs have
been subdivided. A total area of 115,816 hectares have been found to be timberlands,
forests, roads, watersheds, etc. Another 16.5% (139,134 hectares) are collective CLOAs in
which the co-owners opted not to subdivide the collective CLOAs. Thus, there remains
848,420 hectares under collective CLOAs for subdivision. Of this, 579,566 hectares are
priorities for subdivision while the other 268,854 hectares are not priority for
subdivision (See Table 7). Collective CLOAs from LBP compensable lands (227,026
hectares) as well as those from KKK/GOL, Settlements and Landed Estates (346,118
End of Term Report by Secretary Virgilio de los Reyes
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hectares)
are
priority
for
subdivision. Those
awarded
to
farmers
associations/cooperatives (65,701 hectares) and those emanating from voluntary land
transfers (203,153 hectares) are non-priority for subdivision. (See Table 7)
The subdivision of collective CLOAs was delayed or slowed down by issues and problems
emanating from the fact that these collective CLOAs were issued one to two decades ago.
There are operational problems in the identification of ARBs and validation on the
location of the landholdings covered by Collective CLOAs especially those issued in the
1990s. Some ARBs listed in the CLOAs are now deceased and there is a need to go
through the process of inclusion and exclusion of ARBs which is a requirement for the
subdivision survey. Some ARBs are no longer tilling the land and have transferred
his/her rights to another. Some tillers in place are not in the original list of ARBs. Some
collective CLOAs are in the name of the farmers organization but the names of individual
beneficiaries are not annotated in the collective CLOA. A significant number of collective
CLOAs include non-CARPable portions and non-A&D lands.
There is an ongoing project with the Land Registration Authority (LRA) that seeks to
project large collective CLOAs into the land classification map to determine which
portions of those collective CLOAs are in within A&D, timberland and unclassified forest
land. As well collective CLOAs emanating from GOL/KKK and Settlement lands will be
projected in order to identify if these are indeed within areas under PP 2282 and the
various settlement proclamations.
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In DAR parlance there are DNYP land (Distributed but Not Yet Paid) and DNYD land (Distributed but Not Yet
Documented). The nomenclature is not entirely accurate. It is not the case that DNYD lands have no
documentation at all. There are claim folders for these lands but these have not yet been submitted to the Land
Bank because either the documents needed are not yet complete or adjustments have to be made in some of the
documents in the claim folder. Technically, these are the lands which have already been distributed but the
landowner has not yet been paid. In the case of DNYP lands, initial cash payment and even AR bond payments
had actually been paid to the account of the landowner but these remain unclaimed or unwithdrawn.
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agricultural lands7. Of the P69.443 billion, 4.70% or P3.264 billion were compensation
for acquisitions under PD27/EO228 while 78.60% or P54.586 billion were for lands
acquired under RA 6657 and the remaining 16.70% or P11.594 billion were for
acquisitions under RA 9700. (See Table 8)
Moving forward, LBP-compensable lands in the LAD balance total 548,467 hectares. Of
this, 22,231 hectares are deductible. This leaves 526,236 hectares constituting the
realistic LAD balance of compensable lands from 2016 onwards. Using the realistic LAD
Balance of 526,236 hectares, the Land Bank estimates that government will still have to
spend PhP131.56 billion in landowner compensation in order to complete land
distribution under the agrarian reform program.
2. ARB AMORTIZATION
The total amount paid for Landowners Compensation is not the same amount that
agrarian reform beneficiaries will have to pay government for their awarded lands.
a. Amount of ARB Amortization
Of the total PhP69.443 billion paid to landowners, only 84.41% or PhP58.617 billion
will be amortized by 906,997 agrarian reform beneficiaries (ARBs). The difference of
PhP10.826 billion are regular subsidies and adjustments in valuation as a result of
just compensation cases decided by the Courts. These Court-awarded increases are
charged to the account of the national government; these are not charged to ARBs.
(See Table 9)
Of the PhP58.617 billion that will be amortized by ARBs, only 27% (PhP15.658
billion) is at present booked as agrarian reform receivables (ARR). The other 73%
(PhP42.959 billion) is not booked as ARR and remain as Lands Purchased and
Expropriated (LPEx) in AR books due to the absence of Land Distribution
Information Sheets (LDIS) and/or Land Amortization Schedule (LAS). Those booked
as ARR cover 715,783 hectares of land awarded to 464,842 ARBs. There are still
832,272 hectares of land awarded to 442,155 ARBs that are not yet booked as ARR.
(See Table 10)
The absence of LDIS/LAS for a large number of ARBs is a result of a backlog in DARs
completion and submission of the LDIS for these ARBs. The backlog accumulated
because, first, the guidelines for FB amortization were not issued at the same time as
the guidelines on land acquisition and distribution, and second, procedures were not
clearly defined until 1997.
It took the Department four(4) years from the enactment of RA 6657 before coming
up with the implementing rules on FB amortization (AO 3, series of 1992) but the
principle of affordability was not fully implemented: it applied only during the first
five (5) years of repayment and set a condition for its application in the remaining 25
years.
A year after, AO 6, series of 1993 was issued which adhered more closely to the
principle of affordability. But, in both AOs, the procedures were not defined. Instead,
both AOs mentioned that guidelines will be issued to put these into operation.
The discrepancy between DAR-reported accomplishment and LBP-reported acquired area is because there are
lands already distributed by DAR but whose landowners had not yet been paid because DAR has yet to submit
to the Landbank the Claim Folder for these.
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LADIS was prescribed only in 1997 (DAR-LBP JMC 30, series of 1997) which
introduced CARP Form No. 22 and enumerated the documents to be gathered by DAR
and those under the responsibility of LBP. By that time, the CFs requiring LADIS had
already accumulated because it was already on the 9th year of implementation.
In order to accelerate the payment of agrarian reform remittance (ARR), a new MC
was issued (DAR-LBP JMC No. 13, series of 2004 was issued). It would be noted
however, that the procedures referred only to newly registered lands (V. Procedures
- DARMO accomplishes 4 copies of LADIS [CARP Form No. 22]) within 20 days after
receipt of the registered CLOAs. This did not address the backlog.
b. Payment/Collection Rate
Of the PhP15.658 billion booked as ARR, less than half (7.682 billion) are due and
demandable; the other 7.977 billion are classified as Not Yet Due. Out or the 7.682
billion which are due and collectible from ARBs, PhP3.128 billion have been collected
by the Landbank. In addition, even if their amortization is not yet due, some ARBs are
already paying amortization; these payments are booked as Farmers Advance
Remittance.; NYD collected by the Landbank total PhP1.812 billion. (See Table 11)
Overall, the average collection rate from ARBs is 52%.
Of the PhP7.682 billion due and collectible from the ARBs, 51% or PhP3.929 billion
have been fully paid while PhP3,752.71 are classified as Currently Due and Past Due.
Out of the PhP3.753 billion Currently Due and Past Due Accounts, PhP7.3996 billion
have already been paid by FBs or a current collection rate of 19%. (See Table 11)
In terms of the number of ARBs, 112,234 ARBs are with payment while 120,213
ARBs are without payment. Another 232,395 ARBs are fully paid (See Table 12). The
rest are ARBs whose awarded lands still do not have LDIS/LAS.
3. FISCAL IMPLICATION OF FORGOING ARB AMORTIZATION
If the new Administration chooses to forgo further collection of ARB amortization, the
national government will have to expend the total amount of PhP190.308 billion. This is
the cost of writing off the PhP58.748 billion of currently uncollected ARB amortization
plus the PhP131.56 billion of landowner compensation for the remaining LBPcompensable lands in the LAD balance.
Currently, the total amount to be amortized by ARBs is at PhP58.617 billion of which
PhP4.669 billion have already been collected leaving a balance of PhP 53.948 billion. If
the adjustment of PD27/EO228 claims pursuant to DAR AO 6 series of 2015 of P4.80
billion is considered, the adjusted balance to be amortized by FBs shall be P58.748 billion.
As stated above, the Land Bank estimates that government will still have to spend PhP
131.56 billion in landowner compensation in order to complete land distribution of the
remaining 526,236 hectares of LBP-compensable lands under the agrarian reform
program. Thus, total amount of P190.308 billion shall be expended by the new
administration to cover the cost of writing off booked amount to be amortized by FBs of
P58.748 plus the value of the remaining lands for distribution of P131.56 billion.
If we assume an annual average cost of distribution for the remaining 526,236 hectares,
this amounts to PhP 21.93 billion a year for six years. The amount of P80.678 billion shall
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be booked as expense by the national government during the first year, and P21.93
billion each year from the second to the sixth yea8r.
The estimated first year cost of PhP80.678 billion is 3.82% of 2015 total government
revenues of PhP2,109 billion and 0.60% of 2015 GDP of P13,522 billion.
F. LAND TENURE SERVICES UNDER THE AQUINO ADMINISTRATION
1. LAND ACQUISITION AND DISTRIBUTION (LAD) ACCOMPLISHMENT FROM JULY 1, 2010 TO
DECEMBER 30, 2015
a. Cumulative LAD accomplishment and LAD Balance at the Beginning of the Term
At the beginning of the Aquino Administration, DARs cumulative accomplishment in
land distribution stood at 4,184,663 hectares. More than half of these were private
agricultural lands (57%). The rest (43%) were non-private agricultural lands. But
only 39% of the distributed lands were LBP-compensable. Moreover, only 6.87%
were compulsory acquisitions.
The LAD Balance in July 2010 was radically different from the cumulative
accomplishment up to the beginning of July 2010. About 95% of these were private
agricultural lands and only 5% were non-private agricultural lands.
Private
agricultural lands that were compensable by Land Bank consisted of 86%. In terms
of area, close to two-thirds (63%) were to be acquired under compulsory acquisition,
an involuntary way of putting lands under CARP coverage. Moreover, Around 70% of
the balance in private agricultural lands was composed of the medium and big
landholdings. The medium (above 10 to 24 hectares) comprised 36% and the big
landholdings (above 24 and above 50 hectares) consisted of 33%. The rest of the
30% were 10 hectares and below. Around 82.5% of the LAD balance were planted to
four major crops, namely, coconut, rice, sugarcane, and corn. The big proportion of
lands planted to sugarcane is consistent with the fact that Negros Occidental, a
primary producer of sugarcane has the biggest LAD balance among all provinces
nationwide.
Available data showed that most of the landholdings at the beginning of the term
were in early stages of the Land Acquisition and Distribution process. Around 64% of
the LAD Balance (698,996 hectares) were in the first stage of acquisition: research
and gathering of basic documents.
b. Land Distribution Accomplishment under the Aquino Administration (July 1,
2010 to December 31, 2015)
Thus, at the beginning of the Aquino Administration, the DAR was faced with the
challenge of distributing lands that take longer and are more tedious to acquire and
are more contentious.
i.
This assumes that the LAD balance of compensable lands are all acquired during the six year term of the
incoming Administration and these are acquired in equal volume during these six years.
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iii. But there was reversal of trend in the latter part of the term; CA dominated land
distribution accomplishment in 2015
Although non-PAL and non-LBP-compensable lands accounted for the biggest
share in the total accomplishment, the reversal in the trend of CA, VOS, and
GOL/KKK is very noticeable.
Overall, the average share of Compulsory Acquisition with respect to total
accomplishment within the period rose to 13% of net accomplishment in
contrast to the 7% share of CA in the cumulative accomplishment from 19722015. CA accounted for 16.8% of landholdings acquired and distributed and
15.2% of gross accomplishment. (See Table 13)
The share of CA in terms of number of landholdings rose from 10.1% in 2011 to
52% in 2015; in terms of CARP area, CA increased from 9% in 2011 to 57% in
2015; and from 10% to 59% in terms of Gross Area. VOS, likewise had an
upward trend although not as pronounced as that of CA. Both of these modes of
acquisition are LBP-compensable lands, which means, processing time takes
much longer.
In contrast, both GOL/KKK and VLT had a drastic decline in 2015 as a result of
strict implementation of the policy not to include them in the target unless these
were already in process at the beginning of the year. Before 2015, it had been
the practice of some field offices to process government owned lands for
inclusion in the LAD balance, and eventually to distribute these whenever they
are unable to distribute targeted private lands. This is glaringly illustrated by the
fact that although the GOL constituted only less than 60,000 hectares of the LAD
balance at the beginning of 2011, more than 200,000 hectares of governmentowned lands were distributed from 2012-2014.
GOLs share fell from 39% in 2011 down to only 7% in 2015 in terms of gross
area. In terms of CARP area, its share declined from 41% to 8%, and from 35%
down to 4% in terms of number of landholdings. VLT had a similar sudden drop
in share of accomplishment to total. (From 22% to 4% in terms of gross area,
36% to 4% in terms of carp area, and from 33% down to 4% in terms of number
of landholdings.
Aside from the directive not to include VLT and GOL/KKK in the target, there
really was a change in the composition of the LAD balance. With the easier lands
End of Term Report by Secretary Virgilio de los Reyes
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already delivered, what were left were the more difficult ones, particularly CA
landholdings.
c. On the 2015 LAD Accomplishment
For 2015, DAR was only able to complete the processing and documentation of 3,792
landholdings covering 35,015 hectares of which 27,670 hectares were distributed to
agrarian reform beneficiaries. This is one of the lowest LAD accomplishment to date.
But DAR completed more than what this data reflects.
In truth, DAR essentially finished the processing and documentation of 137,418
hectares.
It must be remembered that the bulk of DARs tasks are in the early and middle
stages of the land acquisition and distribution process: identification of the
landholding to be covered, research and compilation of basic documents such as
titles and tax declarations, identification of beneficiaries, issuance of Notices of
Coverage (for compulsory acquisition), survey activities and submission of survey
plans to the Land Management Service of the DENR (DENR-LMS), and participation in
the Joint DAR-Land Bank Field Investigation preparatory to the valuation of the
landholding for the purpose of landowner compensation.
After these, the Land Bank values the covered landholding, the LRA-ROD cancels the
titles of the owner of the covered private land and issues RP titles and then registers
EPs and CLOAs after these have been generated by the DAR. DARs processing of
target landholdings do not proceed at the same pace. Some reach the DENR-LMS or
the Land Bank at a later time than others and therefore do not result in the
registration of EPs or CLOAs before the end of the year.
By the end of 2015, a total of 19,021 hectares were still with the DENR-LMS; a total of
13,096 hectares were still with the Land Bank for valuation; and 27,323 hectares
were still pending at the LRA/ROD either for issuance of RP title or registration of
EP/CLOA. Thus, in all, DAR substantially completed its work in 59,540 hectares that
were already submitted to the other CARP agencies.
In addition, some 42,963 hectares that were part of the target and were being
documented and processed turned out to be not coverable for various reasons such
as being found to be already subdivided among the heirs of deceased landowners,
found to be non-alienable and disposable after plotting and projection in land
classification maps, found to be no longer suitable to agriculture or already devoted
to non-agricultural use during the conduct of field investigation, or final and
executory orders are issued declaring the land exempted, excluded, retained by
landowner or petitions for conversion granted.
Add all this with the 35,015 hectares for which the distributable portions were issued
EP/CLOAs, the DAR was able to complete its work for 137,418 hectares of the
targeted 198,631 hectares.
There are also factors that contributed to the low accomplishment:
i.
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land transfers in order to meet targets in terms of hectarage. For 2015, DAR
management decided to bite the bullet and through budgeting and monitoring,
strictly implemented the policy of acquiring only private lands with very few
exceptions for public lands that were already being processed at the start of the
year knowing that accomplishment will drop drastically in the process.
This change presented a big challenge to the provinces that were used to
delivering mainly non-compensable agricultural lands because they happened to
have the concentration of these type of lands. Their personnel had to cover
compensable private agricultural lands, which for many of them, is an unfamiliar
process. Through the rationalization plan, we have increased the number of
personnel in provinces with high LAD balances; however, those placed or
appointed have yet to gain the proficiency to process the more complicated
compensable private agricultural lands.
Thus, there was a qualitative change in the 2015 accomplishment compared to
previous years: 86% of accomplishment is private lands. Further, 57% of
accomplishment is compulsory acquisition. This is in contrast to past
accomplishment in which only a little more than half were private lands and a
measly 7% were private lands subject to compulsory acquisition. In terms of
magnitude, the 15,745 net accomplishment in compulsory acquisition
accomplishment is the highest within the 10 year period from 2006-2015.
ii.
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There are several cases of unauthorized transfers of titles even when Notices of
Coverage had been issued, and cases of lost or missing RoD copies of titles and
such cases are discovered only at the tail end of the LAD process when DAR
requests for the cancellation of the landowners titles and the issuance of RP
Title. It is not only the delay in the issuance of RP title or the registration of
EP/CLOA that affects DARs output. The delay in the issuance of requested
certified copies of titles also delays the submission of claim folders to Land Bank
or the submission of survey plans to DENR for approval because such copies of
titles are required by these agencies. Thus, the entire LAD process is affected.
2. PROBLEMS ENCOUNTERED/REASONS FOR THE LEVEL OF ACCOMPLISHMENT FROM JULY 2010
2015
a. LAD Balance in July 1, 2010 Consisted of Harder-to-Distribute Lands
An analysis of the composition of the accomplished lands from 1972 to 2010 would
show that only 20% were private agricultural lands acquired under involuntary
scheme (PD 27 under Marcos 13%, and compulsory acquisition 7%). The
majority were either private agricultural lands voluntarily offered or governmentowned lands already turned over to the DAR for distribution.
With the easier lands already delivered, the LAD balance in 2010 was composed of
5% non-private agricultural lands and 95% were private agricultural lands (PAL), of
which 84% of the PALs are to be compensated by Land Bank. In practically all cases
involving compensable landholdings, completion from the start of the documentation
to the registration of EP or CLOA exceeds one year.
This change has also presented a big challenge to the provinces that were used to
delivering mainly non-compensable agricultural lands because they happened to
have the concentration of these type of lands. Now, their personnel had to cover
compensable private agricultural lands, which for many of them, was their first time
to handle such land type.
Through the rationalization plan, we have increased the number of personnel in
provinces with high LAD balances; however, those placed or appointed have yet to
gain the proficiency to process the more complicated compensable private
agricultural lands.
Bottom line, the complexity of the LAD process for compensable private agricultural
lands compounded by the complicated legal and technical issues bedeviling each
landholding cannot be resolved simply through the provision of more financial and
human resources.
b. LAD Process Is Not Solely the Work of DAR But Involves the Participation of
Three Other Major Government Agencies That Are Not under DARs Jurisdiction.
Accomplishment in Land Acquisition and Distribution is not solely, the work of the
Department of Agrarian Reform. There are other government agencies involved,
namely, the Land Bank of the Philippines, the Department of the Environment and
Natural Resources Land Management Services, and the Land Registration Authority
which perform activities critical to the delivery of the final output. Thus, it is not only
the capacity of the DAR but also of these agencies that should be looked into. Delay in
the performance of the activities by these agencies, affect the delivery of the
Page | 24
intermediate outputs leading to the registration of the EPs and CLOAs. These are
beyond the control of the DAR.
The LAD-related functions of the three agencies are presented in the matrix below.
AGENCY
LAD-RELATED FUNCTIONS
DEPARTMENT OF
ENVIRONMENT AND
NATURAL RESOURCES LAND
MANAGEMENT SERVICE
LAND REGISTRATION
AUTHORITY/ REGISTER OF
DEEDS
Page | 25
issues related to collective CLOA parcelization, and thus, stabilize ownership and
tenureship of beneficiaries in collective CLOAs,
b. Completion of Documentation for Landowner Compensation of Distributed but
Unpaid OLT and GFI Lands
From 2010-2015, the DAR completed the documentation for payment of LO
compensation of 26,941 hectares of unpaid OLT and GFI lands.
c. Leasehold Operations
From 2010 2015, leasehold contracts were registered for 91,680 hectares. Region 5
(13,243 hectares), Region 8 (16,695 hectares), and Region 12 (14,351 hectares)
recorded the highest coverage of registered leasehold contract for the period.
The land acquisition and distribution process cannot be completed without the
participation of the LRA as shown in the matrix above. The DAR, however,
experiences problems in securing certified copies of titles of the landowners, which
are necessary in the documentation of the property; requesting annotation of the
Notice of Coverage at the back of the RODs copy of the landowners title in order to
prevent unauthorized transactions; requesting for the cancellation of the title and
generation of title in the name of the Republic of the Philippines; registering EPs and
CLOAs; and in securing the release of registered EPs and CLOAs. These delays
happen despite the fact that the LRA has computerized its land titling system.
4. ISSUES WITH OTHER AGENCIES
a. Land Registration Authority
The LRA entered into a Build, Own-Operate (BOO) contract for its Land Titling
Computerization Project (LTCP) with the Land Registration Systems (LARES), which
is a joint venture with IL & FS Technologies, Ltd., an Indian conglomerate. The
contract involves the comprehensive modernization of the operations of the LRA and
the computerization of its major business processes. The System Integrated IT
solution to be developed would interconnect LRA's Registries of Deeds (RDs)
nationwide, enable on-line transaction processing, and integrate its critical business
processes. The build portion with partial operations was targeted for completion in
three years, and full operations would be for 10 years, renewable every ten years
until a maximum of 50 years. (www.laresinc.com).
Project objectives were defined to ensure:
On July 2, 2009, the LRA published the Implementing Guidelines on the Electronic
Registration of Titles and Deeds. The implementing guidelines intended to inform the
public of changes from the manual system and provide the framework for the
processing of transactions and rendering of services by the Central Office and the
Registries of Deeds using Philaris in accordance with laws.
Page | 26
On July 18 2011, LRA issued Memorandum to all its RDs to immediately stop manual
processing once an ROD is brought into live Philaris Operation. Then in September of
that year, LRA again issued a Memorandum clarifying that all CARP transactions shall
continue to be processed manually and should not be charged IT fees, except when
the privately owned land that is brought under CARP coverage, has already been
converted under Philaris system, the transfer of the title from the landowner to the
Republic of the Philippines and then to CLOA can no longer be processed manually.
The transaction will already be under Philaris and corresponding IT fees shall be
charged to the transactor, whether government entities or private individuals or
institutions.
On November 13, 2013, the LRA issued Memorandum Circular 65-2013 to all officers
and personnel of the Central Office and the computerized RODs on the cessation of
Central Office verification process. According to LRA, among the objectives of
computerization is to prevent the issuance of titles with technical defects such as
open parcels, wrong area, wrong location, overlapping parcels, etc. As such it
instituted a computer system based Central Office Plotting and Verification, which
relies heavily on documents issued and/or approved by other government agencies
(titles and survey plans), the acquisition of which takes time thus affecting LRAs
turn-around time. Considering that the titles and plans were issued and approved by
other government agencies, concerned, then there is presumption of regularity in the
preparation and approval of said documents. Hence, the LRA Administrator directed
the cessation of Central Office Processing and Verification. However, this does not
apply to those titles that were issued and survey plans approved by LRA. In which
case, processing and verification are still required. The Memorandum also set a
minimum quota for all systems users of a minimum of 50 transactions to be sent back
to the RDs daily.
On 20 February 2014, the LRA administrator issued a Memorandum to all registry
personnel to issue pro-forma certification for lost or missing titles or are Not In
Volume or cannot be located in the files of the Registry even after diligent search.
Such certification should be issued upon the lapse of 15 days from the receipt of the
request for certified copies of titles. This was issued due to the complaints from DAR
that requests for certified copies of titles that will be used as reference in issuing the
Notice of Coverage were not being acted upon promptly because the titles
In response to the complaints of LRA that they lacked dedicated manpower to do
CARP activities, DAR Field Operations Office provided them with around 50
additional personnel in the Central Office to speed up encoding, plotting and
verification, and an undetermined number of additional staff provided by the
PARPOs to the provincial Registries of Deeds. DAR also provided two high speed
scanners to the Central Office, and again, the field offices also provided the RDs with
some of the equipment requested.
Despite these assistance, the problem persists. There is a delay in the transactions,
which was expected to be speeded up with the agencies computerization of the land
titling process.
Aside from the delays, there are still unauthorized transfers of agricultural lands
even without the requisite DAR clearance. In many instances, these become known
to DAR only when the LAD process has reached the advanced stage when DAR
requests for the cancellation of the landowners title and to issue RP Title, which then
End of Term Report by Secretary Virgilio de los Reyes
Page | 27
becomes the basis for DAR to generate EP or CLOA in the name of the qualified
agrarian reform beneficiaries. As a result, DAR has to re-do the process.
Lost or missing ROD copies of titles. Several ROD offices were razed to the ground by
fires or damaged by typhoons. As a result many of the titles were damaged or totally
destroyed. Others are missing from the ROD files. This also puts a stop to the LAD
process, because DAR has to file petition for reconstitution of title. There is a further
problem when the court does not want to recognize the personality of the DAR to file
and dismisses the petition because it believes, only the landowner can file for the
reconstitution of title. If DAR succeeds in filing the petition, then it has to wait until
the title is reconstituted before the registration of the EP or CLOA can be done.
5. NOC ISSUANCE
After the results of the nationwide claim folder review were processed, DAR accelerated
the issuance of Notices of Coverage for landholdings subject to compulsory acquisition.
Despite the challenges, the DAR, in 2012, was able to issue 25,841 Notices of Coverage
(covering 239,337 hectares) for landholdings of landowners with aggregate landholdings
above ten (10) hectares. For 2013, another 18,460 NOCs were issued covering 210,655
hectares for these lands whose sizes are 10 hectares and above. In April 2013, the DAR
started issuing NOCs to small landholdings below 10 hectares. Some 12,098 NOCs
covering 70,538 hectares for these small landholdings were issued in 2013. Thus, for
2013, some 30,558 NOCs were issued covering 281,192 hectares. From January to June
30, 2014, the DAR was able to issue and serve NOCs for around 28,091 landholdings with
a total area of about 233,148 hectares9.
The DAR has also already published in its website all landholdings for which it has
already issued Notices of Coverage.
There are still 6,626 landholdings with area of 67,827 hectares for which NOCs have
not been issued. This would necessitate a law to extend the power of the DAR to issue
NOCs.
6. REMEDIAL MEASURES UNDERTAKEN TO FACILITATE LAND ACQUISITION AND DISTRIBUTION
When the present DAR leadership took over on July 2010, it took stock of the tasks it has
to complete. Systems and operating procedures were evaluated. The evaluation revealed
that the systems, operating procedures and, sometimes, the compentencies of personnel
were more suited to acquiring and distributing government-owned lands and voluntary
land transfers rather than the compulsory acquisition of private lands.
It should be noted that additional provisions in the RA 9700 or CARPER stretched the
acquisition process. The process of farmer beneficiary (FB) identification alone takes at
least five (5) to six (6) months to complete as it requires posting, attestation of
landowner, revalidation of list of FB materlist, among others.
NOC accomplishment from 2012 to June 30, 2014 should not be added up. During that period, some NOCs were
re-issued due to defects in previously issued NOCs or transfers of ownership of subject landholding.
Page | 28
a. New Rules to Speed up the LAD Process and Address Problematic Landholdings
i.
ii.
AO 8 Series of 2011
This administrative order provides remedial measures for CARP-covered lands
subjected to unauthorized transfers or conveyances, commonly referred to as
chop-chop titles.
Page | 29
d. Other Measures
i.
In the two provinces with the highest land acquisition and distribution balances,
Negros Occidental and Camarines Sur, the provincial office was split into two
operational units.
ii. A Joint Memorandum Circular of the DAR and LRA signed December 2011
required the annotation of the Notice of Coverage on titles of CARP-covered lands
to prevent illegal transfers meant to circumvent CARP coverage.
iii. Some steps in the distribution process were centralized. Before, each individual
Municipal Agrarian Reform Officer (MARO) procures the certified true copies of
titles with the respective Registers of Deeds, serves the Notice of Coverage (NOC)
to landowners (even if the landowner lives in another province or in Metro
Manila), and requests survey services. Now, the DAR Central Office makes bulk
requests for certified true copies of titles with the central office of the Land
Registration Authority. The DAR Provincial Office now determines survey
schedules and coordinates field investigations with the Land Bank.
iv. The Land Bank and the DAR have agreed on certain measures that reduce total
time for land acquisition and distribution. The number of reviewers/signatories
to valuation was lessened. Augmentation/ redeployment of regional/provincial
Land Bank staff are done as needed by the volume of CARP transactions.
v. The time period within which to file protests or petitions have been prescribed
under the new guidelines. Beyond this period, protests and petitions will no
longer be entertained.
III.
Agrarian Legal Service (ALS)10 involves the provision of agrarian legal assistance to ARBs,
resolution of agrarian law implementation (ALI) cases and adjudication agrarian disputes.
A. PARTICULAR CASES THAT REACHED THE OFFICE OF THE SECRETARY
1. DOJ 44
DOJ 44 is one of the most used grounds for excluding an agricultural landholding from
CARP coverage. It is not an express provision found in R.A. No. 6657 but rather founded
on a spate of Supreme Court decisions that used a 1990 Department of Justice Opinion, as
the name suggests, as basis.
Section 4 of R.A. No. 6657 states that the law covers all public and private agricultural
land, and the term agricultural land was defined by Section 3 (c) of the same law as a
land devoted to agricultural activity as defined in this Act and not classified as mineral,
forest, residential, commercial or industrial land.
On 16 March 1990, the DOJ issued an Opinion addressed to the DAR stating that the
authority of DAR to approve conversions of land use started only on 15 June 1988. The
issue was whether or not the DAR had the authority to unilaterally convert land use prior
to the said date, which the DOJ answered in the negative.
10
Page | 30
Three years later, the Supreme Court en banc ruled in the doctrinal case of Natalia Realty,
Inc. vs. DAR11 that lands converted to non-agricultural use prior to the effectivity of the
CARP law (15 June 1988) are outside the ambit of that law. In deciding the said case, the
Court not only used the definition of agricultural lands as found in Section 3 (c) of R.A. No.
6657, but also the deliberations of the 1986 Constitutional Commission which confirmed
that Agricultural lands are only those lands which are arable and suitable agricultural
lands and do not include commercial, industrial and residential lands.
In 2004, in the case of Justina Advincula-Velasquez vs. Court of Appeals12, the Supreme
Court affirmed that lands already converted prior to 15 June 1988 need not go through
the land use conversion process of DAR.
By virtue of the Natalia Realty doctrine, the DAR has excluded from CARP coverage those
landholdings proven to have been converted/reclassified prior to 15 June 1988.
During the term of this Administration, as per data of 2 June 2016, the Office of the
Secretary decided 80 petitions for exclusion (involving 3,602 hectares of land) on the
basis of DOJ 44. Of these, 59 petitions (73.75%) covering 1,781 (49.47%) hectares were
approved; 18 petitions (22.5%) covering 963 (26.74%) hectares were denied, while 3
petitions (3.75%) covering 857 (23.79%) were partly granted (501.0676 hectares) and
partly denied (355.8783 hectares).
During the same period, the Office of the Secretary was also able to decide 4 cases
(involving 418 hectares of land) seeking for the revocation of approved DOJ 44 Orders.
Of these, 3 approved orders (298 hectares) were revoked, while 1 (28.81 hectares) were
denied.
2. LAND USE CONVERSION
Lands that were reclassified after 15 June 1988, however, is a different story. The
Supreme Court ruled that agricultural lands reclassified after 15 June 1988 may not be
used for non-agricultural use unless a final land use conversion clearance has been
obtained. As late as 18 June 2010, the Supreme Court ruled, in the case of Chamber of
Real Estate and Builders Association, Inc. vs. The Secretary of Agrarian Reform that
[r]eclassification alone will not suffice to use the agricultural lands for other purposes.
Conversion is needed to change the current use of reclassified agricultural lands. x x x It
is of no moment whether the reclassification of agricultural lands to residential,
commercial, industrial or other non-agricultural uses was done by the LGUs or by way of
Presidential Proclamations because either way they must still undergo conversion
process.
a. Main Elements in Approving Land Use Conversion
Section 65 of R.A. No. 6657 governs land use conversion. The main elements
provided by the law in approving land use conversion are the following:
The land either:
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
11
12
Page | 31
Irrigated and irrigable lands shall not be subject to land use conversion
Disturbance compensation are to be paid to tenants (and others working on the
land)13 who will be displaced due to the land use conversion
These elements were embodied in a Department Administrative Order, the current
one of which was issued in 2002.
Whether a landholding is irrigated/irrigable is confirmed by certifications from the
NIA and through ocular inspections conducted by the Land Use Cases Division of the
Bureau of Agrarian Legal Assistance (formerly the CLUPPI Secretariat of the Office of
the Secretary). In 2015, the NIA issued its Memorandum Circular No. 23, Series of
2015 clarifying what an irrigable land is.
Standards, however, in deciding whether or not the first abovementioned element
exists are not found in any rule or law. While certifications from the Department of
Agriculture (DA) as to the suitability of the land for agricultural use has been a major
factor in deciding this element, Secretaries have pretty much relied on their own
wisdom in deciding this matter.
Under the current Administration, in order to standardize the process and not be
accused of arbitrariness, the DAR has relied heavily on the certification of the DA and
the decision of the local government units through land use / reclassification
ordinances in determining whether or not the first element exists.
b. Land Use Conversion Cases from July 2010 to May 25, 2016
During the term of this Administration, per data as of 25 May 2016, the Office of the
Secretary was able to decide 142 applications for land use conversion involving
3,892 hectares. Of these, 41 (1,396.73685 hectares) were denied by the Office of the
Secretary, while the remaining 101 (2,496 hectares) were approved. Out of the 101
approved applications, 9 (191 hectares) are for socialized housing, 7 (117 hectares)
are for PNP/AFP housing, while 11 (589 hectares) are for power plants during the
power crisis.
Once a land use conversion clearance becomes final, the developer has five years to
develop the land. That is a statutory rule. Under the law, the only exception to is if
the developer has proven that the delay is not due to the fault of the landowner.
On the other hand, of the 57 requests for applications (involving 3,632.5427
hectares), 22 (1,859.4179 hectares) were denied while 35 (1,773.1248) were
approved.
c. Priority Projects for Land Use Conversion
Urgent projects of the government were given priority by the DAR in the process of
land use conversion.
When the President announced that housing for PNP and AFP personnel is an urgent
concern of the government, the Department issued a Department Administrative
Order in 2011 to fast-track the process. When Yolanda hit the country, another rule
was issued expanding the jurisdiction of the Regional Offices and providing strict
timelines in processing applications for purposes of housing projects for those hit or
13
Page | 32
to be relocated due to the super typhoon. In both cases, the trigger of the DAR is a
certification from the National Housing Authority this means that only those
certified as PNP/AFP housing or necessary for Yolanda housing projects will be
granted access to these special rules.
Furthermore, when the Department of Energy (DOE) announced an energy crisis in
late 2014 to early 2015, the DAR granted the request of the DOE for prioritization of
DOE-certified priority energy (power plant) projects. Similarly, the trigger to allow
prioritization is the certification from the DOE.
Finally, the DAR also issued this year a Department Order exempting from applicable
fees and certain bonds those projects certified in writing as urgent by national
agencies.
It is vital to note, however, that in all of the above cases, the DAR made it clear in its
issuances that the decision on whether or not to approve the application for land use
conversion must still be based on the provisions of the law. Priority projects,
therefore, are not assured that it will be granted land use conversion clearance. In
fact, at least one urgent energy project has been denied by the Office of the Secretary
when the documents submitted by the applicants showed that the classification of
that portion of the land is agricultural.
Per data as of 25 May 2016, out of the 101 approved applications, 9 (191 hectares)
are for socialized housing, 7 (117 hectares) are for PNP/AFP housing, while 11 (589
hectares) are for power plants during the power crisis.
3. CANCELLATION CASES
R.A. No. 9700 concentrated the jurisdiction to cancel Titles issued pursuant to agrarian
reform programs (referred henceforth as cancellation cases) to the Secretary. Whereas
before, the resolution of these cases was diffused to adjudicators in the provincial level,
all cancellation cases since 1 July 2009 had to fall in line, figuratively speaking, before the
Office of the Secretary. The impact of the CARPER amendment is highlighted by the
figures. Since 2010, a total of 12,366 cancellation cases were filed all of which the law
requires one person to decide.
a. Streamlining Procedures for Processing and Deciding Cancellation Cases
This Administration came in a year after R.A. No. 9700 became effective (30 June
2010). A little more than a year later (further enhanced in 2014), the rules on
cancellation cases were revised with two objectives in mind:
i.
Efficiency:
While CARPER restricted the jurisdiction in resolving cancellation cases to the
Secretary alone, the same law did not prohibit the other units of DAR in aiding
the Office of the Secretary by conducting the necessary staff work. The venue in
the filing of cancellation cases, the issuance of Notices to Comment (akin to
summons), the reception of answers, responses, pleadings, and evidence, and the
investigation of issues raised were delegated to the field offices.
The old two-step rule was also dismantled. In the past, the rules of the DAR
allotted the jurisdiction to cancel Titles, on the one hand, to the provincial
adjudicators, while that to resolve agrarian law implementation (ALI) cases
(such as issues on retention rights, exemption/exclusion of landholding from
Page | 33
14
1 (0.86%) reverted back to the State, 6 (5.17%) were cancelled in favor of the same beneficiaries (changes only
in the technical description).
15
80 (7.80%) reverted back to the State, 7 (0.68%) were cancelled in favor of the same beneficiaries.
Page | 34
cancelling 814 Titles in favor of the former landowner. If we take this away, only 211
Titles out of 718 (29.39%) were cancelled, and out of these 211, only 13 (6.16%)
were decided in favor of returning the land to the former landowners.
c. Transfers in the Guise of Cancellation Cases
There are cancellation cases filed that are based on waivers of an EP/CLOA holder in
favor of another person. In some cases, these waivers have been recognized in final
and executory orders of Regional Directors. The Office of the Secretary, during this
Administration, denied these petitions for cancellation on the ground that these
waivers are akin to voluntary transfers which are not covered by a cancellation case.
Transfers from one beneficiary to another person is covered by A.O. No. 8, Series of
199516 and is subject to requirements by other government agencies (such as
transfer taxes).
It should be noted, however, that the Office of the Secretary recognized waivers made
by beneficiaries to the government which in turn identified new qualified
beneficiaries to take over the land. As of 30 April 2016, a total of 56 cases directing
the cancellation of 64 EPs/CLOAs are based on this.
The Office of the Secretary, during this Administration, settlements of estates of
deceased beneficiaries in the guise of cancellation cases. The law has delegated the
jurisdiction to settle estates and recognize heirs to regular courts, not the DAR.
B. PROCEEDING WITH THE CARP
The DAR in 2012 conducted a review of all claim folders (a claim folder contains all the
documents required or obtained in processing the land acquisition and distribution process
on a particular landholding) pending nationwide. After seeing the results, the DAR declared
early on that not all the lands will be fully acquired and distributed by 30 June 2014.
It was at that point too that the DAR announced its legal position that the only thing that will
expire on 30 June 2014 is the authority of the Department to initiate the land acquisition and
distribution process on landholdings not yet covered by a case or a Notice of Coverage or
voluntarily offered to sell. To bolster this view, the DAR requested DOJs legal opinion on the
matter in 2013. DOJ Opinions Nos. 59 and 60, S. 2013 affirmed the DARs position. This was
further confirmed by Congress when it provided as a special provision in the FY2014 General
Appropriations Act that lands covered by a case or Notice of Coverage by 30 June 2014 may
still be acquired and distributed thereafter.
The CARP Completion Bill was filed by members of the House Committee on Agrarian
Reform, on the part of the House of Representatives, and Senator Honasan, on the part of the
Senate, in order to extend the authority of the DAR to issue all remaining Notices of Coverage.
While the Senate already passed its version, the House Bill is currently stalled due to
objections posed by other members of the lower chamber.
In the meantime, backed by the DOJ Opinion and the GAA, the DAR continued with the
processing of those landholdings covered by Notices of Coverage issued, voluntarily offered
on or prior to, or covered by a case as of, 30 June 2014.
16
Page | 35
Efficiency:
It was made clear in the new procedures the steps and processes involved in the
land acquisition and distribution process need not be sequential; some
processes can be conducted simultaneously with others. Therefore, unless a
particular step is a necessary prerequisite to conduct another step, then each
Page | 36
need not wait for the other to be completed. For example, the conduct of the
segregation survey need not wait for the completion of the identification of
farmer beneficiaries and vice-versa. The valuation of the just compensation can
be started without waiting for the completion of the identification of qualified
beneficiaries.
ii.
17
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Previous to the institution of this provision, there were some cases in which
CLOAs were issued and registered even if cases were still pending. As a
result, not only were the landowners right to due process violated (his
ownership of the land was stripped away even if his objection thereto have
yet to be resolved) but (a) it placed serious doubts as to the validity of the
Title issued to the beneficiaries and (b) public funds have been released in
the name of a person who may not even be eligible to receive just
compensation.
The impact of the doubts as to the validity of the Title (CLOAs) of the
beneficiaries is highlighted by the several Orders issued by the Office of the
Secretary cancelling CLOAs on the ground of final and executory orders by
the Supreme Court and other tribunals asserting that the land is not covered
by the CARP.
As mentioned above, under the rules crafted, it is only after the question has
been decided with finality, or upon the resolution on the issue by the Office
of the President, whichever comes first, will the DAR issue the NLVA, cancel
the Title of the landowner, and order the deposit of the just compensation.
b. Organization of the Rules:
The organization and over-all design of the Administrative Order were made easy to
understand. The rules were embodied in clear sections, with logical numbering, and
organized chapters.
2. COVERING LANDS UNLAWFULLY TRANSFERRED
As a general rule, after 15 June 1988 agricultural lands may not be sold or transferred if it
will result to the transferee obtaining more than five hectares of the land. Furthermore,
these may not be transferred without prior clearance from the DAR. Unfortunately,
agricultural lands were still transferred against the abovementioned rules.
In 2011, the DAR issued a special rule that in these cases, the NOC shall still be issued in
the name of the landowner as of 15 June 1988 but copies thereof shall also be furnished
to the current owner. The just compensation shall be deposited in the name of both the
landowner as of 15 June 1988 and to the current landowner.
In January 2012, the DAR and the Land Registration Authority executed a joint issuance
directing the Registry of Deeds to annotate to the Titles of the landowners the fact of
issuance of NOCs, if issued. This will give due notice to any prospective buyers that the
land is covered by and being processed under CARP.
3. COVERING LANDS OF LANDOWNERS WHO REFUSES ENTRY
In processing the acquisition of landowners, land surveys must be conducted to
segregate those areas not covered by CARP (i.e., irrigation canals, etc.) and to subdivide
the land to individual lots for the several ARBs. A field investigation must also be
conducted in order to make the correct valuation of the just compensation.
Unsurprisingly in cases of compulsory acquisition, some landowners barred the DAR
from entering their landholdings.
In 2011, the DAR issued a special rule that in these cases, a perimeter survey will be
conducted and the entire land will be initially valued as if it is an idle land. Upon
payment of the initial value, and subject to due process, the Title of the land will be
End of Term Report by Secretary Virgilio de los Reyes
Page | 38
transferred in the name of the Republic of the Philippines. Once ownership is transferred
to the State, it can now enter the land and take possession thereof in order to conduct the
necessary surveys and field investigations. The just compensation may be adjusted as a
result thereof.
4. FASTER ISSUANCE OF NOTICES OF COVERAGE (NOC)
Under the general rules issued by the Department, the person that will be issued and
served with a Notice of Coverage is the landowner as of 15 June 1988 as indicated in the
registered Titles. As a matter of course, therefore, the DAR took pains in obtaining
certified true copies of the Titles of the landowner before issuing the NOCs.
The CARPER law allowed the DAR to initiate the acquisition and distribution proceeding
only until 30 June 2014. After the said date, only landholdings already initiated or is a
subject of a pending case may be acquired and distributed under CARP unless a new law
is promulgated.
Due to this, on February 2014, the Department issued a new rule that in case there is
difficulty in obtaining certified true copies of the Title as of 1988, the basis of who to send
the NOC to may be based on mere photocopies of the Title, tax declarations, and other
public documents. Under such rule, however, the NOC must also be published.
5. CHANGES TO THE RULES IN IDENTIFYING QUALIFIED FARMWORKERS
CARP expanded the coverage of the agrarian reform program from tenanted lands to
plantations. However, the same law deferred the coverage of commercial plantations for
a period of ten years. After the ten year period expired, as previously mentioned, the
DAR set out to acquire first government-owned lands and those that are voluntarily
offered for the program. When the present administration came in, CARP has already
been running for more than twenty years and there were still a lot of haciendas which
acquisition and distribution process has yet to be initiated.
From this historical context arose a conceptual issue in the identification of qualified
beneficiaries after twenty years, who are qualified to become beneficiaries of the land?
Do we limit it only to those presently working on the land, or are the former
farmworkers also qualified? The law is silent. It appears that the legislators didnt
expect this kind of problem.
Pursuant to its rule making power, the DAR resolved this quandary by issuing an
Administrative Order in 2014 allowing all those who have worked on the land from 15
June 1988 to the date of the FBID process to present evidence of their qualification.
6. ON OTHER LAND TENURE SERVICE ISSUES
a. Wrapping Up Operation Land Transfer
Operation Land Transfer entered into effect through the issuance of Presidential
Decree No. 27 in 21 October 1972. Under this statute, tenanted rice and corn lands
were to be acquired from the landowner and distributed to the agricultural lessees.
Lands covered by this program were mostly distributed during the 1980s to the early
1990s. Decades later, however, the documentation of many of these lands have
remained incomplete or defective. In order to resolve this, the DAR issued an
Administration Order in 2015.
The same Administrative Order made clear the formula and procedure in computing
the just compensation of landowners, taking into account the pertinent laws and
End of Term Report by Secretary Virgilio de los Reyes
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jurisprudence on the matter. In order not to allow the delay to cause undue harm to
the landowner, it was made, as a matter of policy, and in recognition of the pertinent
jurisprudence, that the valuation shall be based on the government support price of
rice and corn as of the date of taking of the land (i.e., registration of the EPs) rather
than that of 1972 (date of commencement of OLT). The same AO protected the
beneficiaries from the increase in the just compensation of the landowner caused by
the updating of the formula by pegging the amount to be amortized to the
government support price as of 1972. The difference between the amount of the just
compensation of the landowner and the amount to be amortized by the beneficiaries
was designed to be carried (subsidized) by the government.
b. Stabilizing Collective CLOA Issued
From the mid-90s to the early 2000s, to expedite the acquisition and distribution
process, the DAR opted to skip altogether the subdivision of the land (to provide
beneficiaries with distinct individual lots) and opted instead to issue single CLOAs in
the name of all pertinent beneficiaries covering entire landholdings these were
referred to as Mother CLOAs or Collective CLOAs. In some cases, especially in
government-owned lands which do not have predecessor Titles, the segregation of
non-A&D portions was also skipped resulting to some CLOAs encompassing non-A&D
areas (such as timberland or lakes).
As generations passed, the extent of ownership of each beneficiary has been muddled.
The extent of what each beneficiary owns is unknown. Since the groups of
beneficiaries within collective CLOAs, in most cases, were forced to be together by
virtue of their proximity of the land they are tilling (in case of government-owned
lands) or the fact that they belonged previously to the same employer, differences in
opinion as to how to move forward has become a problem.
In recognition of this, the DAR issued an Administrative Order to stabilize the
ownership and tenure of the beneficiaries in collective CLOAs. It aims to firm up the
list of beneficiaries (this is vital considering the number of generations that have
already passed since the collective CLOAs were issued), and afterwards allow once
and for all each beneficiary to decide whether they want their own individual Titles,
or to group together under a collective Title (should they choose the latter, it is of
their own volition, rather than being forced to do so for the expediency of the
process).
7. ON REFERRAL OF CASES
Section 50-A of R.A. No. 6657, as amended, requires courts and prosecutors to refer cases
to the DAR whenever there is an allegation from any of the parties that the case is
agrarian in nature. This will enable DAR to determine whether or not the issue of the
case, or a prejudicial question thereof, is within the jurisdiction of the DAR. The law
requires the DAR to make a determination within fifteen days.
In 2011, the DAR issued the Rules to implement the said provisions. At the same time,
the Office of Secretary recommended in writing to the DOJ and the Office of the Court
Administrator rules which they may opt to issue in order to implement the
abovementioned provision of the law. Unfortunately, to date, the letters of the Secretary
remains pending with the said offices.
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The Philippine Government, through the Department of Agrarian Reform, sought the technical and financial
assistance of the United Nations Food and Agricultural Organization (UN FAO) and the expertise of the World
Resources Institute (WRI) in conducting a Multi-Sectoral Study on Agribusiness Venture Arrangement (AVA)
Policy and Implementation under the Comprehensive Agrarian Reform Program (CARP) in order to install
more responsive policies and guidelines addressing the needs of agrarian reform beneficiaries, smallholder
farmers, and their farmer organizations in increasing their farm-based income, and the private investors with
regard to sustaining the profitability of their investments.
19 Such as the (a) the Principles for Responsible Agricultural Investment That Respects Rights, Livelihoods and
Resources (CFS-RAI); (b) the Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries
and Forests in the Context of National Food Security (VGGT); and (c) the UNIDROIT, FAO and IFAD. 2015.
UNIDROIT/FAO/IFAD Legal Guide on Contract Farming. Rome
18
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itself with its pro-forma templates, Facebook-style features, Global Search tool;
and
The ability to automatically print Registered Return Cards (RRC) for documents
that need to be registered in the postal office along with mail labels for envelopes,
among many others.
The LCMS is therefore not just a comprehensive database, it is also a management and
planning tool, a personnel performance indicator, and a new (web-based) work sharing
or work coaching environment, all rolled into one.
In mid-2014, the public access module of the LCMS, called the Legal Case Inquiry System
(LCIS), was launched, enabling parties to a case, or their counsels or representatives (and
even the general public for that matter) to find out, through the internet, the latest status
of their cases pending in any office within the Department, without having to call or
travel to a DAR office to follow-up on the case.
The LCIS contains the following data, namely, Case Title, Case Number, Status, Case
Category, and Processing Office.
The LCIS may be accessed through the DAR's website.
2. DAR LIS
The DAR Legal Information System (DAR-LIS at www.lis.dar.gov.ph) or electronic legal
library was launched in 2011. DAR-LIS is the first of its kind in the executive branch of
the government.
It contains all agrarian reform laws, jurisprudence, administrative issuances, course
outlines, articles, templates, and related materials, and can be accessed through the
internet (also available on CD-ROM).
On account of the sheer volume of uploaded internal (agrarian reform-related)
documents (over 12,000 issuances), an internal search engine which is site-specific,
customized search templates for the website, full-text search capability, and the linking
of cited issuances are found in the body of the documents themselves.
3. PBD LAWYERING
Program Beneficiary Development (PBD) Lawyering Program in eighty-one (81)
provinces, otherwise known as the Enterprise Lawyering Program, was institutionalized.
PBD Lawyering is a unique training intervention aimed at developing the skills of
agrarian reform beneficiaries (ARBs), and their organizations, in accessing credit
facilities and in managing their farms as business enterprises. Such training intervention
is done through the assistance of DARs legal officers and support services personnel who
comprise the PBD Lawyering Teams in the provincial level. They serve as learning
coaches in various aspects, such as documentation, contract negotiation, governance
and technical assistance, financial literacy, awareness of the regulatory environment and
possible models of agricultural business enterprises, risk mitigation, creation of growth
opportunities, and capturing private investments, among others.
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IV.
DAR is undertaking policy and research studies to determine whether the various CARP
interventions and operating policies have responded to the needs of the agrarian reform
End of Term Report by Secretary Virgilio de los Reyes
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Identify the mechanisms by which CARP could have enhanced or inhibited farmhousehold welfare, e.g., increased equity, changes in credit access, and where the
evidence permits, determine the empirical relevance of said mechanisms.
Identify the mechanisms that enhance or detract from farm productivity and
profitability and, where the evidence permits, determine the empirical relevance of
said mechanisms. This includes obtaining and augmenting more recent data as
appropriate.
Determine how the results differ, data permitting, by type of land transfer (voluntary,
government land, or confiscatory), crop, and other characteristics of the land and
beneficiary.
The study made a comparative analysis of the CARP impact assessment during the 1990 2000 period with the 2010-2015 and initial results indicated that the reduction in the
incidence of poverty was higher in the ARC areas than in the non-ARC areas. DAR engaged
the services of the UP-Philippine Center for Economic Development (PCED). The study is
expected to be completed in June 2016.
B. SURVEY OF AGRARIAN REFORM BENEFICIARIES
There are recurring issues hurled to DAR by militant groups and civil society organizations
such as status of the awarded lands, issues on voluntary land transfer, second generation
problems on land distribution, household level welfare of the ARBs and other related issues.
The ARB Survey is intended to determine the household welfare level of ARBs and other
related issues under the CARP. The survey will involve 9,400 respondents of which 6,000 are
ARBs while 3,400 are non-ARBs to determine the status of the awarded lands, issues on
voluntary land transfer and the second generation problems on land distribution.
Specifically, ARB survey will, i) establish the status of the awarded lands per mode of
acquisition both in individual and collective CLOAs, ii) assess the welfare conditions of the
ARB households, and iii) draw on the perception of the ARBs on rural development, rural
conditions, and government intervention in rural areas.
The ARB Survey Report will contain four (4) parts, as follows:
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Part I: Profile of ARBs. This includes demographic information, household data, education,
employment and livelihood, income level, acquired household and farm-related
assets.
Part II: Analysis on the status of the ARBs vis--vis the awarded lands in each mode of
acquisition. This will cover land use, productivity, income from the awarded land,
status of cultivation, status of ownership, amortization payments, engagement in
AVAs, status of land conversion and other related issues.
Part III: Welfare conditions of the ARBs compared to non-ARBs. This will assess the status of
living conditions, development of capabilities, participation in organization,
community and political affairs, access to support services and adoption of farm
technologies.
Part IV: ARBs perception and level of satisfaction on rural development, rural conditions,
and government intervention e.g. DA, DAR, DENR, LGU.
DAR has commissioned the Philippine Statistical Research and Training Institute (PSRTI), an
attached agency to the NEDA. The ARB survey report will be completed by end of July 2016.
C. COMPREHENSIVE STUDY ON AGRICULTURAL CREDIT FOR SMALLHOLDERS
This Study addresses the need to redesign the credit facilities and financial resources
currently available to consider the needs of smallholders including landless farmers. The
prevailing credit facilities are designed to accommodate landed smallholders and ARBs.
Agricultural tenants, who are oftentimes living in more dire conditions, are overlooked. Reorientation of credit facilities can be met only with the active involvement and investment of
concerned government institutions and even private companies and financial institutions.
The study will review and document existing practices (i.e. program and policy environment)
and conditions in the credit market and policies for credit access of smallholders with due
emphasis on the gaps and limitations of prevailing credit programs and how to properly
address them. It will assess existing programs of lending institutions, banks and other
government financial institutions (GFIs) in terms of loan purpose, loan terms and condition,
monitoring and collection.
A program review of the Agrarian Production and Credit Program (APCP) will be undertaken
in terms of credit assistance, program organization and beneficiary feedback. On this basis,
an assessment will be done on the capacity of smallholder organizations (ARBOs and nonARBOs) in terms of preparing credit proposals, implementing re-lending schemes and
managing credit and providing appropriate interventions. Relevant policies and strategies of
government and private banking institutions will be crafted to improve credit delivery to
smallholders, and identify appropriate credit enhancement measures, e.g. insurance,
guarantees. The Study will identify key parameters that should be considered in designing an
appropriate lending and capability development program for smallholders to enhance their
credit access with formal lending institutions. The Philippine Institute for Development
Studies (PIDS) has been engaged by DAR to undertake the study, which is expected to be
completed in June 2016.
D. MULTI-SECTORAL STUDY ON AGRIBUSINESS VENTURE ARRANGEMENT
(AVA) POLICY AND IMPLEMENTATION UNDER CARP
There are many ARB groups and cooperatives that entered into AVAs with investors to
ensure the continuity of commercial operations of the plantations acquired through CARP
that require massive investments, technology, and market linkaging. This AVA study will
End of Term Report by Secretary Virgilio de los Reyes
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address the prevailing problems in the current status of AVAs such as problems and issues in
contractual arrangements between producer small farmer cooperatives/organizations and
investors/buyers (e.g., contract duration, pricing arrangements, etc.) including indebtedness
status of small farmer producers from investors and banks. The Study will review and assess
government policies and programs in the concerned industries and AVA commodities,
agricultural productivity of lands devoted to AVAs and the competitiveness of the plantation
crops in relation to the export markets demand and the effect and impact of the incoming
tariff regime in 2015.
The methodology for the conduct of the study will involve the conduct an institutional and
policy environment analysis of the institutions involved that impact on the agribusiness
venture arrangements in CARP covered areas and small holders. An analysis will be
undertaken of the supply and value chain of the crops and commodities under AVAs
including but not limited to banana, pineapple, rubber, oil palm, and other high value crops.
The Study will also analyze the key institutional factors that influence the value chain
dynamics and actors behavior in the crops/commodities covered by AVAs, and recommend
appropriate arrangements. On this basis, the Study will develop an industry-wide and interagency plan of action which includes policies and strategies to address the issues and
problems besetting the industries (crops and commodities). Along with existing DAR
guidelines on AVA, the Study will develop the framework and procedures for reviewing
existing and proposed AVAs taking into account the FAO Voluntary Guidelines on the
Governance of Tenure (VGGT) and the Principles on Responsible Investments in Agriculture
that ensure food security and safeguard tenure rights, environment, and human rights.
The conduct of this Study is a collaborative effort of DAR, the World Resources Institute
(WRI) and the UN Food and Agriculture Organization (FAO). A Team of International and
National Experts has been engaged by FAO to undertake the Study. The Team has submitted
the draft Final Report to the FAO for review and endorsement to DAR.
E. TENURE VS. AGRARIAN REFORM: LESSONS FROM THE PHILIPPINE
COMPREHENSIVE AGRARIAN REFORM PROGRAM FROM COMMONWEALTH
TO CONTEMPORARY PERIODS
The study will review the original intent and objectives of the Philippine Agrarian Reform
experience, starting from the commonwealth regime, the martial law period (P.D. No. 27) to
the Comprehensive Agrarian Reform Law (CARL or RA 6657) when it was passed in 1987,
and then the called CARP Extension with Reform (CARPER or RA 9700). This study attempts
to understand how CARL has shaped the institutions related to the land distribution and use
of the land, and how such institutions affect the welfare the productivity of the households
and farms in the rural economy. It is intended to determine the social and political outcomes
arising from of the institutional and social changes, brought about by the law and the DAR
itself, which is its major proponent and implementer.
The specific intent of the Study is to review the CARL in order to determine the objectives
and goals of the law as well as the process and inputs that the program intends to deliver. It
will examine the inputs and outputs of the program as implemented by the DAR, taking note
of the scale and the different types of agricultural lands being distributed. On this basis, the
Study will assess the outcomes of these inputs of the programs especially of the institutional
changes that occurred historically in the rural economy. An assessment will be made on the
impact of the law to the country as a whole in terms of their effects on farm productivity and
employment, poverty and economic growth, especially in the agricultural sector and on the
redistribution of power.
End of Term Report by Secretary Virgilio de los Reyes
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DAR has engaged the experience and expertise of the National Historical Commission of the
Philippines (NHCP) to undertake the Study which is expected to be completed in July 2016.
V. Support to Operations
Many of the reforms in the PNoy administration were implemented as good governance
mechanisms of the DAR. This brief portion provides an orientation of the governance
reforms that were undertaken based on the context in 2010. It also gives a listing of the
activities that must be done as well as the policy and program decisions that are flagged for
the consideration of the next administration. For full details, refer to the report of the
Finance, Planning, and Administration Office (FPAO).
A. IN 2010
DAR, like other agencies, had a budget, which covered activities for one year but is valid for
obligation for two fiscal years. The General Appropriations Act (GAA) as an appropriation
authority was not a complete document as agencies needed an Obligation Authority in the
form of an Agency Budget Matrix or Special Allotment Release Orders (SAROs) containing
detailed funding requirements that were necessary to release the funds to agencies and
offices. At that time, and even in the early years of this Administration, there was no
matching of physical (e.g. hectares of land and status of farmers organizations) and financial
plans, as well as no strict monitoring of budget utilization and no assessment of physical
accomplishments. The budget was crafted top-down where the DAR Central Office
determines the fund requirements of regional, provincial and municipal offices.
In terms of transparency and accountability, the DAR in 2010 also had numerous Trust
Accounts that contained the savings from projects that have ended. Instead of returning
the funds, the remaining resources from previous local and foreign projects were kept in
these Trust Accounts for use in other activities such as bonuses, conferences, and workshops.
The procurement of goods, services, and to some extent, civil works, was not compliant with
RA 9184 or the Government Procurement Reform Act. Moreover, there was also no clear
inventory record of plant, property and equipment (PPE) of prior years whether at the DAR
Central Office or field offices.
Human capital was a concern in the bureaucracy. In 2010, Executive Order 366 or the
Rationalization Program was already in place but the DAR was not submitting its
Rationalization Plan to the Department of Budget and Management (DBM). As such, the DAR
was not allowed to fill up the vacant positions and could only designate Officers-in-Charge
(OICs). At that time, only around 11,000 of the 15,000 available positions were filled up.
When the reforms in planning, budgeting, procurement, accounting, and auditing were being
introduced, two major issues surfaced. First, at the onset, there was resistance to the
reforms that were introduced because these needed time, long-term planning, and evidence
to substantiate plans and proposals. These were not business-as-usual and thus, difficult to
implement. Second, around mid-term of the administration when there was already an
acceptance that reforms must be put in place, the absorptive capacity of the human resources
in the bureaucracy became a concern. The people had difficulty absorbing or internalizing
the major overhauls. Although they were able to absorb and accept the needed changes, they
had difficulty assimilating and applying the new knowledge in their work.
Timing, unfortunately, was a concern. The governance reforms being implemented
coincided with the mandate of RA 9700 to expedite land acquisition and distribution and to
End of Term Report by Secretary Virgilio de los Reyes
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improve the delivery of support services within five years. The DAR had a looming deadline
but the reforms instituted by the DBM, other oversight agencies, and the DAR itself entailed
utilizing information and communication technology, plugging gaps, placing human
resources where needed, and enhancing capacities and competencies (both those in
operations and administrative offices). To an extent, these reforms affected the delivery of
the results in land tenure services and support services.
B. REMEDIAL MEASURES UNDERTAKEN
To address the need to deliver concrete results through a transparent, accountable and
participatory manner, the DBM and the DAR implemented reform measures.
1. SYNCHRONIZATION OF PHYSICAL PLANS AND FINANCIAL PLANS
On the part of the DBM, one of the policy measures that was put in place was the
synchronization of physical plans and financial plans for three years in advance. This
needed long-term planning as well as data and evidence but when it was finally rolling
out, it became clear which landholdings were ripe for distribution and budget cover and
which support services projects and activities were clearly planned out.
2. BOTTOM-UP BUDGETING
The DBM also implemented the BUB or the bottom up budgeting to avoid budget
proposals that were not fit to ground plans and realities. In the DAR, the BUB was also
operationalized through three cuts or iterations combining top down and bottom up
processes to ensure a grounded physical and financial proposal.
3. INVENTORY OF PPES
An inventory of PPE was also undertaken although until this juncture this remains
incomplete because of the length of time between the acquisition of the assets up to the
present and the changes in human resources and institutional memory. Out of this
inventory, many of the SUVs which were in the DAR Central Office were transferred to
regions and provinces that had high land tenure and support services targets.
4. CLOSURE OF TRUST ACCOUNTS
Trust Accounts were closed. This was in line with the DBM policy on One Account per
agency. As such, the source of fund was centralized to the GAA as the ultimate final
document. This thoroughly enhanced the transparency and accountability in the DAR.
5. COMPLIANCE WITH THE PROCUREMENT LAW
In the PNoy administration, procurement became compliant with RA 9184, whether
these involved goods or services. Since the DAR no longer had a budget for farm-tomarket roads, there was no more need to procure civil works. At first, most of the
procurement requirements were centralized at the DAR Central Office. To address the
need for participatory and more accountable governance, many of the procurement
requirements were eventually downloaded to regional and provincial DAR Bids and
Awards Committee. This was accompanied by a package of capacity building activities to
address the knowledge gap not only on RA 9184 but also on the connection of
procurement with planning, budgeting, accounting and auditing. More importantly, from
2014 onwards, most of the DAR procurement requirements were turned over to the DBM
Procurement Service to ensure that the purchase of goods and services is open to more
providers and thus, more transparent and fair.
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Thus far, the major accomplishment on governance reforms is lessened leakage and plugging
of gaps. Hence, the funds remain intact and wholly used for legitimate activities. Moreover,
the budget is now being used for its intended purposes. Cases or incidents where funds were
fully utilized without corresponding physical accomplishments were minimized. It is now
isolated in select field offices.
Unfortunately, there is also consistent underspending of funds. This is because of the
difficulty in harmonizing the plans with targets and budget. The tendency to use unreliable
data and evidence remains among the personnel where they would ask for funds despite
non-readiness to execute such plans. As such, during implementation, it would become clear
that the plans will not work and the funds will not be used.
C. UNDERSTANDING UNDERSPENDING
1. GENERAL REASONS FOR UNDERSPENDING (2011-2015)
a. Disruptive Innovations
The PNoy Administration ran and won on the platform of good governance;
expectedly, disruptive innovations became par for the course. Public Financial
Management, Public Expenditure Management, Results Based Performance
Management System, Zero-Based Budgeting, Bottom-Up Budgeting and recently, the
Two-Tiered Budgeting Approach took time to be understood and implemented
effectively.
b. Absorptive Capacity
The Absorptive Capacity Index of an organization is a measure of the agencys ability
to obligate and disburse the budget appropriated and cash allocated on its planned
activities for the fiscal year. The AC Index is dependent on the agencys Absorptive
Capacity: the ability to absorb, assimilate and apply new knowledge to the
accomplishment of the organizations goals and objectives. With the mean age of the
departments personnel complement just a few years shy of optional retirement age,
the agencys absorptive agility is on the low side.
c. Path Dependence
The introduction of improved governance mechanisms necessitated a revisit of the
way things were and are being done in the bureaucracy. Systemic changes focused on
process improvements in order to streamline process throughputs and reduce the
various sectorial activities throughput rates. This required a shift from output-based
standard cost approach to activity-based costing approach to budget preparation.
These systemic changes continue to be work in progress.
2. SPECIFIC REASONS FOR UNDERSPENDING (2011-2015)
a. Overbudgeting in LTS (Land Tenure Services)
Budget allotment by DBM for 2010-2014 followed the 5-year implementation period
for LAD as provided for in RA 9700, which assumed a standard approach to land
acquisition of generic landholdings. Landholding evaluation of the balance CARPable
lands which are predominantly private agricultural lands subject to compulsory
acquisition, unfortunately, was akin to a biopsy of cancer cells: the complexity of the
necessary and appropriate LAD activity was known only after all the claim folders
documentation were dissected. Interruptions in the LAD process for targeted
landholdings for acquisition during the year negatively affected budget utilization.
End of Term Report by Secretary Virgilio de los Reyes
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D. THINGS TO DO
There is a need to review existing Special Orders (SOs) that place people in DAR committees
(as chairs and vice chairs) such as the PARC Council and the Bids and Awards Committee.
Bank signatories must be also be changed through a concomitant Special Order. Doing the
review and placing immediately would ensure the regular functioning of activities and the
smooth transition of administrations.
The DAR Secretary or his/her designated alternates have seats in the Board of Directors of
the Land Bank of the Philippines, the Development Academy of the Philippines, National
Dairy Administration, and the Quedancorp.
The following are more fundamental issues which need the consideration and decisions of
the next administration.
1. CNA BETWEEN DAR AND DAREA
The 6th Collective Negotiation Agreement (CNA) between the DAR Management and the
DAR Employees Association (DAREA) would occur in October 2016. The Civil Service
Committee had some recommendations in the 5th CNA that need attention and decision
before the 6th CNA.
2. TULAY NG PANGULO PROJECT
The Tulay ng Pangulo para sa Kaunlarang Pang-Agraryo (TPKP), a foreign-assisted
project, requires consideration. The materials for the implementation of this project
have already been delivered from France and are now lodged in the DPWH depots in
Bataan and Cagayan de Oro. However, because of the Blue Ribbon Committee
investigation of the Senate, the implementation of this project was held in abeyance. A
clearance from the Office of the President is necessary to resume project implementation.
3. QUEDANCORP AND PHILFRUITS
Two GOCCs also need attention. In Quedancorp where DAR has a board seat, the
Department has substantial collectibles. However, Quedancorp has not been funded by
the national budget during this administration.
In the case of PhilFRUITS, a GOCC that was attached to the DAR, there were outstanding
issues. In 2010, upon assuming office, this administration looked into the status of
PhilFRUITS and requested the Commission on Audit to conduct a special audit. The
Special Audit Report of the COA notes the problems of this GOCC including lack of funds,
lack of clear records such as Books of Accounts, unauthorized disbursements, and
existing contractual obligations. PhilFRUITS has been ordered by the Office of the
President for dissolution and this was initiated by the Governance Commission for GOCCs
(GCG). Unfortunately, PhilFRUITS cannot pay its contractual obligations because it is
already insolvent.
4. TASK FORCE COLLECTION
A Task Force Collection (TFC) was set up to recover the loans accruing from the direct
lending programs of the DAR before (see discussions on DRDAP, SPO). At present, there
are only a few remaining accounts that require the attention of TFC members. As such,
this task of pursuing loan payment collection from farmers organizations may now be
mainstreamed with the Finance and Legal offices of the DAR.
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of the needed support services. Many of the successful initiatives, as such, were through
national and local level convergence efforts to fill the many gaps in the agri-enterprise efforts.
However, these successes need to be institutionalized by a more cohesive agricultural vision
and policy, one that is biased for smallholder farmers and orchestrated by clear institutional
arrangements. This cohesive vision and policy for agriculture should also be in sync with
programs on poverty reduction and inclusive growth. In particular, this meant improving
rural job generation and reducing the soaring and erratic cost of food especially rice.
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in magnitude, budget, and reach. As such, while DAR improves the farm income of farmers
with land, it contributes less to the income increase of landless rural workers.
B. DISJOINTED POLICIES BASED ON CENTRALLY-PLANNED ECONOMY
Agriculture policies in the Philippines are disjointed with their confusion of goals, programs,
and providers. On the one hand, the government often insists on a strong hand of the state in
prioritizing crops and industries (as evidenced by the focus on rice), in setting floor prices
for certain crops and commodities like rice and tobacco, in providing subsidies like fertilizers
and inputs without clear exit mechanisms, and in approving the substance or actual contents
of agreements between private investors and smallholder farmers in the case of agribusiness
venture arrangements involving ARBs. On the other hand, the government could be slack in
providing public goods like capacity building, extension services, and infrastructure that are
needed by smallholder farmers.
Even the policies on rice sufficiency need to be evaluated. It mandates quantitative
restrictions and. thus, the big proportion of rice supply comes from domestic sources. But
logistics and transport costs are likewise high and thus, this combination contributes to high
food prices. Unfortunately, despite this policy decision to prioritize domestic rice, there are
no proactive decisions to improve wages to increase the purchasing power of the people. To
an extent, the cash transfer program addresses the poors buying ability; but this is not
enough given that the cash transfer program is for extremely poor while high prices of rice
affects even the poor and near poor.
Agrarian laws and the AFMA are also disjointed. While the RA 6657 or the Comprehensive
Agrarian Reform Law and RA 9700 or the law that extended RA 6657 showed a preference
for a strong hand of government in providing support services to beneficiaries (see
discussion on support services), RA 8435 or the Agriculture and Fisheries Modernization Act
or AFMA mandates the pursuit of aggressive market-driven programs and projects to make
products more competitive.
1. LAPSES IN INSTITUTIONAL COLLABORATION
The focus and deliverables of agriculture-related rural agencies (DA, DAR, DTI, and
DOLE) are not properly coordinated and suffers from institutional lapses. The agencies
have different mandates. While the DA aims to achieve food sufficiency, DAR intends to
implement land redistribution and improve the income and welfare of the agrarian
reform beneficiaries while the DTI promotes and enhances the growth of industries
including agri-export industries. DOLE, for its part, ensures the labor rights and
implementation of labor standards. These agencies implement their programs without a
solid agricultural and inclusive growth vision that could orchestrate efforts. It could be
surmised that it must be one of the reasons why growth is exclusive; because the landless
rural workers or the poor in rural areas are not covered by agriculture and other
programs. Both the DA and DAR look into farmers with land, the DOLE handles the plight
of regular and contractual laborers, and the DTI addresses the growth of the agriindustry. This is probably one of the reasons why agriculture has little or no dent on
poverty reduction.
The overall agriculture policies and programs of the Philippines play an important role in
improving the agri-income of agrarian reform beneficiaries and other smallholder
farmers. Agrarian reform does not exist in isolation from agriculture. In fact, improved
land productivity and ARBs welfare are affected to a large extent by the incentives and
regulations from agricultural policies. Even the decision on whether to stay in
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agriculture or to start inching away to other fields are judgments based on the perceived
future that could be reaped from farming.
Agriculture in the Philippines could be characterized as one that is guided by the strong
hand of the state. It is focused on improving productivity (especially of rice) and partly
on improving income and reducing poverty. Agriculture programs, as implemented by
the DA, are focused on improving yield and attaining food security. To achieve these
ends, agriculture strives to protect farmers particularly those that are into rice. Until
2017, the quantitative restrictions (QR) on rice will be in effect so the government
controls the volume of rice that may be imported from overseas markets. A forty percent
(40%) tariff is imposed on imports within the minimum access volume (MAV) and 50%
tariff is imposed outside of the MAV. As a result, it is not easy to import rice. This works
against poor consumers given that the supply of rice is low and that prices are high.
However, DA is not the only agency that has a strong government role. Agrarian reform
laws, particularly the implementation of support services, show evidence of strong role
for government. In this policy and regulatory environment, market operations are
distorted resulting in particular inefficiencies.
2. STRONG HAND OF THE STATE IN AGRARIAN REFORM POLICIES AND ACTIVITIES
The policies on agrarian reform show evidence of strong government. Unfortunately,
support services for smallholders are largely a function of the market. Without allowing
the market on its own, assistance must be effective and strategic.
RA 6657 or the CARL, as amended by RA 7905 and RA 9700, mandated the provision of
support services to ARBs. While RA 6657 or the CARP law provides for the funds for
support services, RA 7905 created agrarian reform communities (ARCs) and the DAR
Support Services Office. RA 9700 provided details that show the perceived ideal roles of
government in improving the income of beneficiaries.
a. Credit: budget, mechanisms, collateral and loan purpose
RA 9700 mandated the appropriation of 30% of all budget for support services to be
set aside and made available for agricultural credit facilities. Moreover, 1/3 of this
segregated appropriation will be dedicated for subsidies to support the initial
capitalization for agricultural production of new ARBs. The remaining 2/3 will be for
socialized credit. The law also directs the Land Bank of the Philippines and other
government financial institutions, cooperatives and banks to provide the delivery for
the disbursement of credit assistance to individual ARBs.
The law mandated the government and private institutions to create the delivery
mechanisms for providing agricultural credit. RA 9700 also states that all financing
institutions may accept as collateral for loans the purchase orders, marketing
agreements or expected harvests: Provided, That loans obtained shall be used in the
improvement or development of the farmholding of the agrarian reform beneficiary
or the establishment of facilities which shall enhance production or marketing of
agricultural products or increase farm income therefrom. In this sense, the law
mandates provisions which are already being undertaken. Also, collateral, like
delivery mechanisms, is a business decision of financial service providers. Similarly,
how beneficiaries will use their loans should be left to their decisions.
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20
In the past, it was assumed that NGOs and civil society in general had funding, mostly from foreign donors, to
undertake farmers organizing. This was an assumption that was good while foreign funding or philanthropy
was available. At present, many of these donor funds have dried up and while NGOs or CSOs could source
organizing funds from government, they might lose independence and flexibility.
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agreement. In some cases, the farmers note that they were not consulted by their
leaders during contract negotiations. For further details on this, see particular
discussion on AVAs. The discussion on AVAs is further expounded in several portions
of this report.
The crux of this issue lies with the role that the government played in the contracts
between the farmers and the agro-enterprise investors. This strong role of
government led to problems and legal cases. The PARC/DAR, who is not competent
to decide on issues like price, contract period and production targets approve the
contracts. In some cases, it also did not ensure that the farmer leaders sought the
informed consent of their members.
In sum, having a centrally-planned support services misses out on the vital role of the
farmers as the empowered players in the agri-enterprises. It likewise misses out on
the vital role of the market as the partners of smallholders in agri-enterprises. The
government intervenes where it should not be and creates inefficiencies and a host of
other problems which manifest much later.
C. POLICIES CONTRIBUTING TO LOW INCOME AND HIGH FOOD PRICES
The issue of food prices in the country has been the source of contention in agriculture
policies and programs in the Philippines. Unfortunately, land redistribution is associated
with policies that contribute to high food prices. This paper posits that while many factors
contribute to high food prices, the main culprit is the countrys disjointed agriculture policy,
one that is confused on whether to open up agriculture to liberalization or to protect it by a
policy of non-importation. High food prices are also due to having a centrally-planned
agriculture, one that insists on a heavy hand of the state in agricultural policies to the
detriment not only of consumers but also of smallholder farmers.
What is glaring is that land and property rights concerns could not be divorced from
agricultural policies and from overall issues of poverty reduction and inclusive growth.
Addressing one concern alone (either land or agriculture concerns) is myopic and makes
only a little dent on poverty reduction. Moreover, it is becoming apparent that public policy
choices should be appropriate for both farmers and consumers. As some analysts aptly
noted, public policy must wrestle with a balancing act between poor farmers and poor
consumers, and which group must bear the burden of agricultural development and the
vagaries (or not) of the international market since autarky is not feasible (or desirable)
[Montes, Briones and Cuevas, 2015]. Smallholder farmers, landless rural workers, and many
food consumers are poor or near poor and inclusive growth should address both the issue on
farm income as well as food accessibility and availability.
Agriculture policies, especially on the food staples and with particular emphasis on rice, have
been favoring protectionist policies. Trade barriers including the quantitative restriction on
rice have been set up with the goal of making the Philippines rice self-sufficient. The
intention is noble: to improve the productivity of agriculture so there would be less
dependence on importation. The protectionist stance, it is argued, would secure the food
source and improve the income of Filipino farmers.
Unfortunately, restricting trade and importation does not necessarily improve the farm
income of smallholder farmers. Aside from the fact that they are also consumers of highpriced food, they also do not necessarily reap the main benefits of trade protection. First,
rice farming siphon off or crowd out the public investments that could be provided to other
smallholder farmers who do not plant rice. It also dissuades farmers to shift to other crops
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even if their income from rice is not high. Second, trade protection mostly benefits rice
producers who have the wherewithal to consolidate land and products, those who have
economic power, and those who could maximize the benefits from the agricultural chain.
While it is true that smallholder rice farmers also stand to lose from opening trade barriers,
the literature and experiences from other countries show that smallholders could be given
public support to diversify to other crops or to shift to non-farm sources of income.
1. FOOD PRICE TRENDS
According to the Food and Agriculture Organization (UN-FAO), the annual growth rates
of domestic food prices across Asia for 2000-2011 appear to be more stable compared to
global food price inflation. Domestic food price inflation in Asian countries during the 11year period averaged 4.29% per annum, lower than the regional average of Latin
America (8.63%) and sub-Saharan Africa (5.70%), although this was higher than
European countries (3.74%).
From 2000 to 2011, the Philippines recorded relatively lower annual growth rates of
food prices among Asian countries, with an average annual food price inflation of 2.93%,
as compared to Indonesia (9.39%), South Korea (9.18%), India (7.43%), Peoples
Republic of China (6.05%), and Thailand (5.04%). Asian countries with comparable food
price inflation rates in the same period include Singapore (2.66%), Laos (2.63%), Hong
Kong (2.95%), and Malaysia (3.65%). Japan (0.07%) and Nepal (1.52%) reported very
low inflation in domestic food prices.
However, in the first half of 2014, the consumer price index for food in the Philippines
went up to 6.5% (PSA), which reduced the growth in income per capita of Filipinos and
contributed to the increase in poverty incidence among families by 1.1 percentage points
in the first semester of 2014. Prices of rice, which is a staple food for low-income and
vulnerable families and usually accounts for around 20% of their budget, posted a
growth of 11.9% in the first half of 2014 from only 1.7% in the same period the previous
year.
Higher food prices in January to June 2014 led to a huge increase in food poverty
threshold and poverty threshold. In the same period, 10 out of the 17 regions
experienced double-digit increases in their poverty thresholds. The highest was observed
in Region VIII with 14.2 percent, possibly due to the lingering effects of Typhoon Yolanda,
then in NCR with 13.5 percent.
The increase in food prices slowed down towards the second half of 2015 and into the
first quarter of 2016. Despite this, NEDA (2016a) observed that the risk of higher food
prices remains, and that while the impact of El Nino is gradually weakening towards the
second half of 2016, the summer season may constrain farm output which may lead to
higher consumer prices.
3. BEYOND TRENDS: FOOD PRICE COMPARISON
Beyond the existing times series data, it is also important to look at static findings on
food prices in the Philippines compared to other countries.
The Philippine Institute for Development Studies (PIDS), in a discussion paper, noted
that the domestic price of rice and sugar in the Philippines in 2010 is higher than world
price [PIDS Discussion Paper, August 2014]. The discussion paper used domestic
resource cost and import price parity ratio as indicators of competitiveness. Based on a
comparison of price, the study showed that rice and sugar in the Philippines were not
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competitive in 2010 because rice was 43% more expensive and sugar was 28% more
expensive. (See Table 16)
In 2015, when the Global Food Security Index (GFSI) was released, it ranked the
Philippines 72nd among 109 countries with a score of 49.4 out of possible 100. The GFSI
is developed by the Economist Intelligence Unit (EIU) from 28 unique indicators and
considers affordability, availability, and quality and safety as core issues. Food security is
when people at all times have physical, social, and economic access to sufficient, safe and
nutritious food that meets their dietary needs and food preferences for a healthy and
active life.
The GFSI ranked Singapore as the worlds second most food secure next to the United
States. Among neighbors in the ASEAN, Malaysia ranked 34th overall with a score of 69,
Thailand ranked 52nd and Vietnam 65th. The Philippines has the following subrankings: 73rd in affordability, 66th in availability, and 68th in quality and safety while
16.2 percent of the population was undernourished.
4. CAUSES OF HIGH AND VOLATILE RICE PRICES
In the Philippines, David [1997] attributes the 1995-1996 price peak as primarily a result
of policy failure, where, presumably due to political pressures from producers groups,
the government adopted a highly protectionist position regarding tariffs on sensitive
agricultural commodities. The study argues that the government could have prevented
the sharp increases in food prices by allowing more imports, and that the timing of
imports exacerbated seasonal price fluctuations as well. Imports of rice in 1995 were
only 240,000 MT as compared to the high of almost 600,000 MT in 1993, 540,000 MT in
1985, and 450,000 MT way back in 1972. Furthermore, whereas a major portion of
imports should have been in the country by the beginning of the lean season in July, only
4% of total rice imports in 1995 arrived towards the end of the month. It is important to
underscore that some of these reasons, the low importation and late decision to import
are also nominated as main causes of the food price spike in 2013-2014.
Since 1995, the most significant reform in rice policy was its compliance with WTO rules
and decisions, particularly on the articles on conversion of quantitative restrictions
(QRs) into equivalent tariffs. However, the Philippines obtained a Special Treatment, and
thus a QR, for rice up to 2005 (now extended to 2017). The Agricultural Tariffication Act
of 1996 (RA 8178) converted trade barriers into tariffs but this exempted rice. The
National Food Authority or NFA was mandated to undertake direct importation of rice or
allocate the import quota among licensed importers. Private sector importation began in
2008, which intensified in 2010 onwards. By 2011, the private sector (inclusive of farmer
organizations) was allowed to import 77% of that years import quota of 860,000 tons.
However, the annual import quota is now restricted to the minimum market access
owing to the self-sufficiency target of 100% by 2013, to be sustained up to 2016.
In the more recent global rice crisis of 2008, the price spike was viewed as partly caused
by the overreaction of both the major exporting countries such as India, Vietnam,
Thailand, and importing countries like the Philippines to a tightening global rice situation.
For the more recent price surge in 2013-2014, there were two views in general. One
view highlights the weaknesses in the decision-making process in the price stabilization
function (Montes, Briones and Cuevas, 2015). This view blames the shortcomings in
applying the established practices during natural disasters (such as Yolanda) and the
delays in decisions and delivery of imported rice on the part of the NFA. Montes, Briones
and Cuevas [2015] note that the efforts to reform the NFA itself led to the delays and
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indecisions. Habito [2015 and 2016] has an alternative view. He said the ambition of
self-sufficiency caused the rising prices. Habito notes that the insistence on rice selfsufficiency makes most Filipinos food insecure by making rice much more expensive than
it needs to be, especially for the poor.21
Beyond the price surges, several studies note that rice and sugar prices are more
expensive in the Philippines compared to its neighbors for various reasons. Cuevas
[2015] cites a benchmarking study conducted by the IRRI and PhilRice [2015] indicates
that the cost of producing rice in the Philippines is higher compared to exporting
countries like India, Thailand and Vietnam. Rice is cheapest to produce in Vietnam. On
the flip side, the cost of production of palay is lower in the Philippines relative to China
and Indonesia. The comparison is based on crop year 2013 from irrigated rice growing
villages in East Asia. The study notes that the cost share of hired labor, as well as the cost
of credit, in the Philippines is one of the highest in the region. Montes, Briones and
Cuevas [2015], however, cautions against misinterpreting this study given that the cost
comparison is incomplete for not taking into account subsidies and not considering longterm dynamics and possible distortions.
Cuevas [2015] notes that the marketing cost for producing rice is higher in the
Philippines than Thailand. Dawe et al (2008) showed that it is more expensive to
transport, dry, store, and mill a ton of dry paddy rice in the Philippines than in Thailand.
Gross marketing margins and percent mark-up between market levels are lower in
Thailand than in the Philippines. Compared to Vietnam, data from FAO and World Rice
Statistics [see Cuevas, 2015] also show that the marketing margin of rice in the
Philippines is also consistently higher (1992-2010).
Cuevas offers four bottlenecks. One, transport costs are higher in the Philippines
compared to other Southeast Asian countries. This is largely due to sea freight concerns
and inadequate infrastructure (i.e. roads and port facilities). Two, there are high
postharvest losses in the Philippines. Cuevas cites the PhilMech and PhilRice study
[2010] that estimate losses due to inadequate facilities at 16.47%. Drying, which is often
done through solar and pavement drying, results in 5.86% loss and accounts for 36% of
total postharvest losses. Low mill recovery also contributes to total losses. Three, the
farmers inadequate information on prices, production, and area harvested also
contributes to their dependence to traders and millers. Four, limited access to credit or
capital constrains rice farmers to financing mechanisms with high interest rates.
A benchmarking study on sugar was also conducted by the University of Asia and the
Pacific. The study states that production costs (e.g. inputs, hired labor) and low
investments in infrastructure are some of the major reasons why Philippine sugar is
more expensive to produce and purchase than Thailand sugar. Thailand also has a large
land mass as compared to the Philippines where inter-island travel entails huge costs
[Center for Food and Agri Business of the University of Asia and the Pacific, 2012].
21
The whole discussion on high food prices is often centered on rice because it is the crop that receives attention
(and budget) of government. It must be noted that while nothing is wrong with this focus, it unfortunately
crowds out or eases other farmers planting other crops. This focus incentivizes the planting of rice (and other
staples) because of subsidies that reduce the farmers production costs. More unfortunately still, other farmers
and areas have low efficiency in rice farming (for various reasons including having marginal lands). There are
no resources for structural adjustment and diversification projects for these rice farmers so they could not shift
away from rice. Further discussion on this is in the discussion on policy levers in agrarian reform and
agriculture.
Page | 64
children from school to secure food. At the macroeconomic level, higher prices
also hurt countries that provide substantial food subsidies. In turn, the high
agriculture support for staple food and the subsidies for food take away the
public investment in other priority sectors such as health, education, and
infrastructure.
D. REVIEW OF RELATED POLICY STUDIES
A supply-demand scenario analysis of the Food Staples Sufficiency Program [Briones, 2010],
which ran scenarios from 2009 to 2020, projected that rice self-sufficiency is unlikely to be
achieved, even over the course of the decade (until 2020). Simply raising productivity
growth higher would still fail to eliminate imports. And raising barriers to rice imports
makes rice substantially more expensive. Briones [2010] argues that the goal of selfsufficiency must not be equated to zero imports and protectionist measures against rice
imports should be discouraged. Rice importation policies need to be rationalized in order to
protect the interests of producers, consumers, and other market participants. Quantitative
restrictions on imports and other high barriers to entry raise the domestic price of rice and
allow the concentration of legally imported supplies in the hands of a few.
Briones [2010] estimates that if quantitative restrictions were eliminated and rice imports
were allowed to freely come in the country, total rice imports would have reached 4.2 million
tons. Such high level of imports would have brought down the retail price of rice to
PhP19.80/kg and PhP17.66/kg at the wholesale level (2013 data). Consumer surplus would
have increased by PhP178,075.65 million, albeit leading to a P33,985.01 million reduction in
producer surplus. In totality, the economy would have benefited by as much as
PhP138,464.10 million above the baseline of PhP442,485.98 million total economic surplus
in the rice market.
The NFA needs to be recapitalized at the same time that substantial policy and bureaucratic
changes in the national government and operational improvements at NFA have to be made
[Intal, 2012]. NFAs focus must be trimmed down towards primarily the management of the
strategic reserves, monitoring of the global rice market which will inform the government on
the tariff on rice imports, and regulating the private sector to prevent collusion and
monopoly at the local level. This will significantly reduce the budget spent by the
government on NFA subsidies. As a result, the amount that is released can be used more
productively for more productivity enhancing agricultural functions like agricultural
research and development, irrigation investments and improvement of facilities to monitor
implementation of standards by the private sector.
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Montes, Briones and Cuevas [2015] in their midterm review of the Food Staples Sufficiency
Program also recommended that NFA must be strengthened in its buffer stocking and price
stabilization functions. They recommend making the NFAs operational funding independent
of its buffer operations so that it will have more independence from market and political
pressures. If the private sector would be certain of its involvement in the international rice
trade, it might be tapped to give supply reliability. After all, the private sector needs to be
allowed to import (or export as the case may be) as is warranted in order to address
domestic supply and demand mismatches as well as to manage rice inventory and thereby
reduce cost. Intal (2012) notes that the private sector, unlike the NFA, can ink long-term
contracts with exporters, as such, they provide certainty in rice supply.
Consistent growth and rising labor productivity (more and better jobs) need the
transformation of the entire value chain towards improved competitiveness, a bigger variety
of goods produced, and wider dispersion of processing activities in the countryside.
Important to this expansion is logistics development to encourage storage and transport;
also important is setting up a utilities system which will give electricity and water on a
reliable and cost-effective basis (Briones, 2013).
E. THE AQUINO ADMINISTRATIONS POLICY: DIVERGENCE AND ADJUSTMENT
PROGRAMS
During the campaign period and the early parts of the PNoy administration, the government
committed the achievement of food sufficiency, which includes rice, corn, cassava and
banana. Montes et al [2015] notes that the Food Staples Sufficiency Program (FSSP) has
been an innovation from past centrally-planned and protectionist programs for the
following:
replacement of the seed subsidy approach to propagation of high quality seeds
(relying more on local and private entities),
irrigation interventions by getting existing irrigation services operational rather than
new construction of irrigation,
introduction of Sikat Saka that exploits innovations of microfinance but at lower cost
and creates a record of individual borrowers,
intervening in mechanization stimulated private mechanization from demonstration
effect
Because of these innovations, the FSSP, at mid-term was able to meet its targets on improved
productivity brought about by widened area for rice and enhanced yield as a result of
interventions in irrigation, access to credit and other program interventions [Montes,
Briones and Cuevas, 2015]. It also had good results in terms of irrigation, mechanization,
and access to credit. Importation was also limited particularly in comparison to the Arroyo
administration where at its peak, it was estimated that importation reached around 20% of
domestic demand.
It could be seen from most of the literature [Briones, Cuevas, Montes, David, Intal] and the
PNoy Administrations FSSP that the FSSP carried out many of the reform requirements to
make rice production sufficient, non-distorting, and less expensive. The divergence lies on
two aspects: a) timing of liberalization and b) provision of structural adjustment program
and diversification program.
While most of the researchers prefer the ending of the QR in 2017 and the entry into a tariff
regime and eventually to a free trade regime, the administration, at least as signaled by the
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FSSP, would make efforts to strengthen rice farmers so they could be better prepared for
liberalization and while doing so, market-distorting, inefficient and corruption-prone aspects
like seed and fertilizer subsidy were not considered. Existing irrigation systems were
rehabilitated and the quality of farm-to-market roads was improved (thicker and concrete).
It could be seen that the FSSP is in the direction towards removing protectionist policies.
The seeming divergence could also be seen in the details of the structural adjustment and
diversification programs to be provided to farmers who will remain planting rice and those
who need to migrate to other crops or to non-agricultural work. There appears to be no
consensus on what programs would be undertaken and as such, there are no details available.
The efforts of the DAR on support services including the ARCCESS project could be expanded
to serve as structural adjustment efforts (see details, the discussion on ARCCESS and AVAs).
Efforts were
First, consider the provision of jobs in rural areas. These need not be agriculture in nature
but these should not be in overcrowded cities. However, investments and jobs would not be
forthcoming without infrastructure and telecommunications so the national government
should provide these necessary public goods. Improving ports and inter-island travel to
reduce costs should also be a top priority. In creating the favorable environment for rural
employment, there is a need for a reform on institutional arrangements since the problem is
bigger than can be addressed by one agency to solve. The latter part of this paper focuses on
the proposed institutional arrangements. It is also important to note that since land sizes are
already small, providing the landless workers with land, like the ARBs, is also not a palatable
solution.
Second, continuously improve human capital. The efforts of TESDA to provide technical
vocational courses could enhance knowledge and upgrade the skills of the landless rural
workers so they could compete in the search for employment.
Third, there is a need to improve the supply of food to lessen consumer costs but this should
not be done without strategic support for smallholder farmers who will be affected by
importation. This proposal is expounded in the next section.
One option is to provide the landless workers with land. Part of the answer is availability of
land. Landholdings, as seen in the other parts of this paper, are already small and further
subdividing it might run counter to anti-poverty efforts. The other answer is the fact that
Section 22 of the CARL limits or excludes farmers based on a priority and landless rural
workers are not high in the order of priority. Technically, laws may be amended but again,
there might not be enough land for every landless farmer.
As such, perhaps the more feasible solution is to ensure job generation for landless rural
workers. This proposal rests on two requisites. First, it requires investments in rural areas
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that will generate employment and thus, the question is what will incentivize investors
(public and private) to set up their investments in Philippine countryside. Two, job
generation needs human capital investment where the workers would be provided with
knowledge and skills necessary to make them employable.
B. ON RICE SUFFICIENCY AND HIGH FOOD COSTS
The theory as well as the results of food sufficiency programs in the Philippines shows that
insisting on food self-sufficiency, usually equated with a no-import policy, as well as
government indecisions during critical periods hurt food consumers. Benefit cost analyses
also show that the support to rice producers do not make them globally competitive. In fact,
Briones [2013] even points out that no amount of assistance on irrigation could make rice
farming competitive. Others, like Habito, insist that food sufficiency as a policy and program
leads to high prices [Habito, 2015]. Roumasset [1999] states that objectives like food
security begets black-holes.
While rice producers stand to lose from opening the rice market to imports, smallholder
agriculture, in general, could benefit from channeling the budget and assistance from rice
production to other crops. It could be seen that insisting on a centrally-planned agriculture
frame hurt not only consumers but also non-rice smallholder farmers because resources are
being crowded out by rice producers. Since rice and other staples receive the governments
budget and attention, it unfortunately eases other farmers planting other crops. However,
not all rice farmers are efficient. But the focus on rice means less resources for structural
adjustment and diversification efforts for rice farmers so they could shift away from rice.
Moreover, it is unlikely that smallholder rice farmers take most of the benefits from
protectionist policies. Trade barriers usually benefit producers who could consolidate
resources and who could maximize the agricultural chain and sell to downstream domestic
markets.
In this context, two policy levers are being proposed for the consideration of the next
administration. In both levers, there is a need to assist rice farmers who are not efficient in
rice farming with structural adjustment programs so they could move out of rice or to move
to other endeavors. There is no sense in insisting on higher productivity and better
irrigation if the land is really marginal and if there are better ways of using the land and
human capital. Moreover, in both levers, effective and efficient rice farmers should be
assisted so they could also diversify to other crops and other sources of income to cushion
against shocks including entry of cheaper rice in the country.
If the decision is to remain protectionist, to retain the QR, or to put high barriers to entry
of imported rice, then support to consumers (including raising labor income and possibly
expanding the cash transfer program) needs to be provided so that poor consumers could
afford high food prices.
If the decision is to immediately remove the QR and to shift to a tariff regime or to a free
trade regime, then support should be immediately provided to less productive smallholder
rice farmers so they could move out of rice farming or out of agriculture. Some of the
proposals on this include providing cash transfers to cushion immediate the loss or
reduction in income. Farmers who will remain planting rice must have improved rice
productivity without incurring high production cost. However, a signal must be sent to the
farmers that they are not being abandoned. In the legislative arena, the Agricultural Rice
Tariff Act must be revised to include rice.
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Whether the decision is to immediately or gradually import rice, the point is to provide
assistance to different types of farmers (whether planting rice or not, whether productive or
not) so they could diversify their farms and be more resilient to shocks. Regardless of the
agricultural trade decision, support services aimed at diversification could mean providing
support services that are responsive to the needs of the farmers and the demands of the
market. These include the provision of public goods similar to the recommendations of
Balisacan, Sebastian and Associates [2006]: rural infrastructure like roads and irrigation,
information, market-oriented extension, research and development, favorable investment
climate, access to credit and crop insurance, market linkage, and transparent and
accountable agriculture governance. Moreover, other assistance such as the provision of
revenue-generating starter asset like select farm machines and equipment could also be
provided to strengthen the organizations of smallholder farmers. The experience in the DAR
ARCCESS project shows that the provision of the needed common service facilities gels and
solidifies farmers organizations and allows them to experience synchronized or organized
farming leading to improved scale. Some of the experiences in DAs FSSP show that the
distribution of farm equipment inspired private mechanization.
Regardless of whether to liberalize rice or not, there is a need to allow more competition in
the transport sector particularly in the management of ports. High transportation costs must
be curbed because this neither benefits smallholder farmers nor poor consumers.
Finally, whether the decision is to immediately or gradually import rice, there is a need to
continue the role of the NFA as the buffer stock of rice. The changes in climate and food
patterns not only in the Philippines but also in neighboring countries that have a competitive
advantage in rice must be anticipated. These countries might be constrained to export rice.
Vice versa, changing conditions in the Philippines might not allow domestic farmers to
produce the needed rice. In this regard, the NFA must determine the consumption
requirements and ensure that a sufficient stock is available. However, the NFA must not
control who should import. The private sector must be allowed to import rice into the
country to add to the buffer and to send a signal that there is sufficient supply.
A final note on food prices: Recommendations from smallholder farmers
Discussions with various smallholder farmers in the Philippines including the result of the
nationwide focus group discussions conducted by the Development Academy of the
Philippines [2016] show that smallholders, when asked for thoughts on how their agriincome could improve, recommend putting up price control mechanisms to address the
buying price of their products. They lament the low price they put up with various traders
and thus want the government to set floor prices for agricultural goods. In many discussions,
smallholders would also want subsidy on the cost of inputs like seeds and fertilizers. They
recommend having a price ceiling for these important production inputs.
Listening to smallholders through participatory governance efforts could sway government
officials to agree to these protectionist suggestions. These are important and reasonable
recommendations coming from specific sub-sectors (e.g. rice farmers, sugar farmers).
However, these proposals should be viewed in light of the whole agricultural sector (in terms
of the resources that could be used for other crops) and in light of the countrys economic
and fiscal considerations (in terms of resources that could be used for other public goods like
health and education). Moreover, as discussed, the unintended consequences of food selfsufficiency - high food prices and rice mono-cropping - should be managed by improving
peoples purchasing power. The other unintended consequence, the maintenance of costly
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and corruption-prone agencies, which are tasked to set price ceilings and price floors, should
be part of policy considerations.
C. CARP COMPLETION AND AGRICULTURE POLICIES
The non-favoring of traditional crops like rice, the setting up of mechanisms to put up rural
non-farm investments, and the freeing of land markets are often included in packets of
recommendations for improving agriculture and overall growth. Completing the agenda
usually include the swift completion of CARP and developing a flexible and responsive
market for land rights [World Bank, 2007; Briones, 2013]. While this package of proposals is
well-founded, a discussion on completing CARP in relation to secure property rights must
be closely examined.
Secure property rights means knowing who owns or possesses the property (including the
agricultural land), who benefits from it, and who should carry its costs. Secure property
rights means knowing who rightfully decides on and makes transactions over the land and
its produce. Non market distorting support services removing the QR, ending the seed and
fertilizer dispersal programs, providing infrastructure, eliminating asymmetry of
information, facilitating access to credit and building the capacity of smallholder farmers
will not be effective without secure property rights. If land tenure and ownership is unsure,
it is difficult to provide clear assistance including the incentives to diversify from rice or
totally from agriculture.
However, completing CARP should not just be on finishing the remaining land acquisition
and distribution (LAD) balance. That is a huge part particularly because the bulk of the
balance is in sugar-producing Negros Island where most of the landless farmers are below
the poverty line. However, completing CARP must also mean looking at the insecure land
tenure of smallholders from the land that had been distributed. Second generation land
problems are prevalent particularly the issue of actual land transfer (either through
succession or purchase/mortgage) without documentation and concomitant change of title
owner/s. The land administration system and the archaic taxation system make it very
difficult and expensive to transfer agrarian land title. The frowning on ARBs who sold or
pawned their awarded land added to the numerous under-the-radar transactions.
As such, there is a need to simplify and to remove the opaqueness and vagaries in the land
administration system, taxes on estate, filing of estate settlement and land registration to
make sure that agrarian land, which were informally transferred would be reflected in actual
land titles.
Aside from succession, the subdivision of collective land titles must also be completed to
truly complete CARP. Abruptly ending the program without subdividing the land based on
the preferences of ARBs (e.g. individual or small group land title) is perpetuating their land
tenure insecurity. This insecurity could contribute to difficulties in deciding to diversify out
of rice or out of agriculture.
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22
Formerly known as Program Beneficiaries Development (PBD) but recently renamed Technical Advisory and
Support Services (TASS).
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also did not provide for the transfer of awarded land when the beneficiary grows too old
to till the land.
2. THE EFFECT OF DIFFERENCE BETWEEN TENANTS AND FARMWORKERS (REGULAR AND
SEASONAL) ON POST-DISTRIBUTION AGRI-ENTERPRISES
When the CARL decided to expand the coverage of agrarian reform to plantations and
haciendas, it did not take into account prevailing farm and employment practices in these
plantations and haciendas. This neglect resulted in issues related to the provision of
support services and the handling of post-distribution agri-enterprises.
Most former tenants knew the supply chain, from production to markets. When land was
awarded to them, most of them would know how to manage their land and make these
productive. Human capital was almost a non-issue. In most cases, their challenge was
their lack of agricultural financing, which was provided by their former landlords. To an
extent, these tenants are similar to regular farmworkers in knowing their production and
processing of crops. However, regular farmworkers would have difficulty managing ARB
cooperatives, which were snowballed from their old workers cooperatives or labor
unions.
In contrast, the more feudal hacienda system that predominate the sugar lands of Negros
had no tenants and few regular employees since most farmworkers were
temporary/seasonal workers and were usually organized into work gangs. Many were
migrants from other places. Some own land where they live and take on temporary farm
work in other places while waiting to harvest their own land. Seasonal farmworkers,
when turned into ARBs, would often have a hard time making their land productive and
earning from their awarded land. Human capital and financial wherewithal are usually
not available to immediately undertake farm and enterprise work.
B. UNFORESEEN EVENTS
1. DEVOLUTION OF AGRICULTURAL EXTENSION
While the DAR provides support services to agrarian reform beneficiaries, its
intervention is limited since most of the fund for assistance for the agriculture sector and
the farmers are with the Department of Agriculture. It was originally conceived that the
Department of Agriculture (DA) would be the agency that will provide technical and
other assistance to the ARBs such as the provision of agricultural extension services,
provision of agricultural inputs, assistance in marketing, facilitation of credit access and
provision for rural infrastructure.
But the Local Government Code of 1991 devolved agricultural extension and on-site
research services and facilities to barangays, municipalities, and provinces. The
supervision of agricultural extension workers was turned over to local governments and
is now the responsibility of provincial and municipal agriculturists. The power and
responsibilities of the Department of Agriculture are now only at the national and
regional levels only. It could be surmised that this is the reason why DA became focused
on improving the productivity of crops.
As a result of devolution provincial and municipal level programs were disrupted. Many
LGUs were not prepared or lacked the resources to implement agriculture-related
programs previously undertaken by the national government in their respective
provinces and municipalities.
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bilateral support to program beneficiaries development. DAR was able to access official
development assistance (ODA) by presenting ARC development packages focused on a
defined and manageable area with a complementary menu of development interventions,
from institutional capacity building to agri-enterprise development and support rural
infrastructure.
The package of development interventions in the ARCs triggered
considerable interest of international development partners and donor institutions to extend
loans and grant assistance to DAR.
The considerable inflow of ODA from multi-lateral and bilateral development partners
became the significant source of needed funds to supplement limited government budget
particularly for program beneficiaries development of CARP. For the past 2 decades (19922012), investment in the ARCs has been substantial, encompassing a wide spectrum of
development assistance to ARBs including, smallholder farmers, landless workers,
fisherfolks, indigenous people, rural women and the other marginalized sector in the rural
communities. The increasing ODA portfolio of DAR manifested the strong support and
confidence of donor communities and international financial institutions to implement
development cooperation programs.
DARs foreign assisted projects (FAPs) enabled the transformation of ARCs into economic
growth points in rural countryside and continue to serve as convergence areas for interagency collaboration and meaningful partnership with international development partners.
The FAPs are aimed to contribute significantly in providing the necessary support services
with the end goal of uplifting the socio-economic status of the beneficiaries of CARP. The
FAPs provided DAR considerable leverage in implementing integrated area-focused
development that enabled ARBs to expand production areas with better market
opportunities and access to credit and to engage in agri-enterprises business, and increase
income with more livelihood opportunities.
Focused on agrarian reform communities (ARCs) - Agrarian Reform Communities are
clusters of barangays or villages which are composed and managed by agrarian reform
beneficiaries who shall be willing to be organized and to undertake the integrated
development of an area and/or their organizations/cooperatives (RA 9700). ARCs were
designed as nucleus estate, kibbutz, or moshav for integrated economic development. ARCs
were intended to group together farmer beneficiaries or their cooperatives under one
umbrella (sponsorship speech of Rep. Cojuangco on HB 13875 and sponsorship speech of
SB 2019 by Sen. Alvarez).
When RA 9700 was being deliberated by both the Senate and the House of Representatives,
ARCs were envisioned to be provided with post-harvest facilities such as warehouses and
storage facilities including refrigeration equipment for perishable crops; moreover, in ARCs,
processing plants such as rice mills, corn dryers, copra dryers and coconut oil mills will be
set up depending on the situation and demand of each ARC (sponsorship speech of Rep.
Cojuangco on HB 13875 and sponsorship speech of SB 2019 by Sen. Alvarez). This was the
reason why the DAR established ARCs. The DAR and other stakeholders of CARP viewed
ARCs as the vehicle of assistance intended for ARBs.
The ARCs were clever mechanisms at the time when DAR had limited resources for support
services. The ARCs, particularly the ARC Development Plans, were utilized to propose and
develop foreign-assisted projects.
The preliminary findings of the DAR-commissioned Philippine for Economic Development
(PCED) study notes that poverty incidence in ARCs went down faster than non-ARCs. The
End of Term Report by Secretary Virgilio de los Reyes
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full results of the study will be available in June 2016 (see study details in the section on
policy studies).
B. SUPPORT SERVICES DELIVERY MECHANISM DURING THE PNOY
ADMINISTRATION
One of the critical efforts introduced during this administration was the strengthening of the
smallholder farmers organizations in ARCs and outside of ARCs (also called agrarian reform
areas) to complement the crafting of ARC Development Plans. To complement the creation
of ARCs, DAR endeavored to facilitate discussions with and eventually helped farmers
organizations become strong and more resilient. The unit of assistance, and later on, of
analysis and monitoring, became the farmers organizations. This was evident in the creation
of new projects and business models that provided direct and strategic assistance to farmers
organizations.
1. ARCCESS
The Agrarian Reform Community Connectivity and Economic Support Services
(ARCCESS) was a project conceptualized in 2010 to 2011 and eventually rolled out
starting 2012. The ARCCESS project aims to address the high production cost, low profit
and thus, low agri-income of smallholder farmers. These goals will be met by
strengthening farmers organizations by providing them access to important goods (such
as farm machines and equipment) and services (capacity building and credit facilitation).
In receiving these interventions, farmer-members bond together to converse about how
to implement their sub-project. The ARCCESS project assisted farmers organizations in
synchronizing and organizing the activities of smallholder farmers in order to attain
economies of scale and agricultural efficiency. In so doing, numerous ARCCESS
subprojects were documented to obtain lessened production cost and improved net
income.
In a sense, the ARCCESS project addresses the gaps in the provision of support services.
It has two major components: first, the provision of professional services and second, the
provision of common service facilities or farm-machines and equipment to farmers
organizations. (See Table 17 for the Framework of the ARCCESS Project)
Professional services are technical services which were performed by independent
organizations civil society organizations, private institutions, public institutions - with
proven track record in the provision of such services. Their main goal was to increase
the farm income of ARBs and other smallholders by improving the capacity of the
farmers organizations to undertake agri-business activities. As such, the provided
services were usually on, (a) market-oriented agri-technology or agri-extension, and (b)
business development. The service providers conducted training, mentoring and
coaching activities with smallholders and farmers organizations on organizational
development, product or crop development, operational management and financial
management. In some cases, back office support such as bookkeeping and recordkeeping were supplied by the professional service providers that were contracted by the
DAR to assist the smallholder farmers organizations. The ARCCESS project did not
provide one-size-fits-all assistance.
The other component of the ARCCESS project was the provision of common service
facilities or CSF to smallholder farmers organizations. CSFs are farm implements,
equipment and machineries that were given as grant to farmers organizations on
condition that these will be used as a business asset. As a business asset, the CSF exacted
End of Term Report by Secretary Virgilio de los Reyes
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the payment of user fees that were utilized to sustain the operation and maintenance of
the CSFs. In many cases, the user fees were used by the farmers organizations to buy
new equipment or better implements. The CSFs were downloaded to farmers
organizations with accompanying professional services.
Aside from professional services (business development and agri-extension) and
common service facilities, the ARCCESS project also included three other important
components: enabling access to credit and crop insurance, provision of rural
infrastructure, improving the policy environment.
Enabling access to credit and crop insurance meant developing new loan packages
(including the Agrarian Production Credit Program), providing business and financial
assistance to farmers organizations, and helping financial institutions manage their risks
attendant to dealing with farmers: these include credit guarantees, weather-based
insurance, and collation of credit information.
Provision of rural infrastructure (e.g. irrigation, post-harvest facilities, and local roads)
enhanced the productivity, reduced farm inefficiencies, and improved the mobility of
goods and people. The DA and DAR provided clear mechanisms for prioritizing the
provision of rural infrastructure, particularly on farm-to-market roads. Among the
criterion for prioritization are the road network and connectivity validated through geotagged maps, the influence area of the road where it is located in an area with highest
number of poor but with economic potentials for agri-enterprise development and the
availability of partnership between smallholder farmers and investors.
Improving the policy environment meant providing assistance to enhance the
smallholder farmers property rights. This included the stabilization of their land tenure
through subdivision of collective title and transfer of land title to heirs and others. Aside
from this, efforts were also made to ensure simplify the procedures for registering and
re-registering farmers organizations and cooperatives (with the SEC and CDA) and
putting them in the formal economy (with the BIR).
The ARCCESS project had clear exit mechanisms (since it was a project that provided
subsidies particularly in the form of professional services and common service facilities).
The ARCCESS project ends assistance to farmers organizations through three
mechanisms: i) Farmers organizations developed their capacity to sustain their
agricultural enterprise and they no longer need their professional service providers; ii)
Farmers organizations decided to retain their partnership with their service providers
using their own funds or they were able to source other means to fund their service
providers; and iii) Farmers organizations failed to make their enterprise fly and as such,
in extreme cases, the CSF were transferred to other farmers groups.
Under the ARCCESS project, two types of subprojects emerged as good models of support
services that synchronize the efforts of smallholder farmers without compromising their
property rights. These are the sugarcane block farms and the subprojects on cacao
contract growing.
2. SUGARCANE BLOCK FARMS
Sugarcane block farming is the synchronization of the activities in small sugar plots so
there was organized planting, buying of inputs, hauling of canes, and bidding of
warehouse receipts. It is the management of small plots of sugar land into a business
unit composed of 30 to 150 hectares. This business unit, managed by the farmers
organizations, implements the activities of the block farm in order to reach scale and
End of Term Report by Secretary Virgilio de los Reyes
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enjoy reduced cost from buying inputs and undertaking farm to marketing logistics. This
operational management of small sugar farms produces scale without consolidating land
ownership or threatening the property rights of the farmers.
The following are some of the elements of sugarcane block farming:
The primary element in block farming is the strengthening of farmers juridical entities.
The farmers organizations manage the block farm, at first, with the assistance of
professional business development specialists and agri-extension workers. The
organizations also manage the CSF, the production financing of the participants, and the
bidding of the quedan or the warehouse receipts. It is surmised that sugar block farms
are succeeding because the government tapped their farmers organizations as business
unit. The farmers groups, which are complex, adaptive systems [Ostrom, 1999], are able
to enforce agreements [Greif, 2005] within block farms.
The second element is the provision and transfer of agri-technology and agri-extension
services as well as business development services including the provision of back office
assistance through record keeping and bookkeeping. The third element is the
synchronized buying of inputs resulting in discount rates. When inputs like canes,
fertilizers, herbicides and pesticides are purchased in bulk and before other farmers are
start buying their inputs, farmers from block farms benefit from wholesale prices and
early buying discounts.
The fourth element is organized harvesting, hauling and marketing of the canes in order
to reduce trucking costs. The consolidated handling of the quedan or the warehouse
receipt could also lead to better price [Capacio and De Los Reyes, 2016].
The fifth element is farm mechanization. The DA, DAR and SRA provided farm machines
and equipment to block farms as business assets. The sixth element is access to financing.
The farmers need resources to be able to utilize high-yielding varieties, buy inputs, hire
farm workers, and hire farm machines and trucking services. The farmers also need
resources for consumption, education, health and other household requirements given
the long gestation of sugarcanes [Capacio and De Los Reyes, 2016].
With these elements in place, the first year of sugarcane block farm implementation in
the Philippines showed encouraging results. In pilot areas/organizations, block farms
gained an average increase of 32.8% in terms of cane yield per hectare. In peso terms,
this could translate to an income increase of PhP 25,000 per hectare at current prices.
(See Table 18 for production increase in pilot sugar cane block farms)
3. CONTRACT GROWING ON CACAO
The cacao contract growing subproject, a partnership among smallholder farmers
organizations, the DAR, and Kennemer Food International (KFI), has been ongoing since
2013. Some of the ARCCESS subprojects that were engaged in cacao production decided
to partner with KFI which sells their produce to Mars Chocolate. The smallholder
farmers purchase their seeds from KFI through agricultural financing from LANDBANK
and during harvest, the farmers sell their produce to Kennemer. In this partnership, the
DAR shouldered the initial costs of meetings or the getting to know you phase to lessen
the farmers and Kennemers transaction costs. The DAR also provided business
development services to farmers organizations. In cacao areas that were also covered
by the Second Agrarian Reform Communities Project (ARCP II), funded by the Asian
Development Bank, the cacao subprojects which is one of the key activities under agri-
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enterprise component also received rural infrastructure such as farm to market roads
and post-harvest facilities.
4. THE MISCONCEPTION ABOUT THE ARCCESS CSF:
When the project was being rolled out, there were misconceptions about its objectives
and project concept. One of the misinterpretation is in the provision of free common
service facilities or farm machines and equipment. Others initially thought the DAR was
undertaking a machinery dispersal program. Others thought the DAR was providing the
full package of CSF requirements of the farmers groups.
A Congressman even raised the issue of tractors and trucks that were allegedly
overpriced and provided with wrong implements.
The common service facilities intends to contribute to the strengthening of smallholder
farmers organizations so they could synchronize their members farming activities and
reach volume or scale in buying inputs, undertaking production, and marketing their
products. The CSF were meant to help improve the farmers bargaining power, reduce
their costs, and improve their income.
Given this model, the DAR ARCCESS project DID NOT MEAN to:
Provide the full package to farmers organizations - The assistance was meant to
provide the initial CSF which would earn the net income that is sufficient for the
groups to operate, maintain and replace the starter package when the organizations
are ready to scale up or expand their operations. The CSF were meant to induce
organized and synchronized management of small farms and not to address all the
farm mechanization requirements.
Assist smallholder farmers infinitely - In the design, there are clear entry and exit
mechanisms.
The entry mechanisms are to look for smallholder farmers
organizations that are ready to undertake agricultural enterprises and to provide
these with tailor-fit assistance (including CSF). The exit mechanism is to ensure than
in 2 to 3 years, the farmers groups could already manage their agri-enterprises, be
able to pay for their service providers and buy replacement, new, or additional CSF.
Give assistance to all smallholder farmers organizations - The intent is to reach as
many smallholders and ARBs as possible through business hubs and service areas
that could benefit from spillover knowledge and skills and use of CSF (provided user
fees are paid).
As a business and starter asset, the DAR (through its own Bids and Awards Committee or
through the Procurement Service) wanted to procure 120 HP tractors because these will
earn more user fees among members and could be used by other farmers in service areas
during downtime. In this case, 120 HP tractors could use better implements (e.g.
subsoiler and mouldboard plow) and could result in better land preparation. However,
90 HP tractors were also procured for areas where these were the request of farmers
groups and during the period when supply availability was mostly 90 HP.
In Negros Occidental, at least three of the smallholder farmers organizations, which are
part of the sugarcane block farm project, were able to purchase improved and additional
implements out of the positive income from their 120HP tractors and implements. One
of these organizations was able to give a loan (without interest) to another smallholder
organization using its tractor proceeds.
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The Occidental Negros Agrarian Reform Planters Association (ONARBPA) was provided
with three 120HP tractors and implements so they will be able to effectively manage
their total service area of 610 hectares covering 782 smallholder sugar farmers. Like
other organizations, they were likewise given agri-extension as well as business
development services to aide in their farm management.
In their latest assessment of income and expenses (6 August 2015), their gross income
from use of these CSF was PhP 1,940,478.59 and their expenses amounted to PhP
934,217.97 (to cover fuel, payment of tractor operator). (See Table 19). This latest
report is consistent with the trend of increasing income and expenses in sugar block
farms.
Out of their net income, ONARBPA was able to undertake the following activities:
Maintain their tractors through change oil and purchase of new tires;
Purchase Geographical Positioning System (GPS) that were used during the survey of
actual area for plowing and harrowing. The GPS amounted to PhP 23,000.00;
Purchase 90HP tractor amounting to PhP 2,200,000.00;
Bought a mouldboard for improved land preparation. This cost them PhP 110,000.00
Bought 2 disc plow amounting to PhP 140,000.00 each;
Provided a loan to Nagasi ARB Cooperative (NARC) amounting to PhP 140,000.00.
NARC used to buy 2 disc plow; and
Invested PhP 500,000.00 to cultivate 6-hectare sugarcane farm.
Like ONARBPA, the NARC was provided with a 120HP tractor with implements. Their
income and expenses from these CSF are steadily increasing. Out of their net income,
NARC was able to maintain their equipment, and purchase a second plow amounting to
PhP 35,000.00. Through a PhP 140,000.00 loan from ONARBPA, whom they consider
their big brother organization, they were able to purchase 2 disc plow.
Out of their positive net income from their 120HP tractor and implements, the
smallholder farmers in Sag-ang in La Castellana were able to purchase a furrower
amounting to PhP 81,000.00. They also purchased two units of GPS amounting to PhP
35,000.00. For their part, the Gen. Malvar ARB MPC was given a 120HP tractor. Out of
their net income, they purchased one unit of GPS amounting to PhP 23,000.00.
5. PARTNERSHIP AGAINST HUNGER AND POVERTY.
DAR, DSWD and DA are undertaking collaborative efforts to increase farm productivity
and income, ensure food security and mitigate levels of malnourishment in the rural
communities through the Partnership Against Hunger and Poverty (PAHP). This
partnership program builds on the success of the Brazilian Government in providing
agricultural extension services linked to the nutrition needs of the national feeding
program. The direct recipients and key stakeholders of the PAHP are the
Day care children and parents group
Smallholder farmers organizations and family farms, and
Participating local government units (LGUs) and collaborating national government
agencies.
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Under the PAHP, pre-schoolers enrolled in the day care children under the DSWD
Supplementary Feeding Program will benefit from the nutritional gains of fresh and
chemical-free vegetables that will be supplied by the farmer organizations under the
agri-enterprise development of DAR and the food security program of DA. Farmer
organizations will benefit from increased income through organized production and
logistics as well as market-referenced price of their produce. The PAHP will enhance the
delivery mechanism of social and economic services in the rural communities. DAR and
DA provide essential support services (business development and agri-extension) and
business assets (farm machines and equipment) to the farmer organizations to produce
the required food items for the supplementary feeding program. The DSWD and the local
government units (LGUs) render assistance through determining the nutritional needs of
children, organizing the parents for food preparation and provision of funds for the
supplementary feeding program in the Day Care Centers.
During the initial phase of PAHP implementation, the United Nations agencies,
particularly the World Food Programme (WFP) and the Food and Agriculture
Organization (FAO) extended technical assistance and advisory services on the
production and consumption of the food items for the supplementary feeding program.
The implementation of PAHP, which was pilot-tested in the provinces of Camarines Sur,
Camarines Norte and Sorsogon in Region V was rolled out in priority municipalities in
Regions VIII (Eastern Visayas) and IX (Zamboanga Peninsula). DAR and DA continue to
provide technical assistance to ARC organizations and family farms in the production of
food items required by DSWD for the supplementary feeding programs in the Day Care
Centers. The PAHP Convergence Team at the regional and provincial levels are closely
coordinating with the local government units and local organizations the implementation
of agreed PAHP work and financial plan in the respective municipalities.
DSWD and DAR has prepared and submitted to the Government Procurement Policy
Board (GPPB) the proposed Community Participation Procurement program that would
allow DSWD and LGU to directly purchase food items from agrarian reform beneficiary
organizations (ARBOs) and farmers association involved in the PAHP.
DAR conducted regional planning and budgeting workshops to ensure fund availability
for PAHP activities from its regular budget for 2016 and 2017. In like manner, DA has
allocated funds to provide technical assistance and production inputs to participating
farmers organizations. DSWD has also allocated its budgetary support for
supplementary feeding program and support to the parent service providers in the day
care centers. The PAHP Convergence Team is assisting the LGUs in the monitoring of the
PAHP activities.
The Memorandum of Understanding (MOU) between the DAR, DA and DSWD has been
prepared and is awaiting the signatures of the Secretaries. The signing of MOU will allow
the roll-out and expansion of the PAHP to other regions in the country.
DAR, WFP and IFAD had initial discussions and agreement on the integration of the PAHP
in the on-going foreign assisted projects of DAR such as the Convergence on Value Chain
Enhancement for Rural Growth and Empowerment (ConVERGE) as a social protection
component.
DAR, DSWD and DA have adopted the following strategic measures to ensure
sustainability and institutionalization of the PAHP;
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The establishment of PAHP Convergence Team at the Regional and Provincial level
comprising of representatives from DAR, DA and DSWD to oversee and coordinate
PAHP implementation at the field levels.
Continuing collaborative efforts of DSWD, DA, DAR and LGU in sustaining the gains of
the initial phase of PAHP implementation toward rolling out the PAHP in other
regions of the country.
Lobby for Legislative support for PAHP implementation and budgetary support for a
nation-wide coverage.
Drawing on experience gained and lessons learned from the initial phase of
implementation, and building on the support of WFP and FAO, the PAHP will also lend
support to the School Feeding Programs of the Department of Education (DepEd), the
Feeding Program for Severely Malnourished of the Department of Health (DOH), the food
requirement for inmates of the Department of the Interior and Local Government (DILG)
and the Community Canteens for affordable meals workers and laborers in special
economic zones.
C. FOREIGN-ASSISTED PROJECTS (FAPS)
1. FAPS BEFORE THE PNOY ADMINISTRATION
During the period 1992 to 2010, bilateral and multi-lateral financial institutions
manifested strong support for the ARC development strategy of DAR with the
implementation of 61 FAPs with a total amount of PhP76.79 billion. Of this amount, 66%
were funded through loans while 9% came from grant assistance. The balance of 25%
was the counterpart of government that was provided in cash or in kind and sourced
from the national government budget, participating local government units, ARBOs and
farmer cooperatives. (See Table 20)
The DAR consistently showed that it could implement projects with minimal cost.
Internal assessments of past and existing projects as of 2010 also showed that household
income increases could be attributed to foreign-assisted projects or FAPs. (See Table 21)
Beyond its results, the DARs PBD performance, specifically its implementation of
foreign-assisted projects, is well-appreciated by donors and the National Economic
Development Agency (NEDA). In NEDA portfolio reviews, the DAR has been commended
for the following:
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23
Note on acronyms. ARISP means Agrarian Reform Infrastructure Support Project, ARCDP means Agrarian
Reform Communities Development Project, ARCP means Agrarian Reform Communities Project, STARCM
means Support to Agrarian Reform in Central Mindanao, WMCIP means Western Mindanao Community
Initiatives Project, while NMCIREMP means Northern Mindanao Community Initiatives and Resource
Management Project.
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the approval of the NEDA Investment Coordination Committee (ICC) for one-year
extension to December 2015. The Project loan closing date is slated in April 2017.
As of 15 March 2016, the Project achieved the following:
An over-all physical accomplishment of 95.40% with the completion of all the
approved institutional and agriculture and agribusiness development support
subprojects.
A total of 394 support rural infrastructure subprojects were completed. Of the
completed subprojects, 162 are farm-to-market roads (FMRs) and 12 units of
bridges, 120 irrigation facilities, 68 post-harvest facilities (PHF) and 70 units of
potable water supply (PWS) and six (6) Agrarian Information and Marketing
Centers (AIM-Cs).
Financial performance progress was 99% with the funds almost fully obligated.
There were 68,000 ARBs who participated and benefitted from the
complementation of development support services.
To date, there are still 44 on-going rural infrastructure subprojects whose
implementation will be completed during the 3rd quarter of 2016. These consist of
16 FMRs, 2 bridges, 12 irrigation facilities, 8 PWS and 6 PHF. The delay in
implementation of these remaining subprojects were caused by the delays in the
procurement process by the implementing agencies like DPWH for FMRs and bridges
and NIA for irrigation facilities, and adverse weather conditions affecting the
schedules of civil works and construction activities being undertaken by the
implementing agencies.
DAR secured the approval of the NEDA/ICC approval on the extension of the Project
and the endorsement of DOF for the increase in cash deposit and corresponding
reallocation of the ARISP III loan proceeds. DAR also obtained the concurrence of
JICA on the Project extension and the increase in cash deposits and reallocation of
loan proceeds. Payments due to NIA and DPWH are now being processed which are
expected to expedite completion of the remaining subprojects during 2016.
The remaining project supervision and monitoring of Project activities including the
preparation of Project Completion Report are now mainstreamed to the Project
Management Service (PMS) of DAR. Processing of full payments and closing of
financial books of accounts are also mainstreamed to the Finance and Management
Service of DAR.
b. Second Agrarian Reform Communities Project (ARCP II)
This Project supported the PNoy administration policy of providing support services
not only to ARCs but also to non-ARCs in the Project covered areas in Southern
Philippines. ARCP II is aimed to reduce poverty and thus improve the socio-economic
status of the identified communities in selected ARC clusters. The Project was
designed to implement complementary support services that would improve access
of the small farmer and landless farm workers to sustainable livelihoods, develop
agribusiness increase and strengthen local organizations.
ARCP II which is supported with financial assistance from the Asian Development
Bank and OPEC Fund for International Development (OFID) commenced
implementation in March 2009 and expected to be completed in March 2015. There
End of Term Report by Secretary Virgilio de los Reyes
Page | 83
were problems encountered during the Project start-up which is due to the difficulty
of participating LGUs in complying with the NG-LGU cost sharing policy of 50-50 for
5th and 6th class and 40-60 for 3rd and 4th class. DAR sought the assistance of the
oversight agencies and the approval of the Office of the President for the suspension
of the NG-LGU cost sharing policy. ARCP II extended capacity building and technical
assistance to the accounting and budget staff of the LGU Project Office in the
preparation and timely submission of fund disbursement reports including
assistance in the procurement procedures for civil works.
As of 31 March 2016, the Project achieved the following:
Based on global targets and approved workplans, ARCP II accomplished 71% of
its physical targets.
A total of 263 subprojects were completed. In terms of subproject type, this is
broken down as follows: i) 115 access infrastructure with total length of 325.43
kms., ii) 4 small scale irrigation with a total service area of 1,230 hectares, iii) 29
units of post-harvest facilities, iv) 109 social infrastructure consisting of 99
classrooms and 61 units of multi-purpose buildings.
Under the Agri-enterprise component, there were 18,219 ARBs and non-ARBs
who were enabled to access credit from micro-finance institutions and Land Bank
through the AGRICASH program. A total of 2,703 small farmers who were
assisted in value-adding agri-enterprises such as organic rice production,
processing and marketing, pili processing, wellness products among others.
There were 234 ARB and non-ARB organizations assisted through capacity
building in organizational strengthening and financial management.
THERE ARE STILL 205 ON-GOING RURAL INFRASTRUCTURE PROJECTS THAT NEED
TO BE PHYSICALLY COMPLETED BY DECEMBER 2016. THE DELAYS IN THE
IMPLEMENTATION AND COMPLETION OF THE RURAL INFRASTRUCTURE
SUBPROJECTS WERE DUE MOSTLY TO THE TEDIOUS PROCUREMENT PROCEDURES
AND SUBMISSION OF COMPLETE FUND DISBURSEMENT REPORTS BY THE
PARTICIPATING LGUS PARTICULARLY IN REGION VIII AND IN THE ARMM. FOR THIS
PURPOSE, DAR OBTAINED THE APPROVAL OF NEDA ICC FOR PROJECT EXTENSION
OF 1 YEAR TO COMPLETE PHYSICAL WORKS BY DECEMBER 2016 AND THE
FINANCIAL LOAN CLOSING BY JUNE 2017.
c. Mindanao Sustainable Agrarian and Agriculture Development Project
(MinSAAD)
The MinSAAD project builds on the innovative approaches, best practices and lessons
learned from the earlier Phase I Mindanao Sustainable Settlement Area Development
Project and other local and foreign-assisted projects of DAR. The MinSAAD is
designed as an integrated, area-based approach to rural and agriculture development
with funding assistance from the Japan International Cooperation Agency (JICA). The
Project objective is to increase agricultural productivity and income of agrarian
reform beneficiaries (ARBs) and other small farmers through the provision of rural
infrastructure and agricultural support services, organizational capacity building.
The implementation of the Project will contribute to increased competitiveness and
sustainability of agriculture in twelve (12) settlements within seven (7) provinces in
Regions X, XI and XII.
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Upon the effectivity of the Loan Agreement, MinSAAD commence in 2012 and is
expected to be completed in 2018. During Project start-up activities, MinSAAD
undertook preparatory implementation involving barangay consultations, updating
the participatory settlement development plans establishing Project management
and organization structure. However, actual implementation of rural infrastructure
particularly for farm to market roads, bridges and irrigation were deferred due to the
delay in the procurement and engagement of consulting services under the Project.
After three (3) bidding process, the Project completed the procurement process in
October 2015 and eventually mobilized the Project consultants on November 2016.
The MinSAAD implementation plan involves preparation, approval and
implementation of 349 subprojects of which 215 are rural infrastructure and 134
subprojects under agriculture, agribusiness and agro-forestry development. Project
consultants have been engaged for the Phase I involving the review, validation and
design supervision of 136 subprojects. The remaining 213 subprojects will be
covered under the proposed Phase II contract of consulting services which is
scheduled for procurement starting July 2016.
As of 31 March 2016, the MinSAAD Project undertook the following:
Preparation, review and approval of 68 subprojects under agriculture,
agribusiness and agro-forestry development component that will directly benefit
a total of 36,029 ARBs and small farmers
Review and approval of 99 rural infrastructure subprojects of which 24 are FMRs
(156.45 kms.), 5 bridges (223 linear meters), 14 communal irrigation projects
(1,099 hectares), 59 units of PHF, solar dryer/warehouse and 16 units of potable
water supply.
Of the approved rural infrastructure subprojects, 3 units of potable water supply
were installed directly 831 households, 2 units of PHF have been completed, and
15 units are on-going construction while the remaining units are under
procurement process.
Under the institutional development, there were 52 ARB organizations and 6
women organizations that were provided capacity building for organizational
strengthening. In addition, there were 14 water users association that were
organized and trained to operate and maintain the installed potable water supply
system.
MinSAAD is closely collaborating with DPWH and NIA for detailed design review and
finalization program of works for the approved FMRs and bridges and communal
irrigation projects. The outcome of the review and program of works will be
presented to the Subproject Approval Committee (SAC) on 15 June 2016 for
concurrence. On this basis, DPWH and NIA will undergo the procurement procedures
for the civil works. Actual implementation of civil for these rural infrastructure
subprojects is expected to commence in September 2016.
d. Italian Assistance to Agrarian Reform Community Development Support
Program (IARCDSP)
This Project is designed to contribute to the improvement of the living conditions of
rural families in 35 ARCs and non-ARCs in Saranggani, Sultan Kudarat, Maguindanao
and Lanao del Sur. The Project aims to increase farm incomes and improve access to
End of Term Report by Secretary Virgilio de los Reyes
Page | 85
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DAR identifies the priority areas for the TPKP based on the needs defined in the ARC
development plans and local development plans and in close consultation with local
authorities. The DPWH through their district offices is tasked to construct, install and
establish the bridges.
f.
for
Rural
Growth
and
Page | 87
The Central Project Management Office (CPMO) will be based in Cagayan De Oro City.
DAR Region X has already designated a working office space for project management and
staff within the DAR Regional Office compound. DAR has already received the designated
representatives from participating government agencies and institutions that will
compose the Project Steering Committee. This committee is scheduled to meet during
second week of July 2016.
3. REMEDIAL MEASURES UNDERTAKEN
To address those gaps and delays in the implementation of FAPs, the DAR took measures
to enhance the transparency and efficiency of the projects. DAR in close collaboration
with the government implementing agencies and participating LGUs prepared concrete
catch up with established timelines to meet physical targets and financial disbursements.
In the case of ARISP III, the necessary supervision works, monitoring of physical progress
and processing of remaining payment claims have now been mainstreamed to the DAR
Project Management and Financial Services. To address the inability of LGUs (belonging
to 3-6th income classes) to put up project equity under ARCP II, DAR requested the
suspension of the cost sharing policy into one that is responsive to the development
concerns of low-income LGUs. With the support and endorsement of the oversight
agencies, DAR eventually obtained the approval of the Office of the President (OP). To
further ease the LGU burden on required equity and avoid Project loan cancellation, DAR
also sought OP assistance for the provision of NG Assistance to LGUs (NGALGU) funds
which shouldered the 25% of the required LGU equity.
In addition, ARCP II extended capacity building and technical assistance to the
accounting and budget staff of the LGU Project Office in the preparation and timely
submission of fund disbursement reports including assistance in the procurement
procedures for civil works. In addition, a Performance-Based Grant System (PBGS) was
also set up where LGUs will receive 20% of total project cost at the end of the project
term if they comply with all the reforms stipulated in the project agreement. In the case
of the Italian ARCDSSP, DAR closely coordinated with the Department of Finance (DOF),
Department of Foreign Affairs (DFA) and the Italian Embassy to amend the critical
provisions of the Financing Agreement related to the requirement for 20% Italian
content in loan utilization and the payment of all contracts in Euro. This was eventually
addressed with the issuance of the Note Verbale by the DFA and concurrence of the
Italian Government.
Despite these concrete changes, some of the FAPs remain delayed. In-depth data
gathering showed that concerns on project bidding and to some extent, issues on project
design and monitoring contributed to the delays. These are being addressed even as the
administration ends in June 2016.
4. FAPS IN THE PIPELINE
DAR conceptualized and proposed the Inclusive Partnership for Agricultural
Competitiveness (IPAC) Project which encapsulates lessons learned and best practices
on agri-enterprise support services and addresses the hurdles accruing from locallyfunded interventions. The proposed IPAC (formerly named as Project GROWTH) was
discussed with the NEDA and got the nod of the World Bank, given its worldwide
experiences on implementing projects on property rights of smallholder farmers and the
use of the matching grant scheme and productive partnerships for agribusiness proposed
by farmers organizations. Unfortunately, IPAC was not deliberated in the NEDA Board
before the 2016 election.
End of Term Report by Secretary Virgilio de los Reyes
Page | 88
The IPAC Project sums up the five lessons that could be gleaned in implementing agrienterprise support services for smallholder farmers:
Instead of pre-identified priority agri-enterprise sub-projects, it is better to have a
call for proposal so that sub-projects are attuned to the requirements of farmers and
private investors;
Instead of pre-identified beneficiaries, it is better to have a competitive selection of
proposed agri-enterprise projects of farmer groups;
Instead of supply-driven interventions which were the models in the past, it is more
profitable and more sustainable for farmers to know and respond to the demands of
the market;
Instead of one-time or occasional selling to private investors, it is better for
smallholders and investors to have long-term productive partnership arrangements;
and
Instead of the government procuring some of the critical public goods needed for
productive partnerships (e.g. farm machines, post-harvest facilities and professional
services), it is better if the farmers organizations receive a certain grant, in cash, to
procure the goods and services themselves.
IPAC gleans the lessons from DARs and other agencies experiences in providing agrienterprise support services to smallholder farmers and included these in the design of
the project. It took lessons from previous projects, which improved the production of
farmers, only to find a supply glut because there were not enough buyers. IPAC
incorporated the lessons from the ARCCESS project where the procurement of the
needed professional services and farm machines were undertaken by the government
due to limits in R.A. 9184 or the Government Procurement Reform Act. Although the
smallholder farmers were grateful of the professional services and common service
facilities procured by the government, they would rather buy some of the services and
brands that they were familiar with. However, these preferences could not be
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enhance linkage of farmers and their groups to viable markets and to establish
productive partnerships between smallholder farmers organizations and
commercial investors,
Beyond these objectives, this administration also had two major reasons why IPAC
was packaged as a foreign-assisted rather than a locally-funded project. First, to avail
of the development expertise and experiences of international financial institutions
on account of their wealth of information and analysis of the experiences of various
countries. The World Bank, in particular, has implemented productive partnerships
and matching grants projects. The World Bank also has access to impact assessment
studies of programs and projects worldwide that utilized rigorous research methods.
Second, to ensure continuity of the innovations and policies beyond June 2016. IPAC,
as a reform initiative for smallholder farmers could be sustained through a signed
loan agreement. In effect, the innovations and reforms in IPAC, like other official
development assistance (ODA) projects, could be insulated from possible political
capture.
b. IPAC Recipients
The proposed IPAC project will cover 650 farmers organizations in 44 provinces
benefiting 300,000 farmers and rural workers over a period of five years. The
assistance to farmers organizations is for a duration of 1 to 2 years after which these
farmers organizations are expected to sustain and grow their agri-enterprises.
c. IPAC Components
The proposed project has two major components. The first is the provision of
support services to smallholder farmers for enhanced market linkages. The support
would be in the form of agri-extension services, business development services, land
tenure services, and rural infrastructure. The second component is the linkage of
farmers to private investors or viable markets through productive partnerships. To
entice productive partnerships, the project will employ matching grants.
The mechanism for the matching grants is two-fold. There is a small grants window
for farmers organizations where PhP 400,000 to PhP 1 Million could be given to
eligible farmers groups, cooperatives or federations. The government provides 60%
of the grant in cash provided this is matched by the recipient organization with the
remaining 40%, 20% being cash and 20% being in-kind grant. There is also an
agribusiness grants for farmers organizations where PhP 1 million to PhP 10 million
could be given to eligible farmers groups, cooperatives or federations. The
government could provide 60% of the grant in cash and the remaining 40%, in cash,
should be matched by the recipient.
d. IPAC Budget and Source
The budget for the proposed project amounts to PhP 10.154 Billion. PhP 4.359
Billion will be sourced from World Bank as loan to fund the productive partnerships
or matching grants while PhP 4.564 Billion will be sourced from government funds to
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support the repair or provision of rural infrastructure. PhP 1.232 Billion will come
from the beneficiaries of the project
The sourcing of the budget is one of the innovations of the proposed IPAC project. In
most projects including DARs past ODAs, rural infrastructure is shouldered by loan
proceeds. IPAC changes this since there are human and financial resources from the
national government for roads, irrigation and other critical infrastructure. The
national government also has a road network plan that would be used to connect
rural with national roads. Thus, the loan proceeds will be for the productive
partnerships or matching grants since this is the component that needs the expertise
of the World Bank.
5. UNFINISHED BUSINESS OR WAYS FORWARD: HARVEST AND IPAC
The Land Bank proposed an agricultural financing project with the World Bank and the
IFC entitled Harnessing Agribusiness Opportunities through Robust and Vibrant
Entrepreneurship Supportive of Peaceful Transformation or HARVEST. This project will
lend support to investors and processors in agribusiness investment in the Autonomous
Region for Muslim Mindanao (ARMM). This project has no component supporting
smallholder farmers and ARBs in mostly in ARMM; as such, there is danger that
implementing HARVEST alone without IPAC (or other project focusing on smallholder
farmers) might lead to serious issues on land tenurial rights and agribusiness contractual
arrangements concerning smallholder farmers. Given that only investors and processors
would have a facility for generating funds, HARVEST might lead to transfers of land rights
and farm-based contracts without a serious regard for the consent and bargaining power
of smallholder farmers.
Implementing HARVEST in ARMM without IPAC or other complementary projects which
support smallholder farmers means tilting the bargaining power in ARMM towards
investors and processors. Without an initiative that could level the playing field, such as
the proposed IPAC project, there is a danger that the smallholders might get into
arrangements over their land and their farm produce without negotiating power and
without their real and informed consent.
The Manual of Operations of the HARVEST project, which will be implemented by the
Land Bank, needs to include provisions that itemize the processes that will be followed
before investors and processors can borrow from funds from the HARVEST project. The
processes must show that in cases of agri-businesses that utilize the landholding of ARBs
and other smallholder farmers, there should be a thorough discussion of issues and
implications with individual farmers or land-owners. Also, should the farmers opt to be
represented by any agent (e.g. spiritual leader or group leader), then the farmers must
issue a Special Power of Authority. For a deeper understanding of consent and
bargaining power and the problems on agribusinesses involving farmers land, see next
Section.
In the case of the IPAC Project, the next administration may consider the following
options:
Option 1.
Considering that the IPAC Project has been approved by the NEDA
Investment Coordinating Committee (ICC), DAR can push for the approval of
IPAC by the NEDA Board in order to complement the efforts of DAR and
other agencies to assist farmers organizations in pursuing agri-enterprise
ventures with private investors. Upon approval, DAR will discuss and
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negotiate with the World Bank the provision of technical and financial
assistance for productive partnership and matching grants for viable agrienterprises proposed by farmers organizations.
Option 2.
The IPAC Project becomes a locally-funded project under DAR. Prior to the
approval by the NEDA Board, DAR can obtain the concurrence of the
oversight agencies (NEDA and DBM) to provide budgetary allocation for the
implementation of the productive partnerships and matching grants for
viable agri-business and support rural infrastructure identified in the IPAC
Project.
Joint venture agreements are contracts where the smallholder farmers and
investors form a joint venture corporation. Usually, the smallholders contribute
their land as equity and provide labor while the investor shoulders the capital as
well as the technology for production, processing and marketing of agricultural
goods, or for construction, rehabilitation, upgrading and operation of agricultural
assets, infrastructure and facilities.
Lease agreements are arrangements where the smallholder farmers give land
control to the investor including use and management of the land in exchange for
an agreed lease rental amount. In most cases, land leases run for a long and
definite period (25 to 50 years).
In some cases, the AVAs are in the form of marketing and financing contracts while in
other cases, these take the form of long-term land leases. In most cases, the smallholder
farmers provide the land and farm labor while the investors shoulder the financing and
manage the whole chain from production, processing, logistics, all the way to marketing
to final consumers. Since the investors have the financial resources, industry
End of Term Report by Secretary Virgilio de los Reyes
Page | 92
information, and business acumen, the farmers could not maximize the negotiation
opportunities or in worse cases, they are at the losing end of the bargain (De Los Reyes et
al, 2015).
The predominant analysis from 2010 onwards was that the DAR or the government
should step into the AVA disputes and settle the issues. The prevailing policies (AO 9
series of 2006 and AO 2 series of 2008 ) mandate the government, to approve the AVA
contracts and eventually, to uphold or rescind these. In order to address the AVAs, this
administration to studied, assessed, asked difficult questions and eventually, addressed
the concerns in the existing AVAs and change the overall policies concerning upcoming
AVAs.
Below are what the studies and the hard questions revealed.
a. DAR and CSOs created farmers organizations
In studying the AVAs and the legal cases, it has become clear that in most cases in
Mindanao, DAR personnel encouraged the farmers that were provided with
agrarian land and CLOAs to form organizations (usually cooperatives) which served
as their vehicle in entering into agribusiness agreements. In most cases, the
government and some CSOs organized the farmers based on the production units
prior to land transfer.
It has become clear that the composition of the farmers organizations was
essentially the same as that of the former labor union prior to the agrarian coverage
of the landholding. In some cases, government officials enjoined the farmers to form
groups or join existing organizations in order to simplify the delivery of services
including access to credit and capacity building. In almost all cases the agricultural
business investor similarly encouraged the formation of organizations to make it
easier for them to deal with large groups of farmer-beneficiaries.
The situation is aggravated in cases where the certificate of title issued by the DAR is
collective in nature (with a list of individual farmers), and the farmers organization
is indicated in the title. In some cases, the names of the agrarian reform beneficiaries
or the smallholders were not annotated in the collective certificate of title, although
the farmers organization is named. The farmers groups and its leaders, become
powerful because these could have sole decision-making on the use of the collective
certificate of title and the land covered by the certificate. There were cases where the
farmers land tenure became equivalent to their membership shares in the
organization as such, the farmers could not leave their organization for fear of losing
their land. They must also continuously abide by the rules and customs of the
organization for it may cause them their membership share and concomitantly, their
land.
b. DAR encouraged ARBs to enter into AVAs
It has also become clear out of the studies and the discussions in the past years that
the government, through the DAR, also had a strong hand in encouraging the
farmers, through their farmers groups, to enter into AVAs. This is particularly true
in lease contracts.
With agrarian reform, the ARBs faced the prospect of undertaking the cultivation and
managing of the agri-enterprise on their own. This they will do without access to
financial services and other mechanisms. Thus, in many instances, the farmers really
End of Term Report by Secretary Virgilio de los Reyes
Page | 93
had no choice but to enter into contracts (from land lease to other long-term
production contracts) as soon as the agrarian reform program covered the land. The
ARBs were aided by the government to enter into these AVAs.
c. Very little consideration for individual farmers consent
This is not to state that the government, the DAR, in particular, committed errors and
must be made accountable for its strong hand or pro-active role in both the creation
of farmers organizations and their entry into partnership agreements. It could be
argued that this strong role was their orientation and their judgment call at that time.
It could even be pointed out this strong role came from the strong centrally-planned
economy tradition of the DAR officials at that time.
However, continuing this tradition, the current rules on AVAs, or treating the
contracts with business-as-usual attitude goes against the property rights of the
ARBs. It contradicts the very nature of the land titles issued to them under agrarian
reform.
Theoretically, the farmers had freedom of will because they were not forced into the
farmers groups, into the lease or the land control arrangement. But it must be noted
that freedom of will was grossly vitiated by the prospect of an immediate loss of
wages and the insufficient resources of the new landowners. It must be carefully
noted that in most of these AVAs, the ARBs were former farm workers and not
tenants. Prior to becoming small landowners or beneficiaries of the CARL, the
farmers were employees who had no control of the production processes in the farm.
This is distinguished from tenants who became landowners. Since tenancy required
only the cultivation of small plots by families, the whole farm cycle was known to the
tenants. As such, when tenants become landowners, there was not too much
disruption in the production process. Compared to tenants, former laborers or farm
workers, knew only specific or particular tasks in the farm, not the whole value chain.
In the exigency of the situation, the new ARBs and the investors came into an
agreement over the farmers land and the government ratified their agreement by its
silence, tacit approval or failure to act on applications for approval. Tacit ratification
by government was seen in the inaction and lack of clear policies on these alternative
modes. With the continued control of the agricultural chain, the investors continued
to provide for the financing requirements as well as the ancillary services (e.g.
trucking services, back office support, provision of security guards). In this case, the
agricultural chain remained centralized with the investors.
Consent, then, becomes an issue. Agrarian reform beneficiaries are landowners with
clear tenure rights (emanating from clear grants of ownership and the resulting
certificates of titles). Their agreement to enter into organizations or to engage in
agribusiness contracts must be arrived at using clear mechanisms for generating
viable and informed consent.
The seeking of consent includes a nuanced discussion of the range of implications of
the contracts that the famers will get into. In the case of most AVAs, the agreements
that were formed undertook short-cuts. First, consent was secured not from the
individual smallholder but from their representatives e.g. organization, community
or spiritual leaders. Second, consent was obtained without a serious discussion of
issues including the costs of such agreement.
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Smallholder
farmers
Investors
Pricing (applicable to contract growing)
Smallholder
farmers
Investors
Smallholder
farmers
Investors
Smallholder
farmers
Smallholder
farmers
Smallholder
farmers
Investors
Issues on the joint venture contract of farmers
and investors
Smallholder
farmers
Particular concern
- The period is too long; No specified timeframe for renegotiation
- Some contracts have no provision for economic review and price
adjustment
- The farmers are aging
- Longer term contracts are better to recoup investments and secure
better markets
- Price provides assured income for the smallholder farmers
- It is sometimes hard to meet the target because of issues like changing
rain patterns and pest infestation
- In cases of excess production, the investors do not wish to buy the
excess goods
- There is low and varying quality due to issues like type of soil, changing
rain patterns and pests
- Low buying price despite high cost of inputs and the smallholder
farmers need to hire extra farm labor. Other buyers are willing to buy
at higher prices
- Prices are dictated by the market
- Rental is based on the production potential of the land
- Cash advances are deductible from the land rental without interest.
- The payment is usually below the minimum wage requirement
- In some cases, the payment of land amortization and RPT is not
updated
- Some members lament that they were not given options in joining or
not joining the juridical entity (JE) that served as contracting party.
- In some cases, the membership in the JE became part of the land
transfer scheme and became synonymous to land ownership, as such,
the governing rules on succession, transfer, or pull-out have become
opaque
- There are evidence of corruption and cooptation of the leaders of the
organization
- Some of the JE leaders lack skills in running their organization. Some
are also showing indications of corruption
- Some smallholder farmers claim that they were not consulted and they
were unaware that they became part of the joint venture contract
It could be seen that the agri-business ventures involving smallholder farmers are
surrounded by problems and concerns, which defeat the fundamental goals of poverty
reduction and inclusive growth. In many cases, the smallholder farmers wanted to exit
from the agreement because they believe they were short-changed (the products are
bought at low prices, the lease rental is low, and a host of other issues). Most of them
End of Term Report by Secretary Virgilio de los Reyes
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also lament that the contract period is too long. The situation is more complicated when
a group of farmers wants to break the contract while another group wants to uphold the
contract. This is more difficult when the certificate of title issued to the farmers is a
collective certificate of title and the names of the farmers are not even annotated on the
certificate. Farmers who want to break the contract will not walk away from the
agribusiness venture, if leaving also means losing their share of the un-subdivided land.
On the part of the investors, they lament the quality and quantity of products and timing
of delivery. They also worry about the risks of contract reneging and thus, not having a
steady supply of products. There are also reputational risks involved when their
company names are dragged into court and administrative cases.
When the issues were traced, it became clear that in most cases, the smallholder farmers
were represented by their labor unions (that later metamorphosed into cooperatives) in
signing their AVAs. The agreement to enter into a land lease and provide farm labor
immediately succeeded their receipt of their certificate of title.
3. FAO-ASSISTED AVA STUDY
In 2015, DAR discussed with the United Nations Food and Agriculture Office (UN FAO)
the possibility of studying the AVAs further. FAO provided DAR technical assistance in
the undertaking the Multi-sectoral Study on Agribusiness Venture Arrangement (AVA)
Policy and implementation under the Comprehensive Agrarian Reform Program (CARP)
that would provide third-party analysis of the issues and challenges confronted by
agrarian reform beneficiaries and rural cooperatives as they enter into AVAs and to
recommend program and policy ways forward. Towards the latter part, the World
Resources Institute or WRI provided their comments to the drafts.
The Study made an assessment of the AVAs between agribusiness firms and the ARBs,
focusing on banana, cacao, oil palm and pineapple plantations in Mindanao. With both
temporal and financial constraints, the study focused only on leasehold and contract
growing arrangements which are the predominant modes of AVAs. As an approach, the
study conducted a review of literature, interviewed key informants and conducted six
focus group discussions (FGDs) in Cagayan de Oro and Davao, where representatives of
farmers groups, business investors and government/private stakeholders met separately
to assess the state of agribusiness arrangements from their perspective.
After the analysis of the FGD outcomes, a national workshop was conducted to report
and validate the recommendations for the agribusiness sector. The study revealed that
despite the 26 years AVAs have been in existence, there are very few examples of
successful arrangements between ARBs and investors. Most of the ARBs are not aware of
their obligations and entitlements under their contracts, for most are written in a
language that they do not understand. Their lack of understanding of their agreements
has been exacerbated by the lack of adequate legal representation and full transparency
from their own cooperative leaders. The capacity of the farmers organizations to run and
operate their farms, make collective decisions, understand financial statements and enter
into intelligent negotiations with regard to the terms and conditions of their agreements
was also identified as a major setback.
An analysis of the AVAs indicated the need for improvement and renegotiation. For lease
agreements, there is no objective standard for the determination of market rates for land.
While various figures have been suggested, based on annual land amortizations, real
property taxes and the poverty threshold, there is a need to conduct a market study to
End of Term Report by Secretary Virgilio de los Reyes
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inform policy on what is a reasonable lease rate. As farmers cannot rely solely on lease
payments to improve their living conditions, additional on-farm and off-farm income
(such as employment, income generating projects) must be sought to supplement their
income stream from the land.
The study proposed that automatic and yearly increases in the land lease rates based on
core inflation be utilized to avoid the erosion of the value of the land lease. One sided
provisions on lease agreements have also been flagged. Renewals of lease agreements
should be mutual and not unilateral. Ownership of the improvements after the lease
agreement should accrue to the ARB. Force majeure should not be a reason for the nonpayment of the lease since the investor is in a better position to absorb the uncertainties
of nature. The duration of leases should be well negotiated and should not be so long to
provide a disincentive for the ARB in becoming an independent and knowledgeable
grower.
In the case of contract growing where prices are fixed prior to the delivery of products,
the Study suggested that this is no longer tenable, for world commodity prices and the
prices of inputs are in a constant state of flux. ARBs and investors need to collaborate
more closely within the value chain to achieve efficiencies in inputs and outputs, and to
share more equitably the risks inherent in global food supply chains. Clauses in the
contracts which allow investors to take-over the management of the farm and the
exclusive right to provide and charge the cost of inputs to ARBs, need to be revisited to
make the process more mutually acceptable and transparent. ARBs and investors need to
learn how to deal with side-buyers to avoid pole vaulting and assure a continuous and
harmonious relationship in the supply chain. Mechanisms for the social protection of
ARBs such as crop insurance to protect against revenue losses should be seriously
explored.
The study strongly supports capacity building for the ARBs and their cooperatives in
various aspects of business, legal, institutional governance and financial management. To
achieve this, close collaboration among DAR, DA and LBP is required to set up a capacity
building fund that will foster the growth of the ARBs and their cooperatives over time.
The study emphasizes the need to invest resources in making ARBs more capable of
understanding and renegotiating their contracts. This can be done through legal
education and representation, rather than the review and approval process which DAR is
currently focused on. A highly decentralized process is recommended for the approval
and review at the regional level for all agreements with the default scenario of approval
within 90 days if the contract is not acted upon by DAR. This puts the onus on DAR to
strengthen its review processes and to put to an end the uncertainty created by delays in
the review and approval process, especially for contracts that have to be approved at
DAR Central Office.
The study encourages adherence to the Voluntary Guidelines on Governance in Tenure
(VGGT) and the Principles on Responsible Agricultural Investments (PRAI) as enunciated
by the UN Committee on Food Security. These best practice guidelines are being
promoted by the FAO to ensure a sustainable and environmentally sound partnership
between smallholder farmers and agricultural companies investing in agribusiness
enterprises.
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and improving the bargaining power of smallholder farmers, and the lessons on the
ideal roles of the government in contracts involving ARBs and smallholder farmers
led to concrete solutions. The solutions address both the past issues on existing
AVAs and the future issues of upcoming agribusiness contracts involving ARBs.
i.
ii.
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2. AGRI-FINANCING IN 2010: DAR PROVIDES FUNDS FOR CAPACITY BUILDING, NOT DIRECT
CREDIT
The government, the donor community, and civil society learned hard lessons from
directed credit so these were discontinued. By 2010, DARs credit assistance to ARBs
was largely in the form of counterpart funds for capacity building or technical assistance.
These were excellent innovations. However, the interventions were relatively small.
In 2010, the DAR had at least five credit programs. These were CAP-PBD Windows II and
III (with LBP), the Grassroots Microfinance in Agrarian Reform Areas (GMFA), the
Agricultural Solutions or AGRISOL program of ARCDP II (in partnership with the LBP and
with donor support from the World Bank), and the Agri-Enterprise Credit and AgriFinance Services or AgriCASH program of ARCP (in partnership with the LBP and with
funding support from the Asian Development Bank). Table 23 summarizes all the credit
programs of the DAR as of November 2010 and Table 24 summarizes the locally-funded
credit programs of the DAR as of November 2010.
It could be seen that the reach of the credit programs was small. The innovations were
worth noting because of the complementation between DAR and the LandBank and
private credit providers (NATTCO and CARD) and these innovations served as lessons
learned in succeeding efforts on agricultural financing.
3. AGRI-FINANCING DURING THE PNOY ADMINISTRATION
Agricultural financing, which includes access to credit, savings mechanisms, and crop
insurance, is one of the accomplishments of this administration. Given the available
funds, not only the budget allocation for the DAR but also for DA and other government
institutions (i.e. LANDBANK, PCIC), a new credit facility, the Agrarian Production Credit
Program or APCP, was launched and thus far, it has shown good results in terms of
availment and repayment rates. Based on the external assessment made by a PIDS study,
the APCP adopted a simpler lending process and the ARBs are generally satisfied with the
lending facility although there are definitely a lot of areas for improvement [Llanto et al,
2016].
Agricultural financing, particularly agricultural credit, is also one of the contentious,
albeit abundantly studied, issues being related with agrarian reform. Numerous studies
noted that the restrictions of CARP (ceiling on landholding and the prohibition on making
land transfer) as well as its long period of implementation hinder the flow of credit. The
lack of collateral value of CARP lands, it has been argued, discouraged formal financial
institutions, particularly banks, from lending to ARBs [Llanto, 2005 and 2015; Fabella,
2014].
This analysis needs serious rethinking and unfortunately, new data and analysis. Talking
to countless stakeholders including formal financial institutions in the past six years
casts doubt on the soundness of the proposition that CARP restrictions discouraged
lending to beneficiaries. It may have been true in the past but the lapse of time, the
improvements in technology, and the mainstreaming of business models involving both
smallholder farmers and financial institutions may have changed the landscape of
agriculture and agrarian credit in the Philippines. Moreover, where there are studies
that blame CARP for banks hesitation to provide loans to ARBs, there are equally the
same number of studies that show a different set of findings.
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households earn approximately 75% of their total income from more than 2 sources.
This allows them to manage their risks and to compensate for a decline or loss in one
source of income.
Unfortunately, the fact that smallholders and ARBs have multiple sources of credit
(formal and informal) and multiple sources of income are not factored in the analysis of
the credit gap. As such, this type of information and analysis are not part of any policy
lever.
5. COMPREHENSIVE STUDY ON AGRICULTURAL CREDIT FOR SMALLHOLDER FARMERS
The access to agricultural credit is one of the essential support services of DAR to
improve productivity and more importantly increase farm income of smallholder
farmers in the rural communities. Along this line, DAR intends to come-up with strategic
measures on improving access of smallholder farmers to rural finance and assess the
effectiveness of credit programs designed and implemented by government for
smallholders. For this purpose, DAR engaged the services of the Philippine Institute for
Development Studies (PIDS) to undertake a Comprehensive Study on Agricultural Credit
for Smallholder Farmers.
Aside from assessing the effectiveness of existing credit programs, the Study was
intended to, a) determine the effectiveness of the Agrarian Production Credit Program
(APCP) designed and implemented by DAR to provide credit assistance to agrarian
reform beneficiaries and smallholders in general; and b)identify specific gaps and issues
in providing smallholders with access to credit, and recommend strategic interventions
by both government and the private sector to address the credit access problem.
a. Findings of the Study
The outcome of the series of focus group discussions (FGDs) conducted with ARBs
indicated satisfaction on the program due mostly to:
low interest rate. APCP interest rate on end borrower (15%) is deemed lower
than the 2 to 3% per month charged by cooperatives on their members loans;
less tedious documentary requirements; and
assistance from DAR program officer in accomplishing and completing required
documents.
The FGDs also confirmed that smallholders need credit not only for their farm operations
but also for consumption smoothing. Aside from using their own funds, smallholders
borrow from either the formal (banks, coops) or informal sources (friend, family,
relatives, input dealers and traders). Effective demand for smallholder credit depends on
their ability and willingness to access and use credit services. Some may have access but
prefer to use their own funds or borrow funds from family and friends to finance their
operations.
The highlights of the keys findings of the Study include the following:
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While the implementation of guarantee and crop insurance programs may help in
reducing risks in lending to agriculture, banks and other formal financial
institutions interested in lending to agriculture may also need to design products
and adapt lending methodologies that are tailor-fitted to the needs and
circumstances of smallholders. New and/or different lending processes and
procedures may be designed and adopted. Use of a conduit that are familiar and
located closely with smallholders is also important.
ii.
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Use of farmers organization as hub for loan distribution and collection, use
of warehouse receipts and equipment leasing as collateral substitutes.
Understanding the value chains and buyer relationships to determine future
cash flows and improve the credit assessments of smallholders.
Product innovations (e.g. credit card concept, with accredited input dealers
and suppliers).
Use of mobile/electronic banking for farmers --- also to provide digital
footprints for smallholders
iii. For Development Organizations.
Donors can help both the government and the private sector in unlocking
demand and supply side constraints to smallholder financing. On the demand
side, donors can provide support in reducing the riskiness of smallholders as
borrowers by helping them acquire skills in financial literacy (e.g. focus
budgeting, roles and responsibilities as borrowers) and in improving their farm
productivity. On the supply side, donors can provide technical assistance to
financial service providers in assessing the risks associated with smallholders
and using the results in designing and customizing appropriate agricultural
financial products.
Some donor are willing to make equity investments in banks that have showed
interest and commitment to smallholder finance. They provide equity
investments and offer training and technical support in adopting specific lending
methodologies as well as in establishing relevant lending procedures, systems
and processes for effective and efficient smallholder financing.
6. VIABLE AGRI-ENTERPRISE WITH DIFFERENT SOURCES OF FINANCING
Given the analysis of the past and current agri-financing programs and the findings and
recommendations of policy studies on credit, two (2) key measures would be essential.
First is on improving the APCP: Modeling a better financial inclusion program (ag
financing + support services + guarantee + insurance + removed pass-on rate). Second is
improving the generation of credit information and developing a farmers scorecard.
It is proposed that agri-enterprise efforts involving smallholder farmers that use
different models should be encouraged by government so long as these agri-enterprises
have the viable consent of farmers. The farmers and their organizations should be
provided with support services (see discussion on non-market distorting assistance) to
ensure that they have bargaining power in the agreement.
Key stories are discussed in this report albeit the role of DAR in the agri-enterprise
models below is not prominent. It is recommended that these models are encouraged by
filling in the gaps in their respective value chain.
a. Kalasag onion farmers and Jollibee
The story of the Kalasag farmers and Jollibee shows the true requirements for
accessing credit: Having a marketing agreement, knowing the contribution of value
chain actors and eventually knowing the farmers. Much has been written about the
success story of the Kalasag Farmers who were able to sustain its supply agreement
with the Jollibee Foods Group (JFG). Kalasag is the first and only farmers
cooperative that supplies onions to Jollibee. To finance the smallholder farmers
End of Term Report by Secretary Virgilio de los Reyes
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After three years of partnership, the OOI picks up vegetables three times a week from
the farmers and delivers monthly payments. In one farmers group, the Conwap
Valley Multipurpose Cooperative, production loans and buying funds for individual
cooperators were provided by the cooperative. However, in the two other groups or
clusters, their organizations could not shoulder the production loans, as well as
buying or financing funds, so they secured these from the Cooperative Bank of Nueva
Vizcaya (CBNV).
At first, CBNV hesitated to provide production and buying funds to the two other
groups or clusters, Villaverde farmers and Kasibu Farmers, because these lacked
records and collateral. However, CBNV also knows that these clusters have supply
agreements with OOI. At first, CBNV used the employees provident fund to provide
the production loan but eventually, CBNV utilized the bank funds.
In regard to the buying fund, both the CBNV and the Conwap Valley Multipurpose
Cooperative were tapped by OOI to issue buying or financing funds to farmercooperators. When the farmers deliver to OOI and the latter issues receiving reports,
the CBNV and the Conwap Valley Multipurpose Cooperative pay the farmercooperators and eventually, these will be paid by OOI, which shoulders the cost of
credit. This arrangement addresses the need to pay the farmers in cash which the
OOI finds difficult to do.
As a result of their arrangement with the farmers of the two clusters, CBNV says it
now knows the farmers. The smallholders now have records with the cooperative
bank and could request for increased production loans. The farmers supply
agreement with OOI and the government offices provision of the supply chain
requirements (i.e. capacity building and synchronization of activities) make them less
risky borrowers.
c. Nestle COFFEE Project
In Tagbina, Surigao del Sur, smallholder coffee farmers are engaged in the Coffee
Technologies and Funds to Fuel Economic Empowerment (COFFEE) project with
Nestle, DA, DENR, and the municipal local government unit. Nestle is a partner of the
National Convergence Initiative of DA, DAR and DENR. In the COFFEE project, which
is expected to expand to other coffee areas, smallholders are introduced to the latest
technologies in robusta coffee including high-yielding seedlings and fertilizers and
provided with farm machines, post-harvest facilities, and truck. The capacity of
farmers is also enhanced so they will have Common Code for the Coffee Community
(4C) accreditation. 4C is a worldwide platform that brings together producers, trade
and industry actors, and civil society to work together for improving the livelihood of
coffee farming communities and the natural environment of coffee production areas.
Although it is a global standard and difficult to obtain, Nestle mentors the farmers
and their group to obtain this parameter and maintain it. Despite these efforts, the
smallholders are NOT obliged to sell their (enhanced) produce to Nestle (although it
must be noted that the project saw improved sales to Nestle). In this arrangement,
Nestle provides stem cuttings and other needed requisites for the setting up of coffee
a nursery in the farmers community. In this way, Nestle, through its third party,
buys from the nursery of the farmers and income from this adds to the farmers
overall income. Along with their income from selling actual beans, earnings from the
nursery serve as their capital for their next planting season.
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there was a seeming preponderance to undertake pilot projects rather than scale up or
expand successful models based on the data and analysis from the ALDA and other tools.
1. ALDA IN 2010
ALDA was being used in 2010 and it had clear strengths and limitations. It was the main
tool to assess these six areas in ARCs:
Land tenure improvement
Organizational maturity of ARB organizations
Economic and physical infrastructure
Farm productivity and income
Basic social services, and
Gender and development.
From 1996 until 2010, the ALDA was conducted by the Bureau of Agrarian Reform
Beneficiaries Development. In 2011, the national conduct of the ALDA was transferred to
the Policy and Planning Service so that together with the ARC-MTS, these instruments
formed part of the DARs planning, monitoring and evaluation system (see Memorandum
No. 147, dated 4 May 2011).
ALDAs strengths lie in its reliable measurement of some of the key areas in ARCs
including the delivery of economic and physical infrastructure, basic social services, and
gender and development. These areas used quantitative indicators that were easy to
gather and verify. And since the interventions in these areas were mostly on capacity
building and delivery of concrete facilities and rural infrastructure, their effectiveness,
efficiency, and other results are easily grasped.
ALDA, however, had huge limitations particularly in the areas of organizational maturity
and farm productivity and income. In a review workshop spearheaded by the DAR Policy
and Planning Service, the feedbacks of ALDA users are as follows:
It is not responsive to current monitoring needs.
The organizational maturity assessment tool is biased for cooperative-type of
organizations
The inclusion of non-functional farmers organizations in the assessment tilts the
ratings.
There is difficulty in securing data or information
There is a short time allotted for data gathering.
It utilized non-acceptable methods of data gathering such as focus group
discussions to gather data when it should only be used for validation.
It is prone to recycling of previous years data.
Unfortunately, ALDA findings have been misinterpreted and misused by policymakers
and academics who do not check the methodology of the ALDA and would use its findings
as the DARs official results. It can be seen that the use of the ALDA, even despite its
limitations, was akin to shooting oneself. It was allowing data to be misinterpreted and
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used against the CARP and the DAR. This was one of the reasons for the rethinking on
the ALDA.
2. THE DEBATE ON THE USE OF THE 2011 ALDA
The UP School of Economics issued a Discussion Paper in February 2014 authored by
Professor Raul Fabella. In this paper and in the lectures that he gave, Fabella insisted
that it is time to let go or to finish CARP. He cited the 2011 ALDA and other studies as
evidence for ending CARP. He was answered by his colleagues, Toby Melissa Monsod and
Sharon Faye Piza, in a UPSE Discussion Paper in March 2014. There were rejoinders to
these debates but were not released as UPSE Discussion Papers.
Fabella, in CARP: Time to Let Go, cited Adriano [2013] who used the ALDA to criticize
the productivity of lands awarded under CARP and the ARBs quality of life. Fabella said
that CARP messed up on these important measures. The 2011 ALDA showed that the
average (ton/hectare) yield among ARBs in ARCs in palay was 10% higher than national
average, 50% higher in corn, 40% lower in coconut, and 8% lower in sugar. Fabella
noted that only 54% of ARBs are in ARCs and ARCs were poured with government and
non-government aid. He surmised that the figure could have been worse for ARBs in
non-ARCs. The figures for coconut and sugar yield among ARBs in ARCs are chilling.
Moreover, the 2011 ALDA, according to Fabella, also showed that 54% of ARB
households in ARCs fell below the poverty line. This is starkly higher than the 2009
Family Income and Expenditure Survey (FIES), which show that 36% of farmers fell
below the poverty line. Fabella further infers that since the plight of ARBs in non-ARCs
can only be worse, the figures could probably look more indicting, and that CARP, it
seems, has created a new class of farmers: the landed poor!
Monsod and Piza answered Fabella by addressing the limitations of the ALDA. They
noted that ALDA is a management tool used to monitor key interventions to ARCs and to
ARB households and ARB organizations in ARCs. They emphasized that the ALDA is not
designed to support statements attributing increases or decreases in productivity to
CARP. They even went on to say that if productivity will be attributed to CARP, then
Fabella should explain why the figures are chilling when rice and corn (representing 62%
of area planted in ARCs) show yields that are higher than the national averages. They
also provided a better or more acceptable way of determining the effect of CARP on
productivity.
Monsod and Piza also addressed Fabellas observations on ARBs quality of life. They
stated three points. First, DAR initially targeted economically-depressed areas in picking
up and launching ARCs so this population, a meager universe of 1.43 households in less
than 10,000 barangays, could be further biased. Second, it is erroneous to compare
poverty incidence estimates from the ALDA household income survey with the 2009 FIES
because both are not comparable. Third, without data from the same households at an
earlier point in time and for comparable ARBs who are not in ARCs, there is no basis to
claim that CARP created the landed poor.
Fabella issues a methodological rejoinder [18 March 2014] to Monsod and Piza
essentially stating the same arguments using the same data and Monsod and Piza
reiterated their points in their own rejoinder [29 March 2014]. In one of their endnotes,
Monsod and Piza insisted that the meaning, use and comparability of ALDAs indicators
and estimates are highly specific. They noted that the estimates from the household
income survey, undertaken for the first time in 2011, are of little use beyond their
End of Term Report by Secretary Virgilio de los Reyes
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internal purpose given the major limitations in the survey instrument and design.
Because of the danger of the ALDAs misuse and misinterpretation to undiscerning
researchers, the 2011 ALDA was not meant for public release but it was featured in
Adriano [2013] and picked up by Fabella [2014] without proper disclaimers.
3. THE ARB CARDING PROJECT AND THE ARB PROFILING STUDY
a. Description of the Project
In 2006, the DAR started the implementation of the ARB Carding and Identification
(ID) System that aimed to provide information on the magnitude of the ARBs still
owning, cultivating, and making the awarded lands productive. The system intended
to generate the database and registry of ARBs awarded with lands. An automated
system was established from the DARPO to DARCO through the Management
Information System (MIS) to facilitate the generation of field reports and ID cards.
The DARCO issued Memorandum Circular No. 04, Series of 2006, which gave the
mechanism for monitoring the whereabouts and status of ARBs in relation to land
ownership, socio-economic conditions, and access to support services.
The field offices were provided with ARB index forms, complete set of computer units,
printers, scanners and cameras. However, despite the setting up of the system and
the provision of a package of support facilities to field offices, there was low
accomplishment. Field offices reasoned the following: limited competent DAR staff
to undertake data gathering activities, the computer units that were provided were
below quality standard for data storage, limited number of cameras for photo
generation, and absence of self-repaired Data Entry System program.
To address the concerns, DAR issued Administrative Order No. 3, Series of 2008 to
integrate and institutionalize the ARB Carding and ID System in the DARs LAD
procedures as a means to document the status of the ARBs, aid in policy and program
development, research and advocacy, resource allocation, and in monitoring and
evaluation of program interventions to ARBs. Around this time, the congressional
deliberations on CARP Extension were ongoing and DAR needed to provide data.
The CARDing system, Barrios [2011] noted, could have been an ideal investment in
setting up a monitoring system internally to the Department but it had serious
bottlenecks. For instance, there was a limited number of personnel and capabilities
that can be tapped to implement the project in addition to their usual duties and
functions. However, the main pitfall of the project though is its lack of an
implementation mechanism on how tracking can be realistically done [Barrios, 2011].
In 2009, Berkman International, Inc. (BII) was commissioned to conduct the ARB
Profiling. The DAR reasoned that this will ensure impartiality on the internal data
that were gathered. When the results of the data analysis were presented in April
2011, it was observed that there are discrepancies on some data and because of
concerns on data collection and methodology, there might be concerns on the
reliability of data generated.
b. The Critique on the ARB Profiling Study
Dr. Erniel Barrios was commissioned to in mid-2011 to scrutinize the BIIs ARB
profiling output to identify if it could still be used for program and policy purposes.
In August 2011, Dr. Barrios submitted a report. The following were some of his
major concerns on the ARB Profiling that was undertaken:
End of Term Report by Secretary Virgilio de los Reyes
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i.
Intention
The intention of the ARB profiling conducted by the BII was to undertake
complete enumeration. However, the resulting design was neither a complete
enumeration, nor purposive sampling nor representative sampling.
ii.
iii. Questionnaire
The portion of the questionnaire on LTI had needed details like serial number
and title number so it was virtually impossible for ARBs to respond to the
needed information if the documents were not easily accessible. In cases of
FGDs and group interviews in a common place, it was impossible for these
details to be provided. The portion of the questionnaire on sources of annual
household income also had problems. A reference point was not used in the
question on income so memory recall bias and guessing were probably high.
There were also no probing questions when these should have been used to
generate as reliable information as possible. Moreover, since the ARBs were
gathered in common areas, other family members were not around to help in
recalling income-related details. The results therefore are doubtful: the farm
income of ARBs was lower than the 2006 poverty threshold and their off-farm
and non-farm income were too small to be their sources of income.
Barrios recommended the conduct of new a representative sampling survey instead
of continuing the BII profiling study.
It was unfortunate that despite the resources spent for both the ARB CARDing and
ARB Profiling, these were not correctly implemented and thus, these were not used
for evidence-based support services. These could have been good sources of data to
understand the demographics, productivity and income of farmers and DAR and
other stakeholders would have had a sense of their quality of life.
4. REMEDIAL MEASURES THAT WERE UNDERTAKEN
Remedial measures were undertaken to address the limited use of evidence in DARs
support services. This included the rethinking of the ALDA.
Given the need to monitor and measure the DARs interventions (on both land tenure
services and support services), data are needed to assess the progress of interventions
and to at least gauge their effectiveness and efficiency. For around 15 years, the ALDA
End of Term Report by Secretary Virgilio de los Reyes
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was used to monitor the ARCs and it was the monitoring tool for programming and
budgeting of local and foreign-assisted projects. However, the ALDA had serious
shortcomings. These limitations even became the source of academic misuse and
misinterpretation [See Monsod and Piza, 2014, on Adriano, 2013, and Fabella, 2014].
Aside from its limitations, the ALDA also needed rethinking when this administration
enhanced the focus of assistance towards enhancing the capacity of farmers
organizations in synchronizing their agri-enterprise efforts and linking with viable
markets. This meant going beyond ARCs or undertaking integrated area-development;
rather, it meant that the farmers organizations became the center of assistance. Thus,
the needed metrics should not just track and measure the assistance poured in the
physical area but these should gauge the actual interventions to and the progress evident
in the assisted smallholder farmers groups. Note that assistance was provided to the
farmers groups, whether these are inside or outside of ARCs, especially if there are
possibilities of marketing arrangement with private investors.
ITeMA changed the OMA of ALDA; but note that ITeMA is also limited - In 2015, the DAR
rolled out a new monitoring tool to enhance the organizational maturity assessment or
OMA portion of the ALDA. This is consistent with the support services interventions that
focus on farmers organizations as main unit for receiving agri-enterprise assistance.
Comprehensively and realistically assessing the organizations capacity, performance,
and viability would provide insights about the development gaps and lessons on how to
improve the smallholders income by assisting their organizations.
The IT-enabled Maturity Assessment for ARB organizations or ITeMA is a new system
replacing the OMA of ALDA. ITeMA has 30 variables under six major indicators namely:
a) Organizational management, b) Resource management, c) Social enterprise operations,
d) Financial performance, e) Alliance building, f) Environment and social responsibility
Farmers organizations that have been functional for a minimum of one year are included
in the ITeMA for evaluation. Non-functional groups are not subjected in ITeMA. Data
gathering is conducted through face-to-face interviews using a structured instrument
programmed in smartphones. ITeMA uses smartphones with installed data applications
that facilitate the conduct of data gathering, the verification of culled data, and the
location of the discussion. The ITeMA also eliminated some layers of activities that were
present in ALDA. With ITeMA, there is no more need to encode answers afterwards
because responses were keyed-in using smartphones. Moreover, there is no tedious
integration and consolidation processes because responses are uploaded to the DAR
Central Office. In this way, recycling and tampering of data are no longer possible.
Another remedial measure was the stopping of the ARB carding and the tapping of the
Philippine Statistical Research and Training Institute (PSRTI), an attached agency to the
NEDA to undertake an ARB profiling. The ARB Survey intends to determine the
household welfare level of ARBs and other related issues under the CARP. The survey
involves ARB and non-ARB respondents to determine the status of the awarded lands,
issues on voluntary land transfer, and second generation problems on land distribution.
The ARB survey report will be completed by end of July 2016.
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Further adjustments were made when DAR conducted its Inventory of the CARP Scope
starting 2006. This again changed and at present, total CARP scope is around 9.2 million
hectares, 5.4 million hectares are under DAR and 3.8 million hectares are under the
DENR.
4. ON LAND CLASSIFICATION AND LAND USE
There are two general classifications of land in the Philippines: alienable and disposable
(A&D) lands and forest lands. As of 2014, around 14.2 million hectares (47.6% of total
land area) are classified as alienable and disposable while 15.8 million hectares (52. 4%
of total land area) are forest land. (See Table 25)
For decades, forest lines remained virtually unchanged. The DENR had only recently
completed the delineation of the countrys forest line. But the final delineation of the
forest line needs legislation for it to be in effect.
There are approximately 755,009 hectares that remains unclassified non-A&D land, 55%
of which are in the Southern Philippines (See Table 25). Unfortunately, many of these
lands are currently occupied by forest dwellers, landless farmers, indigenous peoples,
and other occupants who do not have any ownership or possessory rights.
In many places, land use does not correspond with land classification. Many classified
forest lands are actually used for agricultural use.
Clearly, land use classification needs updating. This needs the passage of the National
Land Use bill which has languished in Congress for more than two decades.
D. DESIGN FLAWS IN CARP
1. FLAWED ASSUMPTIONS
The Comprehensive Agrarian Reform Program in its inception had major conscious and
unconscious assumptions that were flawed.
a. Assumption 1: Land administration system is functional.
As mentioned above, the countrys land administration system had a number of flaws
that made the distribution of land difficult or caused second generation problems.
Errors in land records and survey records caused delays in the acquisition of private
agricultural land. Lost or destroyed titles can only be reconstituted by the courts.
Some courts do not allow the DAR to file for reconstitution of titles. Errors in
technical description in titles and in survey returns need a long process of correction.
There is administrative reconstitution by LRA which also takes a long period of time.
Under the current land registration systems, if the Registrar of Deeds is not diligent, a
CARP-covered landholding can be transferred even if these have been served Notices
of Coverage. Even if the land was illegally transferred, only the courts can annul the
transfer. The current Administration sought to prevent illegal transfers by causing
the annotation the NOC into the title of the covered landholding but some Registrar of
Deeds are slow in complying. Moreover, a number of landowners have filed cases in
court questioning the legality of the DAR-LRA Joint MC 17 Series of 2011 which
instructs the various Registers of Deeds to annotate the NOC on the title of covered
landholdings.
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hectares of tenanted rice and corn lands were issued to beneficiaries of which EPs for
284,007 ha (48% of total OLT accomplishment) were issued within the three-year
period from 1988 to 1990 (See Table 1).
The rush to distribute EPs resulted in problems that are still being resolved today. In
this rush, EPs were distributed even if land valuation had not yet been set and
landowners compensation had not yet been paid. Until now, payment to former
landowners of 10,056 landholdings totaling 55,456 of tenanted rice and corn
lands are still under process.
d. Agrarian reform models from Japan, Taiwan and South Korea can be
transplanted in toto to the Philippines.
The modeling could be seen on the rules on the identification of lands to be covered,
the selection of beneficiaries, the formula for land valuation, and the structures of
governance.
However, it must be noted that the land reform laws of Japan, South Korea and
Taiwan were largely land-to-the-tiller programs fit for tenancy and not necessarily
for plantation areas cultivated by regular and seasonal farmworkers.
Japan utilized village agrarian reform committees as mechanisms for implementing
land reform. This is similar to the barangay agrarian reform committee created to,
among others, assist in beneficiary identification. There is value with this mechanism
given the need for local knowledge in redistributive reforms. However, it has become
clear that while the BARC is effective in tenanted lands, this mechanism fails in
plantation lands. The village leader simply does not know who the regular and
seasonal farmworkers are who till the plantations and haciendas especially those
that span several barangays and even municipalities.
Taiwans land valuation formula shows a striking similarity with the land valuation
formula of Presidential Decree 27 [Prosterman and Brown, 2007]:
Land value = Annual Gross Production x 2.5 x Government Support Price
This valuation was fixed even if farming seasons and market prices were different.
Since land valuation is a function of the court system, this formula has been a source
of court disputes for many years. At present, there are different jurisprudence on
valuation and the wide discrepancies on the rulings is becoming worrisome.
2. CARP POLICIES AND PROGRAMS WERE NOT EVIDENCE-BASED BECAUSE OF INACCURATE OR
INCOMPLETE DATA.
As stated above, no single government agency maintains complete records of all
landholdings. The fragmented of land record mad it difficult to accurately identify which
lands are covered by agrarian reform.
In addition, national level land use data remains unclear up to the present.
This is exemplified by the difficulty in determining the CARP Scope. CARP is supposed to
have a working scope: the amount of land (public and private) that will be distributed by
the agrarian reform program. There were a number of attempts to fix this figure but in
the end, for practical reasons, this scope is a derived/computed figure: accomplishment
plus balance equals CARP Scope.
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As previously stated, in 1987, CARP Scope was initially estimated to be 9.7 million
hectares with 10 million agrarian reform beneficiaries. This was revised in 1989 to 10.3
million hectares and targeted beneficiaries declined to 3.9 million in 1989. In 1992, the
incoming DAR administration launched the CARP Scope Validation Project in order to
establish a comprehensive CARP database.
Initial results in 1994 indicated that the estimate of total scope decreased by more than
2.2 million hectares to only 8.1 million hectares. DARs jurisdiction went up to 4.29
million hectares (53%) while DENRs share went down to 3.77 million hectares (47%).
Further adjustments were made when DAR conducted its Inventory of the CARP Scope
starting 2006.
The Inventory of CARP Scope or ICS Project that was conducted prior to CARPER
(Memo Circular was issued on 2003 but actual validation started in 2007 and was
completed in 2010) actually validate the balance, not the scope. What was certified on
February 18, 2010 by the DAR Executive Committee (DAR Executive Committee
Resolution No. 1, Series of 2010) was the 1,034,661 hectare balance (not the scope of 5.2
Million). This was after the PAROs and the PARCCOM Chairpersons jointly certified the
provincial CARP balances. Planning Service then computed the scope by adding the
cumulative accomplishment to the Balance. (1,034,661 + 4,119,196 hectares = 5,153,857
hectares).
This again changed and at present, total CARP scope is around 9.2 million hectares, 5.4
million hectares are under DAR and 3.8 million hectares are under the DENR.
3. OVERLAPPING LAWS AND COMPLEX LEGAL SYSTEMS
a. RA 6657: a result of compromise
RA 6657, like other laws that seek to change the status quo in a democratic setting, is
a result of compromise.
While land reform advocates got what they wanted (coverage of all private and
public agricultural lands regardless of tenurial arrangement and commodity
produced), the landowner lobby got an implementation schedule that prioritizes
public lands and lands subject to voluntary modes of acquisition. The result is the
non-prioritization of private lands subject to compulsory acquisition that in turn
resulted in a bureaucracy that got used to distributing lands that are easier to acquire
and are non-contentious.
b. Residual powers of old laws over newer ones
Old land laws retain residual powers over the new ones because the old laws were
not necessarily repealed and some of their sections were merely superseded,
replaced, or amended in part by new legislation. This results in a complex system of
laws that are hard to navigate.
For instance, laws enacted in the last century are still used for land administration,
with drastically different circumstances.
Lands initially processed under PD 27 were continuously covered under the same
law even if a more comprehensive law, passed in 1988 (and amended in 1998 and
2009),was already in place. To this day, outstanding issues from the 1972 law,
including cases of undocumented landholdings and unpaid landowners, are still
being addressed.
End of Term Report by Secretary Virgilio de los Reyes
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But from 1990-1996, settlement lands formed either the biggest or second biggest
proportion of DAR-distributed lands. Distribution of government-owned lands (mainly
KKK lands) rose steeply in the period from 1991 until in 1994 contributing 36% of
accomplishment during that period. GOL/KKK lands and settlements together comprised
56.9% of accomplishment during this same period. Non-PAL continued to be a very
important contributor to DAR accomplishment even though eclipsed by voluntary modes
of acquisition (especially voluntary land transfers) from 1996 to 2009 (although even the
highest annual VLT accomplishment never approached the magnitude of the high annual
accomplishments in either settlements of GOL/KKK.). (See Table 1)
In recent years, government-owned lands reported distributed were not even in the
database and were only added after the fact in the LAD Balance Accounting as additional
landholdings (See Table 5). Estimated total area of land under PP 2282 is around 1.5
million hectares; cumulative GOL/KKK accomplishment is still lower than this.
From 1996 to 2009 when RA 9700 put a stop to Voluntary Land Transfers as a mode of
compliance with agrarian reform, VLT became the preferred method of distributing
private lands because of its non-contentious nature.
All in all, 879,800 hectares of land were distributed through VLT from 1988-2015. (Note.
Though RA 9700 was supposed to have stopped VLTs as a mode of acquisition and
distribution, DAR continued to distribute VLT lands which were in process by 2009 on
the basis of DOJ Opinion No. 81 series of 2012). In terms of magnitude, it is second only
to GOL/KKK in terms of distributed hectarage, even higher than settlements. VLT
comprised almost 18% of all distributed lands and 32% of distributed private lands (See
Table 1).
Most landholdings that were distributed through VLT are the smaller landholdings.
Moreover, VLT rules allow the transfer of land below the retention limit of five hectare .
The highest levels of accomplishment were achieved in the years 1993 (411,960
hectares) and 1994 (433,678 hectares). However, most of these are GOL and Settlements
and in the form of collective CLOAs (See Table 1 and Table 6).
2. UNDISTRIBUTED PRIVATE LANDS
Thus, a significant number of large private lands remain undistributed. DAR records
show that 2,608,770 hectares of private land were distributed from 1972-2015. Only
1,773,209 hectares were LBP-compensable. (See Table 2) There remains 575,272
hectares of undistributed private agricultural land (See Table 3).
Private lands subject to compulsory acquisition (CA) got left behind. Since these are the
more contentious and more tedious to process, the more easily distributable lands were
prioritized. By late 2000s, the CA lands that were left were mostly those with landowner
resistance, with technical problems or with beneficiary identification issues (especially in
sugar lands in Negros). From 1988 to 2015, the DAR distributed 357,106 hectares of
private land through compulsory acquisition (See Table 1). A greater number (410,332
hectares) are still for acquisition and distribution (See Table 3).
More than 40% of the LAD balance are large private agricultural lands (See Table 3). Of
the LAD balance, 15,613 private landholdings covering an area of 237,896 hectares are
large landholdings of more than 24 hectares in size (See Table 4).
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transaction between willing landowners and landless farmers who presumably are tillers
of the land. Beneficiaries pay the landowners directly and so logically would want an
individual title for his/her land. Around 432,829 hectares out of a total of 835,561
hectares of VLT lands are covered by collective CLOAs (See Table 6).
But equally disconcerting is that VLT rules allow the transfer of land below the retention
limit of five hectares. This is the only mode of acquisition that allows distribution of land
below the retention limit. Owners of less than five hectares of land can sell this to
preferred beneficiaries without paying capital gains tax. And government pays for the
land survey and titling. This, thus, defeats the purpose of distributing large landholdings.
One can imagine the time, effort, and expense expended in distributing these small
landholdings when the DAR should have been concentrating on the distribution of large
landholdings. In some provinces, notably in the northern part of the Philippines,
distribution of private agricultural land was almost exclusively through VLT.
G. DISTRIBUTED LANDS WHOSE ORIGINAL LANDOWNERS ARE UNPAID
As previously stated, one of the residual tasks of the DAR is the completion of the
documentation for distributed lands whose original landowners remain unpaid. In 1982, in
order to accelerate the land reform accomplishment, President Marcos revised the original
requirement of full amortization payment and allowed the release of EP after payment of
only two successive amortizations by the ARB. Thus, EPs were distributed even when land
valuation was not yet done and landowners compensation had not been paid.
Affected landowners problems arose because the completion of documentation of their
claims took a back seat. Field personnel attended to the documentation of new lands which
would contribute to new accomplishments.
Many of the remaining OLT claims have long been pending and documents are already
missing. Some landowners claim that they have already submitted all the required
documents but they are now lost. Many of those who have handled the processing have long
retired from service.
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agriculture, as if the only pathway out of poverty for rural poor is only through agriculture
and farm-based efforts. As if the interventions to increase the income of farmers (with or
without land) can only be done using the levers available in agriculture. Moving out of
poverty by being employed in the industry or services sector is normally not part of the
considerations. Even smallholder farmers, when asked regarding their suggestions on
improving the income and quality of life of landless rural workers, would recommend
providing them with livelihood opportunities from agriculture. Processing of agricultural
goods for sale is the favorite means of intervention. Young people who move out of
agriculture are generally frowned upon often by those who are not of the sector.
Yes, conditional cash transfers (CCT) for landless farmers are part of the policy mix, but the
conversations often note that livelihood programs for landless farmers must be rooted in
agriculture initiatives. Hence any intervention on this matter is generally left to the
convergence of government departments and agencies related to agriculture. In sum,
making markets work in agriculture is not an accepted policy option. The heavy hand of
government is generally accepted as a reality in agriculture, but not in industry or services.
This must be re-visited, or at the very least adjusted.
Similar to the two other sectors, the government is simply an enabler rather than the driver
of agriculture. True, the state has a role. However, it is time for us to redefine that role.
There are no clear and neatly defined mathematical formulae to answer this question of the
role of an enabler. A big part of the answer is in defining public and private goods.
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On the other hand, the insurance system for agricultural loans must be enhanced. The
PCIC coverage must be expanded beyond the current portfolio and the crops it covers.
There is a need to look at the manner by which adjustments for claims are made and
coverage of losses. While these may result in higher premiums, catastrophes are better
covered by insurance rather than ineffective and untargeted seed subsidies or assistance.
There will always be discussions on the use of awarded land as security for loans.
Several attempts in the past have tried to pass a bill. The recent DOJ opinion states that
only those lands, which are less than ten years from issuance and not yet fully paid, are
covered by the prohibition.
In sum, landholdings emanating from government land, those distributed more than 10
years and those for which amortizations are paid are prohibited from being used as
security. The DOJ opinion clearly lays out the interpretation that the limitation arises
from the theory that land which cannot be sold cannot be mortgaged because they
cannot be the subject of an auction. A discussion on succession issues and taxation is
discussed in this Report.
3. RESEARCH AND DEVELOPMENT
Research and development that is responsive to the needs of farmers and buyers
and is environment-appropriate is a function of the state. Market-appropriate
R&D refers to initiatives that will result in the products of the farmers being
responsive to the needs of the market. Being responsive to the market refers to
technology that will lower the costs of production and result in higher incomes of
the farmers. This is distinguished from R&D that is driven by pure science.
Environment-appropriate R&D are initiatives that take into account the physical
characteristics of each unique ecosystem of the archipelago. If government
abdicates from this function, the farmers will suffer the same fate as many other
farming systems in the world R&D controlled by input providers and buyers.
This is the current fate of many systems in advanced countries where farmers are
tied to such systems. Biodiversity suffers at the fate of the agglomeration of food
producers, costs are controlled by vertically integrated agriculture combines.
4. MARKET INFORMATION
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The Corporation Code is up for review. This is a 36-year old code that has outlived its
usefulness. The requirement of having at least five incorporators (with 2 hectares each
per farmer, this means 10 hectares, if family are not included as incorporators) must be
re-evaluated. The Cooperative Code requires 15 cooperators. The message seems to be
that if a group of farmers wish to unite and form a juridical entity, you will require a large
group. There may be room to explore limited liability corporations with less than 5
incorporators. A special section in the revised code can be had with special emphasis on
start-ups.
There have been several attempts in recent decades to ease regulations in government
from barangay-based enterprises to Kalalakan 20 (patterned after the Italian law).
However, these have been largely unsuccessful and unused. The reason, I suspect, is that
the efforts focused more on the easing of regulations rather than on developing a proper
business plan that is viable. These short-cuts and insulation from various regulations
(particularly the LGU strictures) will never be enough if they are promoted without
conjunction to developing a business-friendly atmosphere and all the interventions
stated in this paper. Insulating juridical entities of farmers and fishers from LGU
regulations is not enough, although it is a good start. The local government regulations
will need to be harmonized and made more accessible.
Finally, the rules on taxation both local and national has a lot of room for improvement. It
is not the rates, because the income of farmers and their juridical entities may, in fact, not
be subject to tax. Compliance with reports for taxes imposed on sales and income are
tedious to fulfill and file. These may be the subject of review to make it easier, with less
transaction costs for the farmers or fishers (and all start-ups). The approach to tax
compliance is not necessarily in tax breaks or incentives. By its very nature the
determination of who will be entitled is, quite often, determined subjectivity and
resulting political capture. Easing compliance is more neutral and less subject to
distortions.
B. PRIVATE GOODS
Private goods may simply be defined as goods granted to a specific set of farmers or a farmer
with such good becoming part of the asset of the group or individual. In sum, the grantee
becomes the owner with full rights of excluding others from the use of such asset. Private
goods as part of a package for support services have always been problematic. They present
a challenge because provision of private goods is subject to unclear rules and issues of
allocation. In the past, the provision of seeds, planting materials and fertilizers to farmers
and farmers organizations was the default mode of assistance. In recent years, the provision
of these recurring inputs has been mostly limited to situations of calamities. The issue of
allocation during these periods has not been totally addressed, but at least these have been
minimized.
1. ON THE ALLOCATION OF GOVERNMENT-PROVIDED PRIVATE GOODS: ISSUES AND CONCERNS
The provision of private goods such as farm machines and equipment has continued in
the DA, DAR and even in the case of the DTI for processing agricultural products.
Equipment dispersal has ranged from shallow tube wells, tractors, mills and warehouses.
The distinction now is that these assets are granted to farmers organizations and has
moved away from grants to local government units. The problem previously with the
grants to LGUs has been the allocation of the time to use and the maintenance of these
equipment. In many cases, the selection of the user is subject to political considerations.
End of Term Report by Secretary Virgilio de los Reyes
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With the grant to the organizations, this has been largely eliminated. The current
problem now has to do with the equity required from the farmers organization. This
equity is mostly sourced from the LGU. This makes the grant of equity still subject to
political consideration. In some extreme cases, the LGU pressures the grantee
organization to allow the use of the equipment, particularly during the political season or
calamities. The identification of farmers organizations which will be the grantee is also
mostly determined by the LGU, particularly in the case of the DA and DTI. This is due to
the devolved nature of these agencies. As such, the identification, possible political
capture, occurs in two levels: identification and the grant of equity. While there are
similar instances of political capture in the DAR, this is largely avoided due to the lower
equity and the kind of equity (in kind or provision of a garage) and selection is mostly
done by the DAR itself on the provincial, or in some cases on a municipal level.
The question that a policy maker confronts with private goods (particularly equipment
or small warehouses) is an issue of allocation. The initial question that a policy maker
has to consider is to determine if the current resources of the government can provide all
the farmers or the groups of farmers all the equipment they need. Inevitably, the answer
is in the negative. One may argue that not all the same time. In both cases the issue is
one of prioritization and the criteria for prioritization. And, even if a clear criteria was
put in place, without a clear design the first group or farmer granted a hand tractor will
most probably have his tractor broken by the time the last group or farmer is granted his
or her tractor. This assumes that the government has the funds and resources to be able
to buy all the equipment for all the farmers.
Many policy makers refuse to acknowledge this because of the disjointed policies that are
now in place. For many, it is a matter of trying to push the allocation for agriculture,
without worrying about the classrooms, hospitals or roads that cannot be built. There are
trade-offs that need to be recognized. This attitude pushes the question aside and leaves
it as simply a prioritization that must be addressed in the next budget cycle.
2. CONCEPT INTRODUCED BY DAR UNDER THE AQUINO ADMINISTRATION: PRIVATE GOODS AS A
BASKET OF STARTER ASSETS FOR ARBS
The recent experience of the DAR may point a way for a possible solution. The current
program sees private goods as a basket of starter assets for AR beneficiaries with
the clear objective of using the private goods as the catalyst to strengthen the farmers
organization.
Note that the objective is not just to lower production costs, but to strengthen farmers
organizations. While lower production costs may be achieved, this is not the primary
objective. The theory behind the program is that if the farmers organizations become
robust and strong, access to equipment and other cost-lowering assets can be better
sourced from the government or from their own resources (capital build-up or loans).
The experience of DAR with these starter assets also show that in giving farmers
organizations initial revenue-generating assets, the farmers groups will maintain and
eventually upgrade or replace their equipment due to improved income. In this way, the
machines and equipment contributed to mechanization and the purchase of better
machines from private providers.
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crops and food items.24 However, although R&D remains with DA, a national agency,
R&D offices should have satellite or field offices in key areas.
b. Market and other valuable information:
National government agencies should diminish information asymmetry on prices,
destination of products, industry status, and industry prognosis and make the vital
information to smallholder farmers who often have no access to these details.
Making these available to smallholders, private investors and other stakeholders
could inform their decisions on agriculture and farm enterprises.
c. Linkage with big institutional markets:
The linkage with large institutional markets should also be pursued by the DA, DAR,
DTI or their new/combined agency if it means lessening transaction costs. It does
not preclude, however, LGUs and local field offices from pursuing and linking farmers
to other private sector investors and institutional buyers.
d. Rural infrastructure:
The national agencies, guided by economic goal and agriculture vision, should
prioritize the provision of rural infrastructure (roads, bridges, irrigation). These
agencies should determine the suitable criteria for distributing the rural
infrastructure. Among the suggested considerations are the following: number of
rural poor and potential for viable agri-enterprise activities.
e. Credit facilitation
The national government should think of and develop medium to large credit
facilities without serving as the direct credit provider. The efforts of the DA, DAR and
DENR to tap the LANDBANK to develop and implement credit facilities like the
Agrarian Production Credit Program and Sikat Saka are worth continuing and
improving.
f.
24
The agriculture agenda of the incoming administration that pinpoints the creation of a nationwide agriculture
guide map that indicates soil suitability, climatic conditions, and rainfall patterns is excellent.
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The Food Staples Sufficiency Program has been at the forefront of this administration. There
is enough literature that has analyzed this program and the current policies. This is not the
portion to capsulize this debate. However, the only issue that needs to be put at the forefront
is that this must be grappled with and a clear policy crafted, taking into account the tradeoffs. These are issues like the role of the state in intervening in markets, rice importation,
and producing the entire food needs of the country. One of the main criticisms, not only of
this administration as regards the current policy of a bias for rice self-sufficiency, is that it is
an unattainable goal. Others will say that with research and development, strategic
infrastructure, and proper extension services, this can be achieved. The counterpoint is the
cost of investment that needs to be made, even assuming that the logic, rhyme and reason for
intervention is clear and unassailable.
There are rumblings that the food staples policy is in effect anti-poor because it keeps the
prices of food high in exchange for being able to produce everything within our borders. One
thing is clear this debate cannot be ignored. Options based on evidence must be clearly
spelled out and a decision on the options made. It cannot be assumed that the current
system is ideal or even appropriate. The policy levers, which were also contained in the
section on food self-sufficiency, are reiterated below.
If the decision is to keep the protectionist and limited or non-importation goal, then the
following must be carefully considered:
Address the high prices of food particularly the price of rice because it affects the poor
and near-poor including the smallholder rice farmers. Support should be provided
(including expanding the conditional cash transfer) so the poor and near-poor will be
able to buy the high-priced food. Review labor wages and if needed, address the low
buying capacity of the poor.
Assist rice farmers in marginal lands to diversify because even if the goal is to be
sufficient in rice and other staples, there should still be a semblance of efficiency in
providing scarce government resources including irrigation support. Goals and
projects like rice and food sufficiency should not be through expansion even in areas
which are not productive or suitable to planting rice.
Move for the extension of the quantitative restriction (QR). This means preparing to
provide concessions on other crops and commodities and providing assistance to
affected agricultural stakeholders.
If the decision is to remove rice and staples protectionism, then the following must be
considered:
Assist rice farmers who are expected to be affected by the importation of cheaper rice
from other countries. This means determining how much is the cost of providing
temporary support (possibly cash) while rice farmers, particularly in less efficient
areas, are diversifying out of rice or possibly out of agriculture. This also means
providing capacity building and other support services (e.g. farm machines, postharvest facilities) to these farmers and their organizations so they could move out of
rice and other staples.
Do not extend the QR and shift to a rice tariff regime.
Whether the decision is to remain protectionist or to veer away from protectionism, two
important assistance are needed:
End of Term Report by Secretary Virgilio de los Reyes
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Assist farmers in crop diversification. All farmers, whether they are rice farmers or not
and whether or not they are effective in planting rice or other crops, need to learn to
diversify their farms. This will ensure that they would have varying sources of food
and income and will make sure they will be able to address food and price shocks.
Continue the role of the NFA as the buffer stock of rice. The changes in climate and food
patterns not only in the Philippines but also in Thailand and Vietnam, which have
competitive advantage in rice, must be anticipated. These countries might be
constrained to export rice. Vice versa, changing conditions in the Philippines might
not allow domestic farmers to produce the needed rice. In this regard, the NFA must
determine the consumption requirements and ensure that a sufficient stock is
available. However, it must not control who should import. The private sector must
be allowed to import rice into the country to add to the buffer and to send a signal that
there is sufficient supply.
E. CLEAR LAND POLICIES AND MORE EFFICIENT AND MODERIZED LAND
ADMINISTRATION
There have been numerous studies made on land policies and land administration in the
Philippines. Foremost among these are the Land Administration Management Project
(LAMP) funded by the World Bank and the Australian government and the Land Governance
Assessment Framework (LGAF). The LGAF benchmarked the land governance in the
Philippines with that of the world. These are all important inputs in analyzing the land
administration system. All these point to the disjointedness and opaque nature of land
governance in the Philippines. The LAMP has developed initiatives in land valuation,
residential free patent and even an institutional re-organization. However, these studies
have failed to cut to the heart of the debate there is a need to harmonize the land laws
before we even discuss the institutional arrangements.
The current laws relating to land were developed decades ago. The population of the
Philippines has grown, the land area has not. Technology has progressed but the benefits of
new processes have not yet been fully exploited. The biggest criticism of the land laws is that
it is anti-poor. It is over-reliant on accurate surveys and titling processes which incur high
financial and transaction costs that are beyond the reach of the poor in the Philippines.
First of all, there is a need to remove the inherent bias against rural titles. At present, it
needs thirty (30) years of uncontested possession to obtain a rural title, as compared to 10
years for urban land. There appears to be no solid reason for this longer requirement. As
such, it is recommended that the number of years for both urban and rural land be set at 10
years.
Second, it is highly recommended that the lengthy and onerous procedures of acquiring land
be simplified and decentralized. Third and in line with the second, there is a need to clarify
land use regulations so these will be clearly reflected in land documents and become easily
enforced.
Fourth, there is a need to enact a Land Code, a comprehensive law to replace outdated and
harmonize existing land laws and regulations such as the cadastral law, public land law,
property registration decree, and surveying rules. Fifth, as a companion to the Land Code,
the forest delineation bill must be sent to Congress for passage.
Sixth, in reviewing the land laws, there is a need to clearly define the policy on the use of land
that is not classified as alienable and disposable as well as the rules by which usufructuary
End of Term Report by Secretary Virgilio de los Reyes
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rights to non-A&D land are granted. Under current rules, possession may be recognized, but
the possession is not subject to transfer. In principle, there is a clear bias of award of
usufructuary rights to communities and the disadvantaged. However, the same rules are
similarly opaque and the award criteria are not clear. This is the reason why the poor who
may be granted use rights can be utilized by third-party entities or persons with capital for in
order to be able access and exploit non-A&D land. Overlay this with various uses of the nonalienable and disposable land, such as mining, pasture, farming, renewable forests and there
emerges competing and conflict-prone utilization of the forest or timberland (the other
description of non-A&D) land is unclear. On top of this is the elephant in the room the
IPRA25. The IPRA was passed without a clear assessment of its effects on the laws pertaining
to use of timberland. Conflicting claims remain largely unsettled and unaddressed and is a
main source of insecurity of property rights.
Seventh (and particular to rural, agricultural areas), there is a need to accelerate and
improve the process of administrative titling and adjudication of property rights in untitled
A&D lands. The process should commence in areas of high agricultural potential. In these
areas, government can proceed from plot to plot and determine land ownership in a
transparent and participatory manner. Immediately after, patents could be issued.
Lastly, it is highly suggested that a single, integrated land information system containing all
land record for all types of land be established. This land information system shall record
property rights, interests, land use, regulations and restrictions, and boundaries. Moreover,
to remove the silos in land administration, the land information system should be shared
among agencies and should be accessible to the public, including the LGUs.
F. CARP RESIDUAL ISSUES
One of this administrations main accomplishments draw up the policies and set up the
systems to address the so-called second-generation problems or residual issues involving
CARP-awarded lands. These issues make property rights insecure, even if government has
booked these as accomplished or distributed..
1. DISTRIBUTED BUT NOT PAID (DNYP) LAND
The rush to issue emancipation patents in the period between 1988 to 1990 resulted in
the incomplete or defective documentation of many OLT lands. The lack of
documentation means that the land owners are not paid, the farmers do not know how
much they owe, and the titles issued are unstable. Parenthetically, these arose because
the 14 years of Marcos administration did not result in securing the promises he had
made in 1972. The land reform program transferred possession, but did not result in
secure property rights.
The processes for the documentation and valuation (to be paid to the land owner and the
amount to be paid by the farmer) have been laid out26. These simply have to be
implemented.
2. COLLECTIVE CLOAS
Collective titles were the result of similarly inordinate rush to puff up the numbers of
accomplishment of the DAR. These collective titles were very pronounced in the earlier
25
Indigenous Peoples Rights Act of 1997 (RA 8371) which belatedly recognized native titles and the rights of
indigenous peoples to their ancestral domain.
26
In DAR Administrative Order 06, series of 2015 and MC 03, series of 2016.
Page | 137
years of the implementation of RA 6657. Collective CLOAs were awarded with the
expressed intension to go back and subdivide these collective CLOAs into individual
CLOAs at a later time. Unfortunately, no funds were allocated for this until the mid2000s.
In 2010, in pursuance of RA 9700, there was a push for the parceling of these collective
CLOAs. However, funds remained largely unutilized. An inquiry by this Administration
initially showed that due to the passage of time, the process had to begin from the initial
step of identification/revalidation of the farmer-beneficiaries. It turned out, that many of
the FBs were not to be found and new possessors were in place. A deeper investigation
showed that, in a number of collective CLOAs, the FB identification process was defective
to begin with particularly in government-owned land.
Further analysis also showed that numerous collective titles were issued over land that
were not alienable and disposable. As a consequence, the DENR-LMS will not approve
collective CLOA subdivision surveys submitted by the DAR even if the survey of the
original collective CLOA was approved by this same body years earlier.
These two issues have stalled the parcelization of collective titles. The processes for
validation/re-identification of beneficiaries are in place27. However, the policy on
erroneously issued collective title on timberland remains mired in inter-agency
processes. This will have to be addressed squarely.
3. AGRIBUSINESS VENTURE ARRANGEMENTS (AVAS)
The distribution of government lands leased by large agricultural corporations and of
private lands utilized for commercial farms28 with high value crops had brought in many
unanswered issues. These have to do with the contracts (ranging from lease to various
forms of joint exploitation) entered into by the new land owners and the corporations
that provided the capital for the production of high value crops. The same corporations
normally processed the same crops in order for them to be sold in the market.
In many cases, farmworkers cooperatives and organizations were created or
transformed into ARB cooperatives/organizations under whose names collective CLOAs
were issued. So as not to disrupt the production by the corporations or the income flow
of the new owners, these ARB cooperatives were encouraged to enter into contracts with
agricultural corporations. Many of these contracts entered into are now subject of a lot of
disagreement. The FBs have aged, some are even not working anymore on the farm. The
large investments of the corporations required long periods of effectivity. The
government was also remiss in the provision of support services (both hard and soft) to
the FBs.
The policy question that needs to be addressed are numerous. The FAO study conducted
for the DAR is informative. DAR AO The new administration needs to evaluate this
clearly.
4. SUCCESSION AND TAXES
It is a sordid joke to say that the CARP law failed to consider that people do pass away
and do not live forever. However, this is the reality. The CARP law, property registration
27
28
AO 3 series of 2016
RA 6657 deferred the coverage of commercial farms for ten (10) years from its passage in 1988.
Page | 138
decree, PD 27 and other rules did not take into consideration this reality. As such, the
operative law is the Civil Code. Layered on top of this is the National Internal Revenue
Code and its strictures on estate taxes or donors taxes. In tandem, these two rules
impede and discourage the formal transfer or donation of awarded lands upon death of
the FB (and agricultural land in general). The transaction costs to transfer the title from
one generation to the next results in titles in the name of a deceased FB, sometimes for
two generations. This is one major source of insecure property rights in agriculture.
5. THE NOC EXTENSION BILL (CARP COMPLETION BILL) AND OTHER PROPOSED AGRARIAN
REFORM MEASURES
RA 9700 was unequivocal in stating that land acquisition was for only until June 30, 2014.
The escape clause (Section 30 of RA 9700) came with a provision that lands which are in
the process of acquisition could be acquired even beyond such period. At the end of June
30, 2014, almost 67,000 hectares of land were not served with notices. A review of the
notices sent shows that there may be an almost equal number which had erroneous
entries (wrong title numbers, names, area, etc.).
These errors or failures were due to the records within the DAR and the difficulty in
obtaining certified true copies of records in the registrars of deeds. In many cases,
requests remained un-acted upon or the copies in the RoDs were lost, but the registrars
refused to certify the loss.
Coverage of military reservations, lands of state-owned colleges and universities and
other large tracts of lands owned by government entities should be discussed by the
government entities concerned. But, first, it is strongly recommended that government
should make an inventory of all of these land and thereafter, create an inter-agency body
that will determined which of these lands remain with the agencies concerned and which
lands will be subject to distribution under the agrarian reform program. The
determination of which lands should be distributed cannot be done piecemeal; there
should be an overarching policy on the use of these lands.
There is nothing inherently unconstitutional in foregoing the collection of ARB
amortization for distributed LBP-compensable lands. The rough estimate of the fiscal
implication of distributing LBP-compensable land for free was given in the first part of
this paper. This can be further refined to take into consideration the cost of collection,
the effect on the budget deficit, the schedule by which this cost will be absorbed by the
national government and others. Then the government can make a choice on whether it
is willing to forgo the collection of ARB amortization.
These three measures are not inextricably linked and it may be more feasible to propose
these measures in Congress separately so that if one measure encounters strong
opposition, the other two measures are not affected. In the opinion of the author, the
NOC Extension Bill takes priority since this will enable the completion of the agrarian
reform program.
6. LAND USE POLICY
The National Land Use Bill has remained mired in every Congress. It has always been
certified, but never passed. Without these, the parameters for delineating land use have
not been put in place. Hence, the area to be delineated for use in agriculture, industry,
recreation, institutions will always remain nebulous. Some sectors benefit from this
failure to set policy. The passage of this bill needs no further discussion, a room can be
filled with studies on this topic.
End of Term Report by Secretary Virgilio de los Reyes
Page | 139
G. INSTITUTIONAL ARRANGEMENTS
1. AGRICULTURE AND RURAL DEVELOPMENT
There was a time when there was a ministry for public highways, and one for public
works. There was one for industry and another one for trade. This was the same time
when there was a ministry for agriculture and one for agrarian reform. The first two
separated twins have since been joined. The one dealing with agriculture has not. Not
only has the horizontal relationships remained unchanged and disjointed, the vertical
relationship between LGUs and NGA was also severed. DAs agricultural extension
function was the subject of devolution while the DAR maintained its presence up to the
municipal level.
The idea in devolution was good if the agricultural policy of the country remained one
that closed our borders and closed it to trade. In short, it was good if the agricultural
policy was mainly one determined by the state, rather than the market. Under a centrally
planned economy, agricultural extension was simply extending the technology of
production. Prices of inputs and outputs were controlled by the state. Imports and
exports were undertaken via state trading enterprises. We have started to move away
from this centrally-planned economy; yet the old paradigm of agricultural extension
remained focused on technology on how to produce.
In the years following the opening of our borders, we passed the Agricultural Fisheries
and Modernization Act (AFMA). This law had a clear bias market-led agriculture with
the state acting as the enabler. Prior to the passage of the AFMA, the CARL was amended
to enhance the support services of the DAR. RA 7905 was passed. A comparative reading
of the two laws will show that the disconnect is apparent. RA 7905 assumed heavy state
involvement in all aspects of agricultural development of the ARBs and left this function
with the DAR. Thus, there were two policies in place, running alongside each other.
In the past, there were attempts at the convergence of the DA, DAR and DENR. This was
also the same attempt in the early years of this administration. However, the alignment
and convergence will not happen unless there is a common policy and this common
policy is reflected in the budget of the three agencies. Today, it has remained disjointed.
The budget of the DA is almost 50 times bigger than DAR for support services. The
discussion in the field level is spotty. Yet, the ARBs and the non-ARBs co-exist in one
barangay. There will be a spatial development plan: a SAFDZ from DA and an ARC plan
from DAR.
The proposal of this Report is to consolidate support services in one national agency.
However, the LGUs (province, cities and municipality, where applicable) should maintain
an office devoted to agriculture. The function of the LGUs agriculture office should be
primarily that of production technology. However, the national agency should handle the
other functions that were not necessary in the old economic paradigm of closed markets.
These functions ought to be handled by the national agency because its breadth and
depth cannot be properly handled by the LGU or are within the confines of the LGU.
These are: rural infrastructure; credit facilitation and risk mitigation; research and
development; market information; capacity building (except production); ease of doing
business; and provision of starter assets.
To be able to do this, the DA will have to extend its offices to the provincial level. The
core of these personnel can be the current employees of the DAR in its provincial offices.
The delivery of support services currently undertaken by the DAR is in these same offices.
End of Term Report by Secretary Virgilio de los Reyes
Page | 140
The personnel in the regional office of the DAR can be added to the regional office of the
DA in order to adjust to its added functions.
The presence of the national government is not an encroachment into the functions of
the LGU. It is simply a way to be more strategic and efficient in the use of resources and
to allow a wider view of agricultural concerns.
2. LAND ADMINISTRATION
The dispersal of the different agencies handling land administration in three
departments has really been problematic. The system wherein LRA is under the DOJ,
LMS is under DENR, NCIP is under the OP and land distribution is under the DAR is a
system that has brought about dysfunctions in land administration. As stated earlier, this
has been aggravated by the disjointedness of the laws being implemented by these
different agencies. The proposal is to transform the DAR into an agency called the
Department of Land Administration (DLA) that will fulfill four functions: issuance of
certificates of title, approval of surveys, land distribution (of both private and public
lands), and adjudication of all land matters (except zoning). The NCIP can be
attached to the DLA. This means that all functions related to recognition or grant of
ownerships will be under one department. Grants of use rights in timberland can remain
with the DENR. All grants or recognition of private ownership over all alienable and
disposable land, land re-distribution under the CARP will be handled by the proposed
DLA. Resolution of applications for recognition of ownership rights including conflicts
over claims (such as original registration) will be with the adjudication board of the DLA.
The new land code may remove this from the purview of courts to expedite this.
A central database of certificates of title, approved surveys and other records will allow
faster adjudication in all issues on land.
Addressing residual or second-generation issues in the CARP can be handled by the DLA.
With a merger in one department, the usual turf war or wrangling can be readily avoided.
3. HANDLING THE BACKLASH OF RE-ORGANIZATION
EO 366 and RA 6656 are insufficient to handle this re-organization. It may be better to
pass a law that can address this, after the passage of the land code. This will also allow a
retirement package that MAY be availed of by employees of the DA, DAR, DENR and LRA.
The recommendation is to provide for an additional benefit equivalent to 1.5 months
salary for every year of government service. The choice to retire should be left with the
employees.
In the case of employees who would rather find a place in the new organization some retraining of the remaining personnel would be in order to address their new functions.
Details of the reorganization may be found in the study conducted by the Development
Academy of the Philippines in pursuance of Administrative Order 34 (2012). The report
is fairly complete with costs.
4. SHORT-TERM INSTITUTIONAL ARRANGEMENTS
While all these bills (land code and re-organization) are being crafted and deliberated, an
interim measure can be made. This can be done by appointing a presidential assistant
for rural development that will handle the coordination of the rural development and
land functions of the DA, DENR, DAR and LRA.
Page | 141
Conclusion
For more than 20 years, the Comprehensive Agrarian Reform Program (CARP) has been the
Philippine governments principal area-based rural development program. Asset reform has
long been recognized by the government as key to improving agricultural productivity and
reducing rural poverty. For its part, DAR which is the lead government agency of the
Program has been working closely with government agencies, local government units, and
development partners in pursuing the enabling measures for competitive and sustainable
agriculture focused on improved food security and increased rural incomes, and enhanced
agrarian reform and agriculture policy environment. Toward this end, DAR lends support to
the harmonization of development efforts of various stakeholders engaged in the agriculture
and rural development sector to maximize impact on rural poverty reduction.
The pursuit of sustainable rural development would draw lessons from past experience
while meeting the prevailing challenges and harnessing available opportunities. The
pervading challenges in the agriculture and rural development sector have been the rapidly
growing population, increasing pressure on limited resources and climate change. The
enormous opportunities include advances in information technologies, resilient agricultural
methods and increasing private sector participation. Such challenges and opportunities will
necessarily build on DARs efforts in drawing the active support and participation of various
stakeholders including the rural communities that were strengthened through institutional
local capacity building programs.
With CARP as both social justice and poverty alleviation program, DAR will continue to play a
critical role in the overall effort to pursue the rural development strategy through its
mandate in ensuring land tenure improvement and the provision of essential support
services with the end goal of improving agricultural productivity and farm income of the
small farmers. The economic policy thrusts of the new administration for sustainable rural
development will further enhance DARs assistance to small farmers through complementary
measures for improved market and credit access and accelerating the provision of essential
support infrastructures that would link rural communities to economic and social services.
DAR will remain to be at the forefront in forging effective coordination among government
agencies and institutions to address the bottlenecks in land administration and management.
This is to ensure the stability of land tenure and ownership and to encourage more
investments in the rural areas.
Page | 142
Tables
Table 2: DAR-Distributed Land from 1972-December 31, 2015
by Year, by Administration, by Land Type/Mode of Acquisition (in hectares)
Non Private Agricultural Land
(Non-PAL)
Land Type/
Year
National
5,413,630
TOTAL DISTRIBUTED
Landed
Estate
GOL/KKK
811,242
81,494
1,217,339
976
1,403
53
2,347
15,220
7,648
8,274
28
50,859
8,553
13,662
18,338
7,336
35
60,657
1,224
6,933
9,738
23,361
10,016
136
47,094
3,697
1,237
9,438
9,937
24,677
16,943
84
45,877
107,180
4,524
755
6,937
6,236
26,566
18,698
70
43,393
2009
59,495
4,743
1,336
7,890
1,777
26,683
2,103
89
14,875
2008
146,274
3,458
2,746
15,198
7,828
56,401
16,901
187
43,553
2007
134,041
5,221
1,419
24,144
10,269
49,029
9,298
82
34,578
2006
125,177
4,319
1,594
27,166
9,883
42,875
12,394
116
26,830
2005
131,069
3,653
2,779
27,262
16,501
39,010
9,427
132
32,305
2004
104,069
3,238
6,098
27,062
13,733
28,060
13,322
705
11,851
2003
97,795
3,847
3,880
30,045
11,986
23,452
10,452
491
13,642
2002
111,722
5,150
2,364
30,984
14,502
23,271
18,072
119
17,260
2001
104,261
5,651
3,930
28,292
17,542
22,434
11,695
172
14,545
2000
110,478
5,972
3,315
26,288
14,348
24,840
11,810
330
23,575
1999
132,069
7,521
4,454
30,341
19,919
27,848
17,426
290
24,270
1998
137,358
8,592
5,634
31,768
21,374
34,902
7,552
616
26,920
1997
210,126
12,803
4,109
35,207
25,485
58,882
22,598
552
50,490
1996
300,195
19,398
17,932
43,873
24,248
78,755
66,800
1,737
47,452
1995
289,324
25,166
11,647
38,470
17,724
66,151
72,005
10,527
47,634
1994
433,678
31,565
22,212
43,312
14,319
60,439
91,918
4,608
165,305
1993
411,960
33,447
33,413
54,187
19,662
34,954
63,956
3,431
168,910
1992
267,381
25,760
16,426
45,036
14,761
20,312
52,091
22,592
70,403
1991
293,219
23,428
15,138
30,005
10,168
12,882
88,202
14,365
99,031
1990
191,903
65,739
2,075
9,902
539
2,317
93,096
7,093
11,142
1989
118,092
98,687
3,987
959
497
10,386
1,273
2,303
1988
142,079
119,581
1,967
293
20,238
1987
44,081
42,811
1,024
246
As of 1986
70,178
15,061
44,076
11,041
OLT
GFI
VOS
CA
VLT
Settlements
4,718,845
594,175
171,391
650,537
357,106
835,561
2015
27,670
1,538
546
5,062
15,745
2014
92,199
3,228
720
6,223
2013
112,036
3,033
421
2012
101,847
3,345
2011
111,889
2010
* Note: Area is CARP Area or Net Area, that is, this is the area reported as actually distributed to agrarian reform
beneficiaries.
Source: Field Operations Office, Department of Agrarian Reform
Page | 143
Compensable/NonCompensable
PAL/Non-PAL
Land Type/
Year
National
Private
Agricultural Land
Non-Private
Agricultural
Land
LBP
Compensable
Non-LBP
Compensable
5,413,630
3,244,341
2,169,288
2,364,541
3,049,088
4,718,845
2,608,770
2,110,075
1,773,209
2,945,636
2015
27,670
23,867
3,803
22,892
2,389
2014
92,199
33,038
59,161
25,390
66,809
2013
112,036
44,008
68,028
25,670
86,367
2012
101,847
44,601
57,246
21,239
80,608
2011
111,889
48,985
62,904
24,308
87,580
2010
107,180
45,018
62,162
18,452
88,728
2009
59,495
42,428
17,067
15,746
43,749
2008
146,274
85,632
60,642
29,231
117,043
2007
134,041
90,082
43,959
41,053
92,988
2006
125,177
85,837
39,340
42,962
82,215
2005
131,069
89,205
41,864
50,195
80,874
2004
104,069
78,191
25,878
50,131
53,938
2003
97,795
73,210
24,585
49,758
48,037
2002
111,722
76,271
35,451
53,000
58,722
2001
104,261
77,849
26,412
55,415
48,846
2000
110,478
74,763
35,715
49,923
60,555
1999
132,069
90,083
41,986
62,235
69,834
1998
137,358
102,270
35,088
67,368
69,990
1997
210,126
136,486
73,640
77,604
132,522
1996
300,195
184,206
115,989
105,451
194,744
1995
289,324
159,158
130,166
93,007
196,317
1994
433,678
171,847
261,831
111,408
322,270
1993
411,960
175,663
236,297
140,709
271,251
1992
267,381
122,295
145,086
101,983
165,398
1991
293,219
91,621
201,598
78,739
214,480
1990
191,903
80,572
111,331
78,255
113,648
1989
118,092
104,130
13,962
103,633
14,459
1988
142,079
119,581
22,498
119,581
22,498
1987
44,081
42,811
1,270
42,811
1,270
As of 1986
70,178
15,061
55,117
15,061
55,117
CUMULATIVE
ACCOMPLISHMENT
LAD
Page | 144
LAND TYPE/MODE
OF ACQUISITION
CA
DEDUCTIBLE
Number
of LHs
PROBLEMATIC
Gross
Area
Number
of LHs
WORKABLE
Gross
Area
Number
of LHs
Gross
Area
TOTAL
Number
of LHs
Gross
Area
3,756
24,725
12,858
111,836
32,428
273,771
49,042
410,332
EO 407/448
147
567
357
2,656
1,051
10,396
1,555
13,618
KKK/GOL
119
3,084
408
3,677
215
16,926
742
23,687
160
143
14
6,431
180
6,581
OLT/PD 27
201
1,043
2,891
11,829
1,558
9,254
4,650
22,126
Settlement
12
217
1,296
555
14,237
776
15,545
VLT/DPS
216
1,112
512
3,342
814
22,258
1,542
26,713
VOS
298
1,555
1,104
14,833
6,905
86,094
8,307
102,483
4,747
32,107
18,507
149,612
43,540
439,367
66,794
621,085
Landed Estate
Grand Total
Number of
Landholdings
5 hectares and below
Percent of
Landholdings
Gross Area
Percent of
Gross Area
2,575
4%
5,390
1%
27,809
43%
145,338
25%
19,099
29%
188,648
33%
4,991
8%
59,914
10%
10,622
16%
175,982
31%
65,096
100%
575,272
100%
Page | 145
# of LHs
144,514
CARPable
Area
NonCARPable
Area*
1,053,413
143,008
21,485
129,821
9,277
139,099
22,525
4,135
10,189
103,133
14,270
88,537
31,147
392
4,800
134,280
14,663
93,337
129,150
977,294
115,946
1,093,240
17,765
28,396
10,880
157,695
170,127
111,889
27,657
26,207
8,395
185,352
196,334
120,284
107,639
852,973
109,001
961,974
13,761
21,535
35,296
6,321
20,144
108,625
1,404
8,225
21,548
116,850
12,083
9,366
92,913
82,776
101,847
770,592
21,174
17,594
98,589
103,950
119,441
869,181
7,777
7,479
15,255
5,895
12,079
18,463
113,078
69,814
4,766
10,937
18,052
23,229
124,015
87,866
7,392
78,981
112,003
691,167
13,559
80,628
125,561
771,795
Total Area
1,196,422
8,275
2,161
2,833
3,190
11,108
5,351
271
2,195
6,575
24,479
141
3,129
6,716
27,608
2,445
6,122
73,722
15,891
92,199
624,658
2,175
11,099
70,127
18,066
103,298
694,784
2,167
6,329
3,168
606
5,334
6,935
1,089
4,251
4,651
37,644
1,215
5,305
5,867
42,949
3,792
66,794
27,670
559,831
7,344
61,254
35,015
621,085
Page | 146
Land
Type/Mode of
Acquisition
Total
Accomplishment
(in hectares)
Collective
CLOA
Issued
(in
hectares)
% of
Collective
CLOA Issued
% of
Accomplishment
CA
357,106
143,513
6.62%
40.19%
VOS
650,537
405,893
18.72%
62.39%
OLT/PD 27
594,175
546
0.03%
0.09%
EO 407/448
171,391
125,446
5.79%
73.19%
VLT/DPS
835,561
432,829
19.96%
51.80%
81,494
12,287
0.57%
15.08%
811,242
339,036
15.64%
41.79%
1,217,339
708,565
32.68%
58.21%
4,718,845
2,168,116
100.00%
45.95%
Landed Estate
Settlement
KKK/GOL
TOTAL
2,168,116
1,064,746
115,816
139,134
Sub Total:
254,950
1,319,696
848,420
228,604
Non-LBP Comp. Lands [Landed Estate (LE), Settlement (SETT), & Government
Owned Lands (KKK/GOL)]
350,962
579,566
22,295
43,406
203,153
268,854
848,420
Page | 147
Program Type
LO Compensation
Area
(PhP millions)
(Hectares)
PD27/EO228
No. of LOs
No. of
Claims
3,263.75
422,695
21,530
36,236
RA 6657
54,585.63
1,039,878
57,058
94,909
RA 9700
11,593.76
85,483
5,555
8,191
69,443.14
1,548,056
84,143
139,336
TOTAL
Program Type
LO Compensation
Subsidy
To Be Paid by FBs
(PhP millions)
(PhP millions)
(PhP millions)
PD27/EO228
No. of FBs
3,263.75
291.23
2,972.52
281,797
RA 6657
54,585.63
9,237.61
45,348.02
577,710
RA 9700
11,593.76
1,297.14
10,296.62
47,490
69,443.14
10,825.98
58,617.16
906,997
TOTAL
Program
Type
Booked as ARR
Amount
PD27/EO228
Area
Amount
Area
No. of FBs
2,972.52
422,695
281,797
0.00
RA 6657
11,847.83
283,923
175,819
33,500.19
755,955
401,891
RA 9700
838.19
9,166
7,226
9,458.43
76,317
40,264
15,658.54
715,784
464,842
42,958.62
832,272
442,155
TOTAL
7,681.78
ADC Collected
3,128.23
7,976.76
NYD Collected
1,812.88
4,941.11
3,929.07
739.96
NYD Collected
272.08
Page | 148
Area
Number of FBs
Fully Paid
327,991
232,395
With Payment
196,969
112,234
Without Payment
190,823
120,213
715,784
464,842
# of LHs
Total Accomplishment
% of LH
47,727
601,267
Net Accomp.
(CARP Area)
% of Net
Accomp
Non-CARP
Area
534,182
67,085
LAD Accomplishment; Private Agricultural Lands (PAL) vs. Non-Private Agricultural Lands (Non-PAL)
Private Agri Land (PAL)
33,491
70.2
275,682
45.9
228,539
42.8
47,143
Non-PAL
14,236
29.8
325,586
54.1
305,643
57.2
19,943
25.2
74.8
41,170
25,916
18,497
29,230
38.8
61.2
175,518
425,750
29.2
70.8
134,348
399,834
8,031
16.8
91,355
15.2
69,379
13.0
21,976
VOS
4,376
9.2
53,158
8.8
41,720
7.8
11,438
OLT/PD 27
5,299
11.1
25,536
4.2
18,537
3.5
6,998
EO 407/448
791
1.7
5,469
0.9
4,711
0.9
758
14,994
31.4
100,164
16.7
94,191
17.6
5,973
VLT/DPS
434
0.9
529
0.1
386
0.1
143
Settlement
4,173
8.7
65,544
10.9
62,591
11.7
2,954
KKK/GOL
9,629
20.2
259,512
43.2
242,666
45.4
16,846
Landed Estate
36.8
174,866
29.1
157,440
29.5
17,426
Corn
5,854
12.3
157,878
26.3
149,028
27.9
8,851
Rice
13,005
27.2
110,546
18.4
91,243
17.1
19,302
Mixed Crop
4,533
9.5
42,690
7.1
37,457
7.0
5,233
Sugarcane
2,393
5.0
39,689
6.6
32,129
6.0
7,560
Coconut
LAD Accomplishment, July 2010-December 2015 By Land Size (Private Agricultural Land [PAL ] only)
Above 50 hectares
4,616
13.8
91,446
33.2
66,915
29.3
24,531
2,364
7.1
26,110
9.5
20,761
9.1
5,349
8,887
26.5
85,344
31.0
74,693
32.7
10,651
11,157
33.3
59,082
21.4
53,624
23.5
5,458
6,467
19.3
13,698
5.0
12,546
5.5
1,153
5 has. or less
Page | 149
Census reference
year
Number of
farms/holdings
1980
3,420,323
2.84
2012
5,562,577
1.29
Increase/Decrease
2006 Poverty
Incidence
2009 Poverty
Incidence
2012 Poverty
Incidence
2006-2009
2009-2012
PHILIPPINES
38.5
38.0
38.3
(0.5)
0.2
CAR
37.2
34.6
33.0
(2.5)
(1.7)
Region I
25.4
21.1
15.8
(4.3)
(5.2)
Region III
13.0
11.6
11.9
(1.4)
0.3
Region IVA
20.5
23.2
24.1
2.7
0.9
Region IVB
40.8
33.9
35.6
(6.9)
1.6
Region V
44.2
42.5
37.0
(1.8)
(5.5)
Region VI
31.3
30.2
31.4
(1.1)
1.2
Region VII
54.6
48.4
47.4
(6.2)
(1.0)
Region VIII
47.4
48.5
49.2
1.1
0.7
Region IX
58.9
58.1
50.6
(0.8)
(7.5)
Region X
51.3
54.9
55.1
3.6
0.2
Region XII
44.0
44.7
45.2
0.7
0.5
Region XIII
39.9
39.7
47.9
(0.2)
8.2
ARMM
46.9
48.8
58.0
1.9
9.2
CARAGA
54.0
57.5
45.5
3.5
(12.0)
Region
Source: PSA,
Notes: Poverty incidence estimates for farmers in NCR and Region II were excluded due to low level of precision
or small sample size. Poverty estimates for the basic sectors for 2006 and 2009, released on 7 June 2012, were
revised by the PSA to adopt the new urban and rural classification in the Family Income and Expenditure Survey
and to use the 2006 Consumer Price Index prices in computing thresholds
Table 17: Indicators of Efficiency of Domestic Production, select crops, 2010
Domestic resource
cost
Domestic price
(2)
Ratio
(1) / (2)
Rice
2.60
21.8
31.2
1.43
Sugar
0.78
16.01
20.44
1.28
Crop
Page | 150
Development Objectives
Planned Results
Goal
Impact
Purpose
Intermediate Outcome
farmers
Immediate Outcome
Enhanced capacity of smallholder farmers
organizations
in
agricultural
technologies
promotion and enterprise development
Activities and Inputs
Outputs
1.
3.
4. Post-harvest
4.
5. Primary processing
5.
Agri-technologies
provided
6.
Technoguides developed
7.
8.
9.
6. Processing
7. Provision of Business Development Services
8. Organizational management
9. Financial management
10. Market management
11. Office management
12. Conduct of Monitoring and Evaluation
and
extension
services
Page | 151
Table 19: Production increase of block farms during first year of implementation
% Increase
40.00
70.00
75%
50.00
100.00
100%
37.00
50.58
36.7%
43.67
57.31
31.2%
41.00
47.31
13.3%
50.00
54.81
9.6%
45.44
55.48
22.1%
38.00
53.27
40.2%
42.05
52.92
25.9%
77.00
82.75
7.5%
59.25
67.04
13.1%
80.00
123.55
54.4%
55.00
65.00
18.2%
52.00
65.00
25.0%
41.50
49.83
20.1%
Source: SRAs Sugarcane Roadmap 2020 PowerPoint presentation, February 2, 2015 version
Table 20: Comparative Assessment of Income and Expenses of Sugarcane Production by Season, ONARBPA
Assessment
Date
Gross Income
(in PhP)
Expenses
(in PhP)
Net Income
(in PhP)
1st
Dec. 2015
460,953.00
241,323.52
219,629.48
2nd
Feb. 2015
1,259,452.09
493,983.55
765,468.54
3rd
May 2015
1,720,405.09
736,307.07
984,098.02
Aug. 2015
1,940,487.59
934,217.97
1,006,269.62
Page | 152
Project Title
Fund Source
Area
Coverage
# of
ARCs
Project Cost
(PhP million)
World Bank
16
Provinces
125
3,419.46
Government of Japan/
Japan International
Cooperation Agency (JICA)
54
Provinces
134
7,964.63
IVB,V,VI, IX
and ARMM
152
8,647.21
Government of France
Nationwide
GOJ/JICA
Aurora,
Quezon
347.68
GOJ/JICA
JICAassisted
areas
25
25.00
Government of Israel
Region III
3.00
18,474.56
38,881.54
37,795.74
76,677.28
Page | 153
Poverty
Incidence
ARISP 2(a)
(ARC)
WMCIP(
2001
Base Year
Resurvey
Year
Aguinaldo
88
(a)
(b)
(c)
(d)
(e)
(f)
MINSSAD
2002
2006
2003
81
66
60
Anao
(d)
STARCM(e)
(Prov.)
ARCD
P 2(f)
2002
2006
North Cotabato
73
62
Sultan Kudarat
78
Pinagsibaan/
P.Kahoy
66
Lanao
Norte
80
Gloria cluster
76
Estaca
84
Mambuaya
62
Kasuga
67
Angas-Awao-Sayon
71
Simbahan/Mapalad
62
2006
Aguinaldo
Anao
Percentage
Points
Change
(Decrease
in poverty
incidence)
SPOTS
2(c)
b)
44
2006
2008
2007
74
59
36
del
85
2007
2009
North Cotabato
58
Sultan Kudarat
68
Pinagsibaan/
P.Kahoy
64
Lanao del
Norte
60
Gloria cluster
32
62
Estaca
60
Mambuaya
28
Kasuga
32
Angas-Awao-Sayon
48
Simbahan/Mapalad
56
North
Cotabato
-16
Sultan
Kudarat
-10
Lanao del
Norte
-20
-22
Aguinaldo
-44
Anao
-54
Pinagsibaan/
P.Kahoy
-2
Gloria cluster
-44
Estaca
-24
Mambuaya
-34
Kasuga
-35
Angas-Awao-Sayon
-23
Simbahan/Mapalad
-6
-7
-7
-24
55
52
-3
Page | 154
Table 23: On-going FAPs by Fund Source, Area Coverage and Cost, as of December 2015
Project
Fund Source
Coverage
GOJ-JICA
54 provinces
7,964.63
ADB, OFID
19 provinces
8,647.21
Govt of
France
Nation-wide
Govt of
Italy
4 provinces
2,518.75
GOJ-JICA
7 provinces
4,402.74
IFAD
11 provinces
2.248.93
18,474.56
GMFA
or
Microfinance
Reform Areas
in
Grassroots
Agrarian
Regular Programs
Foreign-Assisted Programs
CAP-PBD Window II
AGRISOL
AgriCASH
Source: Inputs from BARBD, and the paper, The Gains of PBD under CARP, (no author).
Page | 155
Total amount of
credit availed
(in PhP)
No. of
provinces
No. of
municipalities
No. of ARCs
No. of nonARCs
CAP-PBD Window II
137,900,000
13
24
22
22,670,000
Micro-Agri Loan
Product (MALP)
39,283,000
DAR-NATCCO
MICOOP @ ARAs
19
104
25
79
169,160,000
DAR-CARD MF
CapDev Program
12
32
21
11
4,677,138
TOTAL
53
171
79
93
373,690,138
Source: Inputs from BARBD, and the paper, The Gains of PBD under CARP, (no author).
Table 26: Philippine Land Classification (2014)
(in hectares)
TOTAL PHILIPPINE SURFACE AREA
Land
Inland Water
30,000,000
29,817,000
183,000
LAND CLASSIFICATION
CERTIFIED ALIENABLE AND DISPOSABLE (A & D)
14,194,675
FOREST LAND
15,805,325
755,009
3,270,146
10,056,020
National Parks
1,340,997
1,724,150
Source. FMB-DENR
Page | 156
ANNEX A:
Implementing the Supreme Court Decision on
Hacienda Luisita, Inc.
The vast landholding of Hacienda Luisita, Inc. (HLI) in Tarlac City, Concepcion, and La Paz
was distributed by the DAR pursuant to a final and executory decision of the Supreme Court.
The Antecedent
The vast Hacienda Luisita was once owned by the Tarlac Development Corporation
(TADECO). In 1988, Republic Act No. 6657 came into force. The law, among others, allowed
corporations owning agricultural lands, for a limited time (two years), to comply with the
mandate of CARP by distributing a portion of its capital stocks equivalent to the proportion
of the agricultural land bears in relation to the corporations total assets in lieu of outright
land distribution. TADECO took advantage of this law by creating a spin-off corporation
named Hacienda Luisita, Inc., to which it transferred the agricultural portions of the
Hacienda, and distributed shares of stock of the spin-off corporation to farmworkers. The
scheme was approved by the PARC on 21 November 1989.
On 22 December 2005, the PARC revoked the 1989 approval on the ground that HLI failed to
comply with its obligations under the law and the Stock Distribution Plan. The same issue
eventually reached the Supreme Court.
The Supreme Court, in its 5 July 2011 Decision, affirmed the revocation of the Stock
Distribution Option for two specific reasons:
1. The Stock Distribution Option Agreement stated that the number of shares each
beneficiary will obtain will be contingent on the number of man days / days they
worked during the year. This watered down the shares of the beneficiaries who were
supposed to get more shares than they actually received.
2. The same Agreement provided for a thirty-year time frame for the shares of stock to
be transferred to the farmworker beneficiaries. This violated the rules of the DAR
that the shares of stock must be distributed within three months from receipt of the
landowner of the copy of the approval of the SDO by the PARC.
Peculiar in the said Decision are the:
1. Declaration of the Supreme Court that on the basis of the Doctrine of Operative Facts,
the qualified farmworker beneficiaries as of 21 November 1989 shall have the option
either to remain as stockholders of HLI or to receive a portion of the land;
2. Actual size of land each beneficiary will obtain was provided by the Supreme Court
These are some of the portions that the DAR and PARC, under this Administration, through
the Office of the Solicitor General, questioned. Specifically, the DAR and PARC requested that
the Supreme Court remove the option to remain as stockholder and instead order the full
distribution of the land to all qualified beneficiaries as of 1989; and that to allow the DAR,
through its procedures, determine how large each beneficiary should get.
The Supreme Court rejected the reasoning of the DAR and PARC on the first, but nevertheless
decided to remove the option and declare the full distribution of the land. It then granted the
second abovementioned request of DAR.
End of Term Report by Secretary Virgilio de los Reyes
Page | 157
It is well to note, at this point, that the DAR, during this Administration, determined that
portions of Hacienda Luisita which are agricultural in nature were not transferred to the
spin-off corporation, HLI, and thus was not part of the Supreme Court Order to acquire and
distribute. The DAR, nevertheless, in 2014, pursuant to its mandate, issued a Notice of
Coverage to TADECO covering these portions. The TADECO questioned the coverage of the
land, which is now pending with the DAR.29
29
Page | 158
In line with the directive of the Supreme Court to identify the qualified FWBs with certainty,
two rounds of interviews of Eight Thousand Six Hundred Forty-one (8,641) persons were
conducted from 23 May 2012 to 22 July 2012. A cross verification of the names of FWBs were
also conducted by the DAR to determine the bulk of the qualified FWBs of Hacienda Luisita
and produce a credible Master List of FWBs of Hacienda Luisita (or the heirs of the deceased
FWBs.) To determine the qualified FWBs, the following were considered: the HLI 6296 List,
the MOA Voters List (the list of those who voted whether they approve of the SDO or not
back in 1989), and the SSS records of TADECO at the time.
A back office was created by the DAR Central Office for the sole purpose of expediting and
simultaneously processing the duly accomplished ISFs during interview, and creating a
comprehensive database on all potential FWBs of Hacienda Luisita.
In addition to the massive information drives conducted by the DAR from 21 January to 18
May 2012 at the ten barangays covered by the hacienda to apprise potential beneficiaries of
the details of the Supreme Court Decision, consultation meetings were likewise held with
farmer organizations and barangay officials.
Consequently, the DAR came up with a Preliminary Master List, which included five thousand
three hundred sixty five (5,365) persons assessed to be qualified as FWBs of Hacienda
Luisita, and a Provisional List composed of one thousand two hundred twenty one (1,221)
persons who still need to submit additional proof of their qualification. These were posted
on 31 October 2012 in the ten (10) barangays of Hacienda Luisita, and copies of the same
were furnished to all parties of the case.
On 26 February 2013, DAR Secretary de los Reyes signed the Resolution resolving three
hundred fifty seven (357) Petitions for Inclusion filed with the DAR Tarlac as well as the
status of one thousand Two hundred Eighteen (1,218) names included in the Provisional List,
eight hundred forty seven (845) of these were determined to be qualified as farm worker
beneficiaries.30
On 27 February 2013, the Department of Agrarian Reform (DAR) released the Final Master
List of Farmworker-Beneficiaries of Hacienda Luisita following the Decision of the Supreme
Court.
It has to be said that the DAR did not look at affiliations or level of activeness/ passiveness
when it made the list. Some farmworkers of HLI were affiliate with certain groups, such as,
AMBALA, FARM, and the group of supervisors, although a majority of the farmworkers were
unaffiliated or at least not active with respect to any group. Not all farmworkers actively
pursued as well for the revocation of the SDO during the time it was being litigated. These
affiliations and passiveness were disregarded by the DAR considering that the parameters
set by the Supreme Court was clear give the land to those who were qualified as of the time
of the inception of the SDO. The Court did not say that those who were not affiliated to
groups and those who did not actively participate in the revocation of the SDO be disqualified
from being awarded a portion of the land.
Decision #2: Keep in RP Title Non-Distributable Areas
The landholding was too vast for the DARs employees to (land) survey. Following the
procurement laws and rules, the DAR engaged the services of FF Cruz to survey the land.
30
Page | 159
The 500 hectare portion recognized by the Supreme Court as converted, and the 80.61
hectare portion used for the SCTEX were segregated. These were not acquired from HLI
pursuant to the directive of the High Court. The residential areas, cemetery, and access roads
to the SCTEX were also not acquired from HLI.
Thereafter, eroded areas, concrete road networks, canals, and creeks were segregated as
well. The DAR decided to acquire these areas from HLI (pursuant to the decision of the
Supreme Court) but not distribute the same to individual beneficiaries for two major
reasons:
1.
Equal size of lots: as will be discussed later, the DAR decided to give equal size of
lots to all qualified beneficiaries. It would have been unfair to certain beneficiaries if
portions of their lands are not fit for agricultural use. Had the non-agricultural
portions been distributed to some of the beneficiaries, then the land area which they
can use for agricultural use will be smaller than those beneficiaries who have been
awarded lots which are completely agricultural in nature.
2.
Common access: road networks, canals, creeks, and other areas, such as the
cemetery, are intended to be used by the community, and not just particular persons.
Had these lots been distributed to individuals, it would be unfair to the new owners
to limit their rights to the land they own, such as the manner on how to use every
area space therein. Following this logic, if these non-agricultural community areas
were subdivided into individual ownership, then either the community will be
deprived of the rights to use them should the individual owner chooses to close
these to them, or the individual beneficiaries will be deprived of the full use of
his/her land. In both cases, someone is bound to lose.
Due to the abovementioned reasons, the DAR decided that it would be more prudent for
these non-agricultural areas to remain under the ownership of the State. Thus, while these
areas were compulsorily acquired from HLI, it was not distributed to individual beneficiaries.
Decision #3: Equal Portions to All Beneficiaries; Access to All Lots
The first compulsory land-from-the-owner-to-the-tiller agrarian reform program of the State
was the Operation Land Transfer (OLT) of the Marcos regime. The OLT mandated the
compulsory acquisition of tenanted private agricultural land primarily planted with
rice/corn. This was expanded by the CARP which now covers all agricultural lands,
regardless of the tenurial relationship between the landowner and the tillers (as compared
to OLT which was limited only to those under agricultural leasehold), among others.
To a certain extent, it is easier to distributed OLT lands for the simple reason that the
qualified beneficiaries already have possession of the land. The very essence of tenancy or
agricultural leasehold is that for an agreed-upon (but regulated) consideration, the
landowner gives up the right of possession and use of the land to the tenant/lessee for the
latter to work on. Furthermore, by virtue of R.A. 3844, as amended, the tenure of the lessee
is generally permanent. This means that not only is the person already identified (the lessee),
but also that because the right of possession is given to him, the boundaries of the land
he/she is working on is already defined.
In distributing tenanted land, therefore, the DAR can simply recognized who the tenants are,
the portion of the land they are leasing, and then segregate this area from the original Title
and transfer the same to the beneficiaries, insofar as it does not exceed the awarded area
ceiling.
Page | 160
This is not the case in commercial plantations (or haciendas). The landowner maintains the
right to possess and use the land. Workers are hired for a particular task, on a particular
area of the land, for a particular period of time. It is more fluid. They dont have a defined set
of boundaries since they can be directed to work wherever it is needed.
Since the specific areas worked by farmworkers are not defined, a system least unfair to the
least number of people must be made.
It is due to this context that the DAR, in distributing commercial plantations (not just
Hacienda Luisita), uses a system wherein each individual farmworker will have a lot which is
equally as large as that of the other beneficiaries. Following this standard, this is the
principle that the DAR used in determining how large a lot shall be given to each farmworker
beneficiary of Hacienda Luisita deemed qualified by the Agency.
Furthermore, since Hacienda Luisita is so vast, and the number of qualified beneficiaries
reached more than 4,000 people, in order to prevent or at least mitigate potential conflicts
on ingress/egress, the DAR deemed it prudent to make sure that at least one side of each and
every lot has direct access to an access road. This decision of course has its repercussions.
By deciding that each lot must have direct access to a road, around 64 hectares will be
further excluded from the general aggregate area that may be used as farm lots by the
beneficiaries. Logically speaking, the larger the common areas (such as this road network)
are, the smaller each agricultural lot will result thereto. We have weighed the pros and cons
of this matter, and have decided that it would be better for the welfare, and peace and order,
of the beneficiaries in the long run to mitigate any cause of disputes among them,
particularly those that can come out of right of way issues.
After the converted area, the SCTEX portion, and the non-agricultural portions (see Decision
#2) had been segregated, and after determining the final number of qualified beneficiaries
(see Decision #1), the remaining area was subdivided into individual farm and road lots.
Under the scheme, each farmworker beneficiaries is allotted 6,600 square meters of land. A
beneficiary is not necessarily given just one lot. Due to the geography of the land, some
beneficiaries are given more than one lot (traversed by a road lot or a creek, for example),
but the aggregate area of these two or more lots of one particular beneficiary is still 6,600
square meters.
It must be noted that the area of the original TADECO titles was 6,388.2680 hectares. But per
1989 PARC Resolution, 1,238.7103 hectares were declared Not Agricultural leaving three
5,149.5581 hectares (covered by three big titles) which became HLI and was subject to the
SDO. In computing the area to be distributed to the farmworker-beneficiaries, the nonCARPable areas (roads, canals, eroded portions, legal easement and residential areas)
segregated in 1989 was deducted along with the converted area, the land used for SCTEX, the
cemetery and the SCTEX access road. The acquired area included back the roads, canals, etc.
which will be included in the RP Title but will be for community use. From the acquired area
was deducted the eroded portions, creeks/irrigation, firebreaks/access roads, canals, legal
easement, the fishpond area, the lagoon, buffer zones. This leaves a net distributable area of
4,099.9199 hectares.
Page | 161
Total
6,388.2680
1,238.7103
5,149.5581
35.8115
63.9306
38.0602
2.4815
56.1240
56.1240
4,953.1503
500.0000
80.5115
580.5115
4,372.6388
2.1603
10.0187
12.1250
4,360.5138
35.8115
63.9306
38.0602
2.4815
140.2838
4,500.7976
0.0155
40.8027
6.4580
52.2398
54.0904
2.2315
3.7194
174.0760
0.8323
63.9306
2.4815
400.8777
4,099.9199
Page | 162
whose lots do they want theirs to be adjacent to. This step would also make it easier for the
beneficiaries to organize themselves into business blocs in order to take advantage of the
economies of scale, since it would be easier for them to manage jointly adjacent lots.
Once the subdivision plan was made, and the beneficiaries have already indicated whose lots
they want theirs to be adjacent to, the next procedure was assigning the lots to the
beneficiaries. Following the standard procedures used by the Department in the distribution
of other plantations, the DAR decided to assign the lots among the qualified beneficiaries by
raffle.
It must be recalled that during the time of the inception of the SDO until around 2004,
Hacienda Luisita was run as a commercial plantation.
As previously mentioned, unlike in an agricultural leasehold arrangement where the
possession of defined portions of the land is transferred to the tenants, the landowner in a
plantation maintains the right to possess and use the land. Workers are hired for a particular
task, on a particular area of the land, for a particular period of time. The area tilled and toiled
by the workers during their stint in the landholding is therefore undefined. It is due to the
above reasons that the DAR, in crafting its procedures in distributing all plantations (and not
just Hacienda Luisita), used the method of raffling in assigning lots to qualified beneficiaries.
Some would argue however that the DAR should not have closed its eyes on the fact that
from 2004 (when the business of the plantation stopped) until the time the land was
distributed, certain persons have started, albeit informally, tilling defined portions of the
land. They say that it was unjustified for the Agency to not have recognized the area already
being (informally) tilled by these persons when the Agency decided to raffle all lots to all
beneficiaries.
In response to this, the current administration had to put into consideration the following
factors:
(1) The occupation by some of the old workers was done informally; it was without the
permission of the landowner at that time (the land was yet to be distributed when
the occupation was conducted) or by any government agency;
(2) Not all farmworkers occupied the land; in fact only a minority of them did so;
(3) The sizes of the land informally occupied by each occupant were not uniform;
(4) Although no official inventory were made, there is a chance that not all occupants
were deemed qualified as beneficiaries pursuant to the parameters set by the
Supreme Court; and
(5) As previously mentioned, the DAR does the raffle system in other plantations
Putting all the factors together, the DAR decided to push through with the raffling of the lots
to qualified beneficiaries instead of recognizing the informal occupation. To decide
otherwise would have served injustice to the majority of the old farmworkers who opted not
to informally occupy the land. Furthermore, as mentioned in Decision #3, it is only fair to
give equal sized lots to all beneficiaries. If the occupation has been recognized, then some of
them would have been awarded larger or smaller lots, than those who did not opt to
informally occupy. Finally, qualified beneficiaries informally occupying lots will be displaced
therefrom, this does not mean that they wont be assigned lots. In fact, they were still
included in the list of those who were assigned lots.
Page | 163
It is vital to note, that during the raffling of lots, the residents of a particular barangay, as
indicated in the documents the beneficiaries themselves have submitted, were primarily
given priority on the awarded lots found therein. It is only when the number of residents in a
barangay outnumber the awarded lots therein are some of them (the excess) assigned lots
outside the barangay they are residing in.
Decision #5: Disqualification of Several Non-Participating Beneficiaries
The CARP law states that a basic qualification of a beneficiary is his/her willingness, aptitude,
and ability to cultivate and make the land as productive as possible. Section 26 of R.A. No.
6657 also provides that lands awarded pursuant to CARP must be paid by the beneficiaries
to the LBP in thirty annual amortizations. In order to enforce these provisions of the law, the
DAR has made it a mandatory prerequisite for all qualified beneficiaries to state under oath
that they have the abovementioned basic qualification and that they will pay the LBP for the
land. Otherwise, they will not be deemed qualified beneficiaries.
Unfortunately, a handful of farmworkers listed as qualified failed to execute the
abovementioned prerequisite. The DAR Provincial Office of Tarlac (DARPO Tarlac) exerted
efforts in reaching out to these beneficiaries including the issuance of Notices or Panawagan
and sending letters denominated as Paanyaya, in addition to actual field work undertaken
by DARs community organizers or field facilitators engaged for the purpose. On 15 January
2014, the DARPO Tarlac posted the Huling Panawagan in the Barangay Halls of the ten (10)
barangays in HLI, to inform the remaining farmworker beneficiaries that should they still
wish to undertake their obligations, they can still comply with the prerequisites until 15
February 2014.
Despite the Huling Panawagan, one hundred seventy one (171) farmworker beneficiaries,
out of the more than six thousand two hundred identified, still failed to comply on the date of
the deadline.
Forty six beneficiaries subsequently wrote letters signifying their intention to comply. In an
Order dated 26 August 2014, the Office of the Secretary granted the request and declared the
remaining one hundred twenty five (125) disqualified.
Thereafter, fourteen beneficiaries wrote that they are willing to comply with the prerequisite.
The rest filed a Motion for Reconsideration claiming that they have been deprived of due
process and that the threat of the DAR to disqualify them for failure to comply with the
prerequisite has no basis in law.
In a 1 February 2016 Order, the Office of the Secretary considered the request of the fourteen
beneficiaries and granted them ten days to fulfill the prerequisites. The same Order however
declared the remaining 111 disqualified for failure to comply. Contrary to the claim that the
125 disqualified FWBs have been denied due process, it is noteworthy to point out that from
the moment titles to the subject landholdings were transferred to and registered in favor of
the Republic of the Philippines, the DAR embarked on an extensive information scheme to
notify the FWBs of its lot allocation activities, specifically, the posting of the schedule of the
lot allocation activity in each barangay in the Barangay Halls and DAR Municipal and
Provincial Offices. DAR field facilitators were tasked to go around the barangays distributing
pro-forma manifestations and offering assistance to qualified FWBs, if needed. The DAR also
utilized the medium of paid advertisements. To address the matter of unclaimed LACs and
unsigned APFUs, the DAR Provincial Office even issued a Notice or PANAWAGAN, including
a PAANYAYA , to the FWBs who failed to claim their LAC or sign the APFU. Again, DAR
Facilitators were fielded to search for the said FWBs, on top of a public information campaign
End of Term Report by Secretary Virgilio de los Reyes
Page | 164
undertaken by the DAR. As earlier mentioned, the DAR accorded these FWBs ample time to
comply with the said requirements. The basis of the prerequisite has also already been
stated above.
On 10 May 2016, 11 May 2016, and 24 May 2016, the Office of the President, the Court of
Appeals, and the Supreme Court, respectively, issued certifications that the 1 February 2016
was not appealed to them. By virtue thereof, the Bureau of Agrarian Legal Assistance issued
a Certificate of Finality of the decision on 25 May 2016.
Note as well that 17 farmworker beneficiaries were inadvertently given lots that have
already eroded. The Office of the Secretary issued an Order on 27 May 2016 cancelling the
CLOAs granted to these seventeen beneficiaries and giving them, as replacement, lots from
those originally allocated to beneficiaries who were disqualified pursuant to the final 1
February 2016 Order.
Decision #6: Clarifying Issues Pertaining to the Audit
DAR was tasked to engage an accounting firm approved by the parties to audit the books of
HLI and Centenary Holdings, Inc. to determine how much of the P1,330,551,500.00 proceeds
from the sale of the portions of the land must be distributed to the beneficiaries. Three firms
signified their intention to audit: (1) Ocampo, Mendoza, Leung, Lim (OMLL); (2) ReyesTacandong and Manabat; and (3) San Agustin & Co. (MS & Co.). The DAR then conducted
several meetings with the parties in order to get their approval on the firms. Despite this, no
consensus was reached.
In view of the foregoing, the DAR, through the Office of the Solicitor General, submitted to the
Supreme Court on 23 May 2013 an Urgent Motion and Manifestation requesting for
clarification on certain matters regarding the audit of HLI Books. The DAR resolved the
Motion by creating an auditing panel to audit the said books.
Since the only task of the DAR with respect to the auditing of the books is to engage the
accounting firm, and considering that the Supreme Court itself already appointed the panel,
the DAR has no further role on this matter.
Residual Tasks
1. Installation of Farmworker Beneficiaries
Most of the farmworker beneficiaries have already been installed. Out of the more than
six thousand beneficiaries, there remains only 77 who have yet to be installed (these
includes 14 of those who belatedly complied with the prerequisites and the 17 who were
relocated to new lots) and 14 who needs to be reinstalled. The 14 have already been
installed by the DAR but were subsequently driven away by those who were formerly
informally working on the land.
It is highly recommended that the next Administration push efforts to install the
remaining 91 beneficiaries (a little over 1% of the qualified beneficiaries) in order to
complete the full distribution process of Hacienda Luisita.
2. Support Service
In 2014, ARBs of Hacienda Luisita organized themselves into ten barangay-based
organizations to which the DAR can effectively channel support services, like agriextension and business development services. These organizations were granted not
only farm equipment but also agri-extension services and business development
trainings that will aid in strengthening their organizations and increase productivity. The
End of Term Report by Secretary Virgilio de los Reyes
Page | 165
DAR, DA, and LBP also extended affordable credit to the said organizations, while the
DAR and DTI synchronized their program interventions to provide the beneficiaries with
community-based trainings. The DA has conducted water and crop suitability testing and
provided training for the production of various crops. The Sugar Regulatory
Administration is lining up sugar block farm projects for those who wish to continue with
sugarcane production. These interventions are also being provided to other agrarian
reform beneficiaries and their organizations nationwide.
It is recommended that the support services programs of the government to the
beneficiaries of Luisita and other smallholders nationwide be continued.
Page | 166
There are more than 6,000 qualified ARBs, as explained above. The HLI identified five
thousand four hundred seventy-eight (5,478) homelot awardees in the list it provided in
its letter to the DAR dated 27 May 2013.
Out of the said 5,478 homelot awardees, only 3,797 are qualified ARBs. There is,
therefore, more than a thousand homelot awardees from the HLI list that are not
qualified ARBs.
Out of the said 3,797 homelots, only 1,754 are with Titles and the remaining 2,043
homelots are without titles.
A request was made to the HLI, through a letter dated 07 August 2015, to furnish the
DAR of the following:
a. Certified true copies of the actual transfer documents signed between the HLI and
each of the beneficiaries
b. Certified true copies of other documents issued by the HLI to the recipients of the
homelots evidencing the award
To date, however, the DAR has yet to receive a reply from the HLI.
The LBP also raised the issue of payment of homelots.
On 10 November 2015, twenty-one claim folders involving 1,762 homelots awarded to
qualified FWBs, with registered homelot Titles covering a total area of 41.5617 hectares,
were submitted to the DAR Regional Office of Region III (DARRO) by the DAR Provincial
Office of Tarlac. The processing of these claim folders were held in abeyance due to some
queries of the DARRO on the provisions of the Deed of Conveyance of the homelots.
On 14 January 2016, the Presidential Agrarian Reform Council (PARC), through the Office
of the Solicitor General (OSG), filed a Manifestation and Motion with this Honorable Court
with the following prayers:
a. That the HLI be directed to furnish the DAR with (a) certified true copies of the actual
transfer documents signed between the HLI and each of the beneficiaries, and (b)
certified true copies of the other documents issued by the HLI to the recipients of the
homelots evidencing the award;
b. That the DAR be given ample time from the submission by the HLI of the requested
documents/data to complete the validation with respect to the awardees of homelots
outside those who were qualified as beneficiaries but within the 10,502 farmworkers
listed as HLI stockholders and thereafter to submit the claim folders to the LBP;
c. That the DAR be clarified by the Honorable Court on (a) whether the HLI is still
entitled to be compensated over the homelots given by HLI to the 10,502
farmworkers, in spite of the fact that said homelots were given freely to the
farmworkers, not by force of legal obligation under Sec. 30 of R.A. 6657, but through
stipulation under the SDOA, (b) whether the HLI is entitled to just compensation for
the agricultural land that will be transferred to the DAR under the CARP but because
the homelots had already been received by the 10,502 FWBs, composed of the 6,296
original FWBs and the 4,206 non-qualified FWBs, with no obligation to refund or
return them;
d. That the DAR be clarified with respect to the FWBs who were not awarded
agricultural land, but were awarded with homelots, on where the LBP will draw the
End of Term Report by Secretary Virgilio de los Reyes
Page | 167
payment for just compensation. Can the LBP draw funds from the Agrarian Reform
Fund (ARF) to pay HLI for the areas which are considered residential? and
e. That the DAR be clarified as to what Title shall be issued in favor of the FWBs who
were not issued Certificates of Title pertaining to their homelots, but were given
Certificate of Award by the HLI as of 22 December 2005. Is the DAR mandated to
issue CLOAs for the same?
The DAR is awaiting the High Courts clarification of these matters.
4. Investigation of Illegal Transfers and Leases
There have been reports that a number of beneficiaries have either transferred
ownership over their land (sold their lands) or leased it to other individuals or entities.
The law does not allow the transfer of awarded lands over a ten year holding period and
as long as the amortization to the government has yet been paid. In order to enforce this,
a clearance must be obtained from the DAR first. Unlawful transfers may merit
disqualification of the beneficiaries and cancellation of their Titles.
Leases are considered as agribusiness venture agreements that must be approved by the
PARC.
The DARPO Tarlac already started its investigation on these matters.
5. Quarterly Reports
The Supreme Court directed the DAR to submit to them quarterly reports on the status of
implementation of their directive. The next (fifteenth quarterly) report is due on 15 July
2016.
Page | 168
ANNEX B:
Implementing the 1999 Supreme Court Decision on
the Roxas Properties in Nasugbu, Batangas
Roxas & Co. Inc., owned and operated principally by business magnates Roxas & Elizalde of
Makati City, is the registered owner of 2,943.7641 hectares of land in the different barangays
of Nasugbu, Batangas, composed of three (3) Haciendas namely: Hacienda Palico, Hacienda
Banilad and Hacienda Carmen/Kaylaway.
Name of Hacienda
Hacienda Palico
Hacienda Banilad
Hacienda Carmen/
Kaylaway
Location (Barangay)
Bilaran, Lumbangan, Reparo, Cogunan &
Catandaan
Banilad & Tumalim
Kaylaway & Aga
Title Number
T-985
Area (has.)
1,023.9999
T-924
T-44662
T-44663
T-44664
T-44665
1,050.0604
13.5296
595.8480
259.6777
0.7088
Sub-Total
869.7243
2,943.8244
Total Area
Antecedents
On December 12, 1989, the DAR, through then Secretary Miriam D. Santiago sent a Notice of
Acquisition to Roxas Y Cia, Limited for Hacienda Palico and Hacienda Banilad based on two
separate Summary Investigation Reports which was issued and signed jointly by the MARO,
representatives of the BARC, LBP and by the PARO. On the other hand, Hacienda Kaylaway
(also known as Hacienda Carmen) was voluntarily offered for sale to the government on May
1988 which was accepted by the DAR on January 1989. Subsequently, on August 6, 1992,
Roxas & Co. Inc., through its president Eduardo J. Roxas withdrew its VOS of Hacienda
Caylaway. On September 28, 1992, the DAR denied the withdrawal request of the landowner.
DAR continued the acquisition of the three haciendas and subsequently, the DAR Provincial
Office generated the collective CLOAs based on the approved subdivision plans and
transmitted to the Registry of Deeds of Nasugbu, Batangas for registration. On October 22,
1993 the DAR registered and distributed the following CLOAs:
Name of
Hacienda
Hda. Palico
Title No.
Area /Title
T-985
1023.9999
Hda. Banilad
T-924
1050.0604
T-44662
869.7641
Hda. Carmen /
Kaylaway
Total
Coverage
CLOA#
Area (has.)
6654
513.5983
6646
107.1451
6645
60.6268
6644
18.6668
6643
233.1137
Sub-Total
933.1507
5189
964.0688
Ind. CLOAs
2943.8244
779.0000
2676.2195
No. of
FBs
408
Program
Type
CA
Year
Regd
1993
243
CA
1991
632
VOS
1993
1283
Page | 169
Page | 170
case is still ongoing at the DARPO Legal Division) and on November 8, 2012, they filed an
Application for Exemption based on DOJ Opinion #44 for 285.2853 hectares in Brgys.
Lumbangan/Bilaran/Cogonan, Nasugbu. Consequently, they also filed for cancellation of
CLOAs issued within these barangays which are also already at the DARCO level.
Other Cases/issue:
1. Issue of the alleged illegal conversion (San Antonio Memorial Park & Palm Estate
Subdivision) is already at the DARCO for resolution; Petition for issuance of a CDO is
under evaluation at the DARCO-BALA based on the OCI conducted by DARCO investigation
team last July 1, 2013;
2. Disqualification of ARBs; Case No. A-9999-04-Bi-054-10, Roxas Hacienda Consumers
Cooperative, Inc. (RHCCI) Cornejo vs. Lauro Martin, DAMBA-NFSW president), DARROIVA has issued a Resolution on September 26, 2006 granting the petition for
Disqualification of RHCCI members. The aggrieved parties filed an appeal at DARCO on
March 29, 2010. The case was forwarded to ULAO on January 14, 2014, for proper action.
3. Protest on coverage filed by the landowner: the case was denied by the Regional Office;
for resolution of MR;
4. Application for Exemption: Per inquiry, the case is pending at CLUPPI. The SCS Director
has issued a Memo to HEA La Chica recommending the case as priority/urgent.
5. Partial cancellation of CLOA on the 103-ha. portion in Hda. Palico: the case is pending at
DARAB-DARCO;
6. Petition for installation on the 51-ha. area was filed at the DARCO: waiting for the
instruction from DARCO.
Page | 171
Page | 172
National Administrative Register (ONAR). The Supreme Court held that there is no need for
the publication and filing of the said DAR Memorandum Circular with the ONAR as it is
merely an administrative interpretation.
Roxas further contended that its liability to pay disturbance compensation is limited to its
agricultural lessees only and not to farmer-beneficiaries, citing RA No. 3844, as amended.
The Court held that since the DAR had initially issued CLOAs to the farmer-beneficiaries of
the nine parcels of land in Hacienda Palico, the assailed Decision merely reiterated the
original designation of the affected individuals as farmer-beneficiaries who should be
entitled to disturbance compensation before the cancellation of their respective CLOAs is
effected.
31
As can be expected, landowner filed a Protest which then-RD Pearl Armada denied. This case is under appeal at
the Court of Appeals.
Page | 173
Identify who among the CLOA holders are still tilling their land;
The FB revalidation process involves a massive information campaign, farmer-beneficiary
interviews and validation of interview results
As part of the FB revalidation process, a Preliminary Masterlist and subsequently a Final
Masterlist will be prepared and posted as required by the current rules. Land survey will be
conducted to correct existing survey plans, if needed, and to subdivide existing collective
CLOAs. The Claim Folders will be sent to the Land Bank who will have to decide if the
previous valuation stands or if the valuation will be revised. New LADIS will be made. Old
CLOAs may have to be cancelled if needed and new ones generated and registered.
Activities Conducted
Information Drive
One important activity that was done by DARPO is the information drive that explained the
contents of the Supreme Court Decision. The information drive aimed to inform of what the
DAR will do the implement the SC decision and to solicit support from the stakeholders. The
information drive was conducted in all the barangays where the three Roxas haciendas are
located. A total of 1,019 farmers in 8 batches attended the info drive.
Farmer Beneficiaries Interview
Before the start of the interview proper, consultations were done in order to come-up with a
tool that could effectively and efficiently extract the necessary information for this
undertaking.
For the conduct of actual interviews, the personnel from the Regional Office and other
Region 4-A provinces were tapped to augment the personnel of DARPO Batangas. An
interview tool was installed in laptops in order to facilitate conduct of the said activity.
Actual interviews were conducted in Barangays Aga, Kaylaway, Banilad, Tumalim, Bilaran
and Reparo on February 4, 5, 6, & 13; February 18, 19 & 20; February 24; March 3 & 6, 2016,
respectively. Based on CLOA records, the total number of ARBs targeted for interview was
1,494 - from Brgys. Aga and Kaylaway: 692; Brgy. Banilad: 158; Brgy. Tumalim; 92; Brgys.
Bilaran, Catandaan, Cogunan, Lumbangan, Reparo: 552. Of the subject ARBs, only 68% or an
equivalent of 1,023 farmer beneficiaries came interview.
Data Processing
Data Processing Center was established at DAR Provincial Office-Batangas on March 2015
which housed the Data Processing Team. The team was composed of 4 Administrative
Supervisors, 2 Technical Supervisors, 15 Data Validators (4 of them are from DARPO Cavite
and DARPO Laguna) and 2 hired Data Processors. Six units of Desktop Servers from DARCO
MIS were installed and networked for the data processing proper.
A windows-based program was created by the Data Processor linking the database of the
CLOAs to the result of the interview. This program was used by the Data Validators in
verifying the ARB Folders, identifying the lacking requirements and affixing the pictures of
the ARBs to the interview form.
After the scheduled initial interview, all ARB folders were kept at the Data Processing Center.
ARB folders and soft copy of the interview forms of those interviewed at DARMO Nasugbu
were forwarded to DARPO for linking on the database and inclusion on the data
processing/validation. Prior to the conduct of the data processing, ARB folders were
classified into 4 major classifications with sub-classifications and CLOAs were inventoried by
End of Term Report by Secretary Virgilio de los Reyes
Page | 174
the Data Processors cross referencing all available Databases (MIS, DARRO and DARPO). Out
of 1,378 CLOAs, 90.4% are on the database and with physical copy at DARPO, 6.2% are on
the database but without physical copy, 2.8% are not on the database but with physical copy
and 0.6% are not on the database and without physical copy. CLOAs found on the database
but with no physical copy were requested at the Register of Deed. These CLOAS were used as
an additional document on the validation process to determine the validity of the
information given by the ARBs.
A letter addressed to the ARBs were generated upon identification, informing the addressee
to submit the lacking documents. ARBs qualification for 2nd round of interview will be based
on the completeness of the required documents per classification.
As of March 15, 2016, 98.35 % (due to some interview that lacks information) of the ARB
Folders were validated and 100% of the generated letters were sent to the ARBs thru
personal service.
Actual Ground Validation
After having concluded the interview of the farmer-beneficiaries and other farmworkers
that was conducted on different dates and venues within the barangays covering the three
(3) haciendas of Roxas & Co. and after completion of the data validation of interview folders
classified as CLOA Holders; actual ground validation is necessary, as part of the LAD process
to confirm all information gathered from the interview of ARBs awarded with individual and
collective CLOAs within the three (3) haciendas of Roxas.
On October 21, 2015, Regional Special Order No. 76, Series of 2015 was issued creating three
(3) teams, composed of 3 members from selected staff of DARPO-Batangas and DARMO
Cluster 1 & 4, to execute actual ground validation of ARBs and their respective actual tillage.
After the orientation in the operation of the handheld Global Positioning System (GPS), initial
ground validation was executed on the following day in Hacienda Kaylaway in Bgys. Aga &
Kaylaway based on the Priority List involving landholdings of ARBs categorized as Individual
CLOA Holders-Alive-Tilling the land, -Alive-Heirs Tilling the land and -Deceased-Heirs Tilling
the land.
As part of the strategy to facilitate the conduct of validation, Block Maps containing parceled
lots (derived from the approved subdivision plans) were provided by DARCO-BLTI as
reference and guide in the conduct of the actual ground validation.
The 3 teams were able to validate all lots contained in the Priority List of ARBs for Hacienda
Kaylaway involving 334 lots with an area of 235.2772 hectares.
Below is the summary of validation accomplishment:
No. of Lots Validated
No. of
Lots
Area (has.)
Kaylaway
943
Banilad
Hacienda
Area
Lots for
Validation
Area
Priority
Area (has.)
Other
Categories
575.7747
334
235.2772
609
340.4975
901
941.7730
254
316.2765
286
195.4451
361
430.0514
Palico
453
421.4912
453
421.4912
TOTAL
2297
1939.0389
588
551.5537
286
195.4451
1423
1192.0401
Page | 175
Based on the above data, 25.6% of lots under the Priority List was validated while 12.4% was
validated under other categories. Remaining lots for validation in Hdas. Kaylaway and
Banilad and the whole of Hda. Palico represents 62% of unvalidated lots as of March 16,
2016.
Generally, the three haciendas remain to be agricultural in its land use; no significant change
except for those portions of plantation areas and farm lots of ARBs that were utilized by
other occupants and the heirs and relatives of ARBs and the 6-ha. area that was converted
into a memorial park. The park is part of one of the plantation area of Hacienda Roxas.
Next Steps
DARPO Batangas had charted the activities it intends to undertake for the remaining three
quarters of 2016 and they are listed as follows:
ACTIVITIES
1. Completion of ground validation of ARBs
2. Screening of ARBs for the preliminary list (data gathering,
processing, evaluation, posting)
3. Resolution of protest on ARB preliminary list
TIME FRAME
May to July
July to September
July to September
October to December
October to December
October to December
Page | 176
ANNEX C:
Stabilizing ARBs Property Rights in the CARP-Awarded
NDC Lands in Tupi and Polomolok, South Cotabato
Background
The distribution of the National Development Corporation (NDC) lands at Tupi and
Polomolok in 1988 to farm workers of Dole Phil. Inc. was a milestone in agrarian history in
the Philippines for several reasons First, it was the first title ever awarded under the
Comprehensive Agrarian Reform Program (CARP), particularly Transfer Certificates of Title
Nos. T-00000001 and T-00000002, fondly called as T1 and T2. Second, it was the first time
that lands were given to farm workers of a multi-national company. And third, it was
awarded to Dolefil Agrarian Reform Beneficiaries Cooperative Inc. (DARBCI) with a great
number of Agrarian Reform Beneficiaries, 7,534 members, whose names were annexed to
the aforesaid titles.
NDC, as the governments investment arm acquired lands from settlers of the municipalities
of Polomolok and Tupi in South Cotabato and leased them to Dole Phils. Inc. (DPI) in the
1960s. On July 5, 1961, President Carlos P. Garcia signed Presidential Proclamation No. 762
reserving for settlement purposes of the non-christians about 2,700 hectares, situated in
Tupi and Polomolok. This became the basis of the Indigenous People (IP) claim.
On June 10, 1988, President Corazon C. Aquino approved RA 6657 known as the
Comprehensive Agrarian Reform Law (CARL). After the law took effect, the DAR proceeded
with Lista Saka and one of those covered was the vast tracts of NDC lands in Tupi and
Polomolok, which were leased to Dole Phils. Inc. On September 27, 1988, NDC turned over
these lands comprising of 8,963.7802 hectares, more or less, located in the Municipalities of
Tupi and Polomolok to the DAR through the Execution of a Deed of Sale (DOS) pursuant to
EO 407 as amended by EO 448 and 449 in line with the mandate of RA 6657.
DARPO then conducted FB Registration of all Dole Philippines employees and on December 6,
1988 distributed these lands to 7,534 ARBs through the DARBC, the cooperative formed by
these farmworkers. In 2013, the names of ARBs were annotated in the back of T1 and T2.
As in the case with firstborn, there were a lot of lapses in the coverage which resulted to a lot
of cases not only at DAR and DARAB but also in regional trial courts. These cases boil down
to just one issue, INCLUSION as ARB in the CARP covered NDC lands. The department must
take appropriate action and determine and validate the Farmer Beneficiaries covered by the
first two land titles issued under the Comprehensive Agrarian Reform Program.
On July 16, 2015, DAR Secretary issued an Interlocutory Order consolidating several cases
filed with the DAR and DARAB and ordering the conduct of a census of farmworkers and
other claimant in the former NDC lands to aid in the resolution of the cases.
The goals of the DAR Census are two-folds:
1.
To provide the Secretary of the DAR complete information to assess and decide on
abovementioned ALI cases.
2.
To stabilize the property rights in the CARP-awarded lands leased by DOLE Philippines.
Page | 177
Preparation Phase
To prepare for the DAR Census, the created Taskforce through Provincial Special Order No.
28 dated March 31, 2014 began researching and gathering data from DARBC, DPI, NDC and
the DAR itself. To facilitate the smoother implementation of the Census, a Working
Committee was created. Immersion, meetings and trainings were also conducted. This
phase took more than a year to complete because of the tasks involved: gathering of lists,
case briefs involving DAR, NDC, DPI and DARBC as well as locating each lot/landholding in
the map of NDC covered lands.
The Info Dissemination Campaign
Prior to the actual interview of intended respondents, a massive information drive was
conducted to inform the ARB and other stakeholders of the upcoming census. The campaign
informed the participants on the rationale of the census and the requirements they have to
bring during the Census to prove their claims. The IDC also sought to inform the would-be
respondents of the mechanisms and processes established to facilitate the implementation of
the Census. The ten-day successive, simultaneous IDC was scheduled in 40 barangays
clustered in 30 sites. It started from August 5 19, 2015.
All in all, the Census has covered 40 barangays of Tupi, Polomolok and General Santos City in
30 sites to about 2,463 participants (based on the attendance sheet 1,048 participants in
the barangay and 1,415 at DPI Gym). As the output was low, the team conducted two
additional sessions at DARBC for two Saturdays with a total of 172 attendees as well as
house-to-house campaign.
The Interview
The most critical part of the Census is the Interview. From September 7, 2015 March 31,
2016, in almost seven months of interview, the total respondents were tallied at 6,679, ARBs
and non-ARBs alike.
Considering that the targeted respondents are 7,534 ARBs whose names were annotated in
T1 and T2, only 89.8% was accomplished or 6,435 ARBs subjected themselves for interview.
The remaining 1,099 ARBs are still unaccounted for despite the efforts to inform them of the
Census.
In the following months of October and November, efforts were made to reach out to ARBs
by coordinating with sector leaders through DARBC officials. Support staff also called the
contact numbers of those who registered during the IDC. The Taskforce also interviewed
ARBs/Representatives even without schedule.
The DAR management extended the Census up to December 2015 when the members of
DARBC will be receiving their farm rental shares. The PARO and MARO of Polomolok
verbally arranged with DPI the early release of farm rental (December 11, 2015) to take
advantage of the coming of ARBs to receive their farm rental share. A list of those who were
interviewed was given to DARBC. Prior agreement with the coop was also done to require
DARBC members to show that they have been interviewed as a requirement for the release
of their farm rental. However, the DARBC Board of Directors (BOD) backtracked on this
agreement because they fear that this will lead to outburst of the members. Instead, the
Taskforce was given space in the DARBC office to conduct the interview and DARBC
personnel directed members who wanted to be interviewed at the DAR Taskforce.
On a January 21, 2016 meeting in DARPO Sarangani, Secretary delos Reyes advised to extend
the conduct of the interview up to March 31, 2016 when ARBs will be attending the annual
End of Term Report by Secretary Virgilio de los Reyes
Page | 178
General Assembly. Another verbal agreement was made by the DAR with the DARBC BOD
not to release the members profit shares during the General Assembly without the interview.
Last ditch efforts were made from February March which include the following activities:
delivery of personal mail, posting of notices and tarps, publication of names in a local
newspaper, TV and radio announcements, recorida and word of mouth.
What Remains To Be Done
Data Cleansing
The hiring of an IT personnel and two support staff on a project basis/66 days (May 16, 2016
August 16, 2016) is a must to cleanse the entries in the 6,679 folders. The support staff will
be in-charged of sorting and filing in an alphabetical basis, the hard copies of the interview
and their attachments of these folders.
Consolidation and Processing
Consolidation of all data into one data base was done by DARCO. Afterwards, these will be
saved to a central server and will be given to the DARPO for processing from May 16
August 16, 2016. After the provision of the server, the IT personnel will now begin to
process the data and submit to DARCO.
Upon consolidation of the 6,679 data into one file, these can now be processed into different
groups and sub-groups.
Two weeks after processing, a separate report on the content of the data gathered could
already be submitted to DARPO, DARRO and DARCO on August 31, 2016.
Publication of Notice for Un-Interviewed ARBs in a newspaper of national circulation
The list of 1,099 ARBs who have not been interviewed will be published by the DAR Central
Office in a newspaper of national circulation. The content of this publication shall be
determined by DARCO. After a given time, the DARCO shall decide on the plight of these
ARBs.
Interview of ARBs after the deadline
The fifty (50) ARBs, who came forward after March 31, 2016, and wished to be interviewed
after the deadline is subject to the approval of the DARCO.
Page | 179
ANNEX D:
Other Special Projects Aimed at Stabilizing ARBs
Property Rights in their CARP-Awarded Lands
1. NDCC-GUTHRIE
The National Development Corporation turned over to DAR about 40,000 hectares by way of
a Deed of Sale on September 27, 1988 by virtue of the provisions under RA 6657, which
provided that government-owned lands leased by multi-national corporations shall
immediately be turned-over to DAR for distribution to agrarian reform beneficiaries.
This NDC land is located in the municipalities of Rosario and San Francisco in Agusan del Sur.
It covers 7,927 hectares. This was leased to two Guthrie corporations:
The NDC Guthrie Estate Inc. (NGEI) in which 4,042 hectares was leased; and
The NDC Plantation, Inc. (NGPI) 3,884 hectares leased
As part of the process of distributing these NDC land, in October 1988, 2,090 ARBs were
identified: 987 in NGEI, and 1,153 in NGPI. Immediately, they were organized into two multipurpose cooperatives, the NGEI Multi-Purpose Cooperative and the NGPI Multi-Purpose
Cooperative.
On December 2, 1988, Pres. Cory Aquino awarded the lands to the two multi-purpose
cooperatives. Only the names of the two cooperatives were inscribed in the collective CLOAs.
The names of the individual beneficiaries were not. Both cooperatives entered into a
leaseback agreement with Guthrie, which is now named Filipinas Palm Oil Plantation, Inc.
In the course of time, intra-coop conflicts ensued. Now, there are six cooperatives in the two
landholdings, each wanting to have their own CLOAs. Before the collective CLOAs can,
however, be parcelized, there is a need to determine who the qualified beneficiaries were in
1988. This entails the conduct of re-validation. There is also a need to screen additional
ARBs since the average area per ARB exceeds the award ceiling of 3 hectares. Aside from the
issue of FB validation, and identification, there is also a need to conduct ground validation
and to segregate non-distributable portions of the lands covered by the collective CLOAs.
There are portions that were included in the collective CLOAs but have already been titled by
the DENR. There are EPs within the CLOAs, and portions with adverse claims.
All these issues have to be addressed before the shares of each cooperative can be
determined and subdivision of the collective CLOAs effected. At the same time, the issue of
revocation of lease back agreement, negotiation for more favorable terms of the leaseback
agreement will have to be addressed by the coops, with the assistance of the DAR and the
CDA.
2. Famy-Real Settlement Project in Quezon I
This DAR Resettlement Project is covered by Presidential Proclamation No. 196, which
declared portions of seven (7) barangays that are part of Proclamations 582 and 1626 issued
by Pres. Quezon as Forest Reserved, and by Pres. Marcos as National Park, Wildlife Sanctuary
and Game Reserve, respectively. Those that were taken out of Proclamation 582 and
Page | 180
Proclamation 1626 were those portions that were below 18% slope. These were declared as
alienable and disposable under Proc. 196, for the resettlement program of DAR.
These two Proclamations were amended by Proclamation 196 which excluded portions of
seven (7) Barangays, namely, Kiloloran, Tanauan, Tignoan, Capalong, Tagumpay, Lavac and
Bagong Silang from the operations of Proclamations 582 and 1626. Specifically,
Proclamation 196 declared those portions in the seven (7) barangays which were below
18% in slope as alienable and disposable for the resettlement program of DAR. Covered are
lands whose aggregate area was initially estimated to be 11,629 hectares subject to future
surveys. Of this total area, 10,193 hectares were distributed to 4,930 agrarian reform
beneficiaries. A total of 731.0074 hectares were up for distribution but remained unallocated.
The balance of 758.2318 hectares were determined to be non-CARPable.
The following issues need to be addressed:
Unallocated lots. As mentioned above, there are still 731.0074 hectares unallocated
portion.
Unclaimed or Undistributed CLOAs. A total of 166 CLOAs with total area of
318.3561 hectares which were registered from 1991 to 2004 remain unclaimed or
undistributed
Collective CLOAs. As mentioned above, 373 CLOAs covering 1,624 hectares remain as
collective.
CLOAs with Cancellation Cases. A total of 148 CLOAs with area of 255.4 hectares
have cancellation cases of which 142 CLOAs covering 235 hectares are cancellation
cases due to alleged abandonment.
CLOAs Overlapping Titled Properties. 110 CLOAs seem to overlap with the titled
property of Natures Valley while another 29 CLOAs seem to overlap with the titled
property of Ignacio Gimenez.
CLOAs not on File at the Register of Deeds. When validated with the records of the
ROD, only 3,862 CLOAs for 4,310 agrarian reform beneficiaries with total area of
8,976.0746 hectares are on file with the ROD. Some 553 CLOAs of 620 agrarian
reform beneficiaries covering 1,220.2501 hectares are not on ROD file.
Ground validation, mapping and plotting of the A&D lands, and re-validation and
identification of new ARBs are being conducted with the end in view of awarding individual
CLOAs to the qualified beneficiaries.
3. Bukidnon Farms, Inc.
This 2,697 hectare property was previously owned by the Cojuangcos. However in 1986, a
sequestration order was issued by the PCGG. From the time of the sequestration, the BFI
ceased their operation/management over the coconut and cacao plantation. The company
was placed under the management of Mr. Victoriano Sola having 256 workers under his
supervision. A sizeable portion was cultivated then by around 138 military men of the 425th
Local PC command. There were retrenched farmworkers working on the other portion of the
land upon the consent of Mr. Sola.
On 27 January 1989, a Memorandum of Agreement was executed by and between the DAR
and PCGG, which provided that all agricultural lands surrendered to the PCGG which are
within the scope and coverage of RA 6657, shall immediately be ceded, transferred, conveyed
and turned-over to the DAR.
End of Term Report by Secretary Virgilio de los Reyes
Page | 181
Following this MOA, DARPO Bukidnon started the documentation of the property. In 1990,
three claim folders were submitted to the Land Bank of the Philippines and in 1995 LBP
issued Memorandum of Valuation, and subsequently, Certificates of Deposit. There were no
subdivision surveys conducted yet and collective CLOAs were issued on the entire area
reflected in each of the titles, without delineating the unacquired portions. The beneficiaries
were categorized as follows:
Regular farmworkers of BFI
Retrenched farmworkers
Landless residents
There were numerous protests on the identification of FBs filed by various groups such that
in 1998, revalidation was made and a new list of qualified FBs, known as the Borra List was
generated. In order to correct the error in the inclusion of the unacquired portion in the
CLOAs, the CLOAs were cancelled and new collective titles were issued. Subdivision survey
was conducted to subdivide the CARPable area into one-hectare lots.
Allocation of the lots however, is problematic since there are still around a thousand of those
in the Borra List who have not yet been awarded CLOAs. Other problems are:
It seems that almost all of the CLOA holders are not actual tillers. In most cases, upon
issuance of the CLOA, they leased their awarded land to DAVCO, transactions which have no
DAR participation. A big portion of the undistributed area are occupied by big investors or
non-ARBs. Most of the ARBs are not paying land amortization.
Revalidation of the qualified ARBs will be conducted.
Page | 182
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