AGRARIAN REFORM LAW AND JURISPRUDENCE (A DAR-UNDP

SARDIC PUBLICATION
AGRARIAN LAW AND JURISPRUDENCE
PREFACE
This book has inauspicious beginnings. The original intent of the UNDP-
SARDIC project, which eventually bore this book, was to map out special areas
for policy reform in agrarian reform law. But as the project team delved deeper
into the subject, the long unaddressed need for an organized and systematic
presentation of agrarian law and existing jurisprudence was again put to fore. In
response to that problem, the project team and the UNDP-SARDIC project
decided to widen the scope of the project and, thus, what came of it was not only
a map of the difficult problem areas in the law's implementation but also this
book.TcHCDI

Any foray into the complicated, and often contentious, arena that is agrarian
reform law necessitates a complete and well-grounded grasp of the basics. If
anything, our study revealed that, even after decades, agrarian reform law
remains vastly misunderstood and under-appreciated not only by stakeholders
but by agrarian reform law implementors themselves.
This is largely due to the dearth of materials on the matter. Over the years,
laws and their implementing rules have been refined and promulgated to reflect
the lessons learned and the changing times. Simultaneously, the Supreme Court
issued rulings that elucidate and interpret the law, as well as repudiate portions
thereof. The rights and obligations of the different stakeholders have been
constantly redefined and readjusted.
Despite these exciting developments, however, there has been little done to
mesh all these pieces of knowledge into an organized whole.
This book is an effort towards that end.
In a nutshell, this book is a humble attempt in summing up years of agrarian
reform law implementation. This book intends to reach out to all sectors and
stakeholders to heighten their understanding and appreciation of the agrarian
reform in the Philippines, and hopefully help refine the terms of the ongoing
debates among them. This book hopes to appeal to both familiar and unfamiliar
on the subject. It attempts to present, in an academic fashion, all relevant
agrarian reform laws, DAR implementing rules, and pertinent judicial declarations
on the matter. Hopefully, this will provide a holistic framework for understanding
agrarian law.
Extra effort was also exerted to demonstrate agrarian reform in action by
giving concrete illustrations and discussion from an operational perspective.
Interspersed with the theoretical discussions are the various operational
issues and difficulties that DAR implementors faced or are still facing.
The authors would like to thank
the UNDP-SARDIC project management team for providing the
financial and logistic support to see this project through.
 the members of DAR's management committee who shared with the
project team their invaluable insights and experience in agrarian reform
implementation. Their contribution in making this book complete and
insightful is immeasurable.
the DAR-PPLAO support staff for providing administrative and
secretariat support; and
Antonio Ramos who served as auditor for this project.
This is but a first step. We derive inspiration from the words of T.S. Eliot:

We shall not cease from exploration

And the end of all our exploring

Will be to arrive where we started

And know the place for the first time

[From "Little Gidding"]

THE AUTHORS

CHAPTER 1
Coverage of the Comprehensive Agrarian Reform Program

The Comprehensive Agrarian Reform Program

The Comprehensive Agrarian Reform Program (CARP) is implemented
byRepublic Act No. 6657(1988) otherwise known as the "Comprehensive
Agrarian Reform Law". Prior to its enactment on 10 June 1988, President
Corazon C. Aquino issuedProclamation No. 131(1987) instituting a
comprehensive agrarian reform program, andExecutive Order No. 229(1987)
providing the mechanics for its implementation.RA 6657took effect on 15 June
1988.
While expressly repealing specific provisions of prior enactments on agrarian
reform,RA 6657provides that the provisions ofRA 3844(1963),Presidential
Decree No. 27(1972) andPD 266(1973),EO 228(1987) andEO 229(1987)
and other laws not inconsistent with it shall have suppletory effect.
RA 6657was enacted pursuant to the constitutional mandate enshrined in
Section 4, Art. XIII of the1987 Constitution, which provides:
SEC. 4. The State shall, by law, undertake an agrarian reform program
founded on the right of farmers and regular farmworkers, who are landless, to
own directly or collectively the lands they till or, in the case of other
farmworkers, to receive a just share of the fruits thereof. To this end, the State
shall encourage and undertake the just distribution of all agricultural lands,
subject to such priorities and reasonable retention limits as the Congress may
prescribe, taking into account ecological, developmental, or equity
considerations, and subject to the payment of just compensation. In
determining retention limits, the State shall respect the right of small
landowners. The State shall further provide incentives for voluntary land-
sharing.
The constitutionality ofRA 6657has been upheld inAssociation of Small
Landowners v. Secretary of Agrarian Reform, 175 SCRA 342 (1989)and
companion cases. The Supreme Court held that the requirement of public use
has already been settled by the Constitution itself. It noted that "[n]o less than the
1987 Charter calls for agrarian reform which is the reason why private
agricultural lands are to be taken from their owners, subject to the prescribed
retention limits." (at 378)
WhileRA 6657itself has been held constitutional, the Supreme Court in a
subsequent case,Luz Farms v. Secretary of Agrarian Reform, 192 SCRA 51
(1990), declared unconstitutional Sec. 3 (b), 10 and 11 thereof in so far as they
include lands devoted to the raising of livestock, swine and poultry within its
coverage. As a result of this ruling, Congress enactedRA 7881(1995) amending
these provisions and incorporating new provisions to existing ones. The
amendments adopted theLuzdoctrine by removing livestock, swine and poultry
farms from CARP coverage.
Scope of CARP
TheConstitutionin Sec. 4, Art. XIII, mandates the just distribution of all
agricultural lands, subject to such priorities and reasonable retention limits that
the Congress may prescribe, taking into account ecological, developmental or
equity considerations and subject to the payment of just compensation.
Prior toRA 6657, the operative law on land distribution wasPD 27(1972).
However,PD 27is limited in scope, covering only tenanted private agricultural
lands primarily devoted to rice and corn operating under a system of share-crop
or lease tenancy, whether classified as landed estate or not. The constitutional
provision therefore expanded the scope of agrarian reform to cover all
agricultural lands.
RA 6657operationalized this constitutional mandate and provides in Sec. 4
thereof that the CARP shall cover, regardless of tenurial arrangement and
commodity produced, all public and private agricultural lands, as provided
inProclamation No. 131andEO 229including other lands of the public domain
suitable for agriculture. More specifically, the following lands are covered by
CARP:
a)All alienable and disposable lands of the public domain devoted to
or suitable for agriculture;
b)All lands of the public domain in excess of the specific limits as
determined by Congress in Sec. 4 (a) ofRA 6657;
c)All other lands owned by the government devoted to or suitable for
agriculture; and
 d)All private lands devoted or suitable for agriculture regardless of the
agricultural products raised or that can be raised thereon (Rep. Act No.
6657[1988], Sec. 4).
Definition of agricultural land
Sec. 3 (c) ofRA 6657defines agricultural lands as follows:
(c) Agricultural Land refers to land devoted to agricultural activity as defined in
this Act and not classified as mineral, forest, residential, commercial or industrial
land.

Sec. 3 (b) ofRA 6657, as amended byRA 7881(1995), defines "agricultural

activity" as follows:
(b) Agriculture, Agriculture Enterprise or Agricultural Activity means cultivation of
soil, planting of crops, growing of fruit trees, including the harvesting of such farm
products, and other farm activities and practices performed by a farmer in
conjunction with such farming operations done by persons whether natural or
juridical.

InNatalia v. DAR, 225 SCRA 278 (1993), the Supreme Court held:
Section 4 of RA 6657 provides that the CARL "shall cover, regardless of
tenurial arrangement and commodity produced, all public and private
agricultural lands." As to what constitutes "agricultural land," it is referred to as
"land devoted to agricultural activity as defined in this Act and not classified as
mineral, forest, residential, commercial or industrial land." The deliberations of
the Constitutional Commission confirm this limitation. "Agricultural lands" are
only those lands which are "arable and suitable agricultural lands" and "do not
include commercial and industrial lands" (at 282, 283).
Agricultural lands reclassified by local governments into "forest
conservation zones"
Agricultural lands reclassified by local government units (LGUs) into "forest
conservation zones" even prior to the effectivity ofCARLdo not become forest
land under Sec. 3 (c) ofRA 6657as to be exempted from CARP coverage.
It should be noted that under the Constitution, lands of the public domain are
classified into agricultural, forest or timber, mineral lands and national parks
(CONST., Art. XII, Sec. 3). These classifications are called primary classifications
or "classification in the first instance." The same provision of the Constitution also
provides that agricultural lands of the public domain may be further classified
according to the uses to which they may be devoted. This further classification of
agricultural land is referred to as secondary classification. The responsibility over
primary classification of lands of the public domain is vested in the President who
exercises such power upon the recommendation of the Department of
Environment and Natural Resources (DENR) (Com. Act No. 141[1936], Sec.
6;EO 192[1987]). On the other hand, the authority to reclassify agricultural lands
into residential, commercial or industrial is lodged, among others, in cities and
municipalities (Rep. Act No. 7160[1991], Sec. 20).
The group of lands referred to in Sec. 3 (c) ofRA 6657as non-agricultural
(i.e., mineral, forest, residential, commercial or industrial) is a mix of primary and
secondary classifications. Forest and mineral lands are, under
theConstitutionandCommonwealth Act No. 141(1936), primary classifications,
while the rest are secondary classifications.
Reclassification by LGUs of agricultural lands into "forest conservation zones"
does not have the effect of converting such lands into forest lands as to be
exempted from CARP. Firstly, an agricultural land is already a primary
classification and, hence, can only be subjected to secondary classification.
Secondly, LGUs have no authority or power to make primary classifications
considering that such power is the sole prerogative of the President exercising
such power upon the recommendation of the DENR.
The forest (or mineral) land referred to in Sec. 3 (c) ofRA 6657is therefore to
be understood as referring to forest (or mineral) land declared to be such by the
President/DENR and not by the LGUs.DAR Administrative Order No. 1
(1990)makes this qualification in its definition of "agricultural land," as follows:
. . . Agricultural land refers to those devoted to agricultural activity as defined
in R.A. 6657 and not classified as mineral or forest by the Department of
Environment and Natural Resources (DENR) and its predecessor agencies,
and not classified in town plans and zoning ordinances as approved by the
Housing and Land Use Regulatory Board (HLURB) and its preceding
competent authorities prior to 15 June 1988 for residential, commercial or
industrial use.
Agricultural lands reclassified LGUs into residential,
commercial or industrial
Taking into consideration the effectivity of the law, the secondary
classifications mentioned in Sec. 3 (c) ofRA 6657are treated according whether
they were classified as such before or after the effectivity of the law on 15 June
1988.
If the agricultural land was classified as residential, commercial or industrial
by the LGU and approved by the Housing and Land Use Regulatory Board
(HLURB), or its predecessor agencies, prior to 15 June 1988, the land will be
recognized as so classified under Sec. 3 (c) of RA and is therefore not covered
by CARP. However, anexemptionclearance from DAR is still necessary to
confirm or declare its exempt status. (DAR Adm. O. No. 6 [1994]).
This is based onDepartment of Justice Opinion No. 44 (1990)which provides
that with respect to the conversion of agricultural lands covered byRA 6657to
non-agricultural uses, the authority of the DAR to approve such conversion may
be exercised from the date of its effectivity or on 15 June 1988. Thus, all lands
already classified as commercial, industrial or residential before that date no
longer need any conversionclearancefrom the DAR.
If an agricultural land is reclassified after 15 June 1988, the provisions on land
conversion underCARLand its implementing rules will apply (Rep. Act No.
6657[1988], sec. 65;DAR Adm. O. No. 1 [1999]).
Conversion prior to 15 June 1988 through presidential
proclamation binding before DAR
 The reasoning inDOJ Opinion No. 44 (1990)was validated by the Supreme
Court inNatalia v. DAR, supra. This case involved the question of whether or not
lands already classified for residential, commercial or industrial use, as approved
by HLURB and its precursor agencies, prior to 15 June 1988 are covered by
CARP. SDHCac

Natalia Realty, Inc. vs. Department of Agrarian Reform

225 SCRA 278 (1993)

Facts:
Petitioner Natalia Realty, Inc. is the owner of a 125.0078-ha land set aside by
Presidential Proclamation No. 1637 (1979) as townsite area for the Lungsod
Silangan Reservation. Estate Developers and Investors Corporation (EDIC), the
developer of the area, was granted preliminary approval and locational clearances
by the then Human Settlements Regulatory Commission (HSRC) for the
establishment of the Antipolo Hills Subdivision therein. In November 1990, a
Notice of Coverage was issued by DAR on the undeveloped portion of the
landholding. The developer filed its objections and filed this case imputing grave
abuse of discretion to respondent DAR for including the undeveloped portions of
its landholding within the coverage of CARP.
Issue:
Are lands already classified for residential, commercial or industrial use, and
approved by HLURB and its precursor agencies prior to 15 June 1988, covered by
RA 6657?
Held:
Sec. 4 of RA 6657 states that the CARL covers "regardless of tenurial
arrangement and commodity produced, all public and private and agricultural
lands" and as per the transcripts of the Constitutional Commission, "agricultural
lands" covered by agrarian reform refers only to those which are "arable and
suitable lands" and "do not include commercial, industrial and residential lands."
The land subject of the controversy has been set aside for the Lungsod Silangan
Reservation by Proclamation No. 1637 prior to the effectivity of RA 6657 and in
effect converted these lands into residential use. Since the Natalia lands were
converted prior to 15 June 1988, DAR is bound by such conversion, and thus it
was an error to include these within the coverage of CARL.

Exemptions and Exclusions

Sec. 10 ofRA 6657, as amended byRA 7881(1995), specifically enumerates
the exemptions and exclusions from CARP, as follows:
a)Lands actually, directly or exclusively used for parks and wild-life,
forest reserves, reforestation, fish sanctuaries and breeding grounds,
watersheds and mangroves (Rep. Act No. 6657[1988], sec. 10 [a], as
amended byRep. Act No. 7881[1995]).
b)Private lands actually, directly and exclusively used for prawn farms
and fishponds: Provided, That said prawn farms and fishponds have not
been distributed and Certificate of Land Ownership Award (CLOA) issued to
agrarian reform beneficiaries (ARBs) under CARP (Sec. 10 [b]).
 c)Lands actually, directly and exclusively used and found to be
necessary for national defense, school sites and campuses, including
experimental farm stations operated by public or private schools for
educational purposes, seeds and seedling research and pilot production
center, church sites and convents appurtenant thereto, mosque sites and
Islamic centers appurtenant thereto, communal burial grounds and
cemeteries, penal colonies and penal farms actually worked by the inmates,
government and private research and quarantine centers and all lands with
eighteen percent (18%) slope and over, except those already developed
(Sec. 10 [c]).
Lands devoted to raising of livestock, swine and poultry. The
Luz Farms Case.
Before its amendment byRA 7881, Sec. 3(b) ofRA 6657included in its
definition of agricultural activity the "raising of livestock, poultry or fish". Likewise,
the original Sec. 11 ofRA 6657on commercial farming provided that "lands
devoted to commercial livestock, poultry and swine raising shall be subject to
compulsory acquisition within ten (10) years from the effectivity of the Act."
However, the Supreme Court inLuz Farms vs. Secretary of Agrarian Reform,
supra, held that Sec. 3 (b) and Sec. 11 ofRA 6657(along with Sec. 13 and 32)
are unconstitutional in far as they include the raising of livestock and swine in the
coverage of CARP.

Luz Farms vs. Secretary of the Department of Agrarian Reform

192 SCRA 51 (1990)

Facts:
Petitioner Luz Farms is a corporation engaged in livestock and poultry business. It
seeks to nullify Sec. 3 (b) and Sec. 11 of RA 6657 in so far as they apply to
livestock and poultry business.
Held:
Sec. 3 (b) and Sec. 11 of RA 6657 are unconstitutional in so far as they include
lands devoted to raising livestock, swine and poultry within its coverage. The use
of land is incidental to but not the principal factor or consideration of productivity in
this industry. The Supreme Court held that:
The transcripts of deliberations of the Constitutional Commission of 1986 on the
meaning of the word "agricultural," clearly show that it was never the intention of
the framers of the Constitution to include livestock and poultry industry in the
coverage of the constitutionally-mandated agrarian reform program of the
government.
The Committee adopted the definition of "agricultural land" as defined under
Section 166 of RA 3844, as land devoted to any growth, including but not limited
to crop lands, saltbeds, fishponds, idle and abandoned land (Record, CONCOM,
August 7, 1986, Vol. III, p. 11).
The Supreme Court noted that the intention of the Committee to limit the
application of the word "agriculture" is further shown by the proposal of
Commissioner Jamir to insert the word "arable" to distinguish this kind of
agricultural land from such lands as commercial and industrial lands and
 residential properties. The proposal, however, was not considered because the
Committee contemplated that agricultural lands are limited to arable and suitable
agricultural lands and therefore, do not include commercial, industrial and
residential lands (Record, CONCOM, 7 August 1986, Vol. III, p. 30).
Moreover, in his answer to Commissioner Regalado's interpellation, Commissioner
Tadeo clarified that the term "farmworker" was used instead of "agricultural
worker" in order to exclude therein piggery, poultry and livestock workers (Record,
CONCOM, August 2, 1986, Vol. II, p. 621).

DAR AO 9 (1993)imposes two (2) conditions in order that these lands may be
exempted: (a) that the land or portion thereof is exclusively, directly, or actually
used for livestock, poultry and swine raising as of 15 June 1988; and (b) the farm
must satisfy the ratios of land, livestock, poultry and swine, as follows:
cattle, carabao and horse raising maximum of 1 head to 1 hectare; 21
heads for every 1.7815 hectares of
infrastructure
sheep and goat raising 7 heads to 1 hectare; 147 heads for
every 0.7205 hectare of infrastructure
swine raising 21 heads of hogs for every 0.5126
hectare of infrastructure
poultry raising 500 layers for every 0.53 hectare of
infrastructure or 1000 boilers for every
1.428 hectares of infrastructure
Fishponds and prawn ponds
With the amendment of Sec. 3 (c), 10 and 11 ofRA 6657byRA 7881,
fishponds and prawnponds are also exempted from the coverage of CARP,
provided that said lands have not been distributed to ARBs and no CLOAs have
been issued.
To be exempted, the agricultural land must have been actually, directly and
exclusively used for prawn farms and fishponds as of 12 March 1995, the date of
effectivity ofRA 7881. To avail of the exemption, a landowner or his authorized
representative still has to file a written application for land exemption/exclusion
with the DAR Provincial Office (DAR Adm. O. No. 3 [1995]).
In cases were the fishponds or prawn farms have been subjected to CARP, by
voluntary offer to sell, commercial farms deferment or notice of compulsory
acquisition, they can be exempt from CARP if a simple and absolute majority of
the actual regular workers or tenants consent to the exemption within one (1)
year from the effectivity ofRA 7881or on 12 March 1995. In cases where the
fishponds or prawnponds have not been subjected to CARP, the consent of the
farm workers shall no longer be necessary (Rep. Act No. 6657[1988], sec. 10[b],
as amended).
Sec. 4 ofRA 7881also amendedRA 6657by introducing a new provision
mandating the introduction of an incentive plan for employees of all fishponds
and prawn farms. Operators and entities owning or operating fishponds and
prawn farms are directed to execute within six (6) months from its effectivity an
incentive plan with their regular fishpond or prawn farm worker's organization, if
any, whereby seven point five percent (7.5%) of net profits before tax from the
operation of the fishpond or prawn farms are distributed within sixty (60) days at
the end of the fiscal year as compensation to regular and other pond workers
over and above their current compensation. This incentive plan requirement,
however, does not apply to agricultural lands subsequently converted to
fishponds or prawn farms provided that the size of the land converted does not
exceed the retention limit of the landowner.
Lands used for academic or educational use. The CMU case.
InCentral Mindanao University vs. DARAB, 215 SCRA 85 (1992), the
Supreme Court passed upon the exemption of lands directly, actually and
exclusively used and found to be necessary for school sites and campuses,
including experimental farm stations operated by public or private schools for
educational purposes provided for under Sec. 10 ofRA 6657, as amended.

Central Mindanao University vs. Department of Agrarian Reform

Adjudication Board
215 SCRA 86 (1992)

Facts:
On 16 January 1958, President Carlos Garcia issued Proclamation No. 467
reserving for the Mindanao Agricultural College, now the CMU, a piece of land to
be used as its future campus. In 1984, CMU embarked on a project titled
"Kilusang Sariling Sikap" wherein parcels of land were leased to its faculty
members and employees. Under the terms of the program, CMU will assist faculty
members and employee groups through the extension of technical know-how,
training and other kinds of assistance. In turn, they paid the CMU a service fee for
use of the land. The agreement explicitly provided that there will be no tenancy
relationship between the lessees and the CMU.
When the program was terminated, a case was filed by the participants of the
"Kilusang Sariling Sikap" for declaration of status as tenants under the CARP. In
its resolution, DARAB, ordered, among others, the segregation of 400 hectares of
the land for distribution under CARP. The land was subjected to coverage on the
basis of DAR's determination that the lands do not meet the condition for
exemption, that is, it is not "actually, directly, and exclusively used" for educational
purposes.
Issue:
Is the CMU land covered by CARP? Who determines whether lands reserved for
public use by presidential proclamation is no longer actually, directly and
exclusively used and necessary for the purpose for which they are reserved?
Held:
The land is exempted from CARP. CMU is in the best position to resolve and
answer the question of when and what lands are found necessary for its use. The
Court also chided the DARAB for resolving this issue of exemption on the basis of
"CMU's present needs." The Court stated that the DARAB decision stating that for
the land to be exempt it must be "presently, actively exploited and utilized by the
university in carrying out its present educational program with its present student
population and academic faculty" overlooked the very significant factor of growth
of the university in the years to come.SHECcT
 TheCMUcase is unique as it involves land transferred by the state to CMU
throughPD 467which provided for its commitment to a specific use and purpose.
Thus, the said land was already set aside for a specific purpose and, in effect,
was taken outside the coverage of agrarian reform by law. It is submitted that a
more accurate basis for the exemption should have been that the exclusive use
of the land both present and future has been determined by law, and not
because of the determination of the CMU of what it needs and how it intends to
use it.
In ruling that the CMU is in the best position to determine the use of the land
and not DAR, the Supreme Court seems to have overlookedEO 407(1990), as
amended byEO 448(1991), which provides that DAR is vested with the power to
determine whether lands reserved for public uses by presidential proclamation is
no longer actually, directly and exclusively used and necessary for the purpose
for which they are reserved. Said EO provides that:
Sec. 1-A. All lands or portions thereof reserved by virtue of Presidential
proclamations for specific public uses by the government, its agencies and
instrumentalities, including government-owned or controlled corporations suitable
for agriculture and no longer actually, directly and exclusively used or necessary
for the purposes for which they have been reserved, as determined by the
Department of Agrarian Reform in coordination with the government agency or
instrumentality concerned in whose favor the reservation was established, shall be
segregated from the reservation and transferred to the Department of Agrarian
Reform for distribution to qualified beneficiaries under the Comprehensive
Agrarian Reform Program.

Thus, DAR in coordination with the agency or department involved, can

determine whether the purpose or use for which the lands reserved continues to
exist and therefore establish if they continue to be exempt from CARP coverage.
The Supreme Court's statement that lands of universities and academic
institutions need not be actually, directly and exclusively used for educational or
research purposes at the time of the effectivity of theRA 6657to be exempt from
CARP also fails to consider Sec. 10 ofRA 6657. Sec. 10 is explicit that only
those lands that are "actually, directly, and exclusively" used and found
necessary for the uses enumerated therein are exempt from CARP coverage. A
literal interpretation of the provision implies that the exemption applies only to
those lands already committed for the enumerated purposes at the date of the
effectivity of law on 15 June 1988. Thus, agricultural land acquired by academic
institutions for academic, educational, or research purposes after 15 June 1988,
or those owned by them but not committed exclusively, actually, and directly to
the abovementioned uses before or on such date, are covered by CARP. For its
exclusion from acquisition and distribution, and for its commitment to said
purposes, the institution may file before DAR for clearance to convert these lands
into non-agricultural use.
Lands with 18% slope
Lands with 18% slope or over are exempt from CARP coverage unless these
are found to be agriculturally developed as of 15 June 1988.
 This rule on exemption is based onPD 705(1975), or the "Revised Forestry
Code of the Philippines," which provides that lands with a slope of 18% or over
are generally reserved as forest lands. Sec. 15 thereof states that "no land of the
public domain eighteen per cent (18%) in slope or over shall be classified as
alienable and disposable" and that "lands eighteen per cent (18%) in slope or
over which have already been declared as alienable and disposable shall be
reverted to the classification of forest lands by the Department Head, to form part
of the forest reserves, unless they are already covered by existing titles or
approved public land application, or actually occupied openly, continuously,
adversely and publicly for a period of not less than thirty (30) years as of the
effectivity of this Code, where the occupant is qualified for a free patent under
thePublic Land Act.
If the land has 18% slope or over and is agriculturally developed as of 15
June 1988, the same shall be allocated to the qualified applicants in the following
manner:
a)If land is classified as forest land, and therefore is inalienable and
indisposable, this shall be allocated by the DENR under its Integrated Social
Forestry Program;
b)If classified as alienable and disposable, this shall be allocated by
the Land Management Bureau-DENR and DAR pursuant to the provisions
ofCA 141and theJoint DAR-DENR AO 2 (1988); and
c)If private agricultural land, this shall be acquired in accordance with
the provisions ofRA 6657(DAR Adm. O. No. 13 [1990], item E, part II).
Effects of exemption
Sec. 10 ofRA 6657provides that exempted or excluded lands are removed
from the coverage of CARP. However, there are two (2) contending views on
whether these exempted or excluded lands are perpetually taken out from
coverage of the CARP.
The first view is that lands exempted or excluded from the law are
permanently taken out from coverage of the CARP. The basis of this
interpretation is the phraseology of Sec. 10 which states that exempted lands are
"exempt from the coverage of the law." The legal effect of this interpretation is
that the owner can use and dispose the land as he deems fit without the need for
any clearance from DAR.
The second view is that excluded and exempted lands can be covered by
CARP when the reason for their exemption ceases to exist. Thus, when the
reason for exemption ceases to exist for lands exempt under theLuz
Farmsruling or Sec. 10, as amended byRA 7881(except lands with 18% slope),
they are removed from the exemption and are treated like any other agricultural
land.
It must be remembered that the lands subject of exemption under Sec. 10
ofRA 6657and theLuz Farmsruling are considered agricultural lands as defined
by Sec. 3 (c) ofRA 6657, that is, they are in fact suitable to agriculture and not
classified as mineral, forest, residential, commercial or industrial lands, but are
exempt or excluded from CARP by reason of their actual use and their necessity
for other purposes. Thus, in the event that these lands cease to be used or
necessary for the purposes for which they are exempted, they are removed from
the application of Sec. 10 and are then subject to CARP coverage.
The second view is anchored on the spirit and intent of the law to
coverallagricultural lands suitable to agriculture. Moreover, asRA 6657is a
social welfare legislation the rules of exemptions and exclusions must be
interpreted restrictively and any doubts as to the applicability of the law should be
resolved in favor of inclusion.
In either case, the security of tenure of tenants enjoyed prior to 15 June 1988
shall be respected even when the lands are exempted. As to farmworkers, the
exemption of the land shall not cause the loss of the benefits to which they are
entitled under other laws. In addition, they are granted preference in the award of
other lands covered by CARP (DAR Adm. O. No. 13 [1990], part II).
Homesteads
InAlita vs. CA, the Supreme Court stated that homesteads are exempt from
agrarian reform.

Alita vs. Court of Appeals

170 SCRA 706 (1989)

Facts:
Subject matter of the case consists of two (2) parcels of land acquired by
respondents' predecessors-in-interest through homestead patent under the
provisions of CA 141. Respondents wanted to personally cultivate these lands, but
the petitioners refused to vacate, relying on the provisions of PD 27 and PD 316
and appurtenant regulations issued by the then Ministry of Agrarian Reform.
Issue:
Are lands obtained through homestead patent covered under PD 27?
Held:
No. While PD 27 decreed the emancipation of tenants from the bondage of
the soil and transferring to them ownership of the land they till, the same
cannot be invoked to defeat the very purpose of the enactment of the Public
Land Act or CA 141. InPatricio v. Bayog, 112 SCRA 45, it was held that:
The Homestead Act has been enacted for the welfare and
protection of the poor. The law gives a needy citizen a piece of land
where he may build a modest house for himself and family and plant
what is necessary for subsistence and for the satisfaction of life's other
needs. The right of the citizens to their homes and to the things
necessary for their subsistence is as vital as the right to life itself. They
have a right to live with a certain degree of comfort as become human
beings, and the State which looks after the welfare of the people's
happiness is under a duty to safeguard the satisfaction of this vital
right.
In this regard, Sec. 6 of Article XIII of the 1987 Constitution provides:
Section 6. The State shall apply the principles of agrarian
reform or stewardship, whenever applicable in accordance with law, in
the disposition or utilization of other natural resources, including lands
of public domain under lease or concession suitable to agriculture,
subject to prior rights, homestead rights of small settlers, and the
rights of indigenous communities to their ancestral lands.
Moreover, Sec. 6 of RA 6657 contains a proviso supporting the inapplicability
of PD 27 to lands covered by homestead patents like those of the property in
question, reading:
Section 6.Retention Limits. . . . Provided further, That original
homestead grantees or their direct compulsory heirs who still own the
original homestead at the time of the approval of this Act shall retain
the same areas as long as they continue to cultivate said homestead.
xxx xxx xxx
While homestead lots are declared exempt underPD 27, they are not
expressly declared as such underRA 6657. However, Sec. 6 ofRA
6657provides that homesteaders are allowed to retain the total homestead lot
subject to the conditions provided in the same section and as setDAR MC 4
(1991), to wit:
a)That the original homestead grantee or his/her direct compulsory
heirs still own the land on 15 June 1988;
b)The original homestead grantee or his or her compulsory heirs
cultivate the land as of 15 June 1988 and continue to cultivate the same.
It also provides that the tenants of lands covered by homestead patents
exempted fromPD 27or retained underRA 6657shall not be ejected therefrom
but shall remain as leaseholders therein.
Schedule of Implementation
Sec. 7 ofRA 6657lays out the schedule of acquisition and distribution of all
agricultural lands through a period of ten (10) years from the effectivity of the Act:

Phase Lands Covered

Schedule

IRice and corn lands under Presidential 1988-1992

Decree No. 27;
all idle or abandoned lands;
all private lands voluntarily offered by the owners
for agrarian reform;
all lands foreclosed by the government financial
institutions;
all lands acquired by the Presidential Commission
on Good Government (PCGG); and
all other lands owned by the government devoted
to or suitable for agriculture
 IIAll alienable and disposable public agricultural 1992-1995
lands;
all arable public agricultural lands under agro-
forest, pasture and agricultural leases already
cultivated and planted to crops in accordance;
all public agricultural lands which are to be opened
for new development and resettlement;
and all private agricultural lands in excess of
fifty (50) hectares,

III-ALandholdings above twenty-four (24) 1998-1992

hectares up to fifty hectares; and

III-BPrivate agricultural lands with areas above the1994-1998

retention limit up to 24 hectares

Though Sec. 7 of RA 6657 provides a fixed time table for the

implementation of the CARP law, this provision should be interpreted as
merely directory, rather than mandatory in character. This is the gist of DOJ
Opinion No. 9 (1997). It has been held that the difference between a
mandatory and a directory provision is often determined on grounds of
expediency. Where a provision embodies a rule of procedure rather than one
of substance, the provision as to time will be regarded as directory only
notwithstanding the mandatory nature of the language used. Sec. 5 of RA
6657is more procedural in nature than substantive. The ten (10)-year period
is merely a time frame given to DAR for the acquisition and distribution of
public and private agricultural lands covered byRA 6657. It is merely a guide
to DAR in setting its priorities, and it is not, by any means, a limitation of its
authority. Hence, Sec. 5 ofRA 6657should not be construed as a prescriptive
period, the lapse of which bars the DAR from covering the land under CARP.
Thus, DAR need not wait for the full coverage of those lands in the first phase
before those in the succeeding phases could be covered. DAR may also proceed
with the coverage of lands in different phases simultaneously.
In view of the passing of the ten (10)-year period in 1998, Congress passedRA
8532(1998) providing for the funding for land acquisitions for another ten (10)
years.
Idle or abandoned lands
Sec. 22 of Art. XVIII of the1987 Constitutionand Sec. 18 (h) ofEO
229prioritizes the immediate expropriation or acquisition of idle or abandoned
lands.
Sec 3 (e) ofRA 6657defines idle or abandoned land as "any agricultural land
not cultivated, tilled or developed to produce any crop nor devoted to any specific
economic purpose continuously for a period of three (3) years immediately prior
to the receipt of notice of acquisition by the government as provided underRA
6657. However land that has become permanently or regularly devoted to non-
agricultural purposes is not to be considered as idle or abandoned. Neither can it
be considered as abandoned or idle any land which has become unproductive by
reason offorce majeureor any other fortuitous event, provided that prior to such
event, such land was previously used for agricultural or other economic purpose."
Lands owned by government
To expedite the disposition of lands owned by the government, President
Corazon C. Aquino issuedEO 407(1990) directing all government
instrumentalities, government agencies, government owned and controlled
corporations or financial institutions to transfer to the Republic of the Philippines,
through the DAR, all landholdings suitable for agriculture. Sec. 3 ofEO
407(1990) likewise provides for the redistribution and award of fishponds,
pasturelands and other lands of public domain suitable for agriculture subject of
cancelled or amended lease agreement to the agrarian reform beneficiaries.EO
448(1991) andEO 506(1992) amendedEO 407by including all lands or
portions thereof reserved by virtue of presidential proclamations for specific
public uses by the government, its agencies and instrumentalities, and no longer
actually, directly and exclusively used or necessary for the purposes for which
they have been reserved. These also excluded national parks and other
protected areas, proposed national parks, game refuge, bird sanctuaries, wild-life
reserves, wilderness areas and other protected areas, including old growth or
virgin forests and all forests above 1,000 meters elevation or above 50 percent
slope until such time that they are segregated for agricultural purposes or
retained under the National Integrated Protected Areas System.
Commercial farms
Sec. 11 ofRA 6657allowed the deferment of the coverage of commercial
farms. Deferred commercial farms shall be subject to immediate compulsory
acquisition and distribution after ten (10) years from the effectivity ofRA 6657on
15 June 1988. For new farms, the ten (10)-year deferment will begin from the first
year of commercial production and operation.
For a commercial farm to be qualified for deferment, it must have been planted
to commercial crop or devoted to commercial farming operations before 15 June
1988.DAR AO 16 (1988)provided a 60-day period for the filing of applications of
deferment which lapsed on 2 May 1989.
DAR AO 16 (1988)explicitly allows the DAR to automatically subject the lands
to redistribution when it determines that the purpose for which deferment is
granted no longer exists as when the particular farm areas ceases to be
commercially productive. During the deferment period, the DAR shall initiate
steps to acquire the lands. Final land transfer to the beneficiaries shall be
effected at the end of the deferment period. The acquisition and distribution of
these deferred commercial farms are governed byDAR AO 9 (1998).
Retention
Sec. 4, Art. XIII of the1987 Constitutionsubjects the distribution of agricultural
lands for agrarian reform to "reasonable retention limits as Congress may
prescribe. Sec. 6 ofRA 6657operationalizes this mandate and observes the right
of persons to own, or retain, directly or indirectly public or private agricultural
land, the size of which shall vary according to factors governing a viable family-
size farm in such as commodity produced terrain, infrastructure, and soil fertility,
but in no case shall exceed five (5) hectares.
The retention limits under Sec. 6 ofRA 6657covers all persons whether
natural or juridical. Juridical persons like corporations and partnerships are
therefore subject to the five (5)-hectare limit.
With respect to married couples, their maximum retention limit is determined
by the nature of their property relations. For marriages covered by theNew Civil
Code, in the absence of an agreement for the judicial separation of property,
spouses who own only conjugal properties may retain a total of not more than
five (5) hectares of such properties. However, if either or both of them are
landowners in their own respective rights (capital and/or paraphernal), they may
retain not more than five (5) hectares of their respective landholdings. In no case,
however, shall the total retention of such couple exceed ten (10) hectares. (DAR
Adm. O. No. 5 [2000], sec. 9 [g]).
For marriages covered by theFamily Code, which took effect on 3 August
1988, a husband owning capital property and/or a wife owning paraphernal
property may retain not more than five (5) hectares each provided they executed
a judicial separation of properties prior to entering into the marriage. In the
absence of such an agreement, all properties (capital, paraphernal and conjugal)
shall be considered to be held in absolute community, i.e., the ownership relation
is one, and, therefore, only a total of five (5) hectares may be retained. (DAR
Adm. O. No. 5 [2000], sec. 9 [h]).
The five (5)-hectare retention limit applies to all lands regardless of how
acquired (i.e., by purchase, award, succession, donation) as the law does not
distinguish. Thus, a child who was awarded three (3) hectares as a preferred
beneficiary under Sec. 6 ofRA 6657and subsequently acquires a five (5)-hectare
landholding of his parent by succession can retain only five (5) hectares of the
total landholding.
Landowners have the obligation to cultivate directly or through labor
administration, and thereby make productive the area he retains. He is also
prohibited from making any constructions therein or commit it to purposes
incompatible with its agricultural nature. Before a landowner can commit the
retained land to non-agricultural purposes, he must first secure a conversion
order from DAR, otherwise he can be held liable for premature conversion
(seeDAR Adm. O. No. 1 [1999]).
Award to children
If a landowner has children, three (3) hectares may be awarded to each
subject to the following qualifications:
a)that he is at least fifteen (15) years old as of 15 June 1988; and
b)that he is actually tilling the land or directly managing it (Rep. Act
No. 6657[1988], sec. 6).
DAR MC 4 (1994)defined the term "directly managing" as the cultivation of
the land through personal supervision under the system of labor
administration.DHcESI
 The award to the child is not to be taken from the retained land of the
landowner and is awarded to the child in his own right as a beneficiary. Thus, the
award is not automatic. The child is merely given a preference over other
beneficiaries.
As the right of the child is derived from his being a beneficiary, he must not
only meet the requirements of preference laid out in Sec. 6 ofRA 6657, but also
all the other qualifications of a beneficiary enumerated under Sec. 22 ofRA 6657.
Thus, he must also be landless, a resident of the barangay or municipality where
the land is located, and must have the willingness, aptitude and ability to cultivate
and make the land as productive as possible. Moreover, he is subject to the
same liabilities, responsibilities and limitations imposed on all agrarian reform
beneficiaries.
Exceptions to the 5-hectare retention limit
The five (5)-hectare retention limit underRA 6657does not apply to original
homestead grantees or their direct compulsory heirs at the time of the approval
ofRA 6657who continue to cultivate the same, and to those entitled to retain
seven (7) hectares underPD 27.
In theAssociationcases, the Supreme Court held that landowners who failed
to exercise their rights to retain underPD 27can avail of their rights of retention
under Sec. 6 ofRA 6657and retain only five (5) hectares. However, in the
resolution of the Supreme Court on the motion for consideration in the said case,
the Court qualified that those who, prior to the promulgation ofRA 6657,
complied with the requirements underLetter of Instruction (LOI) Nos.
41,45and52regarding the registration of the landholdings, shall be allowed to
enjoy the seven (7) hectare retention limit. All those who refused to comply with
the requirements cannot, in view of the passage ofCARL, demand that their
retention limit be determined underPD 27.
Thus, the following OLT owners are still entitled to retain seven (7) hectares
even if they exercised their right of retention underPD 27after 15 June 1988:
a)Those landowners who complied with the requirement of eitherLOI
41,45or52;
b)Those who filed their applications before the deadline set (27 August
1985 as provided by AO. 1 [1985]) whether or not they have complied withLOI
Nos. 41,45or52;
c)Those who filed their applications after the deadline but complied with the
requirements ofLOI 41,45or52; and
d)Heirs of a deceased landowner who manifested, while still alive, the
intention to exercise the right of retention prior to 23 August 1990 (the finality of
the Supreme Court decision inAssociation of Small Landowners vs. Hon.
Secretary of DAR; supra)(DAR Adm. O. No. 4 [1991]).
Exercise of right of retention
While Sec. 6 ofRA 6657acknowledges the right of the landowners to choose
the area to be retained, it requires that the area be compact and contiguous, and
shall be least prejudicial to the entire landholding and the majority of the farmers
therein (DAR Adm. O. No. 5 [2000], sec 2 [b]).
Sec. 4 ofDAR AO 5 (2000)provides that under the Compulsory Acquisition
(CA) scheme, the landowner shall exercise his right of retention within sixty (60)
days from receipt of the Notice of Coverage from DAR. Failure to exercise this
right within the prescribed period means that the landowner waives his right to
choose which area to retain. Thereafter, the Municipal Agrarian Reform Officer
(MARO) shall designate the retained area for the landowner.
Under the Voluntary Offer to Sell (VOS) scheme, the right of retention shall be
exercised at the time the land is offered for sale. The offer should specify and
segregate the portion covered by VOS and the portion applied for retention;
otherwise, the landowner shall be deemed to have waived his right of retention
over the subject property (DAR Adm. O. No. 5 [2000], sec. 4).
As a matter of policy, all rights acquired by the tenant-farmers underPD
27and the security of tenure of the farmers or farmworkers on the land prior to
the approval of RA 6657 shall be respected (DAR Adm. O. No. 5 [2000], sec. 2
[c]).
In case the area selected by the landowner or awarded for retention by the
DAR is tenanted, the tenant has two (2) options:
a)To remain as a lessee. If he chooses to remain in the area retained,
he shall be considered a lease holder and shall lose his right to be a
beneficiary; or
b)Be a beneficiary in the same or another agricultural land with similar
or comparable features.
The tenant must exercise either option within one (1) year after the landowner
manifests his choice of the area for retention, or from the time the MARO has
chosen the area to be retained by the landowner, or from the time an order is
issued granting the retention (DAR Adm. O. No. 5 [2000], sec. 10).
Sec. 10 ofDAR AO 5 (2000)further provides that in case the tenant declines
to enter into leasehold and there is no available land to transfer, or if there is, the
tenant refuses the same, he may choose to be paid disturbance compensation
by the landowner.
Where Certificates of Land Transfer (CLTs), Emancipation Patents (EPs) or
Certificates of Land Ownership Award (CLOAs) have already been issued on the
land chosen by the landowner as retention area, the DAR shall immediately
inform the agrarian reform beneficiaries (ARBs) concerned and provide them the
opportunity to contest the landowner's claim. Moreover, the DAR shall ensure
that the affected ARBs, should they so desire, be given priority in the distribution
of other lands of the landowner or other lands identified by the DAR for
redistribution, subject to the rights of those already in the area (DAR Adm. O. No.
5 [2000], sec. 11)
Waiver of right of retention
Sec. 7 ofDAR AO 5 (2000)provides that the following acts constitute waiver
on the landowner's right of retention:
 a)Executing an affidavit, letter or any other document duly attested by
the MARO, Provincial Agrarian Reform Officer (PARO) or Regional Director
(RD) indicating that he is expressly waiving his retention right over subject
landholding;
b)Signing of the Landowner-Tenant Production Agreement and
Farmer's Undertaking (LTPA-FU) or Application to Purchase and Farmer's
Undertaking (APFU) covering subject property;
c)Entering into a Voluntary Land Transfer/Direct Payment Scheme
(VLT-DPS) agreement as evidenced by a Deed of Transfer over the subject
property;
d)Offering the subject landholding under VOS scheme and failure to
indicate his retained area;
e)Signing/submission of other documents indicating consent to have
the entire property covered, such as the form letter of the LBP on the
disposition of the cash and bond portions of a land transfer claim for
payment, and the Deed of Assignment, warranties and undertaking
executed in favor of the LBP;
f)Performing acts which constituteestoppelby laches; and
g)Doing such act or acts as would amount to a valid waiver in
accordance with applicable laws and jurisprudence.
Public Lands
Public lands pertain to all lands that were not acquired by private persons or
corporations either by grant or purchase. These lands are either (a) disposable
(alienable) public lands or (b) non-disposable public lands.
CA 141(1936), otherwise known as the "Public Land Act", governs the
administration and disposition of lands of the public domain. Sec. 9 thereof
classifies alienable or disposable lands of the public domain as (a) agricultural;
(b) residential, commercial, industrial or for similar productive purposes; (c)
educational, charitable, or other similar purposes; or (d) reservations for town
sites and for public and quasi-public uses.
Non-disposable public lands or those not susceptible of private appropriation
and include the following: (a) timber lands which are governed byPD 705(1975)
or the Revised Forestry Code; and (b) mineral lands which are governed byRA
7942(1995) or the Philippine Mining Act of 1995 and other related laws.
All lands of the public domain are under the exclusive jurisdiction of the DENR
except those placed by law and/or by executive issuances under the jurisdiction
of other government agencies. Under Sec. 3 and 5 ofCA 141, the Secretary of
Agriculture and Natural Resources (now the Secretary of DENR) is the executive
officer charged with carrying out the provisions of thePublic Land Act. It is
empowered to prepare and issue such forms, instructions, rules and regulations
consistent with thePublic Land Act. Sec. 6 ofCA 141(see alsoEO 192[1987])
reserves the power to classify lands in the public domain into either agricultural
(disposable), timber or mineral lands to the President, with the recommendation
of the Secretary of DENR.
 Under Sec. 4 ofRA 6657, public and private agricultural lands and lands of
the public domain suitable for agriculture are covered by CARP. It provides,
among others, that all alienable and disposable lands of the public domain
devoted or suitable or devoted to agriculture (Sec 4 [a]) and all lands of the public
domain in excess of the specific limits of the public domain as determined by
Congress (Sec. 4 [b]) shall be covered by CARP. It has also been determined
that public agricultural lands that are untitled and privately claimed are covered
by CARP. In response to a query by DAR, theDepartment of Justice issued
Opinion No. 176 (1992)which stated:
. . . Thus, it has been held that there should be no distinction in the application
of the law where non is indicated therein (SSS vs. City of Bacolod, 115 SCRA
412) . . . By said rule, the term "private agricultural lands" in the
aforementioned section should be interpreted as including all private lands,
whether titled or untitled. . . .
RA 6657has created an overlapping of jurisdictions between the DENR and
the DAR over the disposition of these lands.RA 6657mandates DAR to acquire
and distribute these public lands to agrarian beneficiaries whileCA 141vests
upon the DENR the power to control, survey, classification, lease, sale or any
other form of concession or disposition and management of the lands of the
public domain.
To resolve the overlapping mandates of the DENR and DAR in the disposition
and distribution of public lands for CARP purposes, the two agencies issuedJoint
DAR-DENR MC 9 (1995)which recognizes that lands of the public domain are
under the jurisdiction of the DENR unless placed by law and/or by executive
issuances under the jurisdiction of other government departments or entities.
Under the said circular, the disposition of non-registrable lands of the public
domain is the exclusive responsibility of the DENR under its various programs
(i.e., the Integrated Social Forestry). In this instance, the role of the DAR is to
assist the DENR in identifying and screening of farmer beneficiaries. The
responsibility and authority of DAR to distribute public lands shall be limited to
the following:
a)Lands proclaimed by the President as DAR Resettlement Projects
and placed under the administration of the DAR for distribution to qualified
farmer beneficiaries under CARP;
b)Lands which are placed by law under the jurisdiction of DAR; and
c)Lands previously proclaimed for the various government
departments, agencies and instrumentalities and subsequently turned over
to the DAR pursuant toEO 407(1990), as amended byEO 448and506.
Untitled public alienable and disposable lands are still within the exclusive
jurisdiction of DENR pursuant toCA 141. However, in accordance withDOJ
Opinion No. 176 (1992),Joint DAR-DENR MC 14 (1997)provides that all untitled
public alienable and disposable lands are deemed "private" if the criteria
specified inRA 6940for the determination of whether or not a person has already
acquired a recognizable private right over a landholding is met, namely:
 a)Continuous occupancy and cultivation by oneself or through one's
predecessors-in-interest for at least thirty (30) years prior to the effectivity
ofRA 6940on 16 April 1990;
b)The land must have been classified as alienable and disposable for
at least thirty (30) years prior to the effectivity on 16 April 1990;
c)One must have paid the real estate tax thereon; and
d)There are no adverse claims on the land.
For these privately claimed public alienable and disposable lands, the DENR
first issues a Free Patent to qualified applicants for the retained area of not more
than five (5) hectares. The DAR shall then cover the excess area and issue a
CLOA or EP and distribute these to qualified beneficiaries. TcCDIS

For untitled public alienable and disposable lands which are tenanted and with
claimants not qualified under the criteria specified inRA 6940, the disposition
shall be under the jurisdiction of the DENR. The role of the DAR in this case is
limited to the documentation and protection of the leasehold arrangement
between the public land claimant and the tenants.
If the alienable and disposable land is not tenanted but has actual farm
occupants, and the public land claimant lacks the requisite thirty (30)-year
possession, these shall be under the jurisdiction of the DENR and the
appropriate tenurial instrument shall be applied.
It is submitted, however, that these alienable and disposable lands that are
privately claimed by claimants who are not qualified under the criteria set
underRA 6940(1990) should be turned over to DAR for distribution under CARP.
As these claimants/tenants are mere occupants and can not be granted Free
Patents by the DENR, these land should instead be committed for agrarian
purposes.
A recently issuedDENR MC 22 (1999)entitled "DENR Jurisdiction over all
Alienable ad Disposable Lands of the Public Domain," seems to abrogate or set
asideJoint DAR-DENR MC 14 (1997). It directs all Regional Executive Directors
to strictly exercise DENR's jurisdiction over all alienable and disposable lands of
the public domain, including those lands not specifically placed under the
jurisdiction of other government agencies, and prepare the same for disposition
to qualified and legitimate recipients under the People's Alliance for the
Rehabilitation of Environment of the Office of the Secretary of the DENR.
This recent issuance impliedly prohibits the turnover of alienable and
disposable lands to CARP, and thus, effectively removes remaining public
alienable and disposable lands out of the scope of CARP. While merely an
administrative order that can not overturn legislation on the matter,DENR MC 22
(1999)poses another roadblock which if not corrected or legally challenged in
court can derail the already delayed coverage of public agricultural lands. Sec. 7
ofRA 6657explicitly provides that alienable and disposable public agricultural
lands are among the priority lands for distribution. Needless to say, the political
implications of government's reluctance to commit public agricultural lands for
agrarian ends in the face of its relentless expropriation of private landholdings is
serious.
 Ancestral Lands
Sec. 9 ofRA 6657defines ancestral lands as those lands that include, but not
limited to, lands in actual, continuous and open possession of an indigenous
cultural community and its members. Sec. 3 (b) ofRA 8371(1997) or the
"Indigenous Peoples Rights Act of 1997," has a more encompassing definition, to
wit:
Sec. 3.Definition of Terms. . . .
b).Ancestral Lands Subject to Section 56 hereof, refers to lands occupied,
possessed and utilized by individuals, families, and clans who are members of the
ICCs/IPs (indigenous cultural communities/indigenous peoples) since time
immemorial, by themselves or through their predecessors-in-interests, under
claims of individual or traditional group ownership continuously, to the present,
except when interrupted by war, force majeure or displacement by force, deceit,
stealth or as a consequence of government projects and other voluntary dealings
entered into by government and private individuals/corporations, including, but not
limited to, residential lots, rice terraces or paddies, private forests, swidden farms
and treelots;

Policy for ancestral lands under CARP

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

CHAPTER 2
Agricultural Leasehold

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

Gelos vs. Court of Appeals

208 SCRA 608 (1992)

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

Classes of agricultural tenancy

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

Elements of Agricultural Tenancy

The following are the essential requisites for the existence of a tenancy
relation:
a)The parties are the landholder and the tenant;
b)The subject is agricultural land;
c)There is consent by the landholder for the tenant to work on the
land, given either orally or in writing, expressly or impliedly;
d)The purpose is agricultural production;
e)There is personal cultivation or with the help of the immediate farm
household; and
f)There is compensation in terms of payment of a fixed amount in
money and/or produce.(Carag vs. CA, 151 SCRA 44 [1987];Gabriel vs.
Pangilinan, 58 SCRA 590 [1974];Oarde vs. CA, 280 SCRA 235 [1997];Qua
vs. CA, 198 SCRA 236 [1991])
 The Supreme Court emphasized in numerous cases that "(a)ll these
requisites must concur in order to create a tenancy relationship between the
parties. The absence of one does not make an occupant of a parcel of land, or a
cultivator thereof, or a planter thereon, ade juretenant. This is so because
unless a person has established his status as ade juretenant, he is not entitled
to security of tenure nor is he covered by the Land Reform Program of the
Government under existing tenancy laws." (Caballes v. DAR,168 SCRA 254
[1988])
In the case ofTeodoro vs. Macaraeg, 27 SCRA 7 (1969), the Court found all the
elements of an agricultural leasehold relation contained in the contract of lease
executed by the parties.

Teodoro vs. Macaraeg

27 SCRA 7 (1969)

Facts:
Macaraeg had been the lessee of the property of Teodoro for the past seven (7)
years when he was advised by the latter to vacate the property because it would
be given to another tenant. Thereafter, a new tenant was installed who forbade
Macaraeg from working on the riceland. On the other hand, Teodoro denied that
Macaraeg was his tenant and claimed that he had always leased all of his 39-
hectare riceland under civil lease. He further claimed that after the expiration of his
"Contract of Lease" with Macaraeg in 1961, the latter did not anymore renew his
contract.
Held:
The Contract of Lease between the parties contains the essential elements of a
leasehold tenancy agreement. The landholding in dispute is unmistakably an
agricultural land devoted to agricultural production. More specifically, the parties
stipulated that "the property leased shall be used or utilized for agricultural
enterprise only." Furthermore, the parties also agreed that the farmland must be
used for rice production as could be inferred from the stipulation that "the rental of
nine (9) cavans ofpalayper hectare for one agricultural year . . . must be of the
same variety (of palay) as that produced by the LESSEE."
The land is definitely susceptible of cultivation by a single person as it is of an
area of only four and a half (4-1/2) ha. This court has held that even a bigger area
may be cultivated personally by the tenant, singly or with the help of the members
of his immediate farm household.
From the stipulation that "the rental must be of the same variety as thatproduced
by the LESSEE," it can reasonably be inferred that the intention of the parties was
that Macaraeg personally work the land, which he did as found by the Agrarian
Court, thus: "In the instant case,petitioner (Macaraeg) cultivated the landholding
belonging to said respondent(Teodoro) for the agricultural year 1960-61 in
consideration of a fixed annual rental." (italics supplied) Moreover, there is no
evidence that Macaraeg did not personally cultivate the land in dispute. Neither
did Teodoro allege, much less prove, that Macaraeg availed of outside assistance
in the cultivation of the said riceland.
 Teodoro is the registered owner of the disputed landholding and he delivered the
possession thereof to Macaraeg in consideration of a rental certain to be paid in
produce. Evidently, there was a valid leasehold tenancy agreement. Moreover, the
provision that the rental be accounted in terms of produce 9 cavans per hectare
is an unmistakable earmark, considering the other stipulations, that the parties
did actually enter into a leasehold tenancy relation (at 16-17;underscoring
supplied).

Agricultural tenancy relation is different from farm employer-farm employee

relation.The Court clarified the difference in the case ofGelos vs. CA, 208 SCRA
608 (1992), as follows:
On the other hand, the indications of an employer-employee relationship are: 1)
the selection and engagement of the employee; 2) the payment of wages; 3) the
power of dismissal; and 4) the power to control the employee's conduct
although the latter is the most important element.
According to a well-known authority on the subject, tenancy relationship is
distinguished from farm employer-farm worker relationship in that: "In farm
employer-farm worker relationship, the lease is one of labor with the agricultural
laborer as the lessor of his services and the farm employer as the lessee thereof.
In tenancy relationship, it is the landowner who is the lessor, and the tenant the
lessee of agricultural land. The agricultural worker works for the farm employer
and for his labor he receives a salary or wage regardless of whether the employer
makes a profit. On the other hand, the tenant derives his income from the
agricultural produce or harvest." (at 614)

Parties:landholder and tenant

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

Zamoras vs. Su, Jr.

184 SCRA 248 (1990)
Facts:
Zamoras was hired by Su as overseer of his coconut land in Dapitan City.
Zamoras was tasked to have the land titled in Su's name. He was also "assigning
portions of the land to be worked by tenants, supervising the cleaning, planting,
care and cultivation of the land, the harvesting of coconuts and selling of the
copra." As compensation, he was paid salary of P2,400 per month plus 1/3 of the
proceeds of the sales of the copra. Su got another 1/3 of the proceeds while the
other third went to the tenants. In 1981, Su obtained a loan from Anita Hortellano
and the latter was authorized by Su to harvest the coconuts. Meanwhile, he
informed Zamoras that he was being temporarily laid-off until the loan is settled.
Zamoras filed a case for illegal termination and breach of contract before the
Regional Arbitration Branch of the Ministry of Labor. The Labor Arbiter held that
 Zamoras' dismissal was without just cause and ordered Zamoras reinstatement.
On appeal, the National Labor Relation Commission reversed the Labor Arbiter by
holding that there is no employee-employer relation existing between the parties
but a landlord-tenant relation hence jurisdiction rests with the agrarian court.
Zamoras assailed the decision of NLRC.
Held:
The NLRC's conclusion that a landlord-tenant relationship existed between Su and
Zamoras is not supported by the evidence which shows that Zamoras was hired
by Su not as a tenant but as overseer of his coconut plantation. As overseer,
Zamoras hired the tenants and assigned their respective portions which they
cultivated under Zamoras' supervision. The tenants dealt directly with Zamoras
and received their one-third share of the copra produce from him. The evidence
also shows that Zamoras, aside from doing administrative work for Su, regularly
managed the sale of copra processed by the tenants. There is no evidence that
Zamoras cultivated any portion of Su's land personally or with the aid of his
immediate farm household.
The following circumstances indicate an employer-employee relationship between
them: 1. Zamoras was selected and hired by Su as overseer of the coconut
plantation. 2. His duties were specified by Su. 3. Su controlled and supervised the
performance of his duties. He determined to whom Zamoras should sell the copra
produced from the plantation. 4. Su paid Zamoras a salary of P2,400 per month
plus one-third of the copra sales every two months as compensation for managing
the plantation."

There is no tenancy relation because the element of personal cultivation does

not exist.

Castillo vs. CA
205 SCRA 529 (1992)
Facts:
Alberto Ignacio filed a complaint for injunction against Castillo alleging that he is
the agricultural tenant of the latter. He claims that Castillo allowed him to construct
a rest house in the property and that, thereafter, Castillo started cutting fruit-
bearing trees on the land and filled with adobe stones the area intended for
vegetables. On the other hand, Castillo denied that Ignacio was his tenant but that
the latter was only a "magsisiga" of the landholding and that he did not ask
permission from Ignacio when he constructed his rest house. The trial court found
no tenancy relationship between the parties but this was reversed by the Court of
Appeals.
Held:
The element of personal cultivation is absent in this case. The alleged tenant "is a
businessman by occupation and this is his principal source of income. He
manufactures hollow blocks. He also has a piggery and poultry farm as well as a
hardware store on the land adjoining the subject land. To add to that, the
respondent farms the riceland of one Dr. Luis Santos. It is thus evident that the
working hours of the respondent as a businessman and his other activities do not
permit him to undertake the work and obligations of a real tenant. This is further
supported by the undisputed fact that the respondent cannot even personally
perform the work of a smudger because on 22 October 1986, the respondent
 hired some 20 people who are not members of his family to cut and burn the grass
in the premises of the subject land." (at 535-536).

An owner tilling his own agricultural land is not a tenant within the
contemplation of the law (Baranda vs. Baguio, 189 SCRA 194 (1990).
InOarde vs. CA, et al., 280 SCRA 235 (1997), certifications of tenancy/non-
tenancy issued by DAR are not conclusive.
"The certifications issued by administrative agencies or officers that a certain
person is a tenant are merely provisional and not conclusive on courts, as ruled by
this Court inCuao vs. Court of Appeals, citingPuertollano vs. IAC. Secondly, it is
well-settled that the "findings of or certifications issued by the Secretary of
Agrarian Reform, or his authorized representative, in a given locality concerning
the presence or absence of a tenancy relationship between the contending parties
is merely preliminary or provisional and is not binding upon the courts." (at 246)

Landholder-lessor
A landholder-lessor is defined as "any person, natural or juridical, either as
owner, lessee, usufructuary or legal possessor of agricultural land, who lets,
leases or rents to another said property for purposes of agricultural production
and for a price certain or ascertainable either in an amount of money or produce."
(Rep. Act No. 1199[1954], sec. 42). Thus, consent need not be necessarily given
personally by the registered owner as long as the person giving the consent is
the lawful landholder as defined by law.

Bernas vs. Court of Appeals

225 SCRA 119 (1993)

Facts:
Natividad Deita is the owner of a 5,831-sq m property which she entrusted to her
brother, Benigno, so that he could use the fruits thereof to defray the cost of his
children's education in Manila. The property was leased by Bernas pursuant to a
production sharing arrangement executed between Bernas and Benigno.
Natividad played no part in this arrangement. In 1985, the lots were returned by
Benigno to his sister but when the owners sought to take possession, Bernas
refused to relinquish the property. Bernas was claiming that he was an agricultural
lessee entitled to security of tenure. Natividad filed an action for recovery of
possession. The trial court ruled in favor of Bernas but this was subsequently
reversed by the CA.
Issue:
Is consent by a legal possessor, even if without the consent of landowner,
sufficient to create tenancy relationship?
Held:
Yes. As legal possessor of the property, Benigno had the authority and capacity to
enter into an agricultural leasehold relation with Bernas. "The law expressly grants
him, as legal possessor, authority and capacity to institute an agricultural
leasehold lessee on the property he legally possessed." (at 125-126)

Subject is agricultural land

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

Hilario vs. Intermediate Appellate Court

148 SCRA 573 (1987)
Facts:
Salvador Baltazar was working on the land pursuant to a contract executed
between him and Socorro Balagtas involving a two (2)-ha property. According to
Baltazar, in 1965, he relinquished 1.5 ha to certain individuals and what remained
under his cultivation was -ha owned by Corazon Pengzon. After Socorro's death,
no new contract was executed. Sometime in 1980, the Hilarios started cultivating
a 4,000-sq m portion of the property and enjoined Baltazar from entering the
same. The Hilarios claimed that they acquired the landholding from the Philippine
National Bank after a foreclosure proceeding. On the other hand, Corazon
Pengzon explained that she did not get any share from the produce of the land
since 1964 and she would not have accepted it knowing that she did not own the
property anymore.
Held:
Baltazar is not a tenant because no consent was given by Pengzon. As held
inTiongson v. Court of Appeals, 130 SCRA 482,tenancy relationship can only be
created with the consent of the true and lawful landholder through lawful means
and not by imposition or usurpation. "So the mere cultivation of the land by
usurper cannot confer upon him any legal right to work the land as tenant and
enjoy the protection of security of tenure of the law(Spouses Tiongson vs. Court
of Appeals, 130 SCRA 482)."

Successors-in-interest of the true and lawful landholder/owner who gave the

consent are bound to recognize the tenancy established before they acquired the
agricultural land.

Endaya vs. Court of Appeals

215 SCRA 109 (1992)
Facts:
 Spouses San Diego owned a 2.0200-ha rice and corn land. The property has
been cultivated by Pedro Fideli as a tenant of the couple under a 50-50 sharing
agreement. In 1974, a lease contract was executed between spouses San Diego
and a certain Regino Cassanova for a period of four (4) years at P400.00 per ha
per annum rental and gave him the authority to oversee the planting of crops. The
contract was subsequently renewed to last until 1980. In both cases, Fideli signed
as witness. While the contract was subsisting, Fideli continuously worked on the
property, sharing equally with Cassanova the net produce of the harvests. In 1980,
the land was sold to spouses Endaya. Fideli continued tilling the land despite the
Endaya's demand to vacate the property. Fideli refused to leave and deposited
with Luzon Development Bank the landowner's share in the harvests. Fideli filed a
complaint praying that he be declared the agricultural tenant of the Endayas. The
trial court ruled in favor of the Endayas but the same was subsequently reversed
by the CA holding that Fideli is an agricultural lessee entitled to security of tenure.
Held:
It is true that the Court has ruled that agricultural tenancy is not created where the
consent of the true and lawful owners is absent. Butthis doctrine contemplates a
situation where an untenanted farm land is cultivated without the landowner's
knowledge or against her will or although permission to work on the farm was
given, there was no intention to constitute the worker as the agricultural lessee of
the farm land.The rule finds no application in the case at bar where the petitioners
are successors-in-interest to a tenanted land over which an agricultural leasehold
has long been established.The consent given by the original owners to constitute
private respondent as the agricultural lessee of the subject landholding binds
private respondents who, as successors-in-interest of the Spouses San Diego,
step into the latter's shoes, acquiring not only their rights but also their obligations.
(at 118;underscoring supplied).

Purpose is agricultural production

Tenancy status arises only if an occupant of a parcel of land has been given
its possession for the primary purpose of agricultural production.

Caballes vs. Department of Agrarian Reform

168 SCRA 248 (1988)

Facts:
Spouses Caballes acquired subject land from the Millenes family. Prior to the sale,
Abajon constructed his house on a portion of the property, paying a monthly rental
to the owner. Abajon was also allowed to plant on a portion of the land and that
the produce thereof would be shared by them on a 50-50 basis. When the new
owners took over, they told Abajon to transfer his dwelling to the southern portion
of the property because they would be building a poultry near Abajon's house.
Later, the Caballes asked Abajon to leave because they needed the property.
Abajon refused. During the trial the former landowner testified that Abajon dutifully
gave her 50% share of the produce of the land under his cultivation.
Held:
The fact of sharing alone is not sufficient to establish a tenancy relationship. The
circumstances of this case indicate that the private respondent's status is more of
a caretaker who was allowed by the owner out of benevolence or compassion to
live in the premises and to have a garden of some sort at its southwestern side
 rather than a tenant of the said portion. Agricultural production as the primary
purpose being absent in the arrangement, it is clear that the private respondent
was never a tenant of the former owner, Andrea Millenes. Consequently, Sec. 10
of RA 3844, as amended, does not apply. Simply stated, the private respondent is
not a tenant of the herein petitioner.

Personal cultivation
Cultivation
UnderDAR AO 5 (1993), cultivation is not limited to the plowing and
harrowing of the land, but also the husbanding of the ground to forward the
products of the earth by general industry, the taking care of the land and fruits
growing thereon, fencing of certain areas, and the clearing thereof by gathering
dried leaves and cutting of grasses. In coconut lands, cultivation includes the
clearing of the landholding, the gathering of the coconuts, their piling, husking
and handling as well as the processing thereof into copra, although at times with
the aid of hired laborers.
Meaning of "Personal Cultivation"
"Personal cultivation" exists when a person cultivates the land by himself and
with the aid available from his immediate farm household.
InOarde vs. CA, et al.,supra, the Court held that the element of personal
cultivation is essential for an agricultural leasehold. There should be personal
cultivation by the tenant or by his immediate farm household or members of the
family of the lessee or other persons who are dependent upon him for support or
who usually help him in his activities (Evangelista vs. CA, 158 SCRA 41). The law
is explicit in requiring the tenant and his immediate family to work the land
(Bonifacio vs. Dizon, 177 SCRA 294), and the lessee cannot hire many persons
to help him cultivate the land (De Jesus vs. IAC, 175 SCRA 559). InGabriel vs.
Pangilinan,supra, the Court held that the tenancy relation was severed when the
tenant and/or his immediate farm household ceased from personally working the
fishpond when he became ill and incapacitated.
Compensation in money and/or produce
InMatienzo v. Servidad, 107 SCRA 276 (1981), the Supreme Court held that:
A tenant is defined under section 5(a) of Republic Act No. 1199 as a person who,
himself, and with the aid available from within his immediate household, cultivates
the land belonging to or possessed by another, with the latter's consent for
purposes of production, sharing the produce with the landholder under the share
tenancy system, or paying to the landholder a price certain or ascertainable in
produce or in money or both, under the leasehold tenancy system. From the
above definition of a tenant, it is clear that absent a sharing arrangement, no
tenancy relationship had ever existed between the parties. What transpired was
that plaintiff was made overseer over a 7-hectare land area; he was to supervise
applications for loans from those residing therein; he was allowed to build his
house thereon and to plant specified plants without being compensated; he was
free to clear and plant the land as long as he wished; he had no sharing
arrangement between him and defendant; and he was not obligated to pay any
price certain to nor share the produce, with the latter.CaSHAc

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

Tanpingco vs. Intermediate Appellate Court

207 SCRA 653 (1992)
Facts:
In 1985, Tanpingco filed a complaint for payment of disturbance compensation
against Benedicto Horca, Sr. Tanpingco alleged that he is the tenant-lessee in
Horca's riceland under a leasehold contract; that he was asked to desist from
working on the land because it was already donated to the Ministry of Education,
Culture and Sports; and that he is willing to accept disturbance compensation or in
the alternative to remain as tenant-lessee of the subject land.
Issue:
Is the security of tenure of a tenant affected by the transfer of ownership or legal
possession of an agricultural land?
Held:
Under Art. 428 of the Civil Code, the owner has the right to dispose of a thing
without other limitations than those established by law. As an incident of
ownership, therefore, there is nothing to prevent a landowner from donating his
naked title to the land. However, the new owner must respect the rights of the
tenant.Sec. 7 of RA No. 3844, as amended, gives the agricultural lessee the right
to work on the landholding once the leasehold relationship is established. It also
entitles him to security of tenure on his landholding. He can only be ejected by the
court for cause. Time and again, this Court has guaranteed the continuity and
security of tenure of a tenant even in cases of a mere transfer of legal
possession.As elucidated in the case ofBernardo v. Court of Appeals (168 SCRA
439 [1988]), security of tenure is a legal concession to agricultural lessees which
they value as life itself and deprivation of their landholdings is tantamount to
deprivation of their only means of livelihood. Also, under Section 10 of the same
Act, the law explicitly provides that the leasehold relation is not extinguished by
the alienation or transfer of the legal possession of the landholding. The only
instances when the agricultural leasehold relationship is extinguished are found in Section
8, 28 and 35 of the Code of Agrarian Reforms of the Philippines. The donation of the land did not
terminate the tenancy relationship. However, the donation itself is valid." (at 657-658;underscoring
supplied).
 Constitutionality of the provision on security of tenure
The
constitutionality of the provision on security of tenure has long been
settled by the Supreme Court in the case ofPrimero vs. Court of Agrarian
Relations, 101 Phil. 675 (1957).

Primero vs. Court of Agrarian Relations

101 Phil. 675 (1957)

Facts:
Primero owns a tenanted riceland in Cavite. Because of his desire to let the
property to one Porfirio Potente, he notified his tenant advising the latter to vacate
the land. The tenant refused. Primero filed a case with CAR which subsequently
dismissed the same. On appeal, Primero assailed the constitutionality of Sec. 9
and 50 of RA 1199 claiming that said provisions are limitations on freedom of
contract, a denial of equal protection of law, and an impairment of, or limitation on,
property rights.
Held:
The provisions of law assailed as unconstitutional do not impair the right of the
landowner to dispose or alienate his property nor prohibit him to make such
transfer or alienation; they only provide that in case of transfer or in case of lease,
as in the instant case, the tenancy relationship between the landowner and his
tenant should be preserved in order to insure the well-being of the tenant or
protect him from being unjustly dispossessed by the transferee or purchaser of the
land; in other words, the purpose of the law in question is to maintain the tenants
in the peaceful possession and cultivation of the land or afford them protection
against unjustified dismissal from their landholdings. Republic Act 1199 is
unquestionably a remedial legislation promulgated pursuant to the social justice
precepts of the Constitution and in the exercise of the police power of the state to
promote the commonwealth. It is a statute relating to public subjects within the
domain of the general legislative powers of the State and involving the public
rights and public welfare of the entire community affected by it. Republic Act 1199,
like the previous tenancy laws enacted by our lawmaking body, was passed by
congress in compliance with the constitutional mandates that "the promotion of
social justice to insure the well-being and economic security of all the people
should be the concern of the State" (Art II, sec. 5) and that "the state shall regulate
the relations between landlord and tenant in agriculture" (Art. XIV, sec. 6). (at
680).

InPineda vs. de Guzman,21 SCRA 1450 (1967), the Supreme Court also
held:
Section 49 of the Agricultural Tenancy Act, Republic Act 1199, as amended,
enunciates the principle of security of tenure of the tenants, such that it prescribes
that the relationship of landholder and tenant can only be terminated for causes
provided by law. The principle is epitomized by the axiom on land tenure that once
a tenant, always a tenant. Attacks on the constitutionality of this guarantee have
centered on the contention that it is a limitation on freedom of contract, a denial of
the equal protection of the law, and an impairment of or a limitation on property
rights. The assault is without reason. The law simply provides that the tenancy
relationship between the landholder and his tenant should be preserved in order to
 insure the well-being of the tenant and protect him from being unjustly
dispossessed of the land. Its termination can take place only for causes and
reasons provided in the law. It was established pursuant to the social justice
precept of the State to promote the common weal.(Primero vs. Court of Industrial
Relations, G.R. No. L-10594, May 29, 1957)(at 1456).

Rights and Responsibilities of the Parties

Rights and responsibilities of lessee
The lessee shall have the following rights:
a)To have possession and peaceful enjoyment of the land;
b)To manage and work on the land in a manner and method of
cultivation and harvest which conform to the proven farm practices;
c)To mechanize all or any phase of his farm work;
d)To deal with millers and processors and attend to the issuance of
quedans and warehouse receipts of the produce due him/her;
e)To continue in the exclusive possession and enjoyment of any
homelot the lessee may have occupied upon the effectivity ofRA 3844;
f)To be indemnified for the costs and expenses incurred in the
cultivation and for other expenses incidental to the improvement of the crop
in case the lessee surrenders, abandons or is ejected from the landholding;
g)To have the right of pre-emption and redemption; and
h)To be paid disturbance compensation in case the conversion of the
farmholding has been approved (Rep. Act No. 3844[1963], sec. 23, 24, 25,
11, 12, 36)
On the other hand, the lessee shall have the following responsibilities under
Sec. 26 ofRA 3844:
a)Cultivate and take care of the farm, growing crops, and other
improvements on the land and perform all the work therein in accordance
with proven farm practices;
b)Inform the lessor within a reasonable time of any trespass
committed by third persons on the farm, without prejudice to his/her direct
action against the trespasser;
c)Take reasonable care of the work animals and farm implements
delivered to him/her by the lessor and see to it that they are not used for
purposes other than those intended, or used by another without the
knowledge and consent of the lessor;
d)Keep the farm and growing crops attended to during the work
season; and
e)To pay the lease rental to the lessor when it falls due.
One of the rights of a lessee is to be entitled to a homelot. But only the tenant-
lessee has this right and that members of the immediate family of the tenants are
not entitled to a homelot.


Cecilleville Realty and Service Corporation vs. Court of Appeals

278 SCRA 819 (1997)

Facts:
Petitioner Cecilleville Realty owns a parcel of land, a portion of which is occupied
by Herminigildo Pascual. Despite repeated demands, Herminigildo refused to
vacate the property and insisted that he is entitled to occupy the land since he is
helping his mother, the corporation's tenant, to cultivate the property.
Held:
Only a tenant is granted the right to have a home lot and the right to construct or
maintain a house thereon. And here, private respondent does not dispute that he
is not petitioner's tenant. In fact, he admits that he is a mere member of Ana
Pascual's immediate farm household. Under the law, therefore, we find private
respondent not entitled to a homelot. Neither is he entitled to construct a house of
his own or to continue maintaining the same within the very small landholding of
petitioner. . . . Thus, if the Court were to follow private respondent's argument and
allow all the members of the tenant's immediate farm household to construct and
maintain their houses and to be entitled to not more than one thousand (1,000)
square meters each of home lot, as what private respondent wanted this Court to
dole-out, then farms will be virtually converted into rows, if not colonies, of houses.

In sugarcane lands, the lessee shall have the following rights to be exercised
by him personally or through a duly registered cooperative/farmers' association of
which he is abona fidemember (DAR Adm. O. No. 5 [1993]):
a)To enter into a contract with the sugar central millers for the milling
of the sugarcane grown on the leased property;
b)To be issued a warehouse receipt (quedan) or molasses storage
certificate by the sugar central for the manufactured sugar, molasses and
other by-products;
c)To have free access to the sugar central's factory, facilities, and
laboratory for purposes of checking and/or verifying records and procedures
in the processing of sugarcane through professional representation;
d)To be furnished a weekly statement of cane and sugar account
showing, among other things, the tonnage of the delivered cane and
analysis of the crusher juice;
e)To be given 30 days notice in writing before the sugar and other by-
products are sold through public auction; and
f)To be provided with the standard tonnage allocation by the miller/
sugar central.
Rights and responsibilities of lessor
The lessor shall have the following rights:
a)To inspect and observe the extent of compliance with the terms and
conditions of the leasehold contract;
b)To propose a change in the use of the landholding to other agricultural
purposes, or in the kind of crops planted;
c)To require the lessee, taking into consideration his/her financial capacity
and the credit facilities available to him/her, to adopt proven farm practices
necessary to the conservation of the land, improvement of the fertility and
increase in productivity; and
d)To mortgage expected rentals (Rep. Act No. 3844[1963], sec. 29):
The lessor may propose a change in use but the change shall be agreed upon
by the landowner and the lessee. In case of disagreement, the matter may be
settled by the Provincial Agrarian Reform Adjudicator (PARAD), or in his absence
the Regional Agrarian Reform Adjudicator (RARAD) (DAR Adm. O. No. 5 [1993])
The lessor shall have the following obligations:
a)To keep the lessee in peaceful possession and cultivation of the
land; and
b)To keep intact such permanent useful improvements existing on the
landholding at the start of the leasehold relation (Rep. Act No. 3844[1963],
sec. 30).
Sec. 31 ofRA 3844provides that the lessor is prohibited to perform any of the
following acts:
a)To dispossess the lessee of his/her landholding except upon
authorization by the Court;
b)To require the lessee to assume, directly or indirectly, the payment
of the taxes or part thereof levied by the government on the land;
c)To require the lessee to assume, directly or indirectly, any rent or
obligation of the lessor to a third party;
d)To deal with millers or processors without written authorization of the
lessee in cases where the crop has to be sold in processed form before
payment of the lease rental;
e)To discourage, directly or indirectly, the formation, maintenance or
growth of unions or organizations of lessees in his/her landholding; and
f)For coconut lands, indiscriminate cutting of coconut trees will be
deemedprima facieevidence to dispossess the tenant of his/her
landholding unless there is written consent of the lessee and there is PCA
certification, copy of the findings and recommendations of which shall be
furnished to affected tenants or lessees, or a resolution from the Municipal
Board allowing the cutting for valid reasons (DAR Adm. O. No. 5
[1993]andDAR Adm. O. No. 19 [1989]).
Termination of Tenancy Relation
Causes for termination of leasehold relation
Section 8 ofRA 3844provides that agricultural leasehold relation shall be
extinguished by the following acts or omissions:
 a)Abandonment of the landholding without the knowledge of the
agricultural lessor;
b)Voluntary surrender of the landholding by the agricultural lessee,
written notice of which shall be served three months in advance; or
c)Absence of an heir to succeed the lessee in the event of his/her
death or permanent incapacity.
Conversion of the land to non-agricultural uses also extinguishes the
leasehold relation because the subject land is no longer an agricultural land and
the purpose is no longer agricultural production. However, under Sec. 16 ofDAR
AO 1 (1999), the tenant affected by the conversion is entitled to disturbance
compensation which must be paid within sixty (60) days from the issuance of the
order of conversion.
Abandonment
In the case ofTeodoro vs. Macaraeg,supra, it was held that the word
"abandon," in its ordinary sense, means to forsake entirely, to forsake or
renounce utterly. "The emphasis is on the finality and the publicity with which
some thing or body is thus put in the control of another, and hence the meaning
of giving up absolutely, with intent never again to resume or claim one's rights or
interests." In other words, the act of abandonment constitutesactual, absolute
and irrevocabledesertion of one's right or property. . . . Likewise, failure to
cultivate the land by reason of the forcible prohibition to do so by a third party
cannot also amount to abandonment, for abandonment presupposes free
will." (at 19-20;underscoring supplied).
Voluntary surrender of property
The tenant's intention to surrender landholding cannot be presumed, much
less determined by mere implication, but must be convincingly and sufficiently
proved.

Nisnisan, et al vs. Court of Appeals

294 SCRA 173 (1998)

Facts:
Spouses Gavino and Florencia Nisnisan are the owners of a 4.9774 hectare land
in Davao del Sur. Policarpio, the son of Gavino, has been cultivating one (1) ha of
said land since 1961. In 1976, Gavino and Policarpio executed a leasehold
contract which stipulates a sharing arrangement of 1/3:2/3 of the harvest. In 1978,
Gavino sold two (2) ha of the land, including the land tenanted by Policarpio, to
spouses Mancera. As a result of the sale, Policarpio and family were ousted. They
then filed an action for reinstatement of tenancy against the Manceras. The
Manceras, on the other hand, countered that spouses Nisnisan have no cause of
action because they voluntarily surrendered their landholding.
Issue:
Is the tenant deemed to have voluntarily surrendered subject landholding?
Held:
 Other than their bare allegations, private respondents failed to present any
evidence to show that petitioners-spouses surrendered their landholding
voluntarily after the private respondents purchased the subject property. Moreover,
the filing of the complaint for reinstatement of leasehold tenancy by petitioners-
spouses against private respondents before the CAR militates against the private
respondents' claim that petitioners-spouses voluntarily surrendered their
landholding to them. Under Sec. 8 of RA 3844, voluntary surrender, as a mode of
extinguishing agricultural leasehold tenancy relations, must be convincingly and
sufficiently proved by competent evidence. The tenant's intention to surrender the
landholding cannot be presumed, much less determined by mere implication.

Effect of death or permanent incapacity of tenant-lessee on leasehold

relation
Under Sec. 9 ofRA 3844, in case of death or permanent incapacity, the
leasehold relation continues between the lessor and the person who can cultivate
the land personally, chosen by the lessor within one month from such death or
incapacity, from among the following:
a)The surviving spouse;
b)The eldest direct descendant by consanguinity;
c)The next eldest descendant or descendants in the order of age.
The age requirement is applied under the presumption that all heirs/
successors are qualified.
The
leasehold relation is not terminated by death or permanent incapacity of
the landholder-lessor. It binds his legal heirs (Rep. Act No. 3844[1963], sec. 9).
Also, Sec. 10 ofRA 3844provides that the mere expiration of the term or
period in a leasehold contract nor by sale, alienation or transfer of the legal
possession of the landholding does not extinguished leasehold. In these cases,
the transferee is subrogated to the rights and substituted to the obligations of the
lessor.
Dispossession of Tenants
Under Sec. 36 ofRA 3844, dispossession of tenants may be authorized by
the Court in a judgment that is final and executory if after due hearing it is shown
that:
a)The lessee failed to substantially comply with the terms and
conditions of the contract or with pertinent laws unless the failure is caused
by a fortuitous event or force majeure;
b)The lessee planted crops or used the land for a purpose other than
what has been previously agreed upon;
(Note:
UnderDAR AO 5 [1993], the lessee is now allowed to intercrop
or plant secondary crops after the rental has been fixed, provided the lessee
shoulders the expenses.)
c)The lessee failed to adopt proven farm practices necessary to
conserve the land, improve its fertility, and increase its productivity taking
 into consideration the lessee's financial capacity and the credit facilities
available to him;
d)There has been substantial damage, destruction or unreasonable
deterioration of the land or any permanent improvement thereon due to the
fault or negligence of the lessee;
e)The lessee failed to pay lease rental on time except when such non-
payment is due to crop failure to the extent of 75% as a result of a fortuitous
event;
f)The lessee employed a sub-lessee; or
g)The landholding is declared by the DAR to be suited for residential,
commercial, industrial or some other urban purposes subject to payment of
disturbance compensation to the lessee.
(Note:
Under Sec. 36 [1] ofRA 3844, as amended byRA 6389, disturbance
compensation is equivalent to five [5] times the average of the gross harvest on
his landholding during the last five [5] preceding calendar years.)
In the case ofGarchitorena vs. Panganiban,6 SCRA 338 (1962), it was held
that when non-payment of lease rentals occurs for several years, said omission
has the effect of depriving the landowner of the enjoyment of the possession and
use of the land.
Under Sec. 36 (1) ofRA 3844, as amended, a lessor who ejects his tenant
without the court's authorization shall be liable for:
a)fine or imprisonment;
b)damages suffered by the agricultural lessee in addition to the fine or
imprisonment for unauthorized dispossession;
c)payment of attorney's fees incurred by the lessee; and
d)the reinstatement of the lessee.
Determination of Lease Rentals
The lease rental shall not be more than the equivalent of 25% of the average
normal harvest during the three (3) agricultural years preceding the following
dates:
10 September 1971, the date of effectivity ofRA 6389for tenanted
rice and corn lands;
15 June 1988 or date the tenant opted to enter into leasehold
agreement, whichever is sooner, for tenanted sugar lands; or
15 June 1988 or date of leasehold agreement by the parties
concerned, whichever is sooner, for all other agricultural lands after
deducting the amount used for seeds and the cost of harvesting, threshing,
loading, hauling and processing whichever is applicable (DAR Adm. O. No.
5 [1993]).
DAR AO 5 (1993)defines "normal harvest" as the usual or regular produce
obtained from the land when it is not affected by any fortuitous event like drought,
earthquake, volcanic eruption, and the like. If there had been no normal harvest,
the estimated normal harvest during the three (3) preceding agricultural years
shall be considered as the normal harvest.
"Agricultural year" refers to the period of time required for raising a particular
product, including the preparation of the land, sowing, planting and harvesting of
crops and, whenever applicable, threshing of said crops: Provided, however,
That in case of crops yielding more than one harvest from one planting,
"agricultural year" shall be the period from the preparation of the land to the first
harvest and thereafter from harvest to harvest. In both cases, the period may be
shorter or longer than a calendar year.
The law states that only the amount used for seeds and the cost of
harvesting, threshing, loading, hauling, and processing, whichever is applicable,
are considered allowable deductions from the normal harvest in order to
determine the lease rental.
The lease rental shall cover the whole farmholding attended to by the lessee.
Computation of lease rental shall include both primary and secondary crops
existing as of 15 June 1988. Secondary crops which are planted to an aggregate
area of half a hectare or less shall not be included in the computation of the lease
rental (DAR Adm. O. No. 5 [1993]).
If the land has been cultivated for a period of less than three agricultural
years prior to 15 June 1988, the initial rental shall be based on the average
normal harvest during the preceding agricultural years when the land was
actually cultivated.
After the lapse of the first three (3) normal harvests, the final rental shall be
based on the average normal harvest during these three (3) preceding
agricultural years.

CHAPTER 3
Land Acquisition

Registration of Landholdings and Landowners

Sec. 14 ofRA 6657requires all persons, natural or juridical, and government
entities that own or claim to own agricultural lands, whether, in their names or in
the name of others, are required, to file a sworn statement with the assessor's
office, containing the following data:
a)the description and area of the property;
b)the average gross income from the property for at least three (3)
years;
c)the names of all tenants and farmworkers therein;
d)the crops planted in the property and the area covered by each crop
as of 1 June 1987;
e)the terms of mortgages, lease, and management contracts
subsisting as of 1 June 1987; and
 f)the latest declared market value of the land as determined by the city
or provincial assessor.
The registration drive, denominated as Listasaka II, is governed
byDepartment of Finance MC 5 (1988).
Effect of failure to register
Under Sec. 4 ofEO 229(1987), which originally provided for the compulsory
registration of agricultural landholdings, if the landowner fails to register within
the prescribed period, the government shall base the valuation of his property for
landowner compensation purposes on the City/Provincial Assessor's value.
The effects of non-registration provided in Sec. 40 ofEO 229, however, are
now deemed superseded by Sec. 14 ofRA 6657which does not provide for such
effects. In theAssociationcases, the Supreme Court stated:
The complaint against the effects of non-registration of the land under E.O. No.
229 does not seem to be viable any more as it appears that Section 4 of the said
Order has been superseded by Section 14 of the CARP Law. This repeats the
requisites of registration as embodied in the earlier measure but does not provide,
as the latter did, that in case of failure or refusal to register the land, the valuation
thereof shall be that given by the provincial or city assessor for tax purposes. On
the contrary, the CARP Law says that the just compensation shall be ascertained
on the basis of the factors mentioned in its Section 17 and in the manner provided
for in Section 16.

Registration of Potential Beneficiaries

The law requires the DAR to register all potential beneficiaries and compile a
data bank containing pertinent information on them.
The registration of beneficiaries is governed byDAR AO 10 (1989). The
objectives of this activity include the validation of data reported by landowners
under the LISTASAKA program, and to provide basic data for the planning and
development of support programs.
Beneficiaries ofPD 27who have culpably sold, disposed of, or abandoned
their lands, and landowners ofPD 27beneficiaries who already own or have
already received at least three (3) hectares of land are excluded from
registration, they being disqualified to become beneficiaries under Secs. 22 and
23 ofRA 6657.
Effect of farmer's failure to register
The failure of a farmer to register does not have any effect prejudicial to his
rights as a potential farmer-beneficiary.DAR AO 10 (1989)does not provide for
any penalty against the failure of a farmer to register. He may simply avail of the
next registration period. Under this administrative order, the registration of new
qualified registrants is undertaken as a continuing activity of the DAR.
Landholdings Covered by CARP
The schedule of acquisition and distribution of agricultural lands covered by
CARP is provided for under Sec. 7 ofRA 6657. Land distribution and acquisition
covers three phases. However, this does not mean that in the implementation of
the program, a particular category should be finished first before going to the
next category. In other words, the three (3) phases as outlined in Sec. 7 should
not be interpreted as an exclusive order of priority. Rather, what is contemplated
is simultaneous over-all implementation (Records of the Senate, Volume I, No.
101, pp. 3239-32340; Speech of Rep. Roo, Congressional Deliberations, 6
October 1987). The guiding principle in the implementation of the program is the
readiness of the different farmer groups to work fully without restraints on the
land and make the land productive (Sponsorship Speech of Rep. Andolana,
Congressional Deliberations, 23 September 1987).
It is within this framework that the following lands are to be acquired by the
Republic of the Philippines for ultimate distribution to the qualified farmer-
beneficiaries: rice and corn lands underPD 27/EO 228; idle or abandoned lands;
lands foreclosed by private and government financial institutions; private
agricultural lands; lands acquired by the Presidential Commission on Good
Government (PCGG), and public agricultural lands.
Rice and corn lands underPD 27andEO 228
At the time of the deliberations on House Bill No. 400, otherwise known as "An
Act Instituting a Comprehensive Agrarian Reform Program and Providing the
Mechanism for Its Implementation," and Senate Bill No. 249, otherwise known as
"An Act Instituting a Comprehensive Agrarian Reform Program to promote Social
Justice and Industrialization, Providing the Mechanism for its Implementation and
for Other Purposes," the agrarian reform program was already in place, albeit
limited in scope. Specifically, on 21 October 1972 then President Marcos,
throughPD 27, instituted the agrarian reform program and placed all tenanted
rice and corn lands under its coverage. On 17 July 1987, President Aquino
issuedEO 228which declared full ownership by qualified farmer beneficiaries of
lands they acquired by virtue ofPD 27.
During the congressional deliberations, it was noted that as of 1987 or
fourteen (14) years of implementation ofPD 27, approximately 547,000 hectares
involving 397,896 beneficiaries had been left untouched. The inclusion of rice
and corn lands underPD 27andEO 228in the CARP is to be seen as a mere
continuation of an unfinished business. (Speech of Rep. Gillego, Congressional
Deliberations, 6 October 1987).
Idle or abandoned land
The DAR is mandated to initiate the expropriation or acquisition of idle or
abandoned agricultural lands at the earliest possible time for distribution to
farmer-beneficiaries of the agrarian reform program (Const. Art. XVIII, sec 22;EO
229, sec 18[h]). Idle or abandoned land refers to any agricultural land not
cultivated, tilted or developed to produce any crop nor devoted to any specific
economic purpose continuously for a period of three (3) years immediately prior
to the receipt of notice of acquisition by the government as provided under this
Act, but not include land that has become permanently or regularly devoted to
non-agricultural purposes. It does not include land which has become
unproductive by reason of force majeure or any other fortuitous event, provided
that prior such event, such land was previously used for agricultural or other
economic purpose (RA 6657, sec 3 [e]).
Private agricultural lands
 Private agricultural lands within the context ofRA 6657refer to those lands
devoted to agricultural activity and not classified as residential, commercial or
industrial owned by persons, whether natural or juridical, other than the
government or its instrumentalities. Abandoned private agricultural lands,
commercial farms and agricultural lands subject of mortgage or foreclosure by
natural or juridical persons, private banking or financial institutions are special
classes of private agricultural lands subject of acquisition or distribution to
farmer-beneficiaries.
Agricultural lands under mortgage or foreclosure
Mortgage is an accessory contract whereby the debtor (or a third person)
guarantees the performance of the principal obligation by subjecting real property
or real rights as security in case of non-fulfillment of said obligation within the
period agreed upon. A mortgage follows the property whoever the possessor may
be and subjects it to the fulfillment of the obligation for whose security it was
constituted. (Bonnevie vs. Court of Appeals, 125 SCRA 122, [1983]). Therefore,
even if the ownership of the mortgaged property changes, the encumbrance,
unless extinguished by any means allowed by law, subsists. The parties to such
contract, the mortgagee and the mortgagor under the law, have their respective
rights and obligations. It is the essence of the mortgage contract that when the
principal obligation becomes due, the things in which the mortgage consists may
be alienated for the payment to the creditor. (New Civil Code, Art. 2087) This
remedy is referred to as foreclosure. In the foreclosure proceedings, the
mortgaged property is sold on default of the mortgagor in satisfaction of the
mortgage debt.
The nature and the legal effects of and legal relationships formed by a
contract of mortgage gives rise to an important issue: at what point may the
creditor be considered as the landowner and when may he be treated as a mere
lienholder for the purpose of placing the landholdings under CARP coverage?
When placing mortgaged private agricultural lands under CARP, it is important
to distinguish between the status of creditor as landowner and creditor as lien-
holder/mortgagee. The significance of this distinction lies in the rights and
obligations to which the landowner and mortgagee are entitled and subjected to
as enumerated in Sec. 8 and 9 ofDAR AO 1 (2000). Thus, the creditor-
mortgagee shall be considered as the landowner for the purpose of covering the
properties under CARP under two (2) circumstances: (a) when the mortgagee is
the purchaser in the foreclosure sale and the redemption period has already
expired where the right of redemption exists; or (b) when the mortgagee is the
purchaser in the foreclosure sale and said sale is confirmed by the court in cases
where only equity of redemption is provided (DAR Adm. O. No. 1 [2000], sec. 4).
On the other hand, the creditor is considered as a lien-holder or mortgagee if
as of the date the land transfer claim was received by the Land Bank of the
Philippines (LBP) from the DAR and either of the following circumstances obtain:
the mortgage debt is not yet due and demandable; or the mortgage debt is
already due and demandable but the mortgagee has not foreclosed on the
property; or the mortgage has already been foreclosed but the period to exercise
the right of redemption has not expired or the foreclosure sale has not yet been
confirmed by the court in cases where there is only equity of redemption (DAR
Adm. O. No. 1 [2000], sec. 5)
It is likewise important to state that mortgages and other claims registered
with the register of deeds shall be assumed by the government (when
landholdings subject or mortgage or claim is acquired for CARP purposes) up to
an amount equivalent to the landowner's compensation value as provided in Sec.
72 (b) ofRA 6657. In other words, the government shall assume the mortgage
indebtedness not exceeding the just compensation due the landowner. For
instance, the debt secured by the mortgage is P100,000.00. Assuming that when
the mortgaged landholding is placed under the CARP and acquired by the
government, the landowner's just compensation is determined to be P80,000.00.
In this case, what the government merely assumes is P80,000.00 out of the
P100,000.00 indebtedness. This amount is what the government is obligated to
pay the landowner by virtue of its acquisition under CARP. It cannot be made to
pay the balance of P20,000.00. Said amount is collectible from the debtor/
mortgagor. The obligation of the debtor to pay the debt to the mortgagee stands
although the mortgaged property to secure the payment of said debt may have
been transferred to a third person.(Mccullough & Co. vs. Veloso, 46 Phil. 1,
[1924]).
Commercial farms
Commercial farms are private agricultural lands devoted to commercial
livestock, poultry and swine raising, and aquaculture including saltbeds,
fishponds and prawn ponds, fruit farms, orchards, vegetable and cut-flower
farms, and cacao, coffee and rubber plantations. These farms are subject to
immediate compulsory acquisition and distribution after ten (10) years from the
effectivity ofRA 6657or 15 June 1988. In the case of new farms, the ten (10)-
year period begins from the first year of commercial production and operation as
determined by DAR (Rep. Act No. 6657[1988], sec. 11). Upon the expiration of
the ten (10)-year deferment period on 15 June 1998, theDAR issued AO 9
(1998), otherwise known as "Rules and Regulations on the Acquisition, Valuation,
Compensation and Distribution of Deferred Commercial Farms." All commercial
farms whose deferment expired as of 15 June 1998 shall be subject to immediate
acquisition and distribution under the CARP. Those whose deferments have yet
to expire will be acquired and distributed only upon expiration of their respective
deferment periods as originally determined by the DAR or earlier if the DAR
determines that the purpose for which it was deferred no longer exists and
revokes its deferment (DAR Adm. O. No. 9 [1998], sec. 2 [a]). All infrastructure
facilities and improvements including buildings, roads, machineries, receptacles,
instruments or implements permanently attached to the land which are necessary
and beneficial to the operations of the farm as determined by the DAR, and shall
be subject to acquisition upon the recommendation of the ARBs (DAR Adm. O.
No. 9 [1998], sec. 2 [d]).
Commercial
farms with expired deferment period shall be acquired through
VOS, CA or direct payment scheme. The acquisition of facilities and
improvements as a general rule, shall be encouraged through the direct payment
scheme (DAR Adm. O. No. 9 [1998], sec. 24).
Corporate farms
 Corporate farms are those owned or operated by corporations or other
business associations (Rep. Act No. 6657[1988], sec. 29). Corporate farms may
be acquired through voluntary land transfer, VOS, CA and voluntary stock
distribution plan (Rep. Act No. 6657[1988], sec. 31). It must be noted that
corporate farm owners cannot avail of the ten-year deferment period underDAR
AO 9 (1998). Only commercial farms are subject of deferment. (Rep. Act No.
6657[1988], sec. 11;DAR Adm. O. No. 9 [1998]).
Lands owned by the State in proprietary capacity
Under Sec. 1 ofEO 407(1990), all government instrumentalities were
directed to transfer to the Republic of the Philippines through the DAR all
landholdings suitable for agriculture. The government instrumentalities directed
to do so included government agencies, government owned and controlled
corporations or financial institutions such as the Development Bank of the
Philippines, Philippine National Bank, Republic Planters Bank, Asset Privatization
Trust, Presidential Commission on Good Government, Department of Agriculture,
State Colleges and Universities, Department of National Defense and others.
Modes of Acquisition of Private Agricultural Lands
CARP is founded on the right of landless farmers and regular farmers to own
directly or collectively the lands they till through the just distribution of all
agricultural lands. To achieve this end, a mechanism is provided in the law for the
identification, acquisition, distribution of agricultural lands. As earlier discussed,
CARP covers both private and public agricultural lands. Since the State owns the
latter, they just need to be identified and distributed to the beneficiaries. Private
agricultural lands, upon the other hand, generally have to go through the
acquisition process before their ultimate distribution to the farmers.
In order for the acquisition process to be completed, several requisites must
be satisfied. First, the land should be privately owned and found suitable for
agriculture. Second, there are beneficiaries willing to take over the ownership of
the land and make it more productive. Third, the landowner is paid just
compensation or deposit in cash or LBP bonds is made in his name if the value is
contested. Finally, title to the land is transferred in the name of the Republic of
the Philippines.
It must be clarified, however, that full payment of just compensation is not
necessarily required in Voluntary Land Transfer (VLT)/Direct Payment Scheme
(DPS) because the terms of payment of just compensation are governed by the
mutual agreement of the parties, i.e., the farmer-beneficiary and the landowner.
Likewise, underEO 407, the payment of just compensation to the government
instrumentality as landowner may come even after land distribution, that is, thirty
(30) days from the registration of the ownership documents by the Register of
Deeds in favor of the Department of Agrarian Reform (Exec. Order No.
407[1990], sec. 1, par. 4).
In the same manner that full payment of just compensation is not always
necessary to complete acquisition, transfer of title to the Republic of the
Philippines is not necessary in VLT/DPS since the landholding is directly
transferred from the landowner to the beneficiary.
 The modes by which private agricultural lands may be acquired are as follows:
Operation Land Transfer (OLT), Voluntary Offer to Sell (VOS), Voluntary Land
Transfer/ Direct Payment Scheme (VLT/DPS), Compulsory Acquisition (CA), and
Voluntary Stock Distribution in the case of corporate farms.
Operation Land Transfer
Operation Land Transfer (OLT) is a mechanism established for the
implementation ofPD 27(1972) andEO 228(1987). It is a mode by which
ownership of tenanted rice and corn lands is transferred to tenant-beneficiaries. It
must be stressed that for lands to come under OLT pursuant toPD 27, there
must be first showing that they are tenanted lands. (Castro vs. CA, 99 SCRA 722
[1980])
LOI 227(1974) was issued by then President Marcos directing the immediate
extension of the OLT to the landholdings of over seven (7) hectares.
Subsequently,LOI 474(1976) was issued placing all tenanted rice and corn
lands with areas of seven (7) ha or less belonging to landowners who own other
agricultural lands exceeding seven (7) ha or lands used for residential,
commercial, industrial, or other urban purposes from which they derive adequate
income to support themselves and their families.
LOI 474was subjected to constitutional scrutiny in the case ofZurbano vs.
Estrella, 137 SCRA 333 (1989). In this case, petitioners who are owners of 56.14
ha of coconut lands and 1.86 ha of ricelands, assailed the constitutionality ofLOI
474, arguing that it is a class legislation and therefore a violation of the equal
protection clause. Furthermore, petitioners averred that said issuance is violative
of the due process clause as it would be, as applied to them, a taking of private
property without just compensation. The Supreme Court in upholding its
constitutionality held that:
. . . there is no legal basis for declaring LOI No. 474 void on its face on equal
protection, due process and taking of property without just compensation grounds.
The Constitution decrees no less than the emancipation of tenants, and there are
safeguards therein to assure that there are no arbitrariness or injustice in its
enforcement. There are, moreover, built-in safeguards to preclude any unlawful
taking of the property. There is no merit to the contention that LOI 474 denies
equal protection. To condemn as class legislation an executive act intended to
promote the welfare of tenants is to ignore not only the letter of the Constitution
incidentally cited in the petition itself requiring the formulation and
implementation of an agrarian reform program aimed at emancipating the tenant
from the bondage of the soil, but also the nation's history. . . . The attack on due
process ground is unavailing as on the face of the challenged measure fairness
and justice may easily be discerned. Nothing in its language lend support to the
contention that consequences so harsh and drastic would attend its
implementation. In language, scheme and framework, this Letter of Instruction
reveals the plan and purpose to attain the goal envisioned by the Constitution but
with due regard to the land owners affected. . . . Neither is there any merit on the
contention that there would be a taking of private property for public use without
just compensation. The Constitution itself imposes the duty of the State to
emancipate the tenants from the bondage of the soil. What is more, even a month
before its adoption by the 1971-1972 Constitutional Convention, P.D. No. 27 was
issued. Its validity, to repeat, was unanimously sustained by this Tribunal. No other
 conclusion could have been reached, conforming as it did to what the fundamental
law ordained.

In
the case ofLocsin vs. Valenzuela, 194 SCRA 195 (1991), the Supreme
Court explained the legal effect of land being placed under OLT as vesting
ownership in the tenant. However, in a subsequent case,Vinzons-Magana vs.
Estrella,201 SCRA 536 [1991], the High Tribunal, citingPagtalunan vs.
Tamayowhich predated the Locsin case, ruled that the mere issuance of a
certificate of land transfer does not vest ownership in the farmer/grantee. There
seems to be an inconsistency regarding the treatment of the legal effect of the
placing of the property under the Operation Land Transfer. This is because the
issuance of a Certificate of Land Transfer (CLT) over a landholding presupposes
that the property has already been covered under the OLT. Therefore, if indeed,
as the Locsin doctrine enunciated, ownership of the land is transferred to the
farmer at the time the property is placed under OLT, then, it necessarily follows
the CLT, being an instrument issued subsequent to the coverage of the land
under OLT, is evidence of ownership. However, the latter case ofVinzons-
Maganadisputes this conclusion.
In the case ofLocsin vs. Valenzuela, 194 SCRA 195 (1991), the petitioners
are owners of a landholding which was subject to the lifetime usufructuary of
private respondent. The subject landholding was placed under the Operation
Land Transfer. Petitioners filed a collection suit against the private respondent
claiming that the payments made by the tenants in the subject properties should
be considered as amortization payments for the price of land and as such should
belong to the landowners and not to the usufructuary. The Court, upholding the
petitioners contention, by construingPD No. 27in relation toPD No. 57,
Department Circular No. 8, dated 1 April 1975 andEO No. 228dated 17 July
1987, ruled that underPD No. 27, the tenant-farmer became owner of the land
as of 21 October 1972.
. . . Reading the foregoing provisions together, we observe that under Presidential
Decree No. 27, the basic statute, the tenant-farmer became owner of a family-size
farm of five (5) hectares or, if the land was irrigated, three (3) hectares, and that
the tenant-owner had to pay for the cost of the land within fifteen (15) years by
paying fifteen (15) equal annual amortization payments. Thus, it appears clear that
ownership over lands (like Lot No. 2-C-A-3) subjected to Operation Land Transfer
moved from the registered owner (the old landowner) to the tenants (the new
landowners). The fifteen (15) annual amortizations to be paid by the tenants-
owners were intended to replace the landholdings which the old landowners gave
up in favor of the new landowners, the tenants-owners. It follows that in respect of
land subjected to Operation Land Transfer, the tenants-farmers became owners of
the land they tilled as of the effective date of Presidential Decree No. 27, i.e., 21
October 1972. Pending full payment of the cost of the land to the old landowner by
the Land Bank of the Philippines, the leasehold system was "provisionally
maintained" but the "lease rentals" paid by the tenants-farmers prior to such full
payment by the Land Bank to the old landowner, would be credited no longer as
rentals but rather as "amortization payments" of the price of the land, the
unamortized portion being payable by the Land Bank. In respect of lands brought
within the coverage of Operation Land Transfer, the leasehold system was legally
and effectively terminated immediately on 21 October 1972 (notwithstanding the
curious statement in Department Circular No. 8 that it was "provisionally
 maintained"). It was in respect of lands not yet subjected to the terms and effects
of Operation Land Transfer that the leasehold system did continue to govern the
relationship between the "landowner and his tenant-tillers".
The exemption of the old landowner from the capital gains tax on the amortization
payments made to him by the tenants-purchasers, under Presidential Decree No.
57 (supra), underscores the fact, referred to above, that ownership or dominion
over the land moved immediately from landowner to tenant-farmer, rather than
upon completion of payment of the price of the land. In general, capital gains are
realized only when the owner disposes of his property. . . .

In the case ofPagtalunan vs. Tamayo, 183 SCRA 252 (1990), petitioner
sought to intervene in the expropriation proceedings filed by the Republic of the
Philippines over the subject parcel of land. Petitioner argues that he, being a
bona fide tenant of and holder of Certificate of Land Transfer covering the subject
properties, is entitled to the proceeds of the expropriation. The Supreme Court, in
rejecting petitioner's contention, ruled that the petitioner, being merely a CLT
holder is not the owner of the subject property and thus, not entitled to just
compensation. In explaining the nature of the CLT, the Court stated that:
. . . However, a careful study of the provisions of Pres. Decree No. 27, and the
certificate of land transfer issued to qualified farmers, will reveal that the transfer
of ownership over these lands is subject to particular terms and conditions the
compliance with which is necessary in order that the grantees can claim the right
of absolute ownership over them.
Under Pres. Decree No. 266 which specifies the procedure for the registration of
title to lands acquired under Pres. Decree No. 27, full compliance by the grantee
with the abovementioned undertakings is required for a grant of title under the
Tenant Emancipation Decree and the subsequent issuance of an emancipation
patent in favor of the farmer/grantee [Section 2, Pres. Decree No. 226]. It is the
emancipation patent which constitutes conclusive authority for the issuance of an
Original Certificate of Transfer, or a Transfer Certificate of Title, in the name of the
grantee.
The mere issuance of the certificate of land transfer does not vest in the farmer/
grantee ownership of the land described therein. The certificate simply evidences
the government's recognition of the grantee as the party qualified to avail of the
statutory mechanisms for the acquisition of ownership of the land tilled by him as
provided under Pres. Decree No. 27. Neither is this recognition permanent nor
irrevocable. Failure on the part of the farmer/grantee to comply with his obligation
to pay his lease rentals or amortization payments when they fall due for a period
of two (2) years to the landowner or agricultural lessor is a ground for forfeiture of
his certificate of land transfer [Section 2, Pres. Decree No. 816].
Clearly, it is only after compliance with the above conditions which entitle a farmer/
grantee to an emancipation patent that he acquires the vested right of absolute
ownership in the landholding a right which has become fixed and established,
and is no longer open to doubt or controversy . . . . At best, the farmer/grantee,
prior to compliance with these conditions, merely possesses a contingent or
expectant right of ownership over the landholding. . . .

ThePagtalunandoctrine was reiterated in the case ofVinzons-Magana vs.

Estrella, 201 SCRA 536 (1991). In this case, the petitioner assailed the
constitutionality ofLOI No. 474and its implementing guideline, DAR
Memorandum Circular No. 78-1978 . Moreover, petitioner prayed for the
cancellation of the CLT over the subject landholding arguing that the issuance of
the CLT in favor of the tenant without first expropriating the property to pay the
petitioner landowner the full market value thereof before ceding and transferring
the land to the tenant is unconstitutional as it is confiscatory and violative of the
due process clause. The Supreme Court, brushing aside the petitioner's theory,
held that the issue of the constitutionality of the taking of private property under
the CARP law has already been settled by the Court. Moreover, citing
thePagtalunancase, the Court explained the nature of the CLT, stating that it
does not vest in the farmer/grantee ownership of the land described therein.
Therefore, there is no taking of property without payment of just compensation.
It is noted that in all three cases, the facts from which the controversy arose
occurred prior to the issuance ofEO 228of then President Aquino which
declared that full ownership to qualified beneficiaries of the lands covered byPD
No. 27as of 21 October 1972. Likewise, all cases were promulgated after the
issuance ofEO No. 228in 1987. Therefore, it cannot be said that the reason
behind theLocsinruling declaring the effect of OLT as vesting ownership in the
tenant is the fact thatEO 228, which categorically clarified the legal effect ofPD
No. 27, was factored in the discussion of the case. Why then wasEO No.
228not considered in the subsequent case ofVinzons-Maganawhen it was
already in effect then? Theponenteinstead referred to the pre-Locsin case
ofPagtalunan vs. Tamayo. In so doing, it ignored altogether the legal implications
of theLocsindoctrine.
Voluntary Offer to Sell
Voluntary Offer to Sell (VOS) is a scheme whereby the landowners voluntarily
offer their agricultural lands for coverage regardless of phasing. It does not,
however, mean that landholdings voluntarily offered for sale are automatically
accepted by DAR. A VOS may be rejected if the landholding is not suitable for
agriculture, or has a slope of more than eighteen percent (18%) and is
undeveloped. Likewise, said offer may be refused if there are no takers or
persons willing to be agrarian reform beneficiaries and, lastly, the only identified
ARBs are the qualified children of the landowner. [DAR A. O. No. 06 (1997)]
As a general rule, withdrawal of VOS shall no longer be allowed after the
receipt by the DAR of the letter offer for VOS, i.e., CARP Form No. 1. (DAR A.O.
No. 06 [1997], II [A]). However,DAR may allow the withdrawal of voluntary offers
to sell if the withdrawal of VOS is for the purpose of acquisition and
compensation through the Voluntary Land Transfer/ Direct Payment Scheme
(VLT/DPS), provided, that the claim folder has not yet been forwarded to the LBP
for the computation of the land value. (DAR A.O. No. 06 [1997]II [A] 2nd par.).
DAR may also allow the withdrawal of VOS if the subject landholding is
determined by DAR to be more suitable for a townsite, resettlement site or
individual site needed to address a matter of national interest or concern in
calamity situation (DAR A.O. No. 06 [1997], II [C]).
In case lands voluntarily offered for sale are subsequently found to be outside
the coverage of CARP, such lands shall be reconveyed to the original transferors.
The manner of reconveyance is governed byA.O. No. 09, Series of 1997.
 In the case of commercial farms, the offer to sell must have been submitted
before the expiration of the deferment period in order that their acquisition
through VOS may be allowed, otherwise the property shall be placed under
compulsory acquisition (Section 8 [a]DAR A. O. No. 02-1998).
Landowners who voluntarily offer their lands for sale shall be entitled to an
additional five percent (5%) cash payment. It must be noted, however, that banks
and other financial institutions are not covered by said incentive. (Rep. Act No.
6657, [1988 ], Sec. 19)
Voluntary Land Transfer/ Direct Payment Scheme
Voluntary Land Transfer or Direct Payment Scheme (VLT/DPS) is a mode of
acquisition whereby the landowner and the beneficiary enter into a voluntary
arrangement for the direct transfer of the lands to the latter. Not all private
agricultural lands may be subject of voluntary land transfer. For instance, lands
mortgaged with banking and/or financial institutions cannot be the subject of VLT/
DPS.
All notices for voluntary land transfer must be submitted to the DAR within the
first year of the implementation of the CARP. Negotiations between the
landowners and qualified beneficiaries covering any voluntary land transfer which
remain unresolved after one (1) year shall not be recognized and such land shall
instead be acquired by the government and transferred pursuant to the
Comprehensive Agrarian Reform Law. [Rep. Act No. 6657(1988), sec. 20.] It
must be stressed that this should not be construed to mean that VLT/DPS is no
longer allowed after one year from the effectivity ofR.A. 6657. It is submitted
thatVLT/DPS may be entered into even beyond 15 June 1989, or one year after
the effectivity ofR.A. No. 6657. It is argued that that the exact moment when the
one-year period under Section 20, par (a) ofR.A. No. 6657within which notices
of VLT/DPS may be filed commences from the date when the land subject of the
VLT/DPS is scheduled for acquisition and distribution according to the various
phases of implementation described under Section 7 and 11 and the landowner
is served a notice of acquisition of his landholding.
If the law intended that the one year period be reckoned from the approval or
effectivity ofRA 6657, it would have expressly said so, as it did in the provisions
on priorities (Sec. 7), commercial farms (Sec. 11), and stock transfer option (Sec.
31). Instead, the law used the phrase "within the first year of implementation of
the CARP" which is at the time Section 16 is implemented relative to specific and
distinct classes of agricultural lands. [Memorandum of Asst. Sec. Peaflor for the
Secretary, August 23, 1999, p. 6.]
Section 20 (b) ofR.A. No. 6657provides that the terms and conditions of the
transfer under this mode shall not be less favorable to the transferee than those
of the government's standing offer to purchase from the landowner and to resell
to the beneficiaries, if such offers have been made and are fully known to both
parties.(Sec. 20 (b)) However this does not mean that existence of "a standing
government offer" is not essential to the consummation of a VLT/DPS. The
restriction imposed under Section 20 (b) relative to the government's standing
offer, is not absolute. The law itself subjects its application only in instances
where there is a prior offer by the government and that the same is known to
both the landowner and the qualified beneficiaries. [Memorandum of Asst. Sec.
Peaflor for the Secretary, August 23, 1999, p. 6.]
The terms and conditions of VLT/DPS should include the immediate transfer
of possession and ownership of the land in favor of the identified beneficiaries.
Certificates of Land Ownership Award (CLOAs) shall be issued to the ARBs with
proper annotations. [DAR A.O. No. 08, 1997(Section II (E).]. The voluntary
agreement shall include sanctions for non-compliance by either party and shall
be duly recorded and its implementation monitored by the DAR. [Rep. Act No.
6657 (1988), sec. 20.]
Direct
payments in cash or in kind may be made by the farmer-beneficiary to
the landowner under terms to be mutually agreed upon by both parties, which
shall be binding upon them, upon registration with the approval by the DAR. Said
approval should be received by the farmer-beneficiary within thirty (30) days from
the date of registration. In the event they cannot agree on the price of land, the
procedure for compulsory acquisition as provided in Section 16 shall apply. The
LBP shall extend financing to the beneficiaries for purposes of acquiring the land.
[Rep. Act No. 6657(1988), sec. 21.]
A pressing issue respecting VLT/DPS is its application to commercial farms.
One school of thought espouses the theory that VLT/DPS cannot apply to
commercial farms as Section 11 ofR.A. No. 6657specifically requires their ". . .
immediatecompulsory acquisition and distribution. . ." beginning 15 June 1998.
Hence, it is argued that commercial farms may be acquired only through
compulsory acquisition.
It is submitted that commercial farms may be acquired not only through
compulsory acquisition but through VLT/DPS as well.
There is no dispute that commercial farms whose deferments have expired as
of 15 June 1998 are subject to immediate compulsory acquisition and distribution
as provided in Section 11 ofR.A. No. 6657. It should be stressed, however, that
all acquisitions underR.A. No. 6657are compulsory in nature, in the sense that
the landowners whose agricultural lands are covered by CARP have really no
choice except to submit to the program.
The procedures for acquisition of private lands are provided for under Chapter
V, Section 16 (a) to (f). The procedure for land acquisition are further elaborated
by Chapter VI, Section 17 through Section 21. These provisions prescribe
specific rules for valuation and payment which include, among others, Section 20
on voluntary land transfer and Section 21 on direct payment of beneficiaries.
Thus, even as the process of compulsory acquisition under Section 16 is already
in motion, the option available under Sections 20 and 21 may still be exercised.
The foregoing framework of acquisition is the context within which the phrase
"immediate compulsory acquisition," as used in Section 11 should be understood.
The situation now is that before commercial farms could be compulsorily
acquired and distributed pursuant to Section 16, the preliminary steps for their
acquisition have to be continued or pursued, to wit: identification of beneficiaries,
inspection or technical survey and valuation. During this period, the landowners
and the qualified beneficiaries may, by reason of the options available under
Section 20 and 21, manifest their intent to voluntarily arrange for direct transfer
and payment of the property. In short, the phrase "immediate compulsory
acquisition" under Section 11 ofR.A. No. 6657, when taken in the context of the
procedures for acquiring lands under CARP, still includes VLT/DPS as an option
for valuation and payment of commercial farms subject of acquisition.
[Memorandum of Asst. Sec. Peaflor for the Secretary, August 23, 1999, pp. 2-5]
DPS involving commercial farms may be availed of any time during the
acquisition process, after the preparation of the master list but prior to the
transmittal of the claim folder to the LBP. If the notice of acquisition is served by
the parties upon to the DAR prior to the preparation of the master list, the notice
shall be validated by the MARO with identified ARBs included in the master list,
in a referendum to be held for this purpose. Acquisition under DPS of lands with
liens and encumbrances may be allowed provided that the amount
corresponding to the mortgage over the subject landholding shall be deducted
from the total value of the land to be paid by the ARBs. Provided further that said
agreement shall be upon mutual consent of both the ARBs and the landowner,
duly concurred with by the mortgagee or lienholder. In case of delinquent real
estate taxes, the ARBs may be allowed to assume such liability to be deducted
from the total value of the land. Upon mutual consent of the ARBs and the
landowner, duly concurred with by the mortgagor or the lienholder, the ARBs may
assume the mortgage, provided that such obligation shall not exceed the annual
amortization otherwise due to the land pursuant to Section 26 ofRA 6657, if the
subject landholding was acquired under VOS or CA [DAR A. O. No. 09 (1998),
Section 9 (b)].
Compulsory Acquisition
Compulsory acquisition is a mode whereby the land is expropriated by the
State in accordance with the procedure outlined in Section 16 ofR.A. No. 6657.
All private agricultural lands which have become due under the phase of
implementation as provided in Section 7 ofR.A. No. 6657are subject to
compulsory acquisition. However, where the landowner opts for other modes of
acquisition such as voluntary offer to sell or voluntary land transfer, compulsory
acquisition is suspended. In these cases, if negotiations fail, CA is resumed.
Likewise, all idle or abandoned agricultural lands regardless of size are subject to
compulsory acquisition. Lands subjected to Compulsory Acquisition may be
allowed to shift to Voluntary Land Transfer/Direct Payment Scheme or Voluntary
Offer to Sell provided that the claim folder had not yet been forwarded to the LBP
for the computation of land value. [DAR A. O. 06, (1997)II (D).]
Voluntary stock distribution of corporate farms
Voluntary stock distribution is an alternative arrangement to the physical
distribution of lands wherein corporate owners voluntarily divest a portion of their
capital stock, equity or participation in favor of their workers or other qualified
beneficiaries. Stock ownership is based on the capital stocks of the corporation
and is equivalent to the agricultural land actually devoted to agricultural activities
valued in relation to the total assets of the corporation. (Rep. Act No.
6657[1988], sec. 31 as implemented byDAR Adm. O. No. 10 [1988]andDAR
Adm. O. No. 1 [1991])
 To safeguard the rights of farmer-beneficiaries, corporate farms with a
voluntary stock distribution plan must comply with the following conditions:
1)The books of the corporation or association shall be subject to
periodic audit by certified public accountants chosen by the beneficiaries;
2)Irrespective of the value of their equity in the corporation or
association, the beneficiaries shall be assured of at least one (1)
representative in the board of directors, or in a management or executive
committee, if one exists, of the corporation or association; and
3)Any shares acquired by such workers and beneficiaries shall have
the same rights and features as all other shares. Moreover, any transfer of
shares of stock by the original beneficiaries shall be void unless said
transaction is in favor of a qualified and registered beneficiary within the
same corporation. (Rep. Act No. 6657 [1988], sec. 31 as implemented
byDAR Adm. O. No. 10 [1988]).
However, corporate farm owners cannot avail of voluntary stock distribution at
present. Section 31 ofRA 6657states that "if within two (2) years from the
effectivity of CARP, the land or stock transfer has not been made or the plan for
such stock distribution has not been approved by the Presidential Agrarian
Reform Council (PARC) within the same period, the agricultural land of the
corporate owners or corporation shall be subject to compulsory acquisition under
existing DAR rules and regulations.
The Case of Hacienda Luisita
Hacienda Luisita, Inc. is a corporate farm owning a total of 4,916 hectares
planted to sugarcane located in Tarlac. In May 1988, it applied to avail of the
stock distribution plan under CARP. The application was approved in November
1988. The farm has a total of 355,531,462 shares of stocks with a par value of
P1.00 per share. One-third of these shares is subject for distribution to the
farmworker-beneficiaries (FBs) under the stock distribution plan. The shares for
the FBs are to be distributed in a span of 30 years. At the time of application for
stock distribution, there were about 6,000 FBs within the farm. Under its stock
distribution plan, FBs are supposed to receive cash dividends accruing to their
respective shares, homelots, representation in the Board of Directors, production
based incentives, and other fringe benefits.
Procedure for Acquisition of Private Agricultural Lands
The procedure for the acquisition of private agricultural lands as provided for
in Sec. 16,RA 6657are as follows:
a)After having identified the land, the landowners and the
beneficiaries, the DAR shall send its notice to acquire the land to the
owners thereof, by personal delivery or registered mail, and post the same
in a conspicuous place in the municipal building and barangay hall of the
place where the property is located. Said notice shall contain the offer of the
DAR to pay a corresponding value in accordance with the valuation set forth
in Sections 17 and 18, and other pertinent provisions hereof.
 DAR identifies the land to be covered by CARP as well as the landowners
and beneficiaries thereof on the basis of a master list or inventory of landholdings
prepared by the field offices pursuant to the Land Acquisition and Distribution
Tracing System (LADTRACKS) and the CARP Scope Validation Project. Said
master list in turn is obtained from the LISTASAKA statements as verified or
complemented by the records of the Register of Deeds and Assessor's Offices,
review of town plan and zoning ordinances, field surveys, interviews and
community consultations and general knowledge of the land ownership pattern in
the barangays or municipalities. The identification of lands is done by the DAR
Municipal Office (DARMO) which gathers documents such as OCT/TCT, tax
declaration, copy of the approved survey plan of the property and prepares the
claim folder of the landowner. Thereafter, the DARMO conducts preliminary
ocular inspection to determine initially whether or not the property may be
covered under CARP.
If the property is coverable under CARP, the process of acquisition continues.
DARMO sends the landowner the Notice of Coverage and Field Inspection with a
copy of the Pre-OCI Report by personal delivery with proof of service or by
registered mail with return card. However, in the case of deferred commercial
farms, the Order of Deferment previously issued over the landholding shall serve,
upon expiration of the deferment period of the subject commercial farm, as the
Notice of Coverage, supported by the Compliance Work Program and Summary
of Exceptions originally submitted with the approved deferment application.
However, for record purposes, the landowner shall be served a Notice of
Expiration of Deferment which shall contain a reminder of his right to retention
should he wish to exercise the same. [Section 9 (a) (1),DAR A.O. No. 02-1998].
The landowner is invited to join the field investigation to select his retention area
and to submit his statement of production and income. If the landowner cannot
be contacted or refuses to accept said Notice, the notice shall be effected by
publication in a newspaper of national circulation. Likewise, a notice on the
schedule of the field investigation shall be sent to the BARC, DENR, DA, LBP
and prospective beneficiaries. The DARMO then shall post a copy of the notice
of coverage and field inspection for seven working days in the bulletin board of
the barangay and municipal halls where the property is located and issues
Certification of Posting Compliance. Thereafter, the DARMO shall conduct joint
field investigation of the property with the LBP, DENR, DA BARC, landowner and
prospective ARBs. Jointly with the LBP and BARC, the DARMO shall prepare the
Field Investigation Report and the Land Use Map. The DARMO shall screen/
select qualified ARBs and cause the signing of the Application Purchase and
Farmer's Undertaking (APFU).The DARMO shall forward the claim folder to
DARPO for review and completion of documents. The land is then surveyed. The
claim folder is sent to the Land Bank for valuation. At this stage, the DARPO
sends the Notice of Land Valuation and Acquisition to the Landowner (DAR A. O.
No. 02 (1996)as amended byDAR A.O. No. 1 (1998).]
In the preliminary stage of the acquisition process, notice to the landowner is
vital to the validity of coverage and acquisition of the landholding. The Supreme
Court had occasion to discuss and stress the importance of these notices in the
case ofRoxas & Co. vs. CA, G.R. No. 127876, December 17, 1999. In this case,
petitioner Roxas and Co., a domestic corporation owns three haciendas. Notices
of acquisition informing the landowner that two of the haciendas were being
compulsorily acquired were sent by the DAR and served on the administrator in
his address in the hacienda. The administrator participated in the acquisition
proceedings as representative of the owner. Subject landholdings were acquired
by the DAR and subsequently distributed to the beneficiaries. The petitioner
assailed the validity of the acquisition proceedings on the ground, among others,
that it was denied due process as no notice of acquisition was ever served on it.
The Supreme Court held that:
. . . the procedure in sending notices is important to comply with the requisites of
due process especially when the owner is a juridical entity.
. . . The Notice of Acquisition in Section 16 of the CARL is required to be sent to
the landowner by personal delivery or registered mail. Whether the landowner be
a natural or juridical person to whose address the Notice may be sent by personal
delivery or registered mail, the law does not distinguish. The DAR administrative
orders also do not distinguish. In the proceedings before the DAR the distinction
between natural and juridical persons in the sending of notices may be found in
the Revised Rules of Procedure of the DARAB. Service of pleadings before the
DARAB is governed by Section 6, Rule V of the DARAB Revised Rules of
Procedure. Notices and Pleadings are served on private domestic corporations or
partnerships in the following manner:
"Section 6.Service Upon Private Domestic or Partnership. If defendant is a
corporation organized under the laws of the Philippines or a partnership duly
registered service may be made on the president, manager, secretary, cashier,
agent or any of its directors or partners"
Similarly, the Revised Rules of Court of the Philippines, in Section 13, Rule 14
provides:
"Section 13.Service upon private domestic corporation or partnership. If the
defendant is a corporation organized under the laws of the Philippines or a
partnership duly registered, service may be made on the president, manager,
secretary, cashier, agent or any of its directors."
Summonses, pleadings and notices in cases against private domestic corporation
before the DARAB and the regular courts are served on the president, manager,
secretary, cashier, agent or any of its directors. These persons are those through
whom the private domestic corporation or partnership is capable of action.
Jaime Pimentel (the administrator) is not the president, manager, secretary,
cashier, agent or any of its director of the landowner corporation. Is he, the
administrator of the two Haciendas, considered an agent of the corporation?
The purpose of all rules for the service of process on a corporation is to make it
reasonably certain that the corporation will receive prompt notice in an action
against it. Service must be made on a representative so integrated with the
corporation as to make it a priori supposable that he will realize his responsibilities
and know what he should do with any legal papers served on him, and bring home
to the corporation notice of the filing of the action. The DAR's evidence does not
indicate whether the administrator's duties is so integrated with the corporation
that he would immediately realize his responsibilities and know what he should do
with any legal papers served on him. . . ."
 It is submitted that the DARAB Rules and Procedure and the Rules of Court
were improperly applied to the aforecited case. The rules on service of summons
provided in theRules Courtshould have not been applied since what is involved
in this case is acquisition proceedings which is administrative in nature.
Moreover, it must be emphasized that the DAR, in adjudicating agrarian reform
matters, is not bound by technical rules of procedure. (Sec. 50,R.A. 6657). What
is important in administrative adjudication is the right to be heard. Said
requirement was substantially complied with in this case considering that the
administrator, who takes charge of the daily operations of the subject properties,
participated in the acquisition proceedings. Therefore, it cannot be argued that
there was denial of due process. Finally, the application of theDARAB Rules of
Procedureis erroneous. This is so since the matter of service of notice of
acquisition does not fall within the jurisdiction of the DARAB.
b)Within thirty (30) days from the date of receipt of written notice by
personal delivery or registered mail, the landowner, his administrator or
representative shall inform the DAR of his acceptance or rejection of the
offer.
c)If the landowner accepts the offer of the DAR, the Land Bank of the
Philippines (LBP) shall pay the landowner the purchase price of the land
within thirty (30) days after he executes and delivers a deed of transfer in
favor of the government and surrenders the Certificate of Title and other
muniments of title.
d)In case of rejection or failure to reply, the DAR shall conduct
summary administrative proceedings to determine the compensation for the
land requiring the landowner, the LBP and other interested parties to submit
evidence as to the just compensation for the land, within fifteen (15) days
from the receipt of the notice. After the expiration of the above period, the
matter is deemed submitted for decision. The DAR shall decide the case
within thirty (30) days after it is submitted for decision.
The constitutionality of the aforementioned provision was upheld by the
Supreme Court in the case ofAssociation of Small Land Owners in the
Philippines, Inc., vs. Secretary of Agrarian Reform, 175 SCRA 343 (1989):
Objection is raised, however, to the manner of fixing the just compensation, which
it is claimed is entrusted to the administrative authorities in violation of judicial
prerogatives. Specific reference is made to Section 16(d), which provides that in
case of the rejection or disregard by the owner of the offer of the government to
buy his land. . .
To be sure, the determination of just compensation is a function addressed to the
courts of justice and may not be usurped by any other branch or official of the
government. . . .
A reading of the aforecited Section 16(d) will readily show that it does not suffer
from the arbitrariness that rendered the challenged decrees constitutionally
objectionable. Although the proceedings are described as summary, the
landowner and other interested parties are nevertheless allowed an opportunity to
submit evidence on the real value of the property. But more importantly, the
determination of the just compensation by the DAR is not by any means final and
conclusive upon the landowner or any other interested party, for Section 16(f)
 clearly provides: Any party who disagrees with the decision may bring the matter
to the court of proper jurisdiction for final determination of just compensation. The
determination made by the DAR is only preliminary unless accepted by all parties
concerned. Otherwise, the courts of justice will still have the right to review with
finality the said determination in the exercise of what is admittedly a judicial
function."

Said ruling was reiterated in the case ofVinzons-Magana vs. Estrella, 201
SCRA 538 (1991).
The factors to be considered in the determination of just compensation as
enumerated in Section 17 ofR.A. No. 6657are not exclusive. The DAR and LBP
are not confined in their determination of just compensation to the factors/criteria
set forth in said provision. Notably, Section 17 does not provide hard and fast
rules which must be strictly adhered to by DAR and LBP in the determination of
just compensation. While said section provides that the factors/criteria mentioned
therein" shall be considered" it does not expressly state that only these factors/
criteria and no other shall be considered. The factors/criteria set forth in Sections
17, 18 and other pertinent provisions for that matter should be deemed as mere
standards to guide the proper officials in the determining just compensation, but
in no case shall control or limit such determination, the ultimate consideration
being that the compensation be the full and fair equivalent of the property taken
from its owner by the expropriator. [DOJ Opinion No. 109 (1991), July 25, 1991).]
In the case ofLand Bank of the Philippines vs. CA and Pascual, G. R. No.
128557, December 29, 1999, the Supreme Court ruled that in the determination
of just compensation pursuant to Section 18 ofR.A. No. 6657, consent of the
farmer-beneficiary is not needed. Furthermore, the Court ruled that once the
Land Bank agreed to the valuation, it is its duty to pay the landowner said
amount. In this case, private respondent's properties were subjected to Operation
Land Transfer. Consequently, the PARO issued a valuation of the land which was
rejected by the private respondent who filed a case before the PARAD seeking to
annul the PARO's valuation. The PARAD, ruled in favor of private respondent,
came up with its own valuation, and directed the petitioner LBP to pay private
respondent said amount. Petitioner refused to pay the value of the land as
determined by the PARAD arguing among others that since it merely guarantees
or finances the payment of the value of the land, the farmer-beneficiary's
consent, is indispensable and that the only time the petitioner becomes legally
bound to finance the transaction is when the farmer-beneficiary approves the
appraised value of the land. In other words, petitioner asserts that the landowner,
the DAR, the Land Bank and the farmer-beneficiary must all agree to the value of
the land as determined by them. The Court, brushing aside petitioner's
contention, stated:
A perusal of the law however shows that the consent of the farmer-beneficiary is
not required in establishing the vinculum juris for the proper compensation of the
landowner. Section 18 of R. A. No. 6657 states
Sec. 18.Valuation and Mode of Compensation. The LBP
shall compensate the landowner in such amount as may be agreed upon
by the landowner and the DAR and the LBP in accordance with the
criteria provided for in Sections 16 and 17 and other pertinent provisions
 hereof, or as may be finally determined by the court as just compensation
for the land.
As may be gleaned from the aforementioned section, the landowner, the DAR and
the Land Bank are the only parties involved. The law does not mention the
participation of the farmer beneficiary.
. . . Once the Land Bank agrees with the appraisal of the DAR, which bears the
approval of the landowner, it becomes its legal duty to finance the transaction. In
the instant case, petitioner participated in the valuation proceedings held in the
Office of the PARAD through its counsel . . .

e)Upon receipt by the landowner of the corresponding payment or, in

case of rejection or no response from the landowner, upon the deposit with
an accessible bank designated by the DAR of the compensation in cash or
in LBP bonds in accordance with this Act, the DAR shall take immediate
possession of the land and shall request the proper Register of Deeds to
issue a Transfer Certificate of Title (TCT) in the name of the Republic of the
Philippines. The DAR shall thereafter proceed with the redistribution of the
land to the qualified beneficiaries.
The CARP Law conditions the transfer of possession and ownership of the
land to the government on the receipt by the landowner of the corresponding
payment or the deposit by the DAR of the compensation in cash or LBP bonds
with an accessible bank. Until then, title remains with the landowner. No outright
change of ownership is contemplated either. (Association of Small Land Owners
in the Philippines vs. Secretary of Agrarian Reform),175 SCRA 343 (1989.)
It must be noted, however, that the opening of a trust account and issuance of
a certification from Land Bank that a certain sum has been earmarked for the
landowner does not constitute substantial compliance with Section 16(e) ofR.A.
No. 6657. In the case ofLBP vs. CA[248 SCRA 149 (1995)] respondent
landowners assailed the acquisition of their properties on the ground that there
was a taking without just compensation. They averred that the "earmarking,"
"reservation" and "deposit in trust" made by the DAR and the Land Bank
pursuant toDAR A. O. No. 09-1990is not equivalent to just compensation
underR.A. No. 6657. The Court nullifiedDAR A.O. No. 09-1990, ruling as
follows:
. . . It is very explicit from Section 16 (e) that the deposit must be made only in
"cash" or in "LBP bonds." Nowhere does it appear nor can it be inferred that the
deposit can be made in any other form. If it were the intention to include a "trust
account" among the valid modes of deposit, that should have been made express,
or at least, qualifying words ought to have appeared from which it can be fairly
deduced that a "trust account" is allowed. In sum, there is no ambiguity in Section
16 (e) of R. A. No. 6657 to warrant an expanded construction of the term
"deposit." . . .
. . . The ruling in the Association of Small Landowners case [that payment of the
just compensation is not always required to made fully in money] merely
recognized the extraordinary nature of the expropriation to be undertaken under
R. A. No. 6657 thereby allowing a deviation from the traditional mode of payment
other than in cash. It did not, however, dispense with the settled rule that there
 must be full payment of just compensation before title to the expropriated property
is transferred. . . .

What the Supreme Court nullified was merely the form in which the deposit
was made, i.e., the deposit in trust and not the deposit per se as payment to the
landowners for the expropriated lands. Thus, in effect, the Court in making such
pronouncement, upheld the validity of deposit per se as payment of just
compensation.
f)Any party who disagrees with the decision may bring the matter to
the court of proper jurisdiction for final determination.
In the case ofAssociation of Small Landowners, the Supreme Court explained
that the determination of just compensation is a function addressed to the courts
of justice. [175 SCRA 343 (1989)].
The operating procedures for the acquisition of private agricultural lands are
outlined in the following administrative issuances:
DAR A. O. No. 2, Series of 1996entitled "Revised Rules Governing
the Acquisition of Agricultural Lands Subject of Voluntary Offer to Sell (VOS)
and Compulsory Acquisition (CA) Pursuant to R. A. 6657" as amended
byDAR A. O. No. 2-98;
DAR A. O. No. 09, Series of 1998entitled "Rules and Regulations
on the Acquisition, Valuation, Compensation and Distribution of Deferred
Commercial Farms";
DAR A. O. No. 08, Series of 1997entitled "Revised Rules on the
Acquisition and Distribution of Compensable Agricultural Lands Under VLT/
DPS";
DAR A. O. No. 12, Series of 1990entitled "Policy Guidelines and
Operating Procedures in the Identification and Acquisition of Idle and
Abandoned Lands".
Reconstitution of Lost or Damaged Title
A pressing operational problem besetting agrarian reform implementors is the
delay in the acquisition and distribution of agricultural lands with lost or destroyed
titles. To address this concern,DAR Memorandum Circular No. 05, Series of
1994was issued outlining the procedures on the reconstitution of lost or
destroyed titles.
Reconstitution of a certificate of title denotes restoration of the instrument
which is supposed to have been lost or destroyed in its original form and
condition. The purpose of the reconstitution of title or any document is to have
the same reproduced, after proper proceedings, in the same form they were
when the loss or destruction occurred. (Heirs of Pedro Pinote vs. Dulay 198
SCRA 12 [1990])
There are two types of reconstitution of titles: judicial and administrative.
Judicial reconstitution partakes of a land registration proceeding and is perforce a
proceedingin rem.(Republic vs. Intermediate Appellate Court, 157 SCRA 62
[1988]). Judicial reconstitution is governed byRepublic Act No. 26in relation to
Section 110 ofP. D. No. 1529. Administrative reconstitution of title is likewise
governed byRepublic Act No. 26, as amended byRepublic Act No. 6732.
UnderDAR Memorandum Circular No. 5 (1994), the Department of Agrarian
Reform (DAR), through the duly authorized DAR lawyer, may file a petition for
administrative or judicial reconstitution when the notice of coverage over
landholdings whose titles were lost or destroyed has already been issued.
As a general rule, the remedy for the reconstitution of lost or destroyed
original copies of certificates of titles in the offices of the Register of Deeds is the
filing of a petition for judicial reconstitution of title. However, administrative
reconstitution of lost or destroyed original copies of certificates of title may be
availed of in case of substantial loss or destruction of land titles due to fire, flood
or other force majeure where the number of certificates lost or damaged is at
least ten (10) percent of the total number of titles in the custody of the Register of
Deeds but in no case shall the number of titles lost or damaged be less than five
hundred (500) as determined by the Administrator of the Land Registration
Authority. (Section 1,R.A. No. 6732[1989]).
Detailed discussion of the procedures for the filing of petition for reconstitution
are provided for inR.A. No. 6732as implemented by LRA Circular dated 26 July
1989,R.A. No. 26as amended, LRA Circular No. 35 dated 13 June 1983
andDAR Memorandum Circular No. 05, Series of 1994.
CHAPTER 4
Just Compensation
Definition
Just compensation means the equivalent for the value of the property at the
time of its taking. It means afair and full equivalentfor the loss sustained. All the
facts as to the condition of the property and its surroundings, its improvements
and capabilities should be considered. (Export Processing Zone Authority vs.
Dulay, 149 SCRA 305 [1987]).
In the case ofAssociation of Small Landowners in the Philippines, Inc. vs.
Secretary of Agrarian Reform,supra, the Supreme Court further explained the
meaning of "just compensation". It said:
Just compensation is defined as the full and fair equivalent of the property taken
from its owner by the expropriator. It has been repeatedly stressed by this Court
that the measure is not the taker's gain but the owner's loss. The word "just" is
used to intensify the meaning of the word "compensation" to convey the idea that
the equivalent to be rendered for the property to be taken shall be real,
substantial, full, ample.
As held inRepublic of the Philippines v. Castellvi, there is compensable taking
when the following conditions concur: (1) the expropriator must enter a private
property; (2) the entry must be for more than a momentary period; (3) the entry
must be under warrant or color of authority; (4) the property must be devoted to
public use or otherwise informally appropriated or injuriously affected; and (5) the
utilization of the property for public use must be in such a way as to oust the
owner and deprive him of beneficial enjoyment of the property. All these are
envisioned in the measures before us (at 378, 379).
(T)he content and manner of the just compensation provided for in the afore-
quoted Section 18 of the CARP Law is not violative of the Constitution. We do not
 mind admitting that a certain degree of pragmatism has influenced our decision on
this issue, but after all this Court is not a cloistered institution removed from the
realities and demands of society or oblivious to the need for its enhancement. The
Court is as acutely anxious as the rest of our people to see the goal of agrarian
reform achieved at last after the frustrations and deprivations of our peasant
masses during all these disappointing decades. We are aware that invalidation of
the said section will result in the nullification of the entire program, killing the
farmer's hopes even as they approach realization and resurrecting the spectre of
discontent and dissent in the restless countryside. That is not in our view the
intention of the Constitution, and that is not what we shall decree today" (at 388).

Determination of Just Compensation

Under Sec. 17 ofRA 6657, the factors considered in the determination of just
compensation are:
a)cost of acquisition;
b)current value of like properties;
c)nature of land;
d)actual use;
e)income;
f)sworn valuation by the landowner;
g)tax declaration;
h)assessment by government assessors;
i)social and economic benefits contributed by farmers and
farmworkers and by the government; and
j)non-payment of taxes or loans secured from government financing
institutions on land.
The provisions ofRA 6657on just compensation do not provide hard-and-fast
rules which must be strictly adhered to by DAR and the LBP in determining just
compensation.
Notably, while Section 17 provides that the factors/criteria mentioned therein "shall
be considered" in determining just compensation, it does not expressly state that
only these factors/criteria, and no others, shall be considered.
. . . The factors/criteria set forth in Section 17, and in Section 18 and other
pertinent provisions for that matter, should be deemed as mere standards to guide
the proper officials in determining just compensation, but should in no case control
or limit such determination, the ultimate consideration being that the compensation
be the "full and fair equivalent of the property taken from its owner by the
expropriator".
. . . In every case, what should control is the "just-ness" of the proposal taking into
account the "revolutionary" nature of the expropriation under the CARL.(DOJ
Opinion No. 109 (1991))."

Valuation or Computation
General formula
 The basic formula for the valuation of lands covered by Voluntary Offer to Sell
and Compulsory Acquisition is:
LV = (CNI x 0.6) + (CS x 0.3) + (MV x 0.1)

Where : LV = Land Value

CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax Declaration

The above formula is used if all the three (3) factors are present,
relevant, and applicable (DAR Admin. O. No. 5 [1998]). In any case, the
resulting figure in the equation is always multiplied to the number of area or
hectarage of land valued for just compensation.
To illustrate the formula wherein all of the factors above mentioned are
present:
Area : 3 hectares Capitalized Net Income : P24,900
Market Value : P10,000 Comparable Sales : P 5,000

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

= (14,940) + (1,500) + (1,000)
= (17,440) x (3 hectares)
= P 52,320
Computation of land value
Whenever one of the factors in the general formula is not available, the
computation of land value will be any of the three (3) computations or formulae:
LV = (CNI x 0.9) + (MV x 0.1)
[if the comparable sales factor is missing]
LV = (CS x 0.9 ) + (MV x 0.1)
[if the capitalized net income is unavailable]
LV = MV x 2
[if only the market value factor is available]
In case the comparable sales factor (CS) is relevant or applicable, the land
value is computed in accordance with the general formula where MV is based on
the lowest productivity classification of the land.
In every case, the value of idle land using the formula MV x 2 should not
exceed the lowest value of land within the same estate under consideration or
within the same barangay or municipality (in that order) approved by LBP within
one (1) year from receipt of claimfolder (DAR Admin. O. No. 5 [1998]).
Computation of land value under certain conditions
Valuation of lands planted to permanent but not yet fruit-bearing crops
There are times when the land being valued is planted to permanent crops
which are not yet productive or not yet fruit-bearing at the time of the Field
Investigation (FI) of the land. The land value is equivalent to the value of the land
plus the cumulative development cost (CDC) of the crop from land preparation up
to the time of FI. In equation form, the land value can be computed as:
LV = (MV x 2) + CDC
 Where:
a)The market value (MV) to be used is the applicable unit market
value (UMV) classification of idle land.
b)The cumulative development cost (CDC) is grossed-up from the
date of FI up to the date of LBP Claim Folder (CF) receipt for processing but
in no case should the grossed-up CDC exceed the current CDC data based
on industry.
In case the CDC data provided by the landowner could not be verified, DAR
and LBP should secure the said data from concerned agency/ies or, in the
absence thereof, should establish the same.
However, the resulting land value should not exceed the value of productive
land similar in terms of crop and plant density within the estate under
consideration or within the same barangay or municipality (in that order)
approved by LBP within one (1) year from receipt of CF (DAR Admin. O. No. 5
[1998]).
Lands with permanent but not yet productive crops introduced by
farmer-beneficiaries
When the permanent but not yet fruit-bearing crops are introduced by the
farmer-beneficiaries, the land valuation formula used is the same as if only the
MV is available provided the MV used is the applicable UMV classification of idle
land. In equation form:
LV = MV x 2

In any case, the resulting land value should not exceed the value of
productive land similar in terms of crop and plant density within the estate under
consideration or within the same barangay or municipality (in that order)
approved by LBP within one (1) year from receipt of CF. And in case the CS is
relevant or applicable, the land value is computed in accordance with the general
formula where MV is based on the applicable classification of the land (DAR
Admin. O. No. 5 [1998]).
Use of Salvage Value on valuation of lands planted to permanent but no
longer productive or ready for cutting crops
When lands being valued are planted to permanent but no longer productive
or the crops are ready for cutting, the computation considers the applicable UMV
classification of idle land plus the salvage value of the standing trees at the time
of the FI. In equation form:
LV = (MV x 2) + Salvage Value

But the resulting land value should not exceed the value of productive land
similar in terms of crop and plant density within the estate under consideration or
within the same barangay or municipality (in that order) approved by LBP within
one (1) year from receipt of CF. In case where CS is relevant or applicable, the
land value is computed in accordance with the general formula where MV is
based on the lowest productivity classification of the land (DAR Admin. O. No. 5
[1998]).
 Land value under Voluntary Offer to Sell
In VOS, the computed value using the applicable formula should not exceed
the landowner's offer. The landowner's offer is grossed up from the date of the
offer up to the date of receipt of CF by LBP from DAR for processing. The date of
receipt of CF by LBP from DAR means the date when the CF is determined by
the LBP-LVLCO to be complete with all the required documents and valuation
inputs duly verified and validated, and ready for final computation/processing.
Factors of Land Value
Computation of Capitalized Net Income
Capitalized Net Income refers to the difference between the product of the
gross sales and selling prices (AGP x SP) and total cost of operations (CO)
capitalized at 12%.
Expressed in equation form:

(AGP x SP) - CO
CNI =
0.12

Where: CNI = Capitalized Net Income

AGP = Annual Gross Production corresponding to the latest available 12-months'
gross production immediately preceding the date of FI.
SP = (selling prices) The average of the latest available 12-months' selling prices
prior to the date of receipt of the CF by LBP for processing, such prices to be
secured from the Department of Agriculture (DA) and other appropriate regulatory
bodies or, in their absence, from the Bureau of Agricultural Statistics. If possible,
SP data is gathered from the barangay or municipality where the property is
located. In the absence thereof, selling prices may be secured within the province
or region.
CO = Cost of Operations

Whenever the cost of operations could not be obtained or verified, an

assumed net income rate (NIR) of 20% is used. Landholdings planted to coconut
which are productive at the time of FI will continue to use the assumed NIR of
70%. DAR and LBP will continue to conduct joint industry studies to establish the
applicable NIR for each crop covered under CARP.
0.12 = Capitalization Rate

(DAR Admin. O. No. 5 [1998])

To illustrate the computation of capitalized net income:
Number of coconut trees : 95 trees/hectare
Selling Prices : P6.74/kg.

Hence:

AGP = 95 trees/ha. x 30 nuts/tree 4.5 nuts/kg. = 633.33 kg.

CNI = 633.33 kg. x 6.74/kg. x 70% NIR for coconut

land

12 %

= P24,900.56/hectare

Comparable Sales
Comparable sales refers to any one or the average of all the applicable sub-
factors, namely sales transactions (ST), acquisition cost (AC) and market value
based on mortgage (MVM):
Where: ST = (Peso Value of Sales Transactions)

The criteria in the selection of the comparable sales transaction (ST) shall be
as follows:
a)When the required number of STs is not available at the barangay
level, additional STs may be secured from the municipality where the land
being offered/covered is situated to complete the required three comparable
STs. In case there are more STs available than what is required at the
municipal level, the most recent transactions shall be considered. The same
rule applies at the provincial level when no STs are available at the
municipal level. In all cases, the combination of STs sourced from the
barangay, municipality and province should not exceed three transactions.
b)The land subject of acquisition as well as those subject of
comparable sales transactions should be similar in topography, land use,
i.e., planted to the same crop. Furthermore, in case of permanent crops, the
subject properties should be more or less comparable in terms of their
stages of productivity and plant density.
c)The comparable sales transactions should have been executed
within the period 1 January 1985 to 15 June 988, and registered within the
period 1 January 1985 to 13 September 1988.
d)STs are grossed up from the date of registration up to the date of
receipt of CF by LBP from DAR for processing.
AC or Acquisition Cost is deemed relevant when the property subject of
acquisition was acquired through purchase or exchange with another property
within the period 1 January 1985 to 15 June 1988 and registered within the
period 1 January 1985 to 13 September 1988, and the condition of said property
is still substantially similar from the date of purchase or exchange to the date of
FI.
AC is grossed up from the date of registration of the deed of sale/exchange up
to the date of receipt of CF by LBP from DAR for processing.
MVM or Market Value Based on Mortgage. For MVM to be relevant or
applicable, the property subject of acquisition should have been mortgaged as of
15 June 1988 and the condition of the property is still substantially similar up to
the date of FI. MVM refers to the latest available appraised value of the property
(DAR Admin. O. No. 5 [1998]).
Market Value
 MV or Market Value per Tax Declaration is the latest Tax Declaration (TD) and
Schedule of Unit Market Value (SUMV) issued prior to receipt of CF by LBP. The
Unit Market Value (UMV) is grossed-up from the date of its effectivity up to the
date of receipt of CF by LBP from DAR processing.
Formula in Grossing-Up of Valuation Inputs
The basic formula in the grossing-up of valuation inputs such as LO's Offer,
Sales Transaction (ST), Acquisition Cost (AC), Market Value Based on Mortgage
(MVM) and Market Value per Tax Declaration (MV) is:

Grossed-up
Valuation Input = Valuation Input x Regional Consumer
Price Index (RCPI) Adjustment Factor

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

Most
Recent RCPI for the Month as of the Date
of Receipt of CF by LBP from DAR
RCPI Adjustment Factor =
RCPI for the Month Issued as of the Date/
Effectivity/Registration of the Valuation Input

(DAR Admin. O. No. 5 [1998])

Valuation of deferred commercial farms

The formulae provided underDAR AO 5 (1998)are used in the computation
of valuation for deferred commercial farms (DAR Adm. O. No. 9 [1998]).
Valuation of lands of corporate farms
Agricultural lands owned by corporate farms are valued by considering the
following factors:
a)factors for the determination of just compensation; and
b)factors needed to stimulate the growth of cooperatives and
participation of worker-beneficiaries (Rep. Act No. 6657[1988], sec. 17 in
relation toDAR Adm. O. No. 5 [1998])
Valuation of lands planted to sugarcane
There is a different computation for valuation of lands planted to sugarcane
because of the so-called "ratooning". In the valuation of lands planted to sugar,
the effects of ratooning are considered. Ratooning is the cutting of the straw
close to the ground at harvesting time after all the standing water has been
drained out to allow the young tillers to sprout out of the rootstocks and develop
into mature normal bearing plants in three or four months with the aid of fertilizer,
manure or compost (Rep. Act No. 1199[1954], sec. 5, par. [g-2]).
 The method of ratooning affects land valuation of the property. Majority of
sugar planters practice at least up to two (2) ratoons. This method reduces the
cost of production for sugar planters. Hence, the computation of the land value is
adjusted.
The applicable guideline in the valuation of lands planted to sugarcane is
theJoint DAR-LBP MC 15 (1999).
Valuation of rubber plantations
Valuation of rubber plantations are governed byJoint DAR-LBP MC 7and8
(1999).
Under the old rubber land valuation guideline or the Land Valuation
Guidelines No. 6 (1990), the recognized income of rubber plantations is based on
processed crumb rubber. Under one of the latest guidelines, the standard income
approach to valuation, measures the net income or productivity of the land based
on the farm produce (in their raw forms) and not on the entire agri-business
income enhanced by the added value of farm products due to processing. It
appropriately determines the Capitalized Net Income of rubber plantations based
on the actual yield and farm gate prices of raw products (field latex and cuplump)
and the corresponding cost of production.
Furthermore, the growing market for old rubber trees which was not
considered in the old LVG is now considered.
There are also other several situations which are considered in the
computation of just compensation for rubber plantations. There are rubber claims
pending with the Department of Agrarian Reform Adjudication Board (DARAB) for
reasons such as landowner's rejection of the valuation but the plantation remains
under the management of the landowner. Due to the time gap between the
original date of FI and the date of DARAB's order to recompute the property
(during which period, the age and productivity of the trees change), the valuation
should be made on the basis of the age and productivity of the trees at the time
of recomputation (Joint DAR-LBP Memo. Circ. No. 8, [1999]).
Compensation for Mt. Pinatubo areas
UnderJoint DAR-LBP AO 3 (1994), agricultural lands affected by the Mt.
Pinatubo eruptions have been classified into three categories based on the
NEDA Region III Geographic Information System Database, to wit:
Under the Category I, are those areas actually affected by the lahar and
pyroclastic deposits, including those areas which have become silted, eroded or
continuously flooded for an indefinite period of time.
Under the Category II, are those areas not yet affected but have the possibility
of being actually affected.
Under the Category III, are those areas actually covered or affected by ashfall
but which remain productive.
The general rule is, lands under Category III shall be acquired and
landowners shall be compensated. While compensation of lands under
Categories I and II shall be effected under the following conditions:
 a)Claims have been approved by the LBP and:
Landowner has executed a Deed of Assignment, Warranty and
Undertaking on or before the issuance of theJoint DAR-LBP
Administrative Order No. 3, Series of 1994; or
Transfer Certificate of Title was already registered in the name
of RP on or before the issuance of the same administrative order; or
Partial payment was already effected.
b)Emancipation Patents/Certificates of Land Ownership Award have
been registered on or before 12 June 1991 regardless of whether or not the
claimfolder is with the LBP.
Summary Administrative Proceedings
Land Bank of the Philippines
The Land Bank of the Philippines is primarily responsible for the determination
of the land valuation and compensation for all private lands suitable for
agriculture under either the voluntary offer to sell or compulsory acquisition
arrangement as governed byRA 6657. The DAR makes use of the determination
of the land valuation and compensation by the LBP, in the performance of its
functions (Exec. Order. No. 405[1990], sec. 1).
Public participation
There are several provisions of laws which encourage public participation in
the determination of land valuation, namely:
a) Sec. 3 of EO 129-A states:
. . . partnership between government and organization of farmers and
farmworkers in agrarian reform policy formulation, program implementation
and evaluation shall be institutionalized . . .
b) Sec. 18 of RA 6657 provides:
The LBP shall compensate the landowners in such amount as may be agreed
upon by the landowner and the DAR and the LBP . . .
c) DAR AO 14 (1990) emphasizes Sec. 47 of RA 6657 on
BARC's assistance in the initial determination of the value of
the land.
Preliminary determination of just compensation cases
The summary administrative proceeding is conducted before the Provincial
Agrarian Reform Adjudicator if the compensation offered does not exceed two (2)
million pesos; or before the Regional Agrarian Reform Adjudicator if the
government's offer is more than two (2) million pesos but does not exceed five
(5) million pesos; or before the Department of Agrarian reform Adjudication Board
if the offer is more than five (5) million pesos (DAR Adm. Order No. 8 [1993]).
UnderDAR MC 1 (1995), valuation cases involvingPD 27lands are
cognizable only by the Secretary of DAR (reiterating Sec. 12 ofPD 946[1976]).
But in the recent case ofLand Bank of the Phils. vs. CA,G.R. No. 128557, 29
December 1999, the Supreme Court declared that it was an error for the
Secretary of Agrarian Reform to issueDAR MC 1 (1995)directing the DARAB to
refrain from hearing valuation cases involvingPD 27lands. It is the DARAB
which has the authority to determine the initial valuation of lands involving
agrarian reform pursuant to Sec 1 (b), Rule II,1994 Revised Rule of the
DARABalthough such valuation may only be considered preliminary as the final
determination of just compensation is vested in the courts.
The PARAD's, RARAD's, or DARAB's summary administrative proceeding is
merely a preliminary determination of the just compensation due to the
landowner. The landowner has the right to question such preliminary
determination of the Adjudication Board before the Special Agrarian Courts.
"The determination made by the DAR is onlypreliminaryunless accepted by
all parties concerned. Otherwise, the courts of justice will still have the right to
reviewwith finalitythe said determination in the exercise of what is admittedly a
judicial function" (Association of Small Landowners in the Philippines, Inc. vs.
Secretary of Agrarian Reform,175 SCRA 345 [1989], at p. 382).
The Regional Trial Courts have not been completely divested of jurisdiction
over agrarian reform matters. Section 56 of RA 6657, on the other hand,
confers "special jurisdiction" on "Special Agrarian Courts", which are Regional
Trial Courts designated by the Supreme Court at least one (1) branch
within each province to act as such. These Regional Trial
CourtsquaSpecial Agrarian Courts have, according to Section 57 of the same
law, original and exclusive jurisdiction over: 1) "all petitions for the
determination of just compensation to land-owners," and 2) "the prosecution
of all criminal offenses under . . . (the) Act (at 890).Vda. de Tangub vs. CA,
191 SCRA 885 (1990)
Although the proceedings are described as summary, the landowner and
other interested parties are nevertheless allowed an opportunity to submit
evidence on the real value of the property. But more importantly, such
determination of just compensation by the DAR, as earlier stated is by no
means final and conclusive upon the landowner or any other interested party
for Section 16 (f) clearly provides: "Any party who disagrees with the decision
may bring the matter to the court of proper jurisdiction for final determination
of just compensation"Magana vs. Estrella,201 SCRA 536 (1991).
InPhil. Veterans Bank vs. Court of Appeals,G.R. No. 132767, 18 January
2000, petitioner Bank argued that the DAR Adjudicators have no jurisdiction to
determine just compensation for the taking of lands under CARP because such
jurisdiction is vested in Regional Trial Courts designated as Special Agrarian
Courts. Hence, Petitioner could file its petition with the RTC beyond the 15-day
period of appeal from the decision of the DAR Adjudicator. The RTC dismissed
the petition of Petitioner for being filed beyond the 15-day period for appeal. The
Supreme Court reiterated its ruling inRepublic vs. Court of Appeals, supra,and
said:
. . . this rule is an acknowledgment by the DARAB that the power to decide
just compensation cases for the taking of lands under R.A. No. 6657 is vested
in the courts. It is error to think that, because of Rule XIII, S 11, the original
and exclusive jurisdiction given to the courts to decide petitions for
determination of just compensation has already been transformed into an
appellate jurisdiction. It only means that, in accordance with settled principles
of administrative law, primary jurisdiction is vested in the DAR as an
administrative agency to determine in a preliminary manner the reasonable
compensation to be paid for the lands taken under the Comprehensive
Agrarian Reform Program, but such determination is subject to challenge in
the courts.
The jurisdiction of the Regional Trial Courts is not any less "original and
exclusive" because the question is first passed upon by the DAR, as the
judicial proceedings are not a continuation of the administrative determination.
For the matter, the law may provide that the decision of the DAR is final and
unappealable. Nevertheless, resort to courts cannot be foreclosed on the
theory that courts are the guarantors of the legality of administrative action.
Valuation ofPD 27Lands
Under Sec. 2 ofEO 228, land valuation shall be based on the Average Gross
Production (AGP) as determined by the Barangay Committee on Land
Production (BCLP). The formula is:

Rice Lands LV = AGP x 2.5 x P 35 *

Corn Lands LV = AGP x 2.5 x P 31**

* government support price for one cavan of 50 kilos of palay on October 21,
1972
** government support price for one cavan of 50 kilos of corn on October 21,
1972

Lease rentals paid to the landowner by the farmer-beneficiary after 21

October 1972 shall be considered as advance payment for the land.
The factor of government support price provided underEO 228does not
undervaluePD 27lands. UnderDAR AO 13 (1994), an increment of 6% yearly
interest compounded annually on lands covered byPD 27andEO 228is
granted. The formula is:
(Computed land value using the original formula) x (1.06)n
where : n = number of years from date of tenancy up to effectivity date
The landowners qualified to receive the compensation based on the
increment formula are:
a)Those whose lands are actually tenanted as of October 21, 1972 or
thereafter and Operation Land Transfer (OLT) covered;
b)Those who opted for government financing thru LBP as the mode of
compensation; and
c)Those who have not yet been paid for the value of the land.
 For those who were partially paid, the yearly increment of 6% compounded
annually shall only be applied to the unpaid balance. According to the above
mentioned administrative issuance, the said grant of increment is reckoned from
the effectivity date ofPD 27or date when the land was actually tenanted up to the
effectivity date of DAR AO 13 (1994) or up to 27 October 1994 only. It seems the
grant of increment cannot be applied after this effectivity date even if the actual
payment can be had after 27 October 1994.
In the case ofBenosa vs. CA,G.R. No. 122231, 27 November 1995, on the
issue of granting interest to the landowner, it was held:
It is settled that the landowners are entitled to legal interest on the amount
payable from the time the property was taken until full payment is made(National
Power Corporation vs. Angas, 208 SCRA 542; Commissioner of Public Highways
vs. Burgos, supra; Ortula vs. Republic, 22 SCRA 477; Republic vs. Delente,
supra). DAR Administrative Order No. 13, series of 1994 which grants increment
of 6% yearly interest compounded annually on lands covered by P.D. No. 27 and
E.O. No. 228, squarely recognizes the above rule and thus applies to the private
respondents.

InLBP vs. CA, supra, the Supreme Court decided not to apply the 6%
increment to the valuation because the Court of Appeals affirmed the PARAD's
use of the 1992 Gross Selling Price in the valuation of the private respondent's
land (following the ruling in the Court of Appeals case ofGaleon vs. Pastoral, CA-
G.R. No. 23168; Rollo, p. 36)
Mode of Compensation
Landowners may be paid in cash or in kind. Payment in kind is justified in the
case ofAssociation of Small Landowners of the Philippines, Inc. vs. Secretary of
Agrarian Reform, 175 SCRA 343 (1989)as follows:
It cannot be denied from these cases that the traditional medium for the payment
of just compensation is money and no other. And so, conformably, has just
compensation been paid in the past solely in that medium. However, we do not
deal here with thetraditional exerciseof the power of eminent domain. This is not
an ordinary expropriation where only a specific property of relatively limited area is
sought to be taken by the State from its owner for a specific and perhaps local
purpose. What we deal with here is arevolutionarykind of expropriation.
The expropriation before us affects all private agricultural lands wherever found
and of whatever kind as long as they are in excess of the maximum retention
limits allowed their owners. This kind of expropriation is intended for the benefit
not only of a particular community or of a small segment of the population but of
the entire Filipino nation, from all levels of our society, from the impoverished
farmer to the land-glutted owner. Its purpose does not cover only the whole
territory of this country but goes beyond in time to the foreseeable future, which it
hopes to secure and edify with the vision and the sacrifice of the present
generation of Filipinos. Generations yet to come are as involved in this program as
we are today, . . . .
Accepting the theory that payment of the just compensation is not always required
to be made fully in money, we find further that the proportion of cash payment to
the other things of value constituting the total payment, as determined on the
basis of the areas of the lands expropriated, is not unduly oppressive upon the
 landowner. It is noted that the smaller the land, the bigger the payment in money,
primarily because the small landowner will be needing it more than the big
landowners, who can afford a bigger balance in bonds and other things of value.
No less importantly, the government financial instruments making up the balance
of the payment are "negotiable at any time". The other modes, which are likewise
available to the landowner at his option, are also not unreasonable because
payment is made in shares of stock, LBP bonds, other properties or assets, tax
credits, and other things of value equivalent to the amount of just compensation.
The recognized rule indeed, is that title to the property expropriated shall pass
from the owner to the expropriator only upon full payment of the just
compensation. Jurisprudence on this settled principle is consistent both here and
in other democratic jurisdictions" (at 386, 388 and 389).

Cash Payment
Under Sec. 18 ofRA 6657, the proportion of payment in cash, dependent on
the area/hectarage of the land valued is subject to the following:
a)above 50 hectares, insofar as the excess hectarage is concerned =
25% cash
b)above 24 hectares and up to 50 hectares = 30% cash
c)24 hectares and below = 35% cash
For voluntary offer to sell, the cash portion is increased by 5%.
Payment in kind
Landowners may be paid with:
a)Shares of stock in government owned or controlled corporation, LBP
preferred shares, physical assets or other qualified investments.
b)Tax credits; or
c)LBP bonds
Features of LBP bonds
The new ten (10)-year LBP bonds have attractive features which are more
acceptable and marketable than the other investment instruments. As provided
under Sec. 18 ofRA 6657, these features are:
1)Its market interest rates are aligned with 91-day treasury bill rates,
net of applicable final withholding tax, payable twice a year six months
from date of issue and every six months thereafter.
2)One-tenth of the bond's face value matures every year from date of
issue up to the tenth year.
3)The bond is fully guaranteed by the national government.
4)The bond is non-denominated. Upon request, it can be split
according to amounts desired by the bondholder.
5)The bonds are highly transferable and negotiable. Such LBP bonds
may be used by the landowner, his successors in interest or his assigns, up
to the amount of their face value, for any of the following:
 a)Acquisition of land or other real properties of the government,
including assets under the Asset Privatization Program and other assets
foreclosed by government financial institutions in the same province or
region where the lands for which the bonds were paid are situated;
b)Acquisition of shares of stock of government-owned or controlled
corporations or shares of stock owned by the government in private
corporations;
c)Substitution for surety or bail bonds for the provisional release of
accused persons, or performance bonds;
d)Security for loans with any government financial institution, provided
the proceeds of the loans shall be invested in an economic enterprise,
preferably in a small-and medium-scale industry, in the same province or
region as the land for which the bonds are paid;
e)Payment for various taxes and fees to government; Provided, That
the use of these bonds for these purposes will be limited to a certain
percentage of the outstanding balance of the financial instruments:
Provided, further, That the PARC shall determine the percentage mentioned
above;
f)Payment for tuition fees of the immediate family of the original
bondholder in government universities, colleges, trade schools, and other
institutions;
g)Payment for fees of the immediate family of the original bondholder
in government hospitals; and
h)Such other uses as the PARC may from time to time allow.
The 100% face value and negotiability of LBP bonds are well described in the
case ofGonzales vs. GSIS,107 SCRA 492 (1981). Petitioner filed a petition for
mandamus to compel the respondent Government Service Insurance System
(GSIS) to accept 6% interest-bearing bonds issued by the Land Bank of the
Philippines at their par or face value as payment for petitioners' outstanding
housing loan. The act of the GSIS in discounting the LBP bonds was found
invalid. The Court ruled:
Land Bank bonds are certificates of indebtedness, approved by the Monetary
Board of the Central Bank, fully tax-exempt both as to principal and income, and
bear interest at the rate of 6% per annum redeemable at the option of the Land
Bank at or before maturity, which in no case shall exceed 25 years. They are fully
negotiable and unconditionally guaranteed by the Government of the Republic of
the Philippines. These bonds are deemed contracts and the obligations resulting
therefrom fall within the purview of the non-impairment clause of the Constitution,
and any impairment thereof may take any encroachment in any respect upon the
obligation and cannot be permitted. Thus, the value of these bonds cannot be
diminished by any direct or indirect act, particularly, since said bonds are fully
guaranteed by the Government of the Republic of the Philippines. They are issued
not in the open market nor for the captive market of landowners and to facilitate
the speedy transfer of lands to the tenant-farmers in support of the land reform
program of the Government. They are not ordinary commercial paper in that sense
subject to discounting (at 498, 499 and 502).
 Mode of Payment forPD 27Landowners
The landowners shall be paid in any of the following modes, at their option
(Exec. Order No. 228[1987], sec. 3):
a)Bond payment over ten (10) years, with ten percent (10%) of the
value of the land payable immediately in cash, and the balance in the form
of LBP bonds bearing market rates of interest that are aligned with 90-day
treasury bills rates, net of applicable final withholding tax. One-tenth of the
face value of the bonds shall mature every year from the date of issuance
until the tenth year.
The
LBP bonds issued hereunder shall be eligible for the purchase of
government assets to be privatized.
b)Direct payment in cash or in kind by the farmer-beneficiaries with
the terms to be mutually agreed upon by the beneficiaries and landowners
and subject to the approval of the DAR; and
c)Other modes of payment as may be prescribed or approved by the
PARC.
Under Sec. 9 ofEO 229, landowners who voluntarily offer to sell their lands
are given the same incentive given toPD 27landowners underEO 228, which is
the exemption from the payment of capital gains tax and other taxes and fees.
CHAPTER 5
Land Redistribution
Qualified Agrarian Reform Beneficiaries Under CARP
Section 22 ofRA 6657enumerates the groups of farmers and tillers who are
qualified to become beneficiaries of the Comprehensive Agrarian Reform
Program. They are the following:
(a)Children of landowners, who qualify under Section 6 ofR.A. 6657;
(b)Agricultural lessees and share tenants;
(c)Regular farmworkers;
(d)Seasonal farmworkers;
(e)Other farmworkers;
(f)Actual tillers or occupants of public lands;
(g)Collectives or cooperatives of the above beneficiaries; and
(h)Others directly working on the land.
Section 22 also provides that "[t]he lands covered by the CARP shall be
distributed as much as possible to landless residents of the same barangay, or in
the absence thereof, landless residents of the same municipality", following the
order of priority quoted above.
Qualifications of Agrarian Reform Beneficiary
 According to Section 22 ofRA 6657, to qualify as an agrarian reform
beneficiary, one must:
(a)be landless;
(b)be at least 15 years old or head of a family at the time the property
was transferred in the name of the Republic of the Philippines; and
(c)have the willingness, ability, and aptitude to cultivate the land and
make it as productive as possible.
The requirements enumerated in Section 22 are the minimum or basic
qualifications for a farmer to become a beneficiary of land under the agrarian
reform program.
Qualifications of landowner's children as preferred beneficiaries
As provided in Section 6, three (3) hectares of agricultural land may be
awarded to each child of the landowner, on the condition that he is at least 15
years of age at the time of the award, and that he is actually tilling the land or
directly managing the farm. "Directly managing the farm" refers to the cultivation
of the land through personal supervision under the system of labor
administration.
Children of landowners are classified as preferred beneficiaries, and the land
awarded to them does not form part of the retention right of the parent-
landowners. The transfer of the land to them is effected by the issuance of
CLOAs.
The rules on payment for the value of the land by the Land Bank and the
payment of amortizations by the beneficiary do not apply in the case of preferred
beneficiaries, unless there has been a tenancy relationship between the parent-
landowners and the children. In the latter case, the Land Bank shall finance the
acquisition of the property.
The rights and obligations of landowners' children as preferred beneficiaries
are governed byMemorandum Circular No. 4, Series of 1994.
"Landless Persons" UnderCARL
Section 25 ofRA 6657provides that a landless person is one who owns less
than three (3) hectares of agricultural land. Section 7 also provides that an
owner-tiller may still be awarded another parcel of agricultural land under the
program, provided that he is actually cultivating that land, and only to the extent
of the difference between the area of the land he owns and the award ceiling of
three (3) hectares. A tenant who owns one hectare of agricultural land may still
qualify as a beneficiary for two more hectares.
Persons Disqualified as Agrarian Reform Beneficiaries
The following persons are disqualified from becoming agrarian reform
beneficiaries:
a)Those who are not included in the enumeration in Section 22;
b)Those who fail to meet the qualifications prescribed under Section
22;
 c)Those who have culpably sold, disposed of, or abandoned their land
received under CARP orP.D. 27;
d)Those whose land has been foreclosed by the Land Bank, or
repossessed by the landowner in case of Voluntary Land Transfer/Direct
Payment Scheme, for non-payment of an aggregate of three annual
amortizations;
e)Those who have converted their land to non-agricultural use without
prior approval by DAR; and
f)Those guilty of negligence or misuse of the land or any support
extended to him (Sec. 22).
Grounds for disqualification of beneficiary
UnderDAR Memorandum Circular No. 19 (1996), the following violations will
result in the disqualification of a farmer from being a beneficiary or from
continuing as such under the agrarian reform program:
(a)Misuse or diversion of financial and support services extended to the
beneficiary;
(b)Misuse of the land;
(c)Material misrepresentation of the beneficiary's basic qualifications as
provided under Section 22 ofR.A. No. 6657,P.D. No. 27, and other agrarian
reform laws;
(d)Sale, transfer, lease, or other forms of conveyance by the beneficiary
of rights over the land, in circumvention orR.A. No. 6657,P.D. No. 27, and
other agrarian reform laws;
(e)Continuous neglect or abandonment of the awarded land over a
period of two calendar years as determined by the Secretary or his
authorized representative;
(f)Failure to pay an aggregate of three (3) consecutive amortizations to
the Land Bank or to the landowner, except in cases of fortuitous events;
(g)Illegal conversion of the land by the beneficiary;
(h)Waiver of rights to awarded lands;
(i)Beneficiary's surrender of awarded land to landowner or other non-
beneficiary; and
(j)Other acts or omissions that circumvent laws related to the
implementation of the agrarian reform program.
A separate chapter on prohibited acts,supra., discusses these violations in
detail.
Squatters disqualified to become CARP beneficiaries
In the caseCentral Mindanao University vs. DARAB,G.R. No. 100091,
October 22, 1992, the university entered into a contract with members of the
faculty and staff for an experimental rice project, under which the latter were
given tracts of land for cultivation. It was expressly stipulated in the contract that
no landlord-tenant relationship arose between the parties. After the term of the
project has expired, the university served notices to vacate on the occupants of
the land. The occupants refused to vacate the land, claiming that they are now
entitled to be awarded the land they are tilling pursuant to the land reform
program.
The Supreme Court held that squatters are disqualified from becoming CARP
beneficiaries because they are "guilty of committing prohibited acts of forcible
entry or illegal detainer, [and therefore] do not qualify as beneficiaries of and may
not avail themselves of the rights and benefits of agrarian reform".
The Supreme Court also ruled that "a person entering upon the lands of
another, not claiming in good faith the right to do so by virtue of any title of his
own, or by virtue of some agreement with the owner or with one whom he
believes holds title to the land, is a squatter.Squatters cannot enter the land of
another surreptitiously or by stealth, and under the umbrella of the CARP, claim
rights to said property as landless peasants." (Emphasis supplied.)
Selection of Beneficiaries
The Municipal Agrarian Reform Officer or the Agrarian Reform Program
Technologist, with the participation of the BARC, screens the beneficiaries.
A farmer who claims priority over those who have been identified by the
MARO as beneficiaries should file a written protest with the MARO or the PARO
who is processing the claim folder. Once the protest is filed, the MARO/PARO
shall comment on the protest and submit the same to the Regional Director who
shall rule on the protest. If the parties disagree with the RD's decision, they can
file a written motion for reconsideration. If the motion is denied, the farmers can
appeal to the Secretary.
Landowner not entitled to select beneficiaries
It is not the landowner who distributes his land, so he does not have the right
to select who the transferees. Land acquisition and land distribution are two
different transactions. It is the government which buys the land from the
landowner and then sells it to the beneficiaries. It is not a direct transaction
between the landowner and the beneficiaries.
This rule also applies to voluntary land transfer/direct payment scheme. Even
under this scheme, it is not the landowner who determines who will be the
beneficiaries. The beneficiaries must qualify under the law, and it is still the
MARO and the BARC who do the screening.
Farmworker defined
A farmworker is defined by Section 3 (g),R.A. 6657as a natural person who
renders service for value as an employee or laborer in an agricultural enterprise
or farm regardless of whether his/her companion is paid on a daily, weekly,
monthly, or "pakyaw" basis. The term includes an individual whose work has
ceased because of a pending agrarian dispute and who has not obtained a
substantially equivalent and regular farm employment.
Special qualifications for farmworkers in commercial farms
 Aside from the minimum qualifications in Section 22 ofR.A. 6657, Section 4
ofAdministrative Order No. 9, Series of 1998, provides for special qualifications
for farmworkers in commercial farms, which are as follows:
(a)they must be at least 18 years old upon filing of application as
agrarian reform beneficiary;
(b)they must have the willingness, aptitude, and ability to cultivate and
make the land productive; and
(c)they must have been employed in the commercial farm between
June 15, 1988 and June 15, 1998 or upon expiration or termination of the
deferment.
Farmworkers who have worked longest on the land continuously shall be
given priority.
Specific disqualifications for commercial farmworkers
Section 5 ofAdministrative Order No. 9, Series of 1998, provides that the
following shall be grounds for the disqualification of potential beneficiaries:
a)Mandatory retirement;
b)Optional retirement or resignation, provided that the farmworker has
not filed any case questioning such retirement or resignation;
c)Dismissal for cause by final judgment;
d)Waiver or refusal to be a beneficiary; and
e)Violation of agrarian reform laws and regulations as determined with
finality by the proper tribunal or agency.
Questions have been raised on whether dismissal for cause distinguishes
between just and authorized causes as these two categories are defined
inPresidential Decree No. 442, otherwise known as the Labor Code of the
Philippines.
"Just cause" may consist in serious misconduct, willful disobedience of
reasonable and lawful orders of the employer, gross neglect and abandonment of
duties, dishonesty and loss of confidence of the employer in the employee,
commission of crime or offense by the employee against the person or immediate
family of the employer, and analogous cases (seeLABOR CODE, Article 282).
"Authorized cause", on the other hand, may be one of the following:
introduction of labor-saving devices, redundancy, retrenchment due to legitimate
business losses, closure of business, and ailment or disease of the employee
(seeLABOR CODE, Article 283).
Just cause is distinguished from authorized cause in theLabor Codebecause
while just causes have something to do with the moral depravity and fault of the
employee, termination for authorized causes is due to circumstances beyond the
control of the employee.
It is evident from the history of the provision of the administrative issuances
on qualified farmworkers that the intention is to distinguish between just and
authorized causes. For one, the list of qualifications in Section 4,Administrative
Order No. 9, Series of 1998provides that the potential beneficiary "must have
been employed in the commercial farm between June 15, 1988 and June 15,
1998 or upon expiration or termination of the deferment". This new provision
makes the qualifications encompass even those whose services have been
terminated by the commercial farm as of the time the deferment period expires.
Secondly, the original rules governing the acquisition of commercial
farms,Administrative Order No. 6, Series of 1998, in item (b), no. 2, letter M, Part
IV thereof, provides for dismissal from servicefor causeas a ground for
disqualification. Retrenchment as a ground for disqualification is listed as a
separate item, namely, item (d). This shows that item (b) refers only to dismissal
for just causes, and does not include dismissal for authorized causes.
Administrative Order No. 6, Series of 1998was eventually superseded
byAdministrative Order No. 9, Series of 1998. The latter administrative order
removed retrenchment as a ground for disqualification. Only dismissal for cause
(meaning just cause) has been retained.
Thirdly,Administrative Order No. 9, Series of 1998, item (h), Section 6, Article
II, which provides for the prioritization of beneficiaries, still includes retrenched
workers among the potential beneficiaries. The provision states:
The Beneficiary Screening Committeeshall prioritize the potential
ARBspursuant to Section 22 ofR.A. 6657. They shall be ranked according to the
length of their continuous service in the commercial farm reckoned from June 15,
1988 up to the expiration of the deferment period; residency, i.e. whether residing
in the same barangay or municipality;whether they have been validly retrenched,
i.e. with approval of the Dept. of Labor and Employment; the nature of their work,
i.e. whether directly related to farm activities, and such other factors as the
Committee may deem appropriate. (Underscoring supplied.)
Different Categories of Farmworkers
Section 3,R.A. 6657identifies these categories as follows:
(a)Regular farmworkeris a natural person who is employed on a
permanent basis by an agricultural enterprise or farm.
(b)Seasonal farmworkeris a natural person who is employed on a
recurrent, periodic, or intermittent basis by an agricultural enterprise or farm,
whether as a permanent or a non-permanent laborer, such as
"dumaan"and "sacada".
(c)Other farmworkeris a farmworker who is neither a regular nor a
seasonal farmworker, such as a farmworker who performs farm activities
but is not paid for his or her labor.
DAR A.O. No. 9, Series of 1998, on the other hand, identifies two more
categories:
(a)Technical farmworkeris a natural person employed by an agricultural
enterprise or farm, who is highly educated and trained and performs functions in
scientific, engineering, medical, teaching, and other fields, but who is not vested
with managerial or supervisory functions, such as chemists, agronomists,
veterinarians, and soil analysts.
(b)Managerial or supervisory farmworkeris a natural person who is
employed by an agricultural enterprise or farm vested with powers and
prerogatives (1) to lay down and execute management policies; (2) to hire,
transfer, suspend, layoff, recall, discharge, assign, or discipline employees; and/
or (3) to effectively recommend such managerial actions.
Categories of farmworkers qualified to become beneficiaries under
CARP
Farmworkers who aredirectly working on the land at the time DAR conducts
actual investigation and documentation of the agricultural enterprise, whether as
regular, seasonal, or other farmworkers are qualified beneficiaries. UnderA.O.
No. 9, Series of 1998, however, other farmworkers who are directly employed by
the agri-business enterprise or corporation may be considered as beneficiaries,
provided they meet the basic qualifications prescribed in Section 22.
Selection of Beneficiaries of Commercial Farms
UnderA.O. No. 9, Series of 1998, there is a Beneficiary Screening Committee
responsible for the qualification, identification, and selection of agrarian reform
beneficiaries for acquired commercial farms. The Committee is composed of the
following:
(1)The Provincial Agrarian Reform Officer, as Chairman;
(2)The Municipal Agrarian Reform Officer;
(3)The Provincial Agrarian Reform Coordinating Committee
(PARCCOM) Chairman or his duly authorized representative;
(4)The Barangay Agrarian Reform Council (BARC) Chairman or his
duly authorized representative from each of the barangays where the
subject commercial farm is situated; and
(5)The Barangay Chairman or his duly-authorized representative, from
each of the barangays where the subject commercial plantation is situated;
as members.
The Committee comes up with a master list of qualified beneficiaries, and a
waiting list of those who possess the minimum qualifications and none of the
disqualifications, but who could not otherwise be accommodated in the updated
master list.
Remedy of farmworker excluded from master list
A farmworker who is excluded from the masterlist may file a written protest
with the Beneficiary Screening Committee. The Committee Chairman shall
furnish a copy of the protest to the beneficiaries whose inclusion in the list is
being questioned. The protestees shall file their answer or comment on the
protest, and the Chairman shall transmit the records to the Regional Director for
the latter's decision. The Regional Director shall resolve the protest based on
substantial evidence showing the qualification or disqualification of the
beneficiary subject of the protest. No motion for reconsideration of the decision of
the Regional Director shall be allowed, but such decision may be appealed to the
Office of the Undersecretary for Field Operations and Support Services, whose
decision shall be final and executory. Notwithstanding the appeal, the decision of
the Regional Director shall not be stayed.
Managerial and supervisory farmworkers
Managerial and supervisory farmworkers may qualify as CARP beneficiaries
provided that they have been identified as qualified beneficiaries prior to their
promotion, and that they give up their managerial or supervisory positions
(seeA.O. No. 9, Series of 1998). In the case, however, of supervisory or
managerial employees whose responsibilities do not actually conform to the
definition of supervisory or managerial farmworkers, there are two views on the
matter. One holds that supervisory and managerial employees of commercial
farms are disqualified from becoming beneficiaries since the laws and regulations
specify the rank and not the job description. The other view is that they are
qualified so long as they are directly working on the land, and possess all the
qualifications and none of the disqualifications for becoming an agrarian reform
beneficiary.
It is our opinion that these so called "supervisory or managerial" employees
can qualify as beneficiaries. The definition of supervisory or managerial
farmworkers inA.O. No. 9, Series of 1998, provides that to be considered a
supervisor or a manager, the farmworker must be vested with the power to
formulate and implement management policies; to hire, fire, assign, and
discipline employees; and/or to effectively recommend such managerial actions.
Jurisprudence supports the view that this power is essential before an
employee may be considered as supervisory or managerial. InFranklin Baker
Company vs. Trajano, G.R. No. 75039, January 28, 1988,it was held:
To make one a supervisor, the power to recommend must not be merely routinary
or clerical in nature but requires the use of independent judgment. In other words,
the recommendation is (1) discretionary or judgmental, not clerical; (2)
independent, not a dictation of someone else; and (3) effectively considered in the
management decision. If these qualities are lacking or, worse, if the power to
recommend is absent, then the person is not really a supervisor but a rank-and-file
employee.
There are instances when the position of a farmworker is denominated
"managerial" or "supervisory" even when he is not performing the functions
enumerated in the definition. Hence, it is our view that the functions performed,
rather than the rank, should be determinative of the status of the farmworker. They
should still qualify as beneficiaries, provided they meet all the qualifications and
possess none of the disqualifications, subject to the rules on prioritization set
down under the law.

Seasonal farmworkers
Section 22 includes seasonal farmworkers among the beneficiaries qualified
to receive land underR.A. 6657, following the order of priority set forth in the law.
There is a view that seasonal farmworkers are entitled "only to a just share of
the fruits of the land", but not to own land. This view finds support inFortich vs.
Corona,G.R. No. 131457, August 19, 1999,wherein the Supreme Court said:
 Again, as expressed in the opinion of Mr. Martin, intervenors, who are admittedly
not regular but seasonal farmworkers, have no legal or actual and substantive
interest over the subject land inasmuch as they have no right to own land. Rather,
their right is limited only to a just share of the fruits of the land.

The Court based its observation on Article XIII, Section 4 of theConstitution,

which provides:
The State shall, by law, undertake an agrarian reform program founded on the
rights of farmers and regular farmworkers, who are landless, to own directly or
collectively the lands they till or, in the case of other farmworkers, to receive a just
share of the fruits thereof.

It is our view, however, that the fact that seasonal farmworkers may not have
been given a constitutional right does not mean that they do not have a statutory
right. Congress, in interpreting and implementing Article XIII, Section 4 of
theConstitutionenacted Section 22 ofRA 6657which explicitly includes
seasonal farmworkers among the qualified beneficiaries. Moreover, the
observation made by the Supreme Court is only anobiter dictumand cannot be
made the basis for the loss or acquisition of legal rights. Moreover, even a
collective or cooperative of, among others, "seasonal farmworkers" and "other
farmworkers" may be awarded lands under the agrarian reform program.
Collectives or Cooperatives as Qualified Beneficiaries
A collective or cooperative composed of the beneficiaries listed in Sec. 22 (a)
to (e) ofR.A. 6657, to wit: agricultural lessees and share tenants, regular
farmworkers, seasonal farmworkers, other farmworkers, and actual tillers or
occupants of public lands, can, by itself, be an awardee of land under CARP.
Sec. 25 ofR.A. 6657, in fact, provides that "(t)he beneficiaries may opt for
collective ownership, such as co-ownership or farmers cooperative or some other
form of collective organization".
Cooperatives refer to "organizations composed primarily of small agricultural
producers, farmers, farmworkers, or other agrarian reform beneficiaries who
voluntarily organize themselves for the purpose of pooling land, human,
technological, financial, or other economic resources, and operated on the
principle of one member, one vote. A juridical person may be a member of a
cooperative, with the same rights and duties as a natural person." (Section 3 [k]
ofR.A 6657).
The aggregate size of land that may be awarded to an association or a
cooperative shall not exceed the total number of members multiplied by the
award ceiling of three hectares, except where the Presidential Agrarian Reform
Council (PARC) approves the award of an area exceeding this limit. Thus, a
cooperative composed of 25 members, for instance, can receive a maximum
award of 75 hectares. (see Sec. 25,R.A 6657)
Inclusion of names of members of collective or cooperative not
mandatory
Memorandum Circular No. 24, Series of 1996,Memorandum Circular No. 14,
Series of 1994, andAdministrative Order No. 3, Series of 1993, governing the
issuance of collective CLOAs, expressly require the listing of the names of all
members in the CLOA issued to a collective or cooperative. The purpose of this
requirement is to "protect a farmer-member from possible summary and unjust
separation by the cooperative or association" (Part IV-A-1).
It is our view that inclusion in the CLOA of the names of all the members of a
collective or cooperative is not necessary in all cases. Where the CLOA is under
co-ownership, the names of all the co-owners (i.e. individual farmer-beneficiaries)
should be listed in the collective CLOA. However, where the CLOA is awarded in
the name of the association or cooperative, there is no need to include the
names of the individual members thereof in the collective CLOA. Sec. 25 ofR.A.
6657, in fact, provides that "(t)itle to the property shall be issued in thenameof
the co-ownersorthe cooperative or collective organization as the case may
be." (Underscoring supplied)
Women as Beneficiaries under CARP
Women are qualified to become agrarian reform beneficiaries in their own
right, not only as spouses of agrarian reform beneficiaries. For as long as a
female farmer's rights have vested and have been established separately from
her husband's or her father's, she is entitled to receive land under the program.
The term "vested right" has been defined in the case ofBalboa vs.
Farrales,G.R. No. 27059, February 14, 1928, as some right or interest in
property which has become fixed and established and is no longer open to doubt
or controversy". The Supreme Court, citing American cases, explained that
"rights are vested when the right to enjoyment, present or prospective, has
become the property of some particular person or persons as a present interest".
Involved in theBalboacasewas an application for homestead patent. During
the pendency of his application, however, the law granting him the right to such
patent was repealed. The Supreme Court upheld his claim, stating that at the
time the law was repealed, the applicant has complied with all the requirements
for the issuance of a patent, hence, his right to the patent has vested. "At least on
that date," said the Court, "his right to the land, as owner, ripened into a vested
right. It was no longer expectant as depending on some events or the
performance of some conditions."
Other rights as beneficiaries have been granted to women through other DAR
administrative issuances. UnderMemorandum Circular No. 10, Series of 1986,
support services in terms of loan assistance in an amount not to exceed three
thousand pesos (P3,000.00) has been guaranteed for qualified rural women's
pre-cooperative groups. UnderMemorandum Circular No. 4, Series of 1992, a
budget has been allocated for support services that will empower women
beneficiaries.
Under Part II.D ofAdministrative Order No. 2, Series of 1993, farmworkers
who are husband and wife may be separately entitled to three (3) hectares each
provided that their vested rights to the land have been duly established. Each of
the spouses shall be issued a separate CLOA.
Requirement for separate cultivation by spouses of beneficiaries
UnderMemorandum Circular No. 18, Series of 1996, women who are
spouses of agrarian reform beneficiaries are required to also cultivate the land,
aside from the cultivation undertaken by her husband. We are of the opinion that
separate cultivation must be required of women only where they are recipients of
land in their own right, and should no longer be required of women whose
spouses receive land under the program.
To require separate cultivation by spouses of male agrarian reform
beneficiaries would work against, rather than protect, the interests of women.
This requirement fails to recognize the role of women in the rural household,
particularly in agrarian areas. Women are usually given reproductive tasks, such
as upbringing of children, household chores, and other work having to do with the
maintenance of the home. An additional burden of cultivating the land would be
harshly onerous upon women who are spouses of beneficiaries.
TheCivil Codeand theFamily Coderecognize that the role of women in
traditional families is the maintenance of the household. In both Codes,
maintenance of the home is recognized as the wife's contribution to the conjugal
partnership of gains or to the absolute community of property as to entitle her to
one-half share of the marital partnership property. As long as the wife works in
the home, all properties received or acquired during the subsistence of the
marriage is considered part of the conjugal partnership of gains or of the absolute
community of property. There is no reason forR.A. 6657to be given a different
interpretation as regards the rights of women to land awarded to their spouses
under the Comprehensive Agrarian Reform Program.
Modes of Distribution: Individual vs. Collective Ownership
It is the policy of the CARP to establish owner-cultivatorship of economic-
sized farms as basis ofPhilippine agriculture. In line with this is the award of
three hectares to the individual beneficiaries as the distribution limit. With a view
of equitable land distribution and ownership, DAR is mandated to distribute
agricultural lands to as many tenants and farmworkers as possible. Furthermore,
the distribution of land shall be made directly to individual beneficiaries.
In general, lands shall be distributed directly to the individual worker
beneficiaries. In case it is not economically feasible and sound to divide the land
then it shall be collectively owned by the worker beneficiaries who shall form
into a worker cooperative or association which will deal with the corporation or
business association. [Rep. Act No. 6657(1988) Sec. 29;DAR A.O. No. 10
(1990), II (B)]
The beneficiaries may opt for collective ownership such as co-ownership or
farmer's cooperative or some other form of collective organization. The total area
that may be awarded under a collective CLOA shall not exceed the total number
of co-owners or members of the cooperative or collective organization multiplied
by the award limit of three hectares except in meritorious cases as determined by
the PARC, pursuant to Section 25 ofR.A. No. 6657. Collective co-ownership
CLOAs may be issued to cover any CARPable lands whether private lands or
public lands within proclaimed DAR settlement projects or public lands turned
over to the DAR by other government agencies and institutions pursuant toE.O.
No. 407as amended. [Rep. Act No. 6657(1988), sec. 25.]
Lands covered by collective CLOAs on a co-ownership basis shall be subdivided
in accordance with the actual occupancy of the ARBs, provided it does not
exceed three (3) hectares. Landholding covered by CLOAs in the name of
cooperative or farmer's organization, may, at the option of the organization, also
be subdivided based on the share of each member provided that the subdivision
as determined by the DAR shall be economically feasible. [DAR A. O. No. 03
(1993), III (E).] Subdivision of lands under collective CLOA is governed byA.O.
No. 03, Series of 1993.
Factors Considered in Land Distribution
In the equitable distribution of lands subject of CARP, actual occupancy of a
tenant shall be the basis of the award, provided it does not exceed three
hectares. For untenanted lands, all the farmworkers therein shall be considered
as potential beneficiaries in the estate; provided that the proportional share of
each will not exceed three (3) hectares; otherwise, additional ARBS, shall be
considered. For unoccupied lands, each identified ARB may be allowed the
award ceiling of three hectares, provided that there are enough lands for
distribution under CARP in the barangay to accommodate others who are equally
qualified but who may not have been considered as awardees in such land under
acquisition. In all cases, the aggregate award to an ARB shall not exceed the
limit of three hectares and his total land ownership as a result of the award shall
not exceed three (3) hectares. (DAR A.O. No. 10 [1990], II [D])
Distribution Procedure
The MARO, upon completion of land acquisition, validates the list of qualified
beneficiaries who were identified during the acquisition phase who are still
present and qualified to receive the land. Through a letter or CARP Beneficiary
Certificate (CBC), the identified ARBs are formally notified by the MARO that they
have qualified to receive the land. The ARBs are consulted by the MARO as to
their preferred mode of distribution . Thereafter the Land Distribution Folders are
prepared and based on the ARBs preference and submitted to the PARO.
Upon transmittal, the PARO reviews all documents and generates the
Certificates of Land Ownership Award (CLOAs). If the ARBs prefer individual
parcels, the PARO requests the DENR to conduct subdivision survey. The PARO
then submits the CLOAs to the DAR Regional Office which causes them to be
signed by the Secretary. Lastly, the PARO registers the CLOAs with the Register
of Deeds and forwards the same to the MARO for distribution. (DAR A.O. No. 19
[1990]).
A compelling issue in respect to land distribution is the matter of physical
possession by DAR as a necessary prerequisite to its distribution to the ARBs. It
is submitted that physical possession is not necessary for land to be distributed.
Nothing inR.A. No. 6657requires DAR to take physical possession as a
precondition for redistributing lands subject of acquisition. What is required is
"immediate possession" under Section 16 or "actual possession" under Section
24. Actual possession of the land consists in the manifestation of acts of
dominion over it of such a nature as a party would naturally exercise over his
own property. (Ramos vs. Dir. of Lands [39 Phil 175 [1918]). In issuing the CLOA,
the Republic of the Philippines, which became the registered owner of subject
property, acting through DAR, exercised an act of dominion over the landholding
as redistribution involves disposition or alienation. Having manifested its
dominion over the land, the Republic of the Philippines through DAR, is deemed
to be, for all legal intents and purposes, in actual possession thereof.
Redistribution is not limited to the installation of farmers in the landholding. The
generation and distribution of CLOAs is embraced within the concept of
redistribution.
Distribution of Homelots
A homelot refers to a parcel of agricultural land used by the ARB as the site of
his permanent dwelling including the area utilized for raising vegetables, poultry,
pigs and other animals and engaging in minor industries. The area of the homelot
may not exceed 1,000 square meters. It is an integral part of the farm and an
indispensable factor in farm operations. The procedure for the acquisition and
distribution of farmlots likewise apply to homelots. If the homelot of a tenant-
beneficiary falls within the retained area of the landowner, the beneficiary may be
made to transfer his dwelling to his farmlot or other area to be designated for his
homelot which shall be mutually agreed upon by the parties. Provided that the
landowner shoulders the cost of the transfer of his dwelling and the agreed cost
of other improvements introduced by the tenant-beneficiary on said homelot.
[DAR A.O. No. 12 [1991], II [C])
Distribution of Commercial Farms and Facilities
Commercial farms may be distributed collectively or individually. Qualified
beneficiaries shall be awarded a maximum of three (3) hectares or a minimum of
one (1) hectare each in case the land is not sufficient to accommodate them.
Toexpedite the acquisition, the commercial farms shall be initially distributed
collectively or under co-ownership. In the case the beneficiaries desire to
partition the land, DAR shall first determine whether it is economically feasible to
divide the land, in coordination with the Department of Agriculture and other
concerned agencies. Thereafter, the beneficiaries may, by majority vote, decide
whether to proceed with the partition or not. In the event the beneficiaries decide
to partition, the land shall be allocated to the individual beneficiaries by drawing
lots in the presence of DAR Representatives. (Section 17DAR A.O. No. 2-1998)
Facilities and improvements acquired shall be distributed collectively, through
a Deed of Transfer which shall specify the names of the ARBs and duly
annotated in the CLOAs generated over the subject landholding where said
facilities and improvements are found. Areas where the facilities and
landholdings are found are deemed common areas and shall not be partitioned
individually. (Section 28DAR A.O. No. 02-98)
Collective CLOAS shall be generated within thirty (30) days upon receipt by
the PARO of the certified copy of the certificate of title in the name of the
Republic of the Philippines.
In individual CLOAs shall be generated within thirty (30) days upon receipt of
the approved Segregation Plan (ASP). However in the case of individual
distribution and considering the time and financial constraints particularly in the
conduct of individual surveys, a collective CLOA may be generated in the interim
over the subject landholding (Section 18,DAR A.O. No. 02-1998)
 CLOAs shall be registered immediately upon generation. (Section 20DAR
A.O. No. 02-98)
Distribution of Corporate Farms
The general rule is that corporate farms are distributed directly to the
individual worker-beneficiaries. However, in case it is not economically feasible
and sound to divide the land, corporate farms shall be owned collectively by the
worker-beneficiaries who shall form a cooperative or association which will deal
with the corporation or business association. In the latter case, the individual
members of the cooperatives or corporations shall have homelots and small
farmlots for family use, to be taken from the land owned by the cooperative or
corporation. (Rep. Act No. 6657[1988], sec. 29).
Corporate farms owning or operating under lease or management contract
Pending final land transfer, corporate farms that own or operate under lease
or management contract and realize gross sales in excess of P5 million are
mandated to execute a production and profit sharing (PPS) plan provided
underDAR AO No. 8 (1988). The PPS plan is imposed in order to allow the
farmworkers in corporate farms to realize an improvement in their farm income
pending final transfer of the farm.
All farmworkers in a corporate farm, whether classified as regular, seasonal,
technical or other farmworkers are entitled to PPS. On the other hand,
managerial and supervisory employees are excluded from entitlement to PPS.
(DAR Adm. O. No. 8 [1988])
PPS are distributed to farmworkers, over and above the compensation they
are currently receiving, based on the following schedules:
1.Three (3%) of Annual Gross Sales from 15 June 1988 until final land
or corporate stock transfer to the farmworker-beneficiaries is effected,
provided that the employer is not obligated to pay more than 100% of the
regular annual compensation of the farmworker-beneficiaries;
2.In addition, 10% of net profit after tax, provided that in cases where
the retention right is allowed, the amount to be distributed shall be reduced
by an amount equivalent to the proportion of the retained area to the total
land area. (DAR Adm. O. No. [1988])
To ensure that corporate farm employers comply with the PPS provisions, the
Secretary of DAR or his authorized representatives shall have the power to order
and administer compliance with the PPS provisions and to require submission of
reports, compel the production of books and documents, compel answers to
interrogatories, issue subpoena and subpoenaduces tecum, and enforce its writs
through Sheriffs or other duly deputized officers. Moreover, Sections 73 and 74
ofRA 6657regarding prohibited acts and omissions and the penalties therefor,
are applicable to any person or entity found to be violating any PPS provision.
(DAR Adm. O. No. 8 [1988])
Proof of Ownership of Awarded Lands
The Certificate of Land Ownership Award evidences the ARB's ownership in
respect to private agricultural lands covered underR.A. No. 6657(Rep. Act No.
6657 [1988], sec. 24). Ownership of public lands, upon the other hand, are
evidenced by Free Patents. Emancipation Patents is the ARBs proof of
ownership of lands awarded under Operation Land Transfer. Discussing the
nature of an Emancipation Patent, the Supreme Court ruled in the case
ofVinzons-Magana vs. Estrella(201 SCRA 536 [1991]) that it is only compliance
with the prescribed conditions which entitles the farmer/grantee to an
emancipation patent by which he acquires the vested right of absolute ownership
in the landholding a right which has become fixed and established and is no
longer open to doubt and controversy.
The pronouncement of the court respecting the impregnable character of an
Emancipation Patent should be qualified. The mere issuance of an Emancipation
Patent does not put the ownership of the ARB beyond attack and scrutiny. It must
be noted thatP.D. No. 946vests the Court of Agrarian Relations (now the DAR
Adjudication Board) jurisdiction over cases involving the cancellation of
emancipation patents issued underP.D. No. 266(Pres. Decree [1976], sec. 12
[g]). This only goes to show that ownership of awarded lands covered by
Emancipation Patents may be challenged. The aforecited Supreme Court ruling
presupposes that the issuance of emancipation patents to the ARB is not tainted
with any irregularity such that it acquires the character of indefeasiblity.
TheVinzons- Maganaruling must be appreciated in this context.
Rights and Obligations of Beneficiaries
Once a Certificate of Land Ownership Award has been issued to a beneficiary
and registered in his name, it serves as an evidence of title to the land, entitling
the beneficiary to occupy the land, cultivate it, and maintain possession of the
same. cSIADH

An agrarian reform beneficiary is obliged to exercise the diligence of a good

father of a family in the use, cultivation, and preservation of the land and the
improvements thereon. His rights to the land, as well as to support services to
which he may be entitled as a beneficiary shall be forfeited in the event that he
neglects, abandons, misuses, or sells the land.
The beneficiary is also obliged to keep the land awarded to him intact, and he
may not subdivide the land in favor of his children or heirs. The three hectares
have been identified as an economic-sized family farm which must be preserved
as a single operating unit to promote the farm's economic viability. Even if the
beneficiary dies, his heirs are not allowed to divide the land into smaller units.
However, such heirs are entitled to receive the land by way of hereditary
succession. This means that the land may be transferred either to the spouse of
the beneficiary, or in his or her absence or incapacity, to the eldest child who
meets the qualifications to be a CARP beneficiary, particularly the requirement of
willingness, aptitude, and ability to cultivate the land and make it productive. The
heir who succeeds to the land is under obligation to pay the other heirs their legal
shares in the property of the deceased beneficiary. In the absence of qualified
heirs or children, he land shall revert to the DAR, which shall identify a new
beneficiary the land.
A beneficiary is likewise obliged to comply with the provisions ofR.A.
6657.Memorandum Circular No. 19, Series of 1996,supra., provides for the
grounds for perpetual disqualification of agrarian reform beneficiaries. The
grounds enumerated in this Memorandum Circular are violations of various
provisions ofR.A. 6657and administrative rules and regulations issued pursuant
to this law.
Protection of Rights of Member-Beneficiaries
The protection of rights of member-beneficiaries may be ensured in the
articles of incorporation and in the by-laws of the organization, which the
member-beneficiaries themselves enact and approve. Restrictions in the transfer
of shares or membership rights, by providing that such transfer shall be valid only
if made in favor of another qualified beneficiary, may be adopted. The contract of
membership may likewise contain provisions ensuring that the rights of member-
beneficiaries to ownership or other privileges as members are protected.
The interests of farmer-members may also be adequately protected according
to the exit provisions inRepublic Act No. 6938, otherwise known as the
Cooperative Code. Articles 31 and 32 of the Code provides:
Art. 31.Termination of Membership. (1) A member of a cooperative may,
for any reason, withdraw his membership from the cooperative by giving a sixty
(60)-day notice to the board of directors. The withdrawing member shall be
entitled to a refund of his share capital contribution and all other interests in the
cooperative: Provided, That such refund shall not be made if upon such payment
the value of the assets of the cooperative would be less than the aggregate
amount of its debts and liabilities exclusive of his share capital contribution.
(2) The death, insanity, insolvency or dissolution of a member shall be
considered an automatic termination of membership.
(3) A member may be terminated by a vote of the majority of all the members of
the board of directors for any of the following causes:
(a) When a member has not patronized the services of the
cooperative for an unreasonable period of time as may
be fixed by the board of directors;
(b) When a member has continuously failed to comply with
his obligations;
(c) When a member has acted in violation of the by-laws
and the rules of the cooperative; and
(d) For any act or omission injurious or prejudicial to the
interest or the welfare of the cooperative.
A member whose membership the board of directors may wish to terminate shall
be informed of such intended action in writing and shall be given an opportunity to
be heard before the said board makes its decision. The decision of the board shall
be in writing and shall be communicated in person or by registered mail to the
member and shall be appealable, within thirty (30) days after the decision is
promulgated, to the general assembly whose decision therein, whether in a
general or special session, shall be final. Pending a decision by the general
assembly, the membership remains in force.
Art. 32.Refund of Interests. All sums computed in accordance with the
bylaws to be due from a cooperative to a former member shall be paid to him
either by the cooperative or by the approved transferee, as the case may be, in
accordance with this Code.
 Transferability of Awarded Lands
Section 27 prohibits the sale, transfer, or conveyance of lands acquired by
beneficiaries underR.A. 6657within ten (10) years from the date of award. This
restriction on the transferability of the land is annotated on the certificate of title in
the Register of Deeds. Lands awarded pursuant toE.O. 228andP.D. No.
27may be alienated only upon full payment of amortizations on the purchase
price.
However, the lands acquired under CARP may be alienated through
hereditary succession, or in favor of the government, the Land Bank, or other
qualified beneficiaries even before the expiration of the ten-year period. This
provision presumes that the land to be alienated has been fully paid for by the
beneficiaries.
If the land has not yet been fully paid for, only the rights to the land may be
sold, transferred, or conveyed, and with prior approval of the DAR, and only to
the heirs of the beneficiary or to another beneficiary.
The buyer of agricultural land alienated under this section is still subject to the
aggregate ownership ceiling of five (5) hectares.
Mortgage of awarded land not equivalent to sale, disposition, or
conveyance
Mortgage is a land transaction allowed by the law, and hence is not a sale,
disposition, or conveyance contemplated by the prohibition. The governing
administrative issuance on land transactions isDAR Administrative Order No. 1,
Series of 1989. Section II.3.d provides:
The following are not prohibited transactions and may be registered by the
Register of Deeds without prior clearance from DAR:
d. Deed of real estate mortgage executed by the . . . beneficiary.

Since mortgage is not a prohibited transaction, it follows that it is not

tantamount to selling, disposing of, or conveying the awarded land, which are
prohibited transactions. Moreover, the framers of the law, in not expressly
prohibiting mortgage, may have anticipated circumstances in which the farmer-
beneficiary is left with no alternative but to mortgage his land in order to respond
to emergency situations such as sickness in the family (seeTorres vs. Ventura,
187 SCRA 96, at 103).
Farmer-beneficiary may alienate even without complete payment of
amortizations
The second paragraph of Section 27 ofR.A. 6657allows a farmer-beneficiary
to transfer or convey his rights to the land, provided that prior approval of the
DAR has been obtained, to any qualified heir of the beneficiary or to any other
beneficiary. An essential condition of such transfer or conveyance is that the
transferee shall cultivate the land himself and maintain its productivity as
agricultural land. The failure to comply with this condition shall result in the
availability of the land for distribution to another qualified agrarian reform
beneficiary.
 Disqualification of beneficiary who sold or transferred right to awarded
land
Section 73 (f) provides that the sale, transfer, or conveyance by a farmer-
beneficiary of the right to use or any usufructuary right over the land must be
made "in order to circumvent the provisions" ofR.A. 6657. This must be
harmonized with Section 27, which allows the farmer-beneficiary to transfer or
convey the land or his rights to the land, provided that it is with the prior approval
of DAR.Administrative Order No. 8, Series of 1995, governs the procedure for
obtaining this consent.
Administrative Order No. 10, Series of 1989provides that beneficiaries who
have sold the land they received underR.A. 6657orP.D. 27are no longer
qualified to receive land underR.A. 6657, without any qualification on the manner
of disposition.
We believe, however, that the law intends to preserve the land in the hands of
the beneficiary and to make him benefit from the land for as long a time as
feasible. The administrative issuances regarding the obtention of consent to
convey the land merely exempt the vendor from criminal prosecution for
circumventingR.A. 6657, and cannot be construed to give the farmer-beneficiary
license to convey the land without forfeiting his right to become a beneficiary
again.
Manner of Payment by Beneficiaries
For lands acquired by DAR through the compulsory acquisition scheme or
through voluntary offer to sell, Section 26 provides that lands awarded to
beneficiaries shall be paid for by the farmers in thirty (30) annual amortizations at
six per cent (6%) interest per annum. These are regular annual amortizations,
payable to the Land Bank of the Philippines.
For lands acquired under the VLT/DPS scheme, Section 21 provides that
payment shall be made directly by the farmer-beneficiaries to the landowner
under the terms and conditions mutually agreed upon by the parties. Such terms
and conditions shall be subject to the approval by the DAR.
Pursuant to Section 20, the DAR is mandated to ensure that these terms and
conditions are not less favorable to the farmer-beneficiary than those which
would have prevailed had the DAR acquired the land under the compulsory
acquisition scheme.
If the landowner and the farmer cannot agree on the price of the land, Section
21 provides that the land shall be subject to compulsory acquisition, following the
procedure under Section 16.
Payment by the beneficiaries, in any case, shall start one year from the date
of the registration of the CLOA with the Register of Deeds.Joint DAR-LBP
Memorandum Circular No. 30, Series of 1997states that in case occupancy of
the land occurred before the date the CLOA is registered, then the basis for the
amortization schedule would be the date of CLOA registration. If the occupancy
date occurred after the date of CLOA registration, then the occupancy date would
be the basis for the amortization schedule.
Computation of amount of amortizations
 UnderAdministrative Order No. 2, Series of 1998, the basis of computation
shall be the cost of the land and the permanent improvements thereon.
Pursuant to the mandate of the law that the payments shall be made
affordable to the beneficiaries, however,Administrative Order No. 2, Series of
1998provides that the amortizations may be reduced to:
(1)2.5% of annual gross production (AGP) for the first three years
(2)5% of the AGP for the fourth and fifth years
(3)10% of the AGP for the sixth to thirtieth years, if this amortization
ceiling is lower than the regular amortization.
The annual gross production is defined as the peso value of the annual yield/
produce per hectare of the land awarded to farmer-beneficiaries, which is
reflected in the valuation portion of the Claim Valuation and Processing Form.
In the case of VLT/DPS, for the purposes of computing the regular
amortization, the AGP shall be that agreed upon by the parties during the
proceedings for the determination of just compensation, and shall not be
changed throughout the period for payment of the value of the land.
The ceiling on the payments for lands voluntarily offered or compulsorily
acquired shall be the same. This is pursuant to the provision that, although the
terms and conditions of the VLT/DPS shall be mutually agreed upon by the
landowners and the farmer-beneficiaries, these should not be less favorable to
the ARB that those that would prevail had the land been acquired by the
government compulsorily (see Section 20 [b],R.A. 6657).
Effect of default in payment by beneficiary
In the case of land acquired under the VLT/DPS scheme, the land may be
repossessed in case the beneficiary fails to pay an aggregate of three (3)
consecutive annual amortizations from the date of receipt of the amortization
schedule, except if loss of crops occurs due to fortuitous event or force majeure.
Section 19 (c) provides that the voluntary agreement entered into by the
landowners and the beneficiaries under VLT/DPS shall include sanctions for non-
compliance by either party, subject to the approval by the DAR.
In the case of land voluntarily offered for sale or compulsorily acquired, the
failure of the beneficiary to pay at least three (3) annual amortizations to the Land
Bank gives the bank the right to foreclose the land, with the exception of loss of
crops due to force majeure. In both cases, the beneficiary shall be permanently
disqualified from becoming a beneficiary again.
Failure to pay due to fortuitous event
If the default is occasioned by natural calamity and/or force majeure, or any
other instance when the failure to produce is not due to the fault of the farmer,
the scheduled amortization payment is limited to the maximum amount of 10% of
the annual gross production (see Section IV,A.O. No. 2, Series of 1992). The
default due to fortuitous event shall not result in the permanent disqualification of
the beneficiary.
Effect of higher valuation
 The amount of regular annual amortization is not affected in case the
landowner is granted by the courts a higher valuation than that pegged by the
DAR/LBP/BARC during the valuation process. The only effect of this change is to
increase government assistance or subsidy.
Repossessed land does not revert to former landowner
In case awarded land is repossessed by the government, the DAR shall
cancel the CLOA issued to the beneficiary, and transfer the land to either of the
following:
a)A qualified heir of the beneficiary who shall assume the balance of
the value of the land; or
b)In the absence of a qualified heir, a new qualified beneficiary who,
as a condition for such transfer, is willing to abide by the terms of the
existing VLT/DPS agreement, and who will pay for the entire value of the
land.
Beneficiary in default will not forfeit payments
If the land is sold to a new beneficiary other than an heir of the former
beneficiary, the landowner shall refund the payments to the latter, in one lump
sum or in installments, and shall pay for the improvements made by the former
beneficiary, less the lease rentals for the duration of his use of the land and other
charges allowed by law.
Assistance to farmer-beneficiaries in making payments
Administrative Order No. 2, Series of 1998defines "assistance to farmers" as
follows:
(a)The difference between the regular annual amortization (based on
the amount paid or approved for payment to the landowner) and the
affordable amount during the first five (5) years after the award of the land
to the ARBs where the affordable amount is lower that the regular
amortization;
(b)The difference between the regular annual amortization and ten
percent (10%) of the AGP during the 6thto 30thyear, whenever such 10%
AGP is lower that the regular amortization; and
(c)Rebate of 2% of interest in case the beneficiary makes an early
payment.
Production and Profit Sharing
Under Sections 13 and 32 ofRA 6657, individuals or entities owning
agricultural lands and operating under lease or management contract are
required to execute production and profit-sharing plan with their farmworkers or
farmworkers' organization, pending final distribution of the land or implementation
of the stock distribution scheme. The provisions under AO 8 (1988) governs
production and profit sharing plan underRA 6657.
A production and profit-sharing plan is required in order to improve the income
of farmworkers pending final land transfer or stock distribution or full control in
the case of deferred commercial farms and lease-back arrangements.
 The following employers are required to execute production and profit-sharing
plan provided that their annual gross sales exceed P5 million:
1)Any enterprise owning or operating agricultural lands under lease,
management contract, production venture or other similar arrangement;
2)Multinational corporations engaged in agricultural activities; and
3)Commercial farms devoted to aquaculture including salt beds,
fishponds and prawn ponds, fruit farms, orchards, vegetable and cut-flower
farms, and cacao, coffee and rubber plantation.
All farmworkers of covered employers, regardless of duration, who are directly
working on the land of the corporation or other entities, whether classified as
regular, seasonal, technical or other farmworkers are covered in the mandated
production and profit-sharing plan. To qualify, however, said employees must not
own more than three (3) hectares of agricultural land.
Covered employers are required to pay the following, over and above the
compensation currently received by the farmworkers:
1)Three (3%) of Annual Gross Sales from 15 June 1988 until final land
or corporate stock transfer to the farmworker-beneficiaries is effected,
provided that the employer is not obligated to pay more than 100% of the
regular annual compensation of the farmworker-beneficiaries.
2)In addition, 10% of net profit after tax, provided that in cases where
the retention right is allowed, the amount to be distributed shall be reduced
by an amount equivalent to the proportion of the retained area to the total
land area. [AO 8 (1988)]
Existing production and profit-sharing granted prior to the effectivity of CARP
shall be credited as compliance with the mandated production and profit-sharing
plan. However, where the benefits received are less than what is provided
underRA 6657, covered employers shall pay the difference to the farmworkers.
Non-compliance with the provisions on production and profit-sharing is a
violation covered by the provisions on prohibited acts and omissions and the
penalties therein under Sections 73 and 74 ofRA 6657.
The enforce the above mandate, DAR through its Secretary or authorized
representatives has the following powers:
1)To order and administer compliance with the Production and Profit-
Sharing provisions ofRA 6657;
2)To require covered employers to submit report on the distributed
production and profit shares;
3)To compel the production of books and other relevant documents of
covered employers;
4)To compel answers to questions needing clarifications to shed light
on problems encountered in the implementation of the plan;
5)To issue subpoena; and
6)To enforce its writs through sheriffs or other duly deputized officers.
 Tax Exemption
Transfers of ownership underR.A. No. 6657are tax exempt as provided in
Section 66 thereof, as follows:
Transactions under this Act involving transfer of ownership, whether from
natural or juridical person, shall be exempted from taxes arising form capital
gains. These transactions shall also be exempted from the payment of
registration fees, and all other taxes and fees for the conveyance or transfer
thereof; Provided, That all arrearages in real property taxes, without penalty or
interest, shall be deductible from the compensation to which the owner may be
entitled.
It is submitted that tax-exempt transactions contemplated in the above-quoted
provision only involve lands placed under the coverage of the CARP and
acquired through any of the modes of acquisition provided under the law, i.e.,
compulsory acquisition, voluntary offer to sell, voluntary land transfer or direct
payment scheme for the purposes of transferring these to the beneficiaries.
Hence, transfer of homelots to farmers as disturbance compensation in the case
of lands already exempted from CARP coverage is taxable. This is so since the
farmer-transferees in this case did not acquire the land as agrarian reform
beneficiaries within the context ofR.A. No. 6657. It must be emphasized that tax
exemptions are to be strictly construed against the taxpayer. Therefore, any
transaction not expressly enumerated in Section 66 ofR.A. No. 6657should be
construed as not included in the tax-exempt provision of the law. (Memorandum
of Asst. Sec. Peaflor for the Secretary, 06 April 2000)
Standing Crops
Section 28 provides that the landowner is entitled to retain his or her share in
the standing crops unharvested at the time the DAR shall take possession of the
land under the compulsory acquisition scheme, and shall be given reasonable
time to harvest the same to the extent of the share pertaining to him/her.
Standing crops refer only to those crops existing at the time DAR takes
possession of the land.
In the case of sugarlands, the term shall include the original crop only,
excluding future harvests from ratoons, if what is existing at the time the DAR
takes possession of the land is the original crop. If what is existing at the time of
possession is already the first or second crop, the landowner shall be entitled to
harvest his/her share in that ratoon crop.
Support Services
Agrarian reform involves not only land redistribution, but also the totality of
factors and support services designed to uplift the economic status of the
beneficiaries and all other arrangements which will allow the beneficiaries to
receive a just share of the fruits of the lands they work. (Section 3 (a)R.A. No.
6657). To address the latter, the Office of Support Services was created to
provide general support and coordinative services in the implementation of the
program. (Section 35,R.A. No. 6657). Notwithstanding the enactment ofR.A. No.
7905otherwise known as "An Act to Strengthen the Implementation of the
Comprehensive Agrarian Program and for other Purposes" support services by
the government remained limited because of fiscal constraints. Only 370,000
beneficiaries within the Agrarian Reform Communities (ARCs) out of 3.34 million
as of 1998 are reached by such services. (CARP Annual Report, 1998, PARC
Secretariat). Thus, the Department saw the need to mobilize the private sector to
ensure adequate support services. It is within this framework that Joint Economic
Enterprises was conceived. Joint Economic Enterprises refer to partnerships or
arrangements between beneficiaries and investors to implement an agribusiness
enterprise in agrarian reform areas. The arrangement finds legal basis in Section
35 and 44 ofR.A. No. 6657, as amended byR.A. No 7905, as follows:
There is hereby created the Office of Support Services under the DAR to be
headed by an Undersecretary. . . . This Office shall provide general support and
coordinative services in the implementation of the program. Particularly in carrying
out the provisions of the following services to farmer beneficiaries and affected
landowners: . . . (2) Infrastructure development and public works projects in areas
and settlements that come under agrarian reform . . . . For the purpose of
providing the aforecited infrastructure and facilities, the DAR is authorized to enter
into contracts with interested private parties on long term basis or through joint
venture agreements or build-operate-transfer schemes, . . . (10) Assistance in the
identification of ready markets for agricultural produce and training in other various
aspects of marketing . . .
The PARCCOM shall coordinate and monitor the implementation of the CARP in
the province . . ., in addition, it shall recommend to the PARC the following: . . . 3)
continuous processing of applications for lease back agreements, joint venture
agreements and other schemes that will optimize the operating size for agricultural
productionand also promote both security of income to farmer beneficiaries;
Provided that lease back arrangements should be the last resort. (Underscoring
supplied)

Joint Economic Enterprises

The parties to a joint economic enterprise are the agrarian reform
beneficiaries and investors who may either be private individuals, partnerships or
corporations; non-government organizations; cooperatives or associations of
beneficiaries; government-owned or controlled corporations and other entities
(Section 6DAR A. O. No. 2-1999) It must be noted that the beneficiaries referred
to include holders of Emancipation Patents (EPs) of Certificates of Land
Ownership Awards (CLOAs). Qualified beneficiaries of agricultural lands for
distribution under the agrarian reform program may also avail of the same
provided that the land is distributed to the beneficiaries before an agribusiness
agreement is executed. Small landowners may engage in joint economic
enterprises involving their retained areas. (Section 4,DAR A.O. No. 2-1999)
In a joint economic enterprise, ownership of land remains with the
beneficiaries. Only the use thereof, where necessary, is conveyed. The purposes
for which a joint economic enterprise is to be established are production,
processing and marketing of products, or introduction, maintenance,
rehabilitation or upgrading of agricultural capital assets, infrastructure or facilities,
or provision of management expertise, technology, equipment and other services
to beneficiaries. The equity and interest of the parties to a joint economic
enterprise depend on the nature of enterprise and extent of participation. Parties
hall exercise shared responsibility and co-determination on matters affecting the
viability of land and income of beneficiaries. The parties shall agree on the period
and cause the annotation of the agreement on the titles of the properties.
(Section 6,DAR A.O. No. 2-99)
Types of Joint Economic Enterprises
Joint Venture
In a joint venture, the beneficiaries contribute use of the land together with the
facilities and improvement while the investor provides capital and technology for
production, processing and marketing of goods, or for construction, rehabilitation,
upgrading of agricultural capital assets, infrastructure and facilities. The joint
venture has a personality separate and distinct from the parties. The equity of
beneficiaries in a joint venture depends on the value of use of land and
improvements at the minimum, equal to lease rental. The equity of the
beneficiaries is not subject to dilution. The joint venture is to be managed jointly
by the investors and the ARBs. The beneficiaries are given a fixed number of
seats in its board of directors corresponding to their equity interest. The
beneficiaries and/or their dependents are to be given preference for employment
in the joint venture.
Production, Processing and Marketing Agreement
In a production, processing and marketing agreement, the beneficiaries
engage in production and processing of agricultural products and directly sell
them to the investor who provides loans and technology. Incorporated in said
agreement is a price review mechanism taking into consideration industry
practice, prevailing market prices and other appropriate factors.
Build Operate Transfer Scheme
In a build-operate-transfer scheme, the investor builds or rehabilitates
facilities and improvements necessary to make the lands productive and directly
operates the same for a certain period. The facilities and improvements are
constructed at the investor's own expense, and he shall not be allowed to
access, for this purpose, government funds that would, otherwise be available as
financing or capital for beneficiaries. In said scheme, the beneficiaries receive
reasonable rent for the use of land. Upon expiration of the agreed period,
ownership of the facilities and other improvements is consolidated in the name of
the beneficiaries.
Management Contract
In a management contract beneficiaries hire the services of a contractor with
managerial skills and capability to manage and operate the farm in exchange for
a fixed wage and/or commission. The beneficiaries, in turn provide labor. All
income from the operation of the farm accrue exclusively to the ARBs. In this
arrangement, a human resource development program for the members of the
cooperative, association or federation is to be implemented to facilitate transfer of
technology and management techniques to enable them to directly manage and
operate the farm.
Service Contract
 In a service contract, beneficiaries engage for a fee the services of a
contractor for mechanized land preparation, cultivation, harvesting, post-harvest
operations and other activities. The service contractors may include other ARBs
with necessary equipment and facilities for mechanized farm operations.
Beneficiaries who wish to engage in service contracting but with limited financial
capability may avail of loan facilities or credits pursuant to Section 35 ofR.A. No.
6657as amended.
Lease Contract
In a lease contract, beneficiaries bind themselves to give investor enjoyment
or use of their land for a price certain and for a definite period. In this
arrangement, the investor provides capital to operate the farm, construct facilities
and other improvements, process and market agricultural products. The lessee
may either be a former landowner or other investors. However, under Section 44
ofR.A. No. 6657, as amended byR.A. No. 7905, leaseback arrangements
should be the last resort. This means that the ARBs and the investor (former
landowner) must first consider other types of agribusiness arrangements before
deciding on a lease. The lessee/investor is to give priority to qualified and willing
ARBs and their dependents for employment in the enterprise. In such cases, the
ARBs are to be treated as employees of the lessee/investor and are entitled to
the mandated minimum wage and other economic benefits granted under
theLabor Codeand other existing laws.
Combinations or Phased Arrangements
Combinations or phased arrangements combine the features of any or all of
the preceding forms of agribusiness enterprises, or provide for a phased
implementation thereof. For instance, production and processing of agricultural
corps may be covered by contract growing, while marketing may be under a joint
venture. Small growers may engage production, while a corporation may
undertake processing and marketing. Initially, the arrangement may provide for
leaseback, followed by a contract growing, and finally, joint venture.
Other Schemes
Other schemes refer to other agribusiness arrangements or schemes that
optimize the operating size of distributed lands for agricultural production
consistent with existing laws and regulations. (Section 7,DAR A.O. No. 2-99)
CHAPTER 6
Adjudication of Agrarian Reform Matters
Jurisdiction of DAR
Sec. 50 ofRA 6657provides that the DAR is vested with primary jurisdiction
to determine and adjudicate agrarian reform matters and shall have exclusive
jurisdiction over all matters involving the implementation of agrarian reform,
except those falling under the exclusive jurisdiction of the DA and the DENR. In
the exercise of its jurisdiction, DAR shall not be bound by technical rules of
procedure and evidence but shall proceed to hear and decide all cases, disputes
or controversies in a more expeditious manner, employing all reasonable means
to ascertain the facts of every case in accordance with justice and equity and the
merits of the case.
 Adjudication of agrarian reform matters involves the exercise by the DAR
Secretary of its exclusive jurisdiction over agrarian law implementation (ALI)
cases or the exercise by the DAR Adjudication Board (DARAB) of its jurisdiction
under the 1994 DARAB Revised Rules of Procedure. Petitions for the
determination of just compensation to landowners and the prosecution of all
criminal offenses underRA 6657falls within the original and exclusive jurisdiction
of the Special Agrarian Courts (SACs).
Restraining orders or injunctions issued by regular courts
Any restraining order or injunction issued by courts against DAR pursuant to
the implementation of CARP is null and void as it violates the express provisions
of Sec. 55 and 68 ofRA 6657. Sec. 55 provides that no court in the Philippines
shall have jurisdiction to issue any restraining order or writ of preliminary
injunction against the PARC or any of its duly authorized or designated agencies
in any case, dispute or controversy arising from, necessary to, or in connection
with the application, implementation, enforcement, or interpretation of agrarian
laws. On the other hand, Sec. 68 states that no injunction, restraining order,
prohibition or mandamus shall be issued by the lower courts against DAR, DA,
DENR and DOJ in their implementation of CARP.
ALI Cases
UnderDAR AO 6 (2000), ALI cases refer to those agrarian cases falling under
the exclusive jurisdiction of the DAR Secretary. These cases strictly involve the
administrative implementation ofRA 6657and other agrarian laws, rules and
regulations. These cases include the following:
a)Classification and identification of landholdings for coverage under
CARP, including protests or oppositions thereto and petitions for lifting of
coverage;
b)Identification, qualification or disqualification of potential farmer-
beneficiaries;
c)Subdivision surveys of lands under CARP;
d)Issuance, recall or cancellation of Certificates of Land Transfer
(CLTs) and CARP Beneficiary Certificates (CBCs) in cases outside the
purview ofPD 816, including the issuance, recall or cancellation of EPs or
CLOAs not yet registered with the Register of Deeds;
e)Exercise of the right of retention by the landowner;
f)Application for exemption under Section 10 ofRA 6657as
implemented byDAR AO 13 (1990);
g)Application for exemption pursuant toDOJ Opinion No. 44 (1990)as
implemented byDAR AO 6 (1994);
h)Application for exemption underDAR AO No. 9 (1993);
i)Application for exemption under Section 1 ofRA 7881as
implemented byDAR AO 3 (1995);
j)Issuance of certificate of exemption for lands subject of VOS and CA
found unsuitable for agricultural purposes pursuant toDAR MC 34 (1997);
 k)Application for conversion of agricultural lands to residential,
commercial, industrial or other non-agricultural uses including protests or
opposition thereto;
l)Right of the ARBs to homelots;
m)Disposition of excess area of the FBs landholdings;
n)Transfer, surrender or abandonment by the FBs of his farmholding
and its disposition;
o)Increase of awarded area awarded by the farmer-beneficiary;
p)Conflict of claims in landed estates and settlements; and
q)Such other matters not mentioned above but strictly involving the
administrative implementation ofRA 6657and other agrarian laws, rules
and regulations as determined by the Secretary. (DAR Adm. O. No. 6
[2000], sec. 2).
In the adjudication of ALI cases, the Secretary or his authorized
representative may exercise quasi-judicial powers granted under Section 50
ofRA 6657. He or his authorized representative shall have the power to summon
witnesses, administer oaths, take testimony, require submission of reports,
compel the production of books and documents and answers to interrogatories
and issue subpoena, and subpoenaduces tecumand to enforce its writs through
sheriffs or other duly deputized officers. He or his authorized representative shall
likewise have the power to punish direct and indirect contempts in the same
manner and subject to the same penalties as provided in the Rules of Court.
Likewise, the Regional Director or the DAR official having jurisdiction over the
case, shall, motu propio or at the instance of a party, have the authority to issue a
Cease and Desist Order or Status Quo Order pending the resolution of the case
in the following instances:
a)where grave or irreparable damage will result to the parties;
b)where the doing or continuance of certain acts will render the case
moot and academic; or
c)where there is a need to maintain peace and order and prevent
injury or loss of life or property.
In this regard, the issuing authority may request the assistance of law
enforcement agencies to implement the order. (Sec. 17,DAR Adm. O. 6 [2000])
Moreover, the DAR shall not take cognizance of any agrarian controversy
unless a certification from the BARC has been submitted stating that the dispute
underwent mediation and conciliation without any success of settlement.
However, if no certification is issued by the BARC within thirty (30) days after a
matter or issue is submitted to it for mediation or conciliation the case or dispute
may be brought before the PARC. (Rep. Act No. 6657[1988], sec. 53)
Jurisdiction over ALI Cases
The Secretary shall have exclusive original jurisdiction over all ALI cases.
However, this jurisdiction may be delegated to certain DAR officials in
accordance with existing rules and regulations (DAR Adm. O. No. 6 [2000], sec.
6).
Protest/Petition for Lifting of Notice of Coverage/Application for
Exemption or Exclusion
Under Sec. 7 ofDAR AO 6 (2000), the Regional Director shall exercise
primary jurisdiction over protests or petitions for lifting of notice of coverage.
The Secretary shall exercise exclusive jurisdiction for application for the
issuance of exemption clearance underDAR AO 6 (1994)involving lands with an
area of more than five (5) hectares. For lands with an area of five (5) hectares
and below, the issuance of such clearance is delegated to the Regional Directors
(DAR Adm. O. No. 6 [2000], sec. 8 [a]).
Applications for exemption or exclusion underDAR AO 13 (1990),DAR AO 9
(1993),DAR AO 3 (1995)andDAR MC 34 (1997)and other pertinent rules and
regulations, shall be under the jurisdiction of the concerned DAR officials
identified therein, except those involving lands five (5) hectares and below
situated within the provinces of Cavite, Laguna, Batangas, Rizal and Quezon
(CALABARZON) which are now delegated to the concerned Regional Director.1
Conversion
Jurisdiction over applications for conversion shall pertain to the DAR officials
authorized to approve or disapprove applications for conversion of agricultural
lands to non-agricultural uses pursuant to Sec. 22 ofDAR AO 1 (1999)(DAR
Adm. O. No. 6 [2000], sec. 9).
Other ALI Cases
The jurisdiction over other ALI cases shall generally pertain to the Regional
Directors, except those cases specifically delegated to other DAR officials under
existing rules and regulations, or those that may subsequently be promulgated by
the Secretary (DAR Adm. O. No. 6 [2000], sec. 11).
Flashpoint Cases
Flashpoint cases are ALI cases which fall within the jurisdiction of the
Regional Director or the Director of the Bureau of Agrarian Legal Assistance
(BALA) and determined or certified by the Secretary or the Head Executive
Assistant which (a) threatens to disrupt the status quo in a particular area and
endanger life and limb as a result of the use of force from either the landowners'
side or farmer-beneficiaries' side or other parties; (b) are the subject of massive
pickets or which may immediately result in concerted mass actions either in the
DAR Central Office or in the field offices or at the site of the conflict; or (c) are of
such nature that the Secretary may assign for immediate resolution. (DAR
Memo. Circ. No. 13 [1997])
The following are the procedure in the resolution of flashpoint cases:
a)Once a case has been certified as a flashpoint case by the HEA or
the Secretary, the Director of the Special Concerns Staff (SCS) shall issue
an Order directing the Head of Office/Unit concerned where the case is
pending to transmit the entire case records, together with his comments or
 recommendations, to the Office of the SCS Director within 48 hours from
notice of the directive.
b)Within 24 hours from receipt of the case records, the SCS Director
shall issue a directive to all concerned parties to submit their respective
position papers and such other documentary evidence within ten (10) days
from notice. A clarificatory hearing, dialogue/conciliation/mediation or ocular
inspection may be conducted when appropriate.
c)Within five (5) working days from the conclusion of the investigation/
review/evaluation, the SCS Director shall rule on the case or submit his
recommendation for the resolution of the case.
d)An aggrieved party may file a notice of appeal, together with the
appeal memorandum, to the Assistant Secretary for Policy, Planning and
Legal Affairs Office (PPLAO). The latter office shall forward the records,
together with the evaluation on appeal made and proposed resolution, to
the Office of the Secretary.
e)The Secretary shall have five (5) working days to decide on the
appeal. The decision rendered by the Secretary shall be immediately
executory notwithstanding any duly perfected appeal. (DAR Memo. Circ.
No. 13 [1997])
However, a certification that a case is considered flashpoint shall merely serve
to accord utmost priority to the resolution thereof but shall not divest the
concerned DAR official of the authority to resolve such cases, unless specifically
directed in the national interest, or the Secretary himself has assumed jurisdiction
over the case. (Adm. O. No. 6 [2000], sec. 11)
Resolution of Disputes in Joint Economic Enterprises (JEE)
The following are the hierarchy of dispute resolution methods involving joint
economic enterprises:
1)voluntary methods;
2)mediation or conciliation by trained mediators or conciliators;
3)arbitration; and
4)To any of the following depending on the principal cause of action:
a)DAR Adjudication Board (DARAB) if it involves interpretation of
an agribusiness agreement or an agrarian dispute as defined in Sec. 3
(d) ofRA 6657;
b)Securities and Exchange Commission (SEC) if it involves an
intra-corporate dispute;
c)Cooperative Development Authority (CDA) if it involves an
intra-cooperative dispute; or
d)National Labor Relations Commission (NLRC) if it involves
employer-employee relations. (DAR Adm. O. No. 2 [1999])
 In this regard, the Secretary may issue such writs or orders, as may be
appropriate, to maintain the status quo and preserve peace and order in the farm
subject of a JEE, in the following cases:
a)where there is clear and imminent threat to life or property;
b)where the dispute will cause serious and irreparable damage
to either party or to the agribusiness enterprise; or
c)where, in his judgment, there is an urgent need to protect the
national interest. (DAR Adm. O. No. 2 [1999])
Sec. 14 ofDAR AO 6 (2000)provides that the filing of an application for
exemption, exclusion, conversion, retention or protest against coverage shall
have the following effects in so far as land acquisition and distribution are
concerned:
a)If the application or petition is filed before the issuance of the notice
of coverage, the notice of coverage shall not be issued until the application
or petition is finally resolved;
b)If the application, protest or petition is filed after issuance of the
notice of coverage, the DAR may proceed with the processing of the
claimfolder notwithstanding the pendency of the application, protest or
petition in accordance with the activities outlined underDAR AO 2 (1996),
as amended. The processing of the claimfolder may be suspended by the
PARO if upon proper review and evaluation of the Field Investigation Report
(FIR) submitted by the MARO, and upon personal verification of the
allegations in the application, protest or petition, it is determined that the
subject landholding is in fact exempted or excluded from CARP coverage.
Otherwise, the PARO may forward the claimfolder to the LBP for further
processing.
c)In case the application, protest or petition is filed while the
claimfolder is pending with LBP, or where the claimfolder has been
forwarded by the PARO notwithstanding such application, protest or
petition, the LBP shall continue with the processing of the land
compensation claim, except that the Certification of Deposit (COD) shall not
be issued to the PARO until the application, protest or petition is finally
resolved.
Period in filing actions
Under Sec. 13 ofDAR AO 6 (2000), petitions for lifting of notice of coverage
shall be filed within thirty (30) days from receipt of the Notice of Coverage by the
affected party. Failure by the affected party to file the protest or petition within the
prescribed period shall be deemed a waiver of his right thereto. If the action is
filed after the expiration of the thirty (30)-day period, the protest or petition shall
no longer be entertained or shall be summarily dismissed by the MARO or the
PARO, except in the following instances:
a)the protest or petition is based on allegations that subject
landholding is exempted from CARP coverage underDAR AO 6 (1994); or
 b)upon evaluation of pertinent documents and based on the physical
conditions obtaining in the property, it is determined by DAR that the subject
landholding is exempted from CARP coverage pursuant toDAR AO 13
(1990),DAR AO 9 (1993),DAR AO 3 (1995)andDAR MC 34
(1997)notwithstanding the issuance of the Notice of Coverage.
DARAB Cases
DAR Adjudication Board (DARAB)
The creation of DARAB was mandated underEO 129-A(1987) which aims at
reorganizing and strengthening the DAR. The DARAB was created under the
Office of the Secretary of the DAR and is given the powers and functions to
adjudicate specific agrarian reform cases.
Before the creation of the DARAB, the Courts of Agrarian Relations (CAR)
had the original and exclusive jurisdiction over agrarian reform matters.PD
946(1976) entitled "Reorganizing the Courts of Agrarian Relations, Streamlining
their Procedures and for Other Purposes," gave the CARs original and exclusive
jurisdiction over agrarian reform matters, except those that fall under the
jurisdiction of the Secretary of the DAR. With the passage ofBP 129(1980) or
the Judiciary Reorganization Act, the CARs were integrated into the RTCs and
the jurisdiction of the former was vested in the latter courts. However, with the
promulgation ofEO 229(1987), entitled "Providing the Mechanisms for the
Implementation of the Comprehensive Agrarian Reform Program (CARP)," the
RTCs were divested of their special jurisdiction to try agrarian reform matters.
UnderEO 229(1987), the DAR is vested with primary jurisdiction to
determine and adjudicate agrarian reform matters and has the exclusive
jurisdiction over all matters involving the implementation of agrarian reform,
except those that fall under the exclusive jurisdiction of the DA and the DENR.
This is also clearly provided in Sec. 50 ofRA 6657.
InMachete vs. Court of Appeals250 SCRA 176 (1995),private respondent
Celestino Villalon filed a complaint for collection of back rentals and damages
before the Regional Trial Court against the petitioners. The complaint alleged that
the parties entered into a leasehold agreement with respect to the private
respondent's landholdings in Bohol. Petitioners moved to dismiss the complaint
on the ground of lack of jurisdiction of RTC over the subject matter. Petitioners
alleged that the subject matter of the complaint falls squarely within the
jurisdiction of the DAR in the exercise of its quasi-judicial powers. The Supreme
Court declared the dispute to be agrarian in nature and therefore outside the
jurisdiction of the RTC. The Supreme Court held that:
Section 17 ofEO 229vested the DAR with quasi-judicial powers to determine
and adjudicate agrarian reform matters as well as exclusive original jurisdiction
over all matters involving implementation of agrarian reform except those falling
under the exclusive original jurisdiction of the Department of Agriculture and the
Department of Environment and Natural Resources in accordance with
law.Executive Order 129-A, while in the process of reorganizing and
strengthening the DAR, created the Department of Agrarian Reform Adjudication
Board (DARAB) to assume the powers and functions with respect to the
adjudication of agrarian reform cases" (at 179, 180).
In an earlier case,Quismundo vs. CA,201 SCRA 609 (1991), the Supreme Court
explained in detail the purpose for the creation of the quasi-judicial body, to wit:
Executive Order No. 229, which provides for the mechanism for the
implementation of the Comprehensive Agrarian Reform Program instituted by
Proclamation No. 131, dated July 22, 1987, vests in the Department of Agrarian
Reform quasi-judicial powers to determine and adjudicate agrarian reform matters.
However, with the enactment of Executive Order No. 229, which took effect on
August 29, 1987, fifteen (15) days after its release for publication in the Official
Gazette, the regional trial courts were divested of their general jurisdiction to try
agrarian reform matters. The said jurisdiction is now vested in the Department of
Agrarian Reform.
The foregoing holding is further sustained by the passage of Republic Act No.
6657, the Comprehensive Agrarian Reform Law, which took effect on June 15,
1988. The said law contains provisions which evince and support the intention of
the legislature to vest in the Department of Agrarian Reform exclusive jurisdiction
over all agrarian reform matters.
The resolution by the DAR is to the best advantage of the parties since it is in a
better position to resolve agrarian disputes, being the administrative agency
presumably possessing the necessary expertise on the matter. Further, the
proceedings therein are summary in nature and the department is not bound by
the technical rules of procedure and evidence, to the end that agrarian reform
disputes and other issues will be adjudicated in a just, expeditious and
inexpensive proceeding" (at 613, 614, 615).

Powers and Functions of DARAB

DARAB is composed of seven (7) members with the DAR Secretary as its
Chairman. The members are: two (2) Undersecretaries designated by the
Secretary, the Assistant Secretary for Legal Affairs, and three (3) Assistant
Secretaries appointed by the President upon the recommendation of the
Secretary. A Secretariat is also constituted to support the Board (Exec. Order No.
129-A[1987], sec. 13).
Under Sec. 13 ofEO 129-A(1987), the Board is empowered to delegate its
powers and functions to the regional offices of the Department in accordance
with the rules and regulations it has promulgated. With the implementing
authority of the Secretary under Sec. 34 of the same EO and Sec. 49 ofRA
6657, the Board promulgated the present Rules and Procedures of DARAB
whereby adjudicators are specifically designated to adjudicate agrarian reform
cases in the regions and provinces.
As earlier noted, the DARAB was created under the Office of the Secretary of
the Department (Exec. Order No. 129-A[1987], sec. 13). It was established to
strengthen the Department (Exec. Order No. 229[1987]). However, DARAB has
no jurisdiction on matters which strictly involve the administrative implementation
ofRA 6657and other agrarian laws. Those are within the exclusive jurisdiction of
the Secretary of DAR. UnderDAR MC 13 (1997), the DAR Secretary has the
authority to certify as flashpoint or urgent case, only ALI cases but not cases
within the jurisdiction of DARAB.
 With respect to the regular courts,Supreme Court Administrative Circular No.
3 (1992)provides:
The Court reiterates to all court judges the need for a careful consideration of the
proper application of the CARL (RA 6657) to avoid conflict of jurisdiction with the
DARAB. The trial court judges are directed to take note of the rulings in Vda. de
Tangub vs. CA, 191 SCRA 885 and Quismundo vs. CA, 201 SCRA 609.

InUalat vs. Judge Ramos,265 SCRA 345 (1996), the respondent judge of
MTC was fined P20,000.00 with stern warning from the Supreme Court for gross
ignorance of law for taking cognizance of an ejectment case despite allegations
of tenancy between the parties.

Ualat vs. Judge Ramos

265 SCRA 345 (1996)

Facts:
Complainants filed an administrative case against respondent Judge Ramos for
taking cognizance of the illegal detainer case filed by their landowner against
them. It was shown that the respondent judge had knowledge of a previously filed
DARAB case and the fact that the illegal detainer case falls within the exclusive
jurisdiction of the DAR. Despite the separate affidavits of the complainants
containing allegation of landlord-tenant relationship, the respondent judge took
cognizance of the illegal detainer case.
Issue:
Was the action of Judge Ramos proper?
Held:
The Supreme Court in finding the respondent Judge liable for ignorance of the law
opined: "As can be readily seen from the answer filed by complainants Sabio and
Ualat in the civil case, they alleged the existence of an agrarian tenancy
relationship between themselves and the landowner. Additionally, in the
proceedings before respondent Judge, complainants were even represented by a
lawyer from the DAR. These matters should have been sufficient to put
respondent Judge on notice that complainants were claiming protection under our
agrarian laws. At that point, he ought to have realized that there existed a genuine
issue involving agricultural tenancy among the parties with respect to the subject
property. Knowledge of existing agrarian legislation and prevailing jurisprudence
on the subject, together with an ordinary degree of prudence would have
prompted respondent Judge to refer the case to the DAR for preliminary
determination of the real nature of the parties' relationship, as required by law" (at
357).

However, DARAB has no jurisdiction with respect to agrarian matters

involving the prosecution of all criminal offenses underRA 6657and the
determination of just compensation for landowners (Rep. Act No. 6657[1988],
sec. 57). Jurisdiction over said matters are lodged with the Special Agrarian
Courts (SACs). The Court of Appeals and Supreme Court maintain their
appellate jurisdiction over agrarian cases decided by DARAB.
In this regard, the Supreme Court in the case ofVda. de Tangub vs. CA, 191
SCRA 885 (1990)held that:
 The Regional Trial Courts have not, however, been completely divested of
jurisdiction over agrarian reform matters. Section 56 of RA 6657, on the other
hand, confers "special jurisdiction" on "Special Agrarian Courts", which are
Regional Trial Courts designated by the Supreme Court at least one (1) branch
within each province to act as such. These Regional Trial CourtsquaSpecial
Agrarian Courts have, according to Section 57 of the same law, original and
exclusive jurisdiction over: 1) "all petitions for the determination of just
compensation to land-owners," and 2) "the prosecution of all criminal offenses
under . . . (the) Act" (at 890).

Barangay Agrarian Reform Committee (BARC)

This is originally the Barangay Agrarian Reform Council created underEO
229(1987).RA 6657changed the nomenclature of BARC from "council" to
"committee" and expanded its scope of functions. It is through the organization of
the BARCs that the implementation of CARP is envisioned to be truly community
based where the public can participate in decision-making and resolution of
agrarian reform disputes.
This committee is composed of the following:
a)Representative/s of farmer and farmworker beneficiaries;
b)Representative/s of farmer and farmworker non-beneficiaries;
c)Representative/s of agricultural cooperatives;
d)Representative/s of other farmer organizations;
e)Representative/s of the Barangay Council;
f)Representative/s of non-government organizations (NGOs);
g)Representative/s of Landowners;
h)DA Official assigned to the area;
i)DENR Official assigned to the area;
j)DAR Agrarian Reform Technologist assigned to the area who shall
act as the Secretary; and
k)Land Bank of the Philippines representative (Exec. Order No.
229[1987], sec. 19).
Sec. 46 and 47 ofRA 6657defined the BARC functions in addition to those
provided under Sec. 19 ofEO 229.DAR AO 14 (1990)provides for the guidelines
in the formation, organization and strengthening of the BARCs.
Primary and Exclusive Original and Appellate Jurisdiction of DARAB
Sec. 1, Rule II of the DARAB Revised Rules and Procedures provides that the
Board has primary and exclusive jurisdiction, both original and appellate, to
determine and adjudicate all agrarian cases including but not limited to the
following:
a)All agrarian disputes involving the implementation of the CARP
underRA 6657,EOs 228,229, and129-A,RA 3844as amended byRA
 6389,PD 27and other agrarian laws and their implementing rules and
regulations;
b)Cases involving rights and obligations of persons, whether natural or
juridical, engaged in the management, cultivation and use of all agricultural
lands covered by the CARP and other agrarian laws;
c)Cases involving the valuation of land, and the preliminary
determination and payment of just compensation, fixing and collection of
lease rentals, disturbance compensation, amortization payments and similar
disputes concerning the functions of the LBP;
d)Cases involving the annulment or cancellation of lease contracts or
deeds of sale or their amendments involving lands under the administration
and disposition of the DAR or LBP;
e)Cases arising from or connected with membership or representation
in compact farms, farmers' cooperative and other registered farmers'
associations or organizations, related to lands covered by the CARP and
other agrarian laws;
f)Cases involving the sale, alienation, mortgage, foreclosure,
preemption and redemption of agricultural lands under the coverage of the
CARP or other agrarian laws;
g)Cases involving the issuance, correction and cancellation of
Certificates of Landownership Award (CLOAs) and Emancipation Patents
(EPs) which are registered with the Land Registration Authority;
h)Cases previously falling under the original and exclusive jurisdiction
of the defunct Court of Agrarian Relations under Section 12 ofPD 946,
except sub-paragraph (Q) thereof andPD 815;
i)And such other agrarian cases, disputes, matters or concerns
referred to it by the Secretary of the DAR.
DARAB's Jurisdiction over Agrarian Disputes
The Supreme Court, in several cases, had the occasion to explain what is an
agrarian dispute case for DARAB to try and adjudicate.
In the case ofMachete vs. CA, 250 SCRA 176 (1995), the private
respondents asked for collection of back rentals and damages before the RTC
while the petitioners moved for the dismissal of the case because of lack of
jurisdiction. The Court ordered the transmittal of the case to DARAB and ruled
that:
Section 3, par. (d), of RA 6657 defines the term "agrarian dispute" as referring
to any controversy relating to tenurial arrangements, whether leasehold,
tenancy, stewardship or otherwise, over lands devoted to agriculture, including
disputes concerning farm workers' associations or representation of persons
in negotiating, fixing, maintaining, changing or seeking to arrange terms or
conditions of such tenurial arrangements (at 182).
 In the caseofCentral Mindanao University vs. DARAB,215 SCRA 86 (1992),
on the issue of jurisdiction of the DARAB in ordering the petitioner to segregate
its 400 hectares land and including it under the CARP for distribution to qualified
beneficiaries, the Court opined:
Under Section 4 and Section 10 of RA 6657, it is crystal clear that the jurisdiction
of the DARAB is limited only to matters involving the implementation of CARP.
More specifically, it is restricted to agrarian cases and controversies involving
lands falling within the coverage of the aforementioned program. It does not
include those which are actually, directly and exclusively used and found to be
necessary for, among such purposes, school sites and campuses for setting up
experimental farm stations, research and pilot production centers, etc. (at 99).
Sec. 17 of EO 129-A is merely a repetition of Sec. 50 of RA 6657. There is no
doubt that the DARAB has jurisdiction to try and decide any agrarian dispute in the
implementation of the CARP. An agrarian dispute is defined by the same law as
any controversy relating to tenurial rights whether leasehold, tenancy, stewardship
or otherwise over lands devoted to agriculture (at 100).

InIsidro vs. CA,228 SCRA 503, one of the issues raised is the jurisdiction of
the MTC in taking cognizance of a case involving an agricultural land. The
petitioner refused to vacate the land despite the demand of the private
respondent. The Supreme Court held that there exists no tenurial relations
between the parties, to wit:
An agrarian dispute refers to any controversy relating to tenurial arrangements,
whether leasehold, tenancy, stewardship or otherwise, over lands devoted to
agriculture, including disputes concerning farmworkers associations or
representation of persons in negotiating, fixing, maintaining, changing or seeking
to arrange terms or conditions of such tenurial arrangements. It includes any
controversy relating to compensation of lands acquired under RA 6657 and other
terms and conditions of transfer of ownership from landowners to farmworkers,
tenants and other agrarian reform beneficiaries, whether the disputants stand in
the proximate relation of farm operator and beneficiary, landowner and tenant, or
lessor and lessee (at 510).

Cases under the Court of Agrarian Relations

DARAB has jurisdiction over cases previously falling under the original and
exclusive jurisdiction of the defunct Court of Agrarian Relations underPD
946(1976), except sub-paragraph (Q) thereof andPD 815(1975). The sub-
paragraph (Q) exception under this cited provision refers only to cases involving
violations of the penal provisions ofRA 1199, as amended. Hence, the other
provisions ofRA 1199, as amended, still fall within the jurisdiction of DARAB.
Included in DARAB's jurisdiction is Section 21 ofRA 1199, as amended, which
provides that:
Section 21.Ejectment; Violation; Jurisdiction. All cases involving the
dispossession of a tenant by the landholder or by a third party . . . .

The 'third party' mentioned in the said sec. 21 should be construed to mean a
person who is neither landholder or tenant, but who acts for, openly, secretly, or
factually for the landholder. For instance, a sheriff enforcing an execution sale
against the landholder; or a purchaser or transferee of the land, or a mere
dummy of the landowner (De Luna v. CA, 221 SCRA 703 [1993]).
 Jurisdiction of the Regional Adjudicator (RARAD) and the Provincial
Adjudicator (PARAD)
Sec. 2, Rule II of the DARAB Revised Rules and Procedures provides that
the RARAD and the PARAD has concurrent original jurisdiction with the Board to
hear, determine and adjudicate all agrarian cases and disputes, and incidents in
connection therewith, arising with their assigned territorial jurisdiction.
The RARAD is the Executive Adjudicator in his/her region directly responsible
to the Board. He/she shall:
1)Direct supervision over the PARADs;
2)Recommend to the Board the territorial assignments and the
disciplinary measures appropriate to the PARADs;
3)Adjudicate agrarian disputes and land valuation cases;
4)Hear and handle other cases which cannot be handled by the
PARADs:
a)by reason of PARADs disqualification or inhibition;
b)PARADs cannot handle the case properly;
c)because of the complexity and sensitivity of the case;
d)delegated just compensation cases;
e)and those assigned by the Board.
The RARAD has concurrent original jurisdiction with the PARAD.
Appellate Jurisdiction of the Board
Under Sec. 5, Rule II of theDARAB Revised Rules and Procedures, the
Board has the jurisdiction to review all the decisions of the Adjudicators.
However, underDAR MC 7 (1991), reiterating Sec. 1, par. (c) of the Revised
DARAB Rules and Procedures, it is emphasized that DARAB has no jurisdiction
over cases involving annulment or cancellation of orders and decisions of the
Secretary.
Not all decisions or orders of the PARAD and RARAD are reviewable by the
Board. UnderDAR AO 8 (1993), the PARADs, RARADs and DARAB has original
and exclusive jurisdiction in the preliminary determination of just compensation
cases which are appealable only to the Special Agrarian Courts.
Mediation/Conciliation at Barangay Level
The BARC does not function as an adjudicator at the barangay level. The
BARC is mandated to mediate and conciliate agrarian disputes at the barangay
level. In a mediation/conciliation, BARC's objective is to persuade the contending
parties to settle their dispute amicably. The BARC does not act as an adjudicator.
It is the responsibility of the BARC to promote a speedy and cost-free
administration of justice, prevent a dispute from going out of the barangay level
to DARAB level, and help the landowners and farmer-beneficiaries commit
themselves in complying with their agreements. This in turn is envisioned to help
in the efficient and successful implementation of the CARP.
 Where the land in dispute straddles two (2) or more barangays or the parties
involved reside in different barangays, the BARC of the barangay where the
biggest portion of the property lies, shall have the authority to conduct the
mediation or conciliation proceedings, unless for convenience and accessibility
and upon agreement of parties such proceedings should be held in another
barangay within the municipality or adjacent municipality where the land in
dispute is located (DARAB Revised Rules and Procedures[1994] Rule III, sec. 3)
Under theDARAB Revised Rules and Procedures, DARAB can take
cognizance of an agrarian dispute even without the BARC Certification if:
1)The dispute does not involve any of the following:
a)Valuation lands to determine just compensation for
landowners;
b)One of the parties is a public or private corporation,
partnership, association or juridical person, or a public officer/
employee wherein the dispute relates to the performance of his official
functions;
c)Issue involved is an administrative implementation of agrarian
laws and policies; and
d)Cases determined by the Secretary as beyond the ambit
mediation/conciliation or compromise.
2)The required certification cannot be complied with for valid reasons
like the non-existence or non-organization of the BARC or the impossibility
of convening it. The PARO shall conduct mediation and conciliation
proceedings and issue a certification to that effect.
3)It involves resolving and disposing of preliminary incidents related to
the case, such as motion for the issuance of status quo orders, temporary
restraining orders, preliminary injunctions and such similar motions
necessitating immediate action (DARAB Revised Rules and Procedures
[1994], Rule III, secs. 1 and 2).
The lack of a BARC certification is not a ground for dismissal of an action. A
complainant is given every opportunity to secure said certification.
Powers and Duties of DARAB
Under the DARAB Revised Rules and Procedures, the powers and duties of
the Adjudicators include but are not limited to the following:
a)Personally conduct a hearing, take control of the proceedings,
employ reasonable means to ascertain the facts of the case, determine the
real parties in interest, define and simplify the issues of the case, and thresh
out preliminary matters.
b)To subpoena, summon witnesses, examine witnesses, may limit the
right of parties/counsels to ask questions to clarify the points of law at issue
or of facts involved, may limit the presentation of evidence to matters
relevant to the issues, and endeavor to settle the case amicably/approve
compromise agreements.
 c)To hold a party in contempt, to issue writs and interlocutory orders,
and may award actual, compensatory, exemplary and moral damages and
attorney's fees.
Special Agrarian Courts (SACs)
Special agrarian courts are Regional Trial Courts within each province
designated by the Supreme Court to exercise special jurisdiction in addition to its
regular jurisdiction. The Supreme Court may designate more branches to
constitute such additional SACs as may be necessary to cope with the number of
agrarian cases in each province. (Rep. Act No. 6657[1988], sec. 56)
Sec. 57 ofRA 6657provides that the SACs shall have original and exclusive
jurisdiction over all petitions for the determination of just compensation to
landowners and the prosecution of all criminal offenses underRA 6657.
InRepublic vs. Court of Appeals,758 SCRA 263 (1996), the Supreme Court
held that "any effort to transfer the original and exclusive jurisdiction to the DAR
adjudicators and to convert the original jurisdiction of the RTCs into appellate
jurisdiction would be contrary to Section 57 ofRA 6657and therefore would be
void."
Judicial Review
Orders or Decisions of DAR Secretary
The decisions of the DAR Secretary in ALI cases may be appealed to the
Office of the President or the Court of Appeals, at the option of the appellant.
Sec. 54 ofRA 6657states that any decision, order, award or ruling of the DAR
on any agrarian dispute or on any matter pertaining to the application,
implementation, enforcement, or interpretation of this Act and other pertinent
laws on agrarian reform may be brought to the Court of Appeals by certiorari. On
the other hand, Sec. 15 and 20, Book VII ofEO 292(1987) or the Administrative
Code of 1987, as implemented byDAR MC 3 (1994)provides that an appeal
from the decision/order issued by DAR shall be perfected within fifteen (15) days
after receipt of a copy of the decision/order complained of by the party adversely
affected. Said appeal shall be perfected by filing with the DAR a notice of appeal,
serving copies thereof upon the prevailing party and the Office of the President
and paying the required fees. The DAR shall upon perfection of the appeal
transmit the records of the case to the Office of the President.
DARAB Decisions
Any decision, order, resolution, award or ruling of DARAB on any agrarian
dispute or on any matter pertaining to the application, implementation,
enforcement, interpretation of agrarian reform laws or rules and regulations
promulgated thereunder, may be brought within fifteen (15) days from receipt of a
copy thereof, to the Court of Appeals by certiorari. (Rep. Act No. 6657[1988],
sec. 54;Revised DARAB Rules[1994], Rule XIV, sec. 1)
Notwithstanding an appeal to the Court of Appeals, the decision of DAR shall
be immediately executory. (Rep. Act No. 6657[1988], sec. 50;Revised DARAB
Rules [1994], Rule XIV, sec. 1)
Decisions of Special Agrarian Courts
 An appeal may be taken from the decision of the Special Agrarian Courts by
filing a petition for review with the Court of Appeals within fifteen (15) days from
receipt of notice of the decision. (Rep. Act No. 6657[1988], sec. 60)
Note:
1.The transfer of jurisdiction over applications for CALABARZON areas
from the Center for Land Use Policy, Planning and Implementation (CLUPPI)
2 to the Regional Director shall take effect upon implementation of the DAR
reorganization, or as directed by the Secretary (DAR Admin. O. No. 6 [2000],
sec. 36)
CHAPTER 7
Land Use Conversion
Definition
DAR AO 1 (1999), entitled "Revised Rules and Regulations on the Conversion
of Agricultural Lands to Non-agricultural Uses," defines "land use conversion" as
"the act or process of changing the current use of a piece of agricultural land into
some other use as approved by DAR." (Sec. 2(k)). Pursuant to the Memorandum
of the President dated 16 April 1999, this administrative order serves as the
primary guidelines on the conversion of agricultural lands to non-agricultural
uses.
RA 8435(1997), also known as the "Agriculture and Fisheries Modernization
Act of 1997," provides for a similar definition: "agricultural land use conversion
refers to the process of changing the use of agricultural land to non-agricultural
uses." (Sec. 4).
Conversion versus Reclassification
DAR's conversion authority is most often seen as synonymous with the power
of local government units (LGUs) to reclassify lands within their territorial
jurisdiction. This misconception has resulted in a lot of conflicts and confusion not
only between the two agencies but among other concerned sectors.
"Reclassification" refers to the "act of specifying how agricultural lands shall
be utilized for non-agricultural uses such as residential, industrial, commercial, as
embodied in the land use plan, subject to the requirements and procedures for
conversion. It also includes the reversion of non-agricultural lands to agricultural
use." (Joint HLURB, DAR, DA, DILG Memo. Circular Prescribing the Guidelines
to Implement MC 54, [1995], sec. 2[2.3]). On the other hand, conversion is
defined by the same Memorandum Circular as the "act of changing the current
use of a piece of agricultural land into some other use." [Id., sec. 2[2.2])
Under section 20 ofRA 7160(1991) or the "Local Government Code of 1991,"
a city or municipality may authorize the reclassification of agricultural lands and
provide for the manner of their utilization or disposition under the following
circumstances:
a)when the land ceases to be economically feasible and sound for
agricultural purposes as determined by the DA; or
 b)where the land shall have substantially greater economic value for
residential, commercial, or industrial purposes, as determined by the
sanggunian concerned.
Said Act mandates that the reclassification should be made after conducting
public hearing and that it shall be limited to the following percentage of the total
agricultural land area at the time of the passage of the ordinance: (a) for highly
urbanized and independent component cities, fifteen percent (15%); (b) for
component cities and third class municipalities, ten percent (10%); and (c) for
fourth to sixth class municipalities, five percent (5%):Provided, further,that
agricultural lands distributed to agrarian reform beneficiaries pursuant toRA
6657shall not be affected by the said reclassification and the conversion of such
lands into other purposes shall be governed by Section 65 of said Act. This
percentage ceiling on the land area which the LGUs can reclassify is not
absolute. The President may, when public interest so requires and upon
recommendation of the National Economic and Development Authority (NEDA),
authorize a city or municipality to reclassify lands in excess of the limits cited
above (Rep. Act No. 7160[1991], sec. 20 [b]).
Also, LGUs are mandated to exercise such authority in accordance withMC
54 (1993)of the Office of the President entitled "Prescribing the Guidelines
Governing Section 20 ofRA 7160, otherwise known as the Local Government
Code of 1991, Authorizing Cities and Municipalities to Reclassify Agricultural
Lands Into Non-agricultural Uses." Under these Guidelines, the following types of
agricultural lands shall not be covered:
a)Agricultural lands distributed to agrarian reform beneficiaries subject
to Sec. 65 ofRA 6657;
b)Agricultural lands already issued a notice of coverage or voluntarily
offered for coverage under CARP;
c)Agricultural lands identified underAO 20 (1992), as non-negotiable
for conversion.
On the other hand, the power of the DAR to approve or disapprove land use
conversion applications is exclusive (Exec. Order No. 129-A[1982], sec. 5[e];
seeOP Memorandum Circular No. 54, Sec. 4, [1993] Book IV, Title XI, Chapter 1,
sec. 3 [13];RA 6657[1988[, sec. 65). It is distinct from the power of LGUs to
reclassify agricultural land under Section 20 of theLocal Government Code.
This is evident in Sec. 20 (e) ofRA 7160which provides: "Nothing in this
Section shall be construed as repealing, amending or modifying in any manner
the provisions of RA 6657." In his commentary, Sen. Aquilino Q. Pimentel,
principal author of the Local Government Code of 1991, stated as follows:
Sanggunian Power to Reclassify Not to Convert. This is one section of the Code
which evoked a lot of discussion among the members of the Conference
Committee. The proposal to allow local governments to reclassify land and
provide for the manner of their utilization or disposition was made by
Congressman Pablo Garcia of Cebu, who argued that the central government has
no business dictating to the local governments how to classify land within their
jurisdiction. Some legislators, however, felt that to allow local governments to
 reclassify land may open the door to a nationwide frustration of the goals of the
agrarian reform law.
Congressman Garcia disputed the argument by pointing out that the power he had
sought to invest the local governments with was not to convert land for any
purpose contrary to the provisions of the Comprehensive Agrarian Reform Law but
merely to "reclassify" land. (A.Q. Pimentel, Jr., The Local Government Code of
1991, The Key to National Development 111).

DAR's role in the reclassification process is the issuance of a certification that

the lands sought to be reclassified are not distributed or not covered by a notice
of coverage or not voluntarily offered for coverage under CARP. This certification
must be secured by the sanggunian concerned prior to the enactment of an
ordinance reclassifying the agricultural land (OP Memorandum Circular No. 54,
[1993], sec. 2 (b) (2)).
After the reclassification by the LGU, a DAR conversion clearance shall still be
required prior to actual change of use of the land as explicitly provided inOP
Memorandum Circular No. 54(1993), to wit:
"actions on applications for land use conversion shallremain as the
responsibility of DAR".(Sec. 4; Underscoring supplied.)
The case ofFortich, et al. v. Corona, et al.,G.R. No. 131457 (19 August
1999)illustrates the confusion between reclassification and conversion. In said
case, a statement was made that LGUs have authority to convert or reclassify
agricultural lands without DAR approval. The Supreme Court resolved two (2)
separate motions for reconsideration filed by respondents and intervenors of the
Court's resolution dated 17 November 1998 as well as their motion to refer the
case to the Courten banc.The Supreme Court stated that "(t)he crux of the
controversy is the validity of the "Win-Win" Resolution dated 7 November 1997 of
the Office of the President which is "void and of no legal effect considering that
the March 29, 1996 decision of the Office of the President had already become
final and executory even prior to the filing of the motion for reconsideration which
became the basis of the said "Win-Win" Resolution." (at 5).
The DAR clarified its position on this issue through a Memorandum of the
DAR Secretary dated 13 October 1999, to wit:
It should be stressed that the motions in Fortich were denied on the ground that
the "win-win" resolution is void and has no legal effect because the decision
approving the conversion has already become final and executory. This is
theratiodecidendior reason of the decision. The statement that LGUs have
authority to convert or reclassify agricultural lands without DAR approval is merely
a dictum or expression of the individual views of theponenteor writer of the
Resolution of August 19, 1999. It does not embody the Court's determination and
is not binding.

Expropriated Lands Not Subject to DAR Conversion Clearance

Agricultural
lands expropriated by LGUs pursuant to the power of eminent
domain need not be subject of DAR conversion clearance prior to change in use.
This was the Court's pronouncement inProvince of Camarines Sur vs. CA, 222
SCRA 173 (1993).



Province of Camarines Sur vs. Court of Appeals

222 SCRA 173 (1993)

Facts:
The Governor of Camarines Sur filed two (2) separate cases for expropriation
against Ernesto and Efren San Joaquin pursuant to Sangguniang Panlalawigan
Resolution No. 129 authorizing the Governor to purchase or expropriate properties
owned by the San Joaquins for the establishment of a pilot farm for non-food and
non-traditional agricultural crops and a housing project for provincial government
employees. The San Joaquins moved to dismiss the complaints on the ground of
inadequacy of the price offered. The motion was denied and a writ of possession
was issued in favor of the province. On appeal with the CA, the San Joaquins
asked the appellate court to, among others, nullify the resolution issued by the
Sanggunian. The CA asked the Office of the Solicitor General to comment to the
petition. The Solicitor General stated that the approval of the Office of the
President is not needed but the province must first secure the approval of the DAR
of the plan to expropriate the lands of petitioners. The CA set aside the order of
the trial court allowing the province to take possession and ordered the
suspension of the expropriation proceedings until after the submission of the DAR
approval to convert the property.
Issue:
Is DAR approval still necessary before an LGU can expropriate agricultural lands
for conversion to non-agricultural use?
Held:
It is true that local government units have no inherent power of eminent domain
and can exercise it only when expressly authorized by the legislature (City of
Cincinnati v. Vester, 281 US 439, 74 L.ed. 950, 50 S Ct. 360). It is also true that in
delegating the power to expropriate, the legislature may retain certain control or
impose certain restraints on the exercise thereof by the local governments (Joslin
Mfg. Co. v. Providence, 262 US 668 67 L. ed. 1167, 43 S Ct. 684). While such
delegated power may be a limited authority, it is complete within its limits.
Moreover, the limitations on the exercise of the delegated power must be clearly
expressed, either in the law conferring the power or in other legislation.
Resolution No. 129 [1988] was promulgated pursuant to Section 9 of B.P. Blg.
337, the Local Government Code, which provides: . . .
Section 9 of B.P. Blg. 337 does not intimate in the least that local government
units must first secure the approval of the Department of Land Reform for the
conversion of lands from agricultural to non-agricultural use, before they can
institute the necessary expropriation proceedings.Likewise,there is no provision
in the Comprehensive Agrarian Reform Law which expressly subjects the
expropriation of agricultural lands by local government units to the control of the
Department of Agrarian Reform.The closest provision of law that the Court of
Appeal could cite to justify the intervention of the Department of Agrarian Reform
in expropriation matters is Section 65 of the Comprehensive Agrarian Reform Law,
which reads: . . .
 The opening, adverbial phrase of the provision sends signals that it applies to
lands previously placed under the agrarian reform program as it speaks of "the
lapse of five (5) years from its award."
The rules on conversion of agricultural lands found in Section 4 (k) and 5(l) of
Executive Order No. 129-A, Series of 1987, cannot be the source of the authority
of the Department of Agrarian Reform to determine the suitability of a parcel of
agricultural land for the purpose to which it would be devoted by the expropriating
authority. While those rules vest on the Department of Agrarian Reform the
exclusive authority to approve or disapprove conversions of agricultural lands for
residential, commercial or industrial uses, such authority is limited to the
applications for reclassifications submitted by the land owners or tenant
beneficiaries..
Statutes conferring the power of eminent domain to political subdivisions cannot
be broadened or constricted by implication (Schulman v. People, 10 N.Y. 2d. 249,
176 N.E. 2d. 817, 219 NYS 2d. 41).
To sustain the Court of Appeals would mean that the local government units can
no longer expropriate agricultural lands needed for the construction of roads,
bridges, schools, hospitals, etc., without first applying for conversion of the use of
the lands with the Department of Agrarian Reform, because all of these projects
would naturally involve a change in the land use.In effect, it would then be the
Department of Agrarian Reform to scrutinize whether the expropriation is for a
public purpose or public use. (at 179-181;underscoring supplied).

Authority to Approve/Disapprove Conversion

UnderSec. 4 and 5 ofEO 129-A(1987), the DAR is mandated to "approve or
disapprove the conversion, restructuring or readjustment of agricultural lands into
non-agricultural uses." It authorizes DAR to "have exclusive authority to approve
or disapprove conversion of agricultural land for residential, commercial,
industrial, and other land uses as may be provided for by law." Also, Sec. 4 ofOP
MC 54(1993), provides that "action on application for land use conversion on
individual landholdings shall remain as the responsibility of the DAR, . . . ,
pursuant toRA No. 6657andEO 129-A."
Moreover,RA 6657provides:
Section 65.Conversion of Lands. After the lapse of five (5) years from its
award, when the land ceases to be economically feasible and sound for
agricultural purposes, if the locality has become urbanized and the land will have
greater economic value for residential, commercial or industrial purposes, the
DAR upon application of the beneficiary or the landowner, with due notice to the
affected parties, and subject to existing laws, may authorized the reclassification
or conversion of the land and its disposition; Provided, That the beneficiary shall
have fully paid his obligations.

In the case ofRoxas v. CA,G.R. No. 127876, 16 December 1999, the

authority of the DAR to approve or disapprove conversion was reiterated by the
Court:
Respondent DAR's failure to observe due process in the acquisition of petitioner's
landholdings does notipso factogive this Court the power to adjudicate over
petitioner's application for conversion of its haciendas from agricultural to non-
agricultural.The agency charged with the mandate of approving or disapproving
 applications for conversion is the DAR." (at 45-46;underscoring supplied). The
Court further stated that, "(t)he DAR's mandate over applications for conversion
was first laid down in Section 4 (j) and Section 5 (l) of Executive Order No. 129-A,
Series of 1987 and reiterated in the CARL and Memorandum Circular No. 54,
Series of 1993 of the Office of the President. (at 46).

DAR's authority to allow conversion is not limited only to lands awarded under
CARP. As stated inDOJ Opinion No. 44 (1990):
Being vested with exclusive original jurisdiction over all matters involving the
implementation of agrarian reform,it is believed to be the agrarian reform law's
intention that any conversion of a private agricultural land to non-agricultural uses
should be cleared before hand by the DAR. True, the DAR's express power over
land use conversion is limited to cases in which agricultural lands already awarded
have, after five years, ceased to be economically feasible and sound for
agricultural purposes, or the locality has become urbanized and the land will have
a greater economic value for residential, commercial or industrial purposes.But to
suggest that these are the only instances when the DAR can require conversion
clearances would open a loophole in R.A. No. 6657, which every landowner may
use to evade compliance with the agrarian reform program. Hence, it should
logically follow from the said department's express duty and function to execute
and enforce the said statute that any commercial or industrial property should first
be cleared by the DAR.
xxx xxx xxx
Based on the foregoing premises, we reiterate the view thatwith respect to
conversions of agricultural lands covered by RA No. 6657 to non-agricultural uses,
the authority of DAR to approve such conversion may be exercised from the date
of the law's effectivity on June 15, 1988.This conclusion is based on a liberal
interpretation of R.A. No. 6657 in the light of DAR's mandate and the extensive
coverage of the agrarian reform program.(Underscoring supplied.)

DAR Officials Authorized to Issue Conversion Orders

Under Sec. 22 (a) ofDAR AO 1 (1999), the following DAR officials shall
approve or disapprove applications for land use conversion:
a)The Regional Director for areas of not more than five (5) hectares;
b)The duly authorized Undersecretary for areas above five (5)
hectares but not more than fifty (50) hectares;
c)The Secretary for areas of more than fifty (50) hectares, except for
those highly restricted from conversion which shall be subject to his
approval regardless of the area.
For purposes of determining the appropriate approving authority, the total
area for conversion shall refer to the aggregate area of all applications regardless
of the number of applications and the nature of the proposed project where (a)
the properties are owned by the same person or entity or the owners of which are
represented by the same person or entity; and (b) the properties are located in
the same barangay or adjacent barangays within the same municipality/ies or
city/ies. In case the subject land is adjacent to an area previously issued with
conversion order, the foregoing test shall be applied to determine the appropriate
approving authority (DAR Adm. O. No. 1 [1999], sec. 22 [b] and [c]).
 Scope of Land Use Conversion
UnderDAR AO 1 (1999), the following agricultural lands are subject to DAR's
conversion authority:
a)Those to be converted to residential, commercial, industrial,
institutional and other non-agricultural purposes;
b)Those to be devoted to another type of agricultural activity such as
livestock, poultry, and fishpond the effect of which is to exempt the land
from CARP coverage;
c)Those to be converted to non-agricultural use other than that
previously authorized; and
d)Those reclassified to residential, commercial, industrial, or other
non-agricultural uses on or after the effectivity ofRA 6657on June 15, 1988
pursuant to the Local Government Code.
Sec. 3 (b) ofDAR AO 1 (1999)states that the change in use of land from one
agricultural activity to another use which would exempt the land from CARP
coverage under Sec. 10 ofRA 6657andDOJ Opinion No. 44 [1990]requires
conversion clearance. Hence, landowners of agricultural lands devoted to
coconuts must first secure a conversion clearance from DAR if they want to
convert the same to poultry farm or fishpond.
Also,DAR AO 1 (1990)requires landowners to secure another conversion
clearance if the change that will be undertaken is not what has been authorized
in a previous conversion order. In short, if DAR issues a conversion order
authorizing the landowner to change the use of the property from agricultural
use, e.g. coconut plantation to a memorial park, the owner cannot develop the
property into a residential subdivision without getting another conversion
clearance specifically allowing the residential use of the land.
Agricultural lands outside DAR's conversion authority
The following lands do not require DAR conversion clearance or are not
subject to conversion:
a)Agricultural lands reclassified to non-agricultural uses prior to 15
June 1988 (DAR Adm. O. No. 1 [1999], sec. 3 (d) andDOJ Opinion No. 44,
[1990]). (These lands are subject to DAR exemption clearance);
b)Agricultural lands considered non-negotiable for conversion (DAR
Adm. O. No. 1 [1999], sec. 4);
c)Lands within the Strategic Agriculture and Fisheries Development
Zones (SAFDZs) which are subject to the five (5) year moratorium period
beginning 10 February 1998 up to 9 February 2003 (Rep. Act No. 8435
[1997], sec. 9;DA Adm. O. No. 6 [1998], rule 9). (Except as to 5% thereof).
Areas highly restricted from conversion
Under Sec. 2 (b) and 5 ofDAR AO 1 (1999), areas highly restricted from
conversion refer to the following:
 a)Irrigable lands not covered by irrigation projects with firm funding
commitment;
b)Agro-industrial croplands, or lands presently planted to industrial
crops that support the economic viability of existing agricultural
infrastructure and agro-based enterprises;
c)Highlands or areas located in elevations of 500 meters or above and
have the potential for growing semi-temperate and usually high-value crops;
d)Lands issued with notice of land valuation and acquisition, or subject
of a perfected agreement between the landowner and the beneficiaries
under the voluntary land transfer/direct payment scheme;
e)Environmentally critical areas as determined by the DENR in
accordance with law.
The conversion of these areas, if at all, shall undergo a more stringent
process and the applicant must clearly show that conversion is far more
beneficial to the community and the public at large. Applications involving areas
highly restricted from conversion are deliberated upon by the PARC Land Use
Technical Committee and subject to the Secretary's approval regardless of the
area. The applicant is also required to submit the following additional
requirements: (a) a project feasibility study; and (b) environmental compliance
certificate, if within environmentally critical area.
Lands non-negotiable for conversion
Under Sec. 4 ofDAR AO 1 (1999), areas non-negotiable for conversion are
not eligible for conversion. Applications for conversion involving these areas shall
not be given due course, regardless of whether all or some portions thereof are
within areas highly restricted from conversion or within priority development
areas for conversion. These lands include the following:
a)Agricultural lands within protected areas designated as such under
the National Integrated Protected Areas System including watershed and
recharged acquifers, as determined by the DENR;
b)All irrigated lands, as delineated by the DA and/or NIA, where water
is available to support rice and other crop production;
c)All irrigated lands where water is not available for rice and other crop
production but are within areas programmed for irrigation facility
rehabilitation by the DA and/or NIA; and
d)All agricultural lands with irrigation facilities operated by private
organizations.
Conversion moratorium underRA 8435
UnderRA 8435, the following lands within the SAFDZs are not eligible for
conversion for a period of five (5) years starting on 10 February 1998 until 9
February 2003:
a)All irrigated lands;
 b)Irrigable lands already covered by irrigation projects with firm
funding commitments; and
c)Lands with existing or having the potential for growing high-value
crops.
The 5-year conversion moratorium is not absolute. Five percent (5%) of said
lands within SAFDZs may be converted upon compliance with existing laws,
rules and regulations. DAR and DA, upon the recommendation of the Regional
and National SAFDZ Committees, shall jointly determine the maximum 5%
equivalent to the total area of land eligible for conversion. (DAR Adm. O. No. 1
[1999], sec. 7 (b), (c );DA Adm. O. No. 6, [1998], rule 9.5.2).
Upon expiration of the moratorium, conversion may be allowed, if at all, on a
case to case basis, subject to existing laws, rules and regulations on land use
conversion (DAR Adm. O. No. 1 [1999], sec. 7 [d]).
Lands within SAFDZs
SAFDZs refer to Strategic Agriculture and Fisheries Development Zones.
They are areas within the Network of Protected Areas for Agricultural and Agro-
industrial Development (NPAAAD) identified for production, agro-processing and
marketing activities to help develop and modernize, with the support of the
government, the agriculture and fisheries sectors in an environmentally and
socio-culturally sound manner (Rep. Act No. 8435[1997], sec. 4). Lands within
SAFDZs shall be identified by the DA on the basis of the criteria prescribed inRA
8435.
Priority development areas for conversion
Under Sec. 6 ofDAR AO 1 (1999), the following are priority development
areas for conversion:
a)Specific sites in regional agri-industrial centers/regional industrial
centers identified by the Department of Trade and Industry and the DA;
b)Tourism development areas identified by the Department of Tourism
as indicated in the current Medium Term Philippine Development Plan;
c)Sites identified and proposed to be developed by LGUs into
socialized housing projects which are presently used for agricultural
purposes;
d)Sites intended for socialized housing projects underEO 184, series
of 1994;
e)Agricultural areas intended for ECOZONE projects pursuant toRA
7916.
Conversion of agricultural lands within priority development areas requires
DAR clearance. However, the period within which to process and evaluate
applications involving lands within these areas is shorter. Processing of
applications is conducted within 13 days from submission of complete set of
documentary requirements. Also, an environmental compliance certificate is not a
pre-condition to the approval of the conversion application; instead, it forms part
of the conditions of the order of conversion where applicable.
 SHOPC
Under present guidelines, socialized housing projects are considered priority
development areas. (DAR Memo. Circular No. 9 [1999], sec. 1 [1.6].)
UnderDAR AO 2 (2000), Mass Housing Desks shall be created at the
CLUPPI which shall be responsible for the receipt, processing and disposition of
all applications for conversion for socialized and low-cost housing projects.
Applicants for conversion involving socialized and low-cost housing projects
are exempt from the posting of cash bond, submission of Certification of Eligibility
for Conversion from DA and Environmental Compliance Certificate from DENR.
(DAR Adm. O. No. 2 [2000], sec. 3)
Likewise, applications for conversion involving socialized and low-cost
housing projects shall be processed for a period of thirteen (13) working days
upon receipt of the completed application pursuant to Sec. 1 ofEO 258 (2000).
(DAR Adm. O. No. 2 [2000], sec. 4)
Criteria for Conversion
Under Sec. 8 ofDAR AO 1 (1999), the following criteria shall guide the
resolution of applications for conversion:
1)Conversion may be allowed if the land subject of application is not
among those considered non-negotiable for conversion;
2)Conversion may be allowed under the following cases, in
accordance with Section 65 ofRA 6657:
a)when the land has ceased to be economically feasible and
sound for agricultural purposes; or
b)the locality has become urbanized and the land will have
greater economic value for residential, commercial, industrial or other
non-agricultural purposes.
3)Conversion of lands within SAFDZs shall take into consideration the
following factors:
a)The conversion is consistent with the natural expansion of the
municipality or locality, as contained in the approved physical
framework and land use plan;
b)The area to be converted is not the only remaining food
production area of the community;
c)The conversion shall not hamper the availability of irrigation to
nearby farmlands;
d)Areas with low productivity will be accorded priority for
conversion; and
e)Sufficient disturbance compensation shall be given to the
farmers whose livelihoods are negatively affected by the conversion.
4)Conversion may be allowed when the environmental impact
assessment or initial environmental examination, as may be appropriate,
 shall have determined that it shall not adversely affect air and water quality
and the ecological stability of the area.
Under the previous guidelines, conversion may be allowed if the land has
been reclassified by the LGUs to non-agricultural uses, but said criterion has
been deleted under the present guidelines. That the land has been reclassified to
non-agricultural use as per zoning certification remains one of the factors to
consider in resolving whether to approve or disapprove an application for
conversion. It is not an indispensable condition, however, for the approval of the
application. Thus, conversion may be allowed even if the property has not yet
been reclassified to non-agricultural use if the conditions underRA 6657orRA
8435warrant the same.
It is evident that the thrust of DAR conversion guidelines is to give the
department sole and exclusive prerogative to decide on conversion applications.
Certifications issued by other agencies are given persuasive effect but the final
determination belongs to the DAR.
Bonds and Disturbance Compensation
Under the present guidelines, applicants are required to post two (2) kinds of
bonds: cash bond and performance bond. They are also required to pay
disturbance compensation in appropriate cases.
Cash Bond
Cash bond is posted by the applicant upon filing of the application equivalent
to two point five percent (2.5%) of the total zonal value of the land. It is
refundable upon issuance of the order of conversion or convertible into
performance bond at the option of the applicant (DAR Adm. O. No. 1 [1999], sec.
15).
The cash bond is forfeited in favor of the government in the event actual
conversion activities are undertaken by the applicant prior to approval of the
application for conversion (DAR Adm. O. No. 1 [1999], sec. 15).
Performance Bond
Performance bond is posted in favor of DAR to guarantee the payment of the
amount of security as penalty in the event it is established that the applicant/
developer is in default of their obligations under the order of conversion. It shall
be effective for the duration of the project approved under the conversion order.
The performance bond shall be in the form of either of the following:
a)Cash, manager's check, cashier's check, irrevocable letter of credit,
bank draft equivalent to 2.5% of the total zonal value of the land; or
b)Bank guarantee equivalent to 5% of the total zonal value of the land;
or
c)Surety equivalent to 15% of the total zonal value of the land (DAR
Adm. O. No. 1 [1999], sec. 15 [c).
The performance bond shall be forfeited in favor of the government in case of
violation of the conditions of the conversion order such as non-payment of
disturbance compensation, failure to develop or complete the project within the
period prescribed, etc. (DAR Adm. O. No. 1 [1999], sec. 15, last par.)
Disturbance Compensation
UnderRA 3844, disturbance compensation is given only tode juretenants.
However, under the present conversion guidelines, tenants, farmworkers,
orbona fideoccupants who will be affected by the conversion of the property to
non-agricultural uses are all entitled to disturbance compensation (DAR Adm. O.
No. 1 [1999], sec. 15 [a]).
Disturbance compensation, in cash or in kind or both, shall be paid by the
landowner or developer, as may be appropriate, in such amounts or under such
terms as may be mutually agreed upon between the affected tenants,
farmworkers or occupants and the landowner or developer but it should not be
less than five (5) times the average of the gross harvests on their landholding
during the last five (5) preceding calendar years. Any agreement for the payment
between them shall be subject to DAR's approval and compliance monitoring
(DAR Adm. O. No. 1 [1999], sec. 15 (a)).
Payment of disturbance compensation or compliance with the terms and
conditions of the approved agreement must be made within sixty (60) days from
the date of approval of the application for conversion (DAR Adm. O. No. 1 [1999],
sec. 15 [b]).
In case of disagreement between the parties, the issue on disturbance
compensation may be brought by either of them before the DAR Adjudication
Board for resolution (DAR Adm. O. No. 1 [1999], sec. 15 [c]).
Protests and Oppositions
Sec. 21 ofDAR AO 1 (1999)states that the DAR admits protest or opposition
against any application for conversion which is resolved by the approving
authority simultaneously with the application. It may be filed by any person who
will be displaced or directly affected by the proposed land use conversion such
as occupants, tenants, farmworkers, identified beneficiaries,bona fideresidents
of adjoining properties or communities against the application with the DAR
Regional Office or Central Office, as appropriate (DAR Adm. O. No. 1 [1999],
sec. 18 and 19).
The protest must be in writing and filed within fifteen (15) days from the date
of posting of the Notice of Application. However, if the oppositor is an identified
beneficiary under the agrarian reform program of the land applied for and who
failed to file a written protest within the said period due to fraud, accident,
mistake or excusable neglect, he shall have the right to intervene at any time
during the pendency of the application.
Protests or oppositions may be filed on the following grounds:
a)The area applied for is non-negotiable for conversion;
b)The adverse effects or the displacement to be caused by the
proposed conversion far outweigh the social and economic benefits to the
affected communities;
 c)Misrepresentation or concealment of material facts;
d)Illegal/premature conversion;
e)Existence of proof that conversion was resorted to as a means to
evade CARP coverage and to dispossess the tenant farmers of the land
tilled by them. (DAR Adm. O. No. 1 [1999], sec. 20)
Effects of Approval of Conversion Application
An order of conversion is generally subject to the following conditions:
a)Payment of disturbance compensation within 60 days from issuance
of the order;
b)Posting of a notice of conversion in a conspicuous place;
c)Development of the land within a specific period;
d)Withdrawal or cancellation of the order for misrepresentation of facts
integral to its issuance or for violation of the rules and regulations on land
use conversion.
Sec. 23 ofDAR AO 1 (1999)also provides for the following effects:
First, the conversion of an agricultural land to non-agricultural uses is limited
to the specific use of the land authorized in the order. In case the landowner
decides to use the land for purposes other than that authorized, a new
application must be filed which must go through the process of conversion again.
Otherwise, he may be charged for unauthorized conversion (DAR Adm. O. No. 1
[1999], sec. 40 (d) and 2 [y]).
Second, all conversion orders are subject to the schedule indicated in the
detailed site development plan and work and financial plan submitted by the
applicant. The rules, however, require that the period of development should not
extend beyond five (5) years from the issuance of the order except as authorized
by the Secretary or the approving official on meritorious grounds.
Third, the conditions of the order are binding not only upon the applicant but
also upon successors-in-interest of the property.
Fourth, duly authorized representatives of DAR should be allowed free and
unhampered access to the property subject of the conversion order for
compliance monitoring purposes.
Fifth, the use authorized in the order of conversion shall be annotated on the
title of the subject property.
Sixth,the order is without prejudice to ancestral domain claims of indigenous
peoples pursuant toRA 8371.
Effect on tenants, farmworkers or occupants of property
Upon payment of disturbance compensation or compliance with the terms and
conditions of the agreement for disturbance compensation, the tenants,
farmworkers or occupants are expected to give up all their rights over the land
such as possession, tenancy, etc., in favor of the landowner or developer.
 InGonzales v. CA, 174 SCRA 398, it was held that an agricultural leasehold
cannot be established on land which has been converted to residential use.
Grounds for Revocation/Withdrawal/Cancellation of Conversion Order
Under Sec. 35 ofDAR AO 1 (1999), a petition for cancellation/revocation/
withdrawal of the order of conversion may be filed at the instance of DAR or any
aggrieved party on the following grounds:
a)Misrepresentation or concealment of facts or circumstances material
to the grant of conversion;
b)Non-compliance with the conditions of the order of conversion;
c)Lack of jurisdiction of the approving authority;
d)Non-compliance with the agreement on disturbance compensation;
e)Conversion to use other than that authorized in the conversion
order; and/or
f)Any other violation of relevant rules and regulations of DAR.
The period within which to file the petition varies depending on the ground
raised by the petitioner:
a)The petition must be filed before the approving authority within 90
days from discovery of facts which would warrant such cancellation but not
more than one year from issuance of the order if the basis is
misrepresentation or concealment, or non-compliance with the agreement
on disturbance compensation;
b)The petition must be filed with 90 days from discovery of such facts
but not beyond the period for development stipulated in the order if the
basis is non-compliance with the conditions of the order, conversion to use
other than that authorized, or any other violation of relevant rules and
regulations of DAR;
c)Where the ground is lack of jurisdiction, the petition shall be filed
with the Secretary at any time.
In the event the conversion order is cancelled or withdrawn, the land subject
thereof shall revert to the status of agricultural lands and shall be subject to
CARP coverage as circumstances may warrant. (Sec. 37,AO 1 (1999)).
CHAPTER 8
Prohibited Acts and Omissions
Preliminary Considerations
RA 6657,RA 8435andRA 3844are the primary sources of prohibited acts
and omissions under the agrarian reform program which are criminal in nature
and punishable with fine and imprisonment, or both. As a rule, the prosecution of
these acts does not preclude the DAR from pursuing administrative cases
against the offenders for the same acts or on the basis of the same facts.
Other acts and omissions in violation of agrarian laws are also
administratively sanctioned. As the principal agency tasked with the
implementation of CARP, the DAR is vested with the power to establish and
promulgate operational policies, rules and regulations for agrarian reform
implementation (seeExec. Order No. 129-A(1987), sec. 4 [c]). Moreover, Sec.
50 ofRA 6657vests DAR with the primary jurisdiction to determine and
adjudicate agrarian reform matters and exclusive original jurisdiction over all
matters involving the implementation of agrarian reform.
Prohibited Acts and Omissions by Landowners underRA 6657
Sec. 73 ofRA 6657enumerates acts and omissions which are criminally
punishable. Other provisions ofRA 6657proscribing certain acts and omissions
not included in Sec. 73 are subject to administrative regulation or sanctions.
1.Ownership and Possession of Land Beyond Allowable Limits
Sec. 73 (a) ofRA 6657prohibits "The ownership or possession, for the
purpose of circumventing the provisions of this Act, of agricultural lands in excess
of the total retention limits or award ceilings by any person, natural or juridical,
except those under collective ownership by farmer-beneficiaries."
Elements:
a)Offender is any person, natural or juridical;
b)Person owns or possess agricultural lands in excess of
retention limit or award ceilings, except in the case of collective
ownership by farmer beneficiaries; and
c)The purpose of ownership or possession is to circumvent the
provisions ofRA 6657;
2)Prohibited Sale, Transfer, Conveyance or Change in the Nature of
the Land
Sec. 73(e) ofRA 6657also prohibits "The sale, transfer, conveyance or
change of the nature of lands outside urban centers and city limits either in whole
or in part after the effectivity of this Act. The date of the registration of the deed of
conveyance in the Register of Deeds with respect to titled lands and the date of
the issuance of the tax declaration to the transferee of the property with respect
to unregistered lands, as the case may be, shall be conclusive for the purpose of
this Act."
CIHTac

Elements:
a)The offender is any person;
b)The person either effects the
i.sale, transfer or conveyance of the land; or
ii.change the nature of the land.
c)The land must be outside of urban centers and city limits;
d)The transaction or the change of the nature of the land may be of
the whole or a portion of the land; and
e)The transaction or the change of the nature of the land was effected
after 15 June 1988.
DAR AO 1 (1989) provides for administrative sanctions for the sale, transfer,
conveyance of lands outside urban centers. The elements of the administrative
offense is similar to that defined under Sec. 73 (e). Sec. 6 ofRA 6657also
provides that the sale, disposition, lease, management contract or transfer of
possession of private lands executed by the original owner in violation ofRA
6657shall be null and void. The sale or disposition, however, is not totally void.
Part I (B) ofDAR AO (1989)provides that the sale or disposition of agricultural
land is valid to the extent that the total landholding of the transferee as a result of
the said acquisition does not exceed the landholding ceiling.
3.Illegal/Premature/Unauthorized Conversions
Illegal Conversion
Sec. 73 (c) of RA 6657 penalizes "The conversion by any
landowner of his agricultural land into any non-agricultural use with intent
to avoid the application of this Act to his landholdings and to dispossess
his tenant farmers of the land tilled by them."
Elements:
a)The land is agricultural land;
b)The offender is the landowner;
c)There are acts committed converting the use of the land into non-
agricultural use; and
d)The intent is to:
i.avoid the application ofRA 6657; and
ii.to dispossess tenant farmers tilling the land.
DAR AO 1 (1999) provides a more expansive definition of illegal
conversion. Sec. 2 (g) ofDAR AO 1 (1999)defines illegal conversion as
"the conversion by any landowner of his agricultural land into any non-
agricultural use with intent to avoid the application of RA 6657 to his
landholding and to dispossess his tenant farmers of the land tilled by
them; or the change of the nature of lands outside urban centers and city
limits either in whole or in part after the effectivity of RA 6657, as
provided in Sec. 73 (c) and (e) respectively, of the said Act." Thus, under
the administrative rule, there are two (2) ways of committing illegal
conversion.
Elements of the First Type:
a)Offender is the land owner;
b)He/she converts his/her agricultural land into any non-
agricultural use without authority or DAR clearance;
c)The intention of the conversion is to
i.avoid the application ofRA 6657; and
ii.to dispossess the farmers of the land tilled by them;
Elements of the Second Type:
 a)Offender is the landowner or any other person;
b)He/she changes the nature of the agricultural land, in whole or
in part;
c)Land is located outside urban centers and city limits; and
d)Act was committed after 15 June 1988.
Premature Conversion
Sec. 11 ofRA 8435penalizes ". . . the undertaking of any development
activity, the results of which modify or alter the physical characteristics of the
agricultural lands to render them suitable for non-agricultural purposes without an
approved order of conversion from the DAR."
Elements:
a)The land is agricultural land;
b)The offender may be any person;
c)Actual development activity is undertaken on the land;
d)The development activity modifies or alters the physical
characteristics of the land;
e)The land development renders the land suitable for non-agricultural
purposes; and
f)There is no approved order of conversion from the DAR.
Unauthorized conversion
Unlike illegal and premature conversions, unauthorized conversion is not a
criminal act but is merely administratively sanctioned.
Sec. 2 (w) ofDAR AO 1 (1999)defines unauthorized conversion as "the act of
changing the current use of the land from agricultural (e.g. riceland) to another
agricultural use (e.g. livestock) without an order of conversion from DAR, or
changing the use of the land other than that allowed under the order of
conversion issued by DAR." There are, thus, two (2) ways to commit
unauthorized conversion.
Elements of the First Type:
a)Offender is any person, i.e., landowner, developer or any other
person;
b)The person changes the current use of an agricultural land into
another agricultural purpose; and
c)The change of use was done without an order of conversion
from DAR.
Elements of the Second Type:
a)Offender is any person, i.e., landowner, developer, or any other
person;
 b)The subject land is granted an order of conversion for its
commitment to non-agricultural purposes; and
c)The person commits the land to a purpose other than that
allowed under the order of conversion.
In addition to the foregoing, Sec. 35 ofDAR AO 1 (1999)also provides for
administrative sanctions against certain acts in connection with the grant of
conversion application by landowners or their duly authorized representatives.
These include the following:
a)Misrepresentation or concealment of material facts in
conversion application;
b)Non-compliance with the conditions set forth in the conversion
order; and
c)Non-compliance with the agreement on disturbance
compensation.
Prohibited Acts and Omissions by Beneficiaries underRA 6657
1.Sale, Transfer, Conveyance of Rights Acquired as a Beneficiary
Sec. 73 (f) ofRA 6657prohibits "The sale, transfer or conveyance by a
beneficiary of the right to use or any other usufructuary right over the land he
acquired by virtue of being a beneficiary, in order to circumvent the provisions of
this Act."
Elements:
a)The offender is an agrarian reform beneficiary;
b)Offender sells, transfers or conveys the right to use or any
other usufructuary right over his land;
c)The subject land was acquired by him/her by virtue of being a
beneficiary; and
d)The act is motivatedby the design to circumvent the
provisions ofR.A. 6657.
Relatedly, Part I (4) ofDAR MC 19 (1996)provides that the "[s]ale, transfer,
lease and other forms of conveyance by beneficiary of the rights to use or any
other usufructuary right over the land acquiredby virtue of being a beneficiary, in
circumvention of the provisions of Sec. 73 ofRA 6657,PD 27and other agrarian
law" is a prohibited act. However, if the lands has been acquired underPD 27/EO
228, ownership may be transferred upon full payment of amortization by the
beneficiary.
Elements:
a)The offender is an agrarian reform beneficiary;
b)He/she sells, transfers or conveys the right to use or any other
usufructuary right over his land without legal basis;
c)The subject land was acquired by him/her by virtue of being a
beneficiary underRA 6657orPD 27/EO 228; Provided that lands
 acquired underPD 27/EO 228can be transferred upon full payment of
amortizations. In the case of lands awarded under CARP, the land can
be transferred ten (10) years after the registration of the CLOA; and
d)The act is motivated by the design to circumvent the provisions
ofRA 6657,PD 27and other agrarian laws.
2.Misuse or Diversion of Financial Aid and Support Services
Sec. 37 ofRA 6657provides that the "misuse or diversion of the financial and
support services provided the beneficiary shall result in sanction against the
beneficiary guilty thereof, including the forfeiture of the land transferred to him or
lesser sanctions as may be provided by the PARC without prejudice to criminal
prosecution." This is reflected in Item A, No. 1 ofDAR MC 19 (1996).
Elements:
a)The beneficiary was granted financial aid and other support
services;
b)The beneficiary either:
i.misuses the financial aid and support services; or
ii.diverts such aid or services for other purposes.
3.Misuse of the Land
Par. 4, Sec. 22 ofRA 6657provides that any beneficiary guilty of negligence
or misuse of the land or any support extended to him shall forfeit his right to
continue as such beneficiary. Misuse of the land is administratively sanctioned
underDAR MC 19 (1996).
Part III, Item (A) ofDAR AO 2 (1994)defines misuse of the land as "any act
causing substantial and unreasonable damage on the land, and causing the
deterioration and depletion of the soil fertility and improvements thereon. It also
includes the act of knowingly planting, growing, raising of any plant which is the
source of a dangerous drug, as defined underPD 1683(1980)." Under the
definition, there are two ways of committing this offense.
Elements of the First Type:
a)Offender is a grantee of land awarded through CLOA or EP;
b)Offender commits acts which cause substantial and unreasonable
damage to the land; and
c)Such act causes the deterioration and depletion of the soil fertility
and improvements thereon.
Elements of the Second Type:
a)Offender is a grantee of land awarded through a CLOA or EP; and
b)He knowingly plants, grows or raises any plant which is the source
of dangerous drug as defined inPD 1683.
4.Continuous Neglect or Abandonment of Awarded Lands
 Sec. 22 ofRA 6657provides that any beneficiary who is guilty of negligence
of the land extended to him shall forfeit his right to continue as such beneficiary.
Part I, A (5) ofDAR MC 19 (1996)provides that "continuous neglect or
abandonment of the awarded lands over a period of two (2) years as determined
by the Secretary or his authorized representative" is subject to administrative
sanctions.
Part III, Item (B) ofDAR AO 2 (1994)defines neglect or abandonment as the
"willful failure of the ARB, together with his farm household, to cultivate, till, or
develop his land to produce any crop, or to use the land for any specific
economic purpose continuously for a period of two calendar years."
Elements:
a)The offender is an agrarian reform beneficiary;
b)The beneficiary willfully fails or refuses to cultivate, till or develop to
produce any crop the land awarded him; and
c)Such failure or refusal continue for a period of two (2) calendar
years.
5.Material Misrepresentation of Qualifications
The material misrepresentation of qualifications provided under Sec. 22 ofRA
6657and other agrarian reform laws is administratively sanctioned under Item A
(3), Part I ofDAR MC 19 (1996).
Elements:
a)The offender is a beneficiary;
b)Offender intentionally made false statements respecting a matter of
fact in his application for qualification as an ARB underRA 6657or any
other agrarian laws; and
c)The misrepresented fact was material to the determination of his
qualification to become a beneficiary.
6.Default and Failure in the Payment of Amortization to Landowner
Part I, item A(1) ofDAR MC 19 (1996)provides that "default in the obligation
of the ARBs to pay the aggregate of three (3) consecutive amortizations to the
landowner in the case of awarded lands under voluntary land transfer/direct
payment scheme, except in cases of fortuitous events and force majeure" is
administratively sanctioned. The administrative rule is based on Sec. 26,RA
6657which states that a beneficiary whose land has been foreclosed shall
thereafter be permanently disqualified from becoming a beneficiary.
Elements:
a)Offender is an ARB;
b)The beneficiary acquired the land by virtue of Voluntary Land
Transfer or Direct Payment Scheme;
c)The beneficiary fails to pay the landowner amortization for three (3)
consecutive months; and
 d)Failure is due to reasons other than force majeure or fortuitous
events.
7.Failure to Pay Amortizations to LBP
Similarly, the failure to pay amortizations to LBP is penalized underDAR MC
19 (1996)which states that "[f]ailure of the ARBs to pay at least three (3) annual
amortizations to the LBP in the case of awarded lands under the Compulsory
Acquisition (CA) or Voluntary Offer to Sell (VOS), except in the case of fortuitous
events and force majeure."
Elements:
a)The beneficiary is an awardee of a land acquired through the
Compulsory Acquisition or Voluntary Offer to Sell;
b)The beneficiary fails to pay the LBP at least three (3) annual
amortization; and
c)Failure is due to reasons other than force majeure or fortuitous
events.
8.Waiver of Rights to Awarded Lands
Part I, item A, no. 9 ofMC 19 (1996)treats the waiver of rights to awarded
lands by a beneficiary as an administrative offense.
Elements:
a)Offender is a beneficiary; and
b)The beneficiary has expressly or impliedly waived his rights over the
land.
9.FB's Surrender of Awarded Lands to Landowner or Other Non ARBs.
The surrender by a beneficiary of his awarded lands to landowner or other
non-ARBs is penalized under part I, item A (10) ofMC 19 (1996).
Elements:
a)Offender is a beneficiary;
b)Offender surrenders land awarded him to the landowner or other
non-beneficiaries; and
c)Such surrender is without legal authority or clearance from DAR.
Prohibited Acts and Omissions by Other Persons underRA 6657
1.Forcible Entry and Unlawful Detainer
Sec. 73 (b) ofRA 6657provides that "The forcible entry or illegal detainer by
persons who are not qualified beneficiaries under this Act to avail themselves of
the rights and benefits of the Agrarian Reform Program" is a prohibited act that is
criminally punishable.
Elements:
a)Offender is any person who is not qualified to become an agrarian
reform beneficiaries;
 b)He/she deprives the owner, or legal representatives or any assigns
of the said owner, the right of possession thereof either through the
following acts:
i.by entering the land of another by force, intimidation, threat,
strategy, or stealth; or
ii.unlawfully refusing to vacate the land after the right to hold
possession thereof has expired;
c)The intention of the acts is to avail themselves of the rights and
benefits of the Agrarian Reform Program.
2.Obstruction and Prevention of CARP Implementation
Sec. 73 (d) ofRA 6657penalized the "[w]illful prevention or obstruction by any
association or entity of the implementation of the CARP."
Elements:
a)Offender may be a landowner, beneficiary or any other person,
natural or juridical; and
b)The person commits acts to prevent or obstructs the implementation
of the CARP.
Prohibited Acts by Agricultural Lessees and Lessor underRA 3844
RA 3844enumerates the criminal acts and omissions by agricultural lessees
and lessors.
By Agricultural Lessor
1.Unlawful Recording of Sale in the Registry of Property Subject to
Right of Redemption
Sec. 13 ofRA 3844states that "[n]o deed of sale of agricultural land under
cultivation by an agricultural lessee or lessees shall be recorded in the Registry
of Property unless accompanied by an affidavit of the vendor that he has given
the written notice required in Section eleven of this Chapter or that the land is not
worked by an agricultural lessee." Failure to comply with this provision is
criminally punishable under Sec. 167(1) ofRA 3844.
Elements:
a)The offender is the landowner or agricultural lessor, or in case of
juridical persons, the manager or person who has charge of the
management or management of the property or in his default, the person
acting in his stead;
b)He effects the recording of the sale of the land subject of an
agricultural lease; and
c)Such recording was effected without the necessary Affidavit by
vendor that he has given prior written notice of the sale to the agricultural
lessor as required by Sec. 7 ofRA 3844.
2.Unlawful Disposition of Lessee
 Sec. 31(1) ofRA 3844provides that it shall be unlawful for the agricultural
lessor to "dispossess the agricultural lessee of his landholding except upon
authorization by the Court under Section thirty-six. Should the agricultural lessee
be dispossessed of his landholding without authorization from the Court, the
agricultural lessor shall be liable for damages suffered by the agricultural lessee
in addition to the fine or imprisonment prescribed in this Code for unauthorized
dispossession." Sec. 167(1) ofRA 3844penalizes the commission by an
agricultural lessor of the act defined under Sec. 31 ofRA 3844.
Elements:
a)Offender is an agricultural lessor;
b)Offender dispossess the agricultural lessee of his landholding; and
c)Dispossession is without authorization from the Court.
3.Inducement to Execute or Enter into a Share Tenancy Contract
Sec. 167(2) ofRA 3844provides that "Any person, natural or juridical, who
induces another, as tenant, to execute or enter into a share tenancy contract with
himself or with another in violation of this Code shall be punished by a fine not
exceeding five thousand pesos with subsidiary imprisonment in accordance with
theRevised Penal Code: Provided, That the execution of a share tenancy
contract shall be considered prima facie evidence of such inducement as to the
owner, civil law lessee, usufructuary or legal possessor. In case of juridical
persons, the manager or the person who has charge of the management or
administration of the property or, in his default, the person acting in his stead,
shall be liable under this Section."
Elements:
a)Offender is any person, natural or juridical. In case of juridical
persons, the manager or the person who has charge of the management or
administration of the property, or in his default, the person acting in his
stead shall be liable; and
b)Offender induces another person, as tenant, to execute or enter into
a share tenancy contract with himself or another in violation ofRA 3844.
4.Making Untruthful Statements in Affidavit Required under Sec. 13,RA
3844
Sec. 167(2) ofRA 3844provides "Any person who executes an affidavit as
required by Section thirteen of Chapter I, knowing the contents thereof to be
false, shall be punished by a fine not exceeding one thousand pesos or
imprisonment of not more than one year, or both, in the discretion of the court."
Sec. 13 ofRA 3844requires that prior to the registration of the sale or transfer
of land in the Registry of Property, the landowner must execute an affidavit that
written notice of the sale or transfer was made to the agricultural lessor as
required under Sec. 7 ofRA 3844.
Elements:
a)Offender is the landowner, agricultural lessor or any person; and
 b)He/she knowingly makes untruthful statements on a material matter
in an affidavit required for the registration of a sale of land subject to right of
pre-emption as required under Sec. 13 ofRA 3844.
5.Acts Violating Farmworker's Rights to Self-Organization and to
Engage in Other Concerted Activities
Sec. 167 (4) ofRA 3844penalizes "Any person who willfully violates the
provisions of Sections forty and forty-one of this Code shall be punished by a fine
of not less than one hundred pesos nor more than one thousand pesos or by
imprisonment of not less than one month nor more than one year, or both such
fine and imprisonment, in the discretion of the court. If any violation of Sections
forty and forty-one of this Code is committed by a corporation, partnership or
association, the manager or, in his default, the person acting as such when the
violation took place shall be criminally responsible."
Sec. 40 ofRA 3844recognizes the farmworkers' right to self-organization, and
provides that "the farm workers shall have the right to self-organization and to
form, join or assist farm workers' organizations of their own choosing for the
purpose of collective bargaining through representatives of their own choosing:
Provided, That this right shall be exercised in a manner as will not unduly
interfere with the normal farm operations. Individuals employed as supervisors
shall not be eligible for membership in farm workers' organizations under their
supervision but may form separate organizations of their own."
Sec. 41 ofRA 3844likewise recognizes the right of farmworkers to engage in
concerted activities, to wit: "The farm workers shall also have the right to engage
in concerted activities for the purpose of collective bargaining and other mutual
aid or protection. For the purpose of this and the preceding Section, it shall be
the duty of the farm employer or manager to allow the farm workers, labor
leaders, organizers, advisers and helpers complete freedom to enter and leave
the farm, plantation or compound at the portion of same where said farm workers
live or stay permanently or temporarily."
Elements:
a)Offender is the landowner, agricultural lessor or any person;
b)Offender commits acts which impair or prevent the exercise of
i.the right of farmworkers to self-organization under Sec. 40
ofRA 3844; or
ii.the right to engage in concerted activities as defined under
Sec. 41 ofRA 3844.
6.Acts Violative of the Right of Farmworkers to a Minimum Wage
Sec. 167 (5) ofRA 3844provides "Any person who willfully violates the
provisions of Section forty-two of this Code shall, upon conviction thereof, be
subject to a fine of not more than two thousand pesos, or upon second
conviction, to imprisonment of not more than one year or both such fine and
imprisonment, in the discretion of the court. If any violation of the provisions of
Section forty-two of this Code is committed by a corporation, partnership or
association, the manager or, in his default, the person acting as such when the
violation took place shall be criminally responsible."
Sec. 42 ofRA 3844protects the farmworkers right to a minimum wage and
provides that "[n]otwithstanding any provision of law or contract to the contrary,
farm workers in farm enterprises shall be entitled to at least P3.50 a day for eight
hours' work: Provided, That this wage may, however, be increased by the
Minimum Wage Board as provided for in Republic Act Numbered Six hundred
and two."
Elements:
a)Offender is a landowner or any other person; and
b)Offender fails or refuses to pay the farmworker the minimum daily
wage as set in Sec. 43,RA 3844or determined by the Minimum Wage
Board.
By Agricultural Lessees
1.Cultivation of Another Farmland without Consent of Lessor
Sec. 167 (1) ofRA 3844penalizes the commission by agricultural lessees of
the prohibited acts under Sec. 27 ofRA 3844.
Sec. 27 (1) ofRA 3844provides that it shall be unlawful for an agricultural
lessee "[t]o contract to work additional landholdings belonging to a different
agricultural lessor or to acquire and personally cultivate an economic family-size
farm, without the knowledge and consent of the agricultural lessor with whom he
had first entered into household, if the first landholding is of sufficient size to
make him and the members of his immediate farm household fully occupied in its
cultivation."
Elements:
a)Offender is an agricultural lessee;
b)The land leased by him is of sufficient size to make him and the
members of his immediate farm household fully occupied in its production;
c)He contracts to work another landholdings belonging to a different
agricultural lessor or acquires and personally cultivate an economic family-
size farm; and
d)The cultivation of the other landholding is without the consent of his
first lessor.
2.Unlawful Sublease of Leased Land by Lessor
Sec. 27 (b) ofRA 3844declares that it shall be unlawful for an agricultural
lessee "[t]o employ a sub-lessee on his landholding: Provided, however, That in
the case of illness or temporary incapacity, he may employ laborers whose
services on his landholdings shall be on his account." This prohibition is
reiterated in Item B(1), part VI ofDAR AO 5 (1997).
Elements:
a)Offender is an agricultural lessee;
 b)That he employs as sublessee on his landholdings; and
c)The reason for the sub-contracting is other than illness or temporary
incapacity.
Penalties for Violation
The penalties for the prohibited acts and omissions which are criminal in
nature are as follows:

Act or Omission Penalty

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

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

under RA 8435equivalent to one hundred percent (100%) of the
government's investment cost, or both, at the
discretion of the court, and an accessory penalty of
forfeiture of the land and any improvement thereof.
(Sec. 11, RA 8435)

Violation of Sec. 13, Sec. 27,Fine not exceeding one thousand pesos or
and 31 (1) of RA 3844imprisonment not exceeding one year or both in the
discretion of the court (RA 3844, Sec. 167 (1).)

Inducement to ExecuteFine not exceeding five thousand pesos with

or Enter into a Sharesubsidiary imprisonment in accordance with the
Tenancy ContractRevised Penal Code (Sec. 167 [2], RA 3844)
(Sec. 167 [2], RA 3844)

Making untruthful statementsFine not exceeding one thousand pesos or

in affidavit required underimprisonment of not more than one year, or both, in
Sec. 13, RA 3844the discretion of the Court (Sec. 167 (3), RA 3844)
(Sec. 167 (3), RA 3844)

Acts Violating Farmworker'sFine of not less than one hundred pesos nor more than
Rights to Self-organizationone thousand pesos or by imprisonment of not less
and to Engage in Otherthan one month nor more than one year, or both such
Concerted Activitiesfine and imprisonment, in the discretion of the court
(Sec. 167[4], RA 6657)(Sec. 167 [4], RA 6657).

Acts Violative of the RightFine of not more than two thousand pesos, or upon
of Farmworkers to asecond conviction, to imprisonment of not more than
Minimum Wage (Sec.one year or both such fine and imprisonment, in the
167[5], RA 3844)discretion of the court (Sec. 167 [5], RA 3844).

Upon the other hand, the penalties for prohibited acts and omissions which
are administrative in nature are as follows:
Acts or O m i s s i o n s
Administrative Sanction
 Under MC 19 (1996) Cancellation of EPs/CLOAs and perpetual
disqualification of Agrarian Reform Beneficiaries(see MC 19 s. 1996, Part I).
Under AO 1 (1999) 1. Cancellation or withdrawal of the
authorization for the land use conversion;
2.Blacklisting of the applicant, developer,
orrepresentative;
3.Automatic disapproval of pending
subsequent conversion applications that the offender may file with the DAR;
4.Issuance of cease and desist order
(CDO);and/or
5.Forfeiture of cash bond in accordance
withSec. 16 hereof. (A.O. 1 s. 1999, Sec. 49)
Jurisdiction Over Violation of Agrarian Laws
The power and duty to hear and try cases involving the criminal acts
enumerated underRA 6657,RA 8435andRA 3844and other relevant agrarian
laws belongs to the Special Agrarian Courts. HcaATE

With respect to administrative offenses, the DAR shall have jurisdiction over
the same by virtue of its express primary jurisdiction to determine and adjudicate
agrarian reform matters and exclusive original jurisdiction over all matters
involving the implementation of agrarian reform.