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.

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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 by Republic Act No.
6657 (1988) otherwise known as the "Comprehensive Agrarian Reform Law". Prior to its
enactment on 10 June 1988, President Corazon C. Aquino issued Proclamation No. 131(1987)
instituting a comprehensive agrarian reform program, and Executive Order No. 229(1987)
providing the mechanics for its implementation. RA 6657 took effect on 15 June 1988.
While expressly repealing specific provisions of prior enactments on agrarian reform, RA
6657 provides that the provisions of RA 3844 (1963), Presidential Decree No. 27 (1972)
and PD 266 (1973), EO 228 (1987) and EO 229 (1987) and other laws not inconsistent with it
shall have suppletory effect.

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RA 6657 was enacted pursuant to the constitutional mandate enshrined in Section 4, Art.
XIII of the 1987 Constitution, which provides:
SEC. 4.

The State shall, by law, undertake an agrarian reform program founded on the

right of farmers and regular farmworkers, who are landless, to own directly or collectively
the lands they till or, in the case of other farmworkers, to receive a just share of the fruits
thereof. To this end, the State shall encourage and undertake the just distribution of all
agricultural lands, subject to such priorities and reasonable retention limits as the Congress
may prescribe, taking into account ecological, developmental, or equity considerations, and
subject to the payment of just compensation. In determining retention limits, the State shall
respect the right of small landowners. The State shall further provide incentives for
voluntary land-sharing.
The constitutionality of RA 6657 has been upheld in Association of Small Landowners v.
Secretary of Agrarian Reform, 175 SCRA 342 (1989) and companion cases. The Supreme
Court held that the requirement of public use has already been settled by the Constitution
itself. It noted that "[n]o less than the 1987 Charter calls for agrarian reform which is the
reason why private agricultural lands are to be taken from their owners, subject to the
prescribed retention limits." (at 378)
While RA 6657 itself has been held constitutional, the Supreme Court in a subsequent
case, Luz Farms v. Secretary of Agrarian Reform , 192 SCRA 51 (1990), declared
unconstitutional Sec. 3 (b), 10 and 11 thereof in so far as they include lands devoted to the
raising of livestock, swine and poultry within its coverage. As a result of this ruling, Congress
enacted RA 7881 (1995) amending these provisions and incorporating new provisions to
existing ones. The amendments adopted the Luz doctrine by removing livestock, swine and
poultry farms from CARP coverage.
Scope of CARP
The Constitution in Sec. 4, Art. XIII, mandates the just distribution of all agricultural lands,
subject to such priorities and reasonable retention limits that the Congress may prescribe,
taking into account ecological, developmental or equity considerations and subject to the
payment of just compensation.
Prior to RA 6657, the operative law on land distribution was PD 27 (1972). However, PD
27 is limited in scope, covering only tenanted private agricultural lands primarily devoted to
rice and corn operating under a system of share-crop or lease tenancy, whether classified as
landed estate or not. The constitutional provision therefore expanded the scope of agrarian
reform to cover all agricultural lands.
RA 6657 operationalized this constitutional mandate and provides in Sec. 4 thereof that
the CARP shall cover, regardless of tenurial arrangement and commodity produced, all
public and private agricultural lands, as provided in Proclamation No. 131 and EO

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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) of RA 6657;
c)
and

All other lands owned by the government devoted to or suitable for agriculture;

d)
All private lands devoted or suitable for agriculture regardless of the
agricultural products raised or that can be raised thereon (Rep. Act No. 6657 [1988],
Sec. 4).
Definition of agricultural land
Sec. 3 (c) of RA 6657 defines agricultural lands as follows:
(c)
Agricultural Land refers to land devoted to agricultural activity as defined in this
Act and not classified as mineral, forest, residential, commercial or industrial land.
Sec. 3 (b) of RA 6657, as amended by RA 7881 (1995), defines "agricultural activity" as
follows:
(b)
Agriculture, Agriculture Enterprise or Agricultural Activity means cultivation of
soil, planting of crops, growing of fruit trees, including the harvesting of such farm
products, and other farm activities and practices performed by a farmer in conjunction
with such farming operations done by persons whether natural or juridical.
In Natalia v. DAR, 225 SCRA 278 (1993), the Supreme Court held:
Section 4 of RA 6657 provides that the CARL "shall cover, regardless of tenurial arrangement
and commodity produced, all public and private agricultural lands." As to what constitutes
"agricultural land," it is referred to as "land devoted to agricultural activity as defined in this
Act and not classified as mineral, forest, residential, commercial or industrial land." The
deliberations of the Constitutional Commission confirm this limitation. "Agricultural lands"
are only those lands which are "arable and suitable agricultural lands" and "do not include
commercial and industrial lands" (at 282, 283).
Agricultural

lands

reclassified

by

local

governments

into

"forest

conservation zones"
Agricultural lands reclassified by local government units (LGUs) into "forest conservation
zones" even prior to the effectivity of CARL do not become forest land under Sec. 3 (c) ofRA
6657 as to be exempted from CARP coverage.

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It should be noted that under the Constitution, lands of the public domain are classified
into agricultural, forest or timber, mineral lands and national parks (CONST., Art. XII, Sec. 3).
These classifications are called primary classifications or "classification in the first instance."
The same provision of the Constitution also provides that agricultural lands of the public
domain may be further classified according to the uses to which they may be devoted. This
further classification of agricultural land is referred to as secondary classification. The
responsibility over primary classification of lands of the public domain is vested in the
President who exercises such power upon the recommendation of the Department of
Environment and Natural Resources (DENR) (Com. Act No. 141 [1936], Sec. 6; EO
192 [1987]). On the other hand, the authority to reclassify agricultural lands into residential,
commercial or industrial is lodged, among others, in cities and municipalities (Rep. Act No.
7160 [1991], Sec. 20).
The group of lands referred to in Sec. 3 (c) of RA 6657 as non-agricultural (i.e., mineral,
forest, residential, commercial or industrial) is a mix of primary and secondary
classifications. Forest and mineral lands are, under the Constitution and Commonwealth Act
No. 141 (1936), primary classifications, while the rest are secondary classifications.
Reclassification by LGUs of agricultural lands into "forest conservation zones" does not
have the effect of converting such lands into forest lands as to be exempted from CARP.
Firstly, an agricultural land is already a primary classification and, hence, can only be
subjected to secondary classification. Secondly, LGUs have no authority or power to make
primary classifications considering that such power is the sole prerogative of the President
exercising such power upon the recommendation of the DENR.
The forest (or mineral) land referred to in Sec. 3 (c) of RA 6657 is therefore to be
understood as referring to forest (or mineral) land declared to be such by the
President/DENR and not by the LGUs. DAR Administrative Order No. 1 (1990) makes this
qualification in its definition of "agricultural land," as follows:
. . . Agricultural land refers to those devoted to agricultural activity as defined in R.A. 6657
and not classified as mineral or forest by the Department of Environment and Natural
Resources (DENR) and its predecessor agencies, and not classified in town plans and zoning
ordinances as approved by the Housing and Land Use Regulatory Board (HLURB) and its
preceding competent authorities prior to 15 June 1988 for residential, commercial or
industrial use.
Agricultural lands reclassified LGUs into residential, commercial or
industrial
Taking into consideration the effectivity of the law, the secondary classifications
mentioned in Sec. 3 (c) of RA 6657 are treated according whether they were classified as
such before or after the effectivity of the law on 15 June 1988.

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If the agricultural land was classified as residential, commercial or industrial by the LGU
and approved by the Housing and Land Use Regulatory Board (HLURB), or its predecessor
agencies, prior to 15 June 1988, the land will be recognized as so classified under Sec. 3 (c)
of RA and is therefore not covered by CARP. However, an exemption clearance from DAR is
still necessary to confirm or declare its exempt status. (DAR Adm. O. No. 6 [1994]).
This is based on Department of Justice Opinion No. 44 (1990) which provides that with
respect to the conversion of agricultural lands covered by RA 6657 to non-agricultural uses,
the authority of the DAR to approve such conversion may be exercised from the date of its
effectivity or on 15 June 1988. Thus, all lands already classified as commercial, industrial or
residential before that date no longer need any conversion clearance from the DAR.
If an agricultural land is reclassified after 15 June 1988, the provisions on land conversion
under CARL and its implementing rules will apply (Rep. Act No. 6657 [1988], sec. 65; DAR
Adm. O. No. 1 [1999]).
Conversion prior to 15 June 1988 through presidential proclamation
binding before DAR
The reasoning in DOJ Opinion No. 44 (1990) was validated by the Supreme Court
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.

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:

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Sec. 4 of RA 6657 states that the CARL covers "regardless of tenurial arrangement and
commodity produced, all public and private and agricultural lands" and as per the
transcripts of the Constitutional Commission, "agricultural lands" covered by agrarian
reform refers only to those which are "arable and suitable lands" and "do not include
commercial, industrial and residential lands." The land subject of the controversy has
been set aside for the Lungsod Silangan Reservation by Proclamation No. 1637 prior to
the effectivity of RA 6657 and in effect converted these lands into residential use.
Since the Natalia lands were converted prior to 15 June 1988, DAR is bound by such
conversion, and thus it was an error to include these within the coverage of CARL.
Exemptions and Exclusions
Sec. 10 of RA 6657, as amended by RA 7881 (1995), specifically enumerates the
exemptions and exclusions from CARP, as follows:
a)
Lands actually, directly or exclusively used for parks and wild-life, forest
reserves, reforestation, fish sanctuaries and breeding grounds, watersheds and
mangroves (Rep. Act No. 6657 [1988], sec. 10 [a], as amended by Rep. Act No.
7881[1995]).
b)
Private lands actually, directly and exclusively used for prawn farms and
fishponds: Provided, That said prawn farms and fishponds have not been distributed
and Certificate of Land Ownership Award (CLOA) issued to agrarian reform
beneficiaries (ARBs) under CARP (Sec. 10 [b]).
c)
Lands actually, directly and exclusively used and found to be necessary for
national defense, school sites and campuses, including experimental farm stations
operated by public or private schools for educational purposes, seeds and seedling
research and pilot production center, church sites and convents appurtenant thereto,
mosque sites and Islamic centers appurtenant thereto, communal burial grounds and
cemeteries, penal colonies and penal farms actually worked by the inmates,
government and private research and quarantine centers and all lands with eighteen
percent (18%) slope and over, except those already developed (Sec. 10 [c]).
Lands devoted to raising of livestock, swine and poultry. The Luz Farms
Case.
Before its amendment by RA 7881, Sec. 3(b) of RA 6657 included in its definition of
agricultural activity the "raising of livestock, poultry or fish". Likewise, the original Sec. 11
ofRA 6657 on commercial farming provided that "lands devoted to commercial livestock,
poultry and swine raising shall be subject to compulsory acquisition within ten (10) years
from the effectivity of the Act." However, the Supreme Court in Luz Farms vs. Secretary of
Agrarian Reform, supra, held that Sec. 3 (b) and Sec. 11 of RA 6657 (along with Sec. 13 and
32) are unconstitutional in far as they include the raising of livestock and swine in the
coverage of CARP.

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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:

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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 of RA 6657 by RA 7881, fishponds and
prawnponds are also exempted from the coverage of CARP, provided that said lands have
not been distributed to ARBs and no CLOAs have been issued.
To be exempted, the agricultural land must have been actually, directly and exclusively
used for prawn farms and fishponds as of 12 March 1995, the date of effectivity of RA 7881.
To avail of the exemption, a landowner or his authorized representative still has to file a
written application for land exemption/exclusion with the DAR Provincial Office (DAR Adm. O.
No. 3 [1995]).
In cases were the fishponds or prawn farms have been subjected to CARP, by voluntary
offer to sell, commercial farms deferment or notice of compulsory acquisition, they can be
exempt from CARP if a simple and absolute majority of the actual regular workers or tenants
consent to the exemption within one (1) year from the effectivity of RA 7881 or on 12 March
1995. In cases where the fishponds or prawnponds have not been subjected to CARP, the
consent of the farm workers shall no longer be necessary (Rep. Act No. 6657[1988], sec.
10[b], as amended).
Sec. 4 of RA 7881 also amended RA 6657 by introducing a new provision mandating the
introduction of an incentive plan for employees of all fishponds and prawn farms. Operators
and entities owning or operating fishponds and prawn farms are directed to execute within
six (6) months from its effectivity an incentive plan with their regular fishpond or prawn farm
worker's organization, if any, whereby seven point five percent (7.5%) of net profits before
tax from the operation of the fishpond or prawn farms are distributed within sixty (60) days
at the end of the fiscal year as compensation to regular and other pond workers over and
above their current compensation. This incentive plan requirement, however, does not apply
to agricultural lands subsequently converted to fishponds or prawn farms provided that the
size of the land converted does not exceed the retention limit of the landowner.
Lands used for academic or educational use. The CMU case.
In Central Mindanao University vs. DARAB, 215 SCRA 85 (1992), the Supreme Court
passed upon the exemption of lands directly, actually and exclusively used and found to be
necessary for school sites and campuses, including experimental farm stations operated by

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public or private schools for educational purposes provided for under Sec. 10 of RA 6657, as
amended.

Central Mindanao University vs. Department of Agrarian

Reform Adjudication Board
215 SCRA 86 (1992)
Facts:
On 16 January 1958, President Carlos Garcia issued Proclamation No. 467 reserving for
the Mindanao Agricultural College, now the CMU, a piece of land to be used as its
future campus. In 1984, CMU embarked on a project titled "Kilusang Sariling Sikap"
wherein parcels of land were leased to its faculty members and employees. Under the
terms of the program, CMU will assist faculty members and employee groups through
the extension of technical 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
The CMU case is unique as it involves land transferred by the state to CMU through PD
467 which provided for its commitment to a specific use and purpose. Thus, the said land
was already set aside for a specific purpose and, in effect, was taken outside the coverage of
agrarian reform by law. It is submitted that a more accurate basis for the exemption should

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have been that the exclusive use of the land both present and future has been
determined by law, and not because of the determination of the CMU of what it needs and
how it intends to use it.
In ruling that the CMU is in the best position to determine the use of the land and not
DAR, the Supreme Court seems to have overlooked EO 407 (1990), as amended by EO
448 (1991), which provides that DAR is vested with the power to determine whether lands
reserved for public uses by presidential proclamation is no longer actually, directly and
exclusively used and necessary for the purpose for which they are reserved. Said EO
provides that:
Sec. 1-A.
All lands or portions thereof reserved by virtue of Presidential
proclamations for specific public uses by the government, its agencies and
instrumentalities, including government-owned or controlled corporations suitable for
agriculture and no longer actually, directly and exclusively used or necessary for the
purposes for which they have been reserved, as determined by the Department of
Agrarian Reform in coordination with the government agency or instrumentality
concerned in whose favor the reservation was established, shall be segregated from
the reservation and transferred to the Department of Agrarian Reform for distribution
to qualified beneficiaries under the Comprehensive Agrarian Reform Program.
Thus, DAR in coordination with the agency or department involved, can determine
whether the purpose or use for which the lands reserved continues to exist and therefore
establish if they continue to be exempt from CARP coverage.
The Supreme Court's statement that lands of universities and academic institutions need
not be actually, directly and exclusively used for educational or research purposes at the
time of the effectivity of the RA 6657 to be exempt from CARP also fails to consider Sec. 10
of RA 6657. Sec. 10 is explicit that only those lands that are "actually, directly, and
exclusively" used and found necessary for the uses enumerated therein are exempt from
CARP coverage. A literal interpretation of the provision implies that the exemption applies
only to those lands already committed for the enumerated purposes at the date of the
effectivity of law on 15 June 1988. Thus, agricultural land acquired by academic institutions
for academic, educational, or research purposes after 15 June 1988, or those owned by them
but not committed exclusively, actually, and directly to the abovementioned uses before or
on such date, are covered by CARP. For its exclusion from acquisition and distribution, and
for its commitment to said purposes, the institution may file before DAR for clearance to
convert these lands into non-agricultural use.
Lands with 18% slope
Lands with 18% slope or over are exempt from CARP coverage unless these are found to
be agriculturally developed as of 15 June 1988.
This rule on exemption is based on PD 705 (1975), or the "Revised Forestry Code of the
Philippines," which provides that lands with a slope of 18% or over are generally reserved as

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forest lands. Sec. 15 thereof states that "no land of the public domain eighteen per cent
(18%) in slope or over shall be classified as alienable and disposable" and that "lands
eighteen per cent (18%) in slope or over which have already been declared as alienable and
disposable shall be reverted to the classification of forest lands by the Department Head, to
form part of the forest reserves, unless they are already covered by existing titles or
approved public land application, or actually occupied openly, continuously, adversely and
publicly for a period of not less than thirty (30) years as of the effectivity of this Code, where
the occupant is qualified for a free patent under the Public Land Act.
If the land has 18% slope or over and is agriculturally developed as of 15 June 1988, the
same shall be allocated to the qualified applicants in the following manner:
a)
If land is classified as forest land, and therefore is inalienable and indisposable,
this shall be allocated by the DENR under its Integrated Social Forestry Program;
b)
If classified as alienable and disposable, this shall be allocated by the Land
Management Bureau-DENR and DAR pursuant to the provisions of CA 141 and theJoint
DAR-DENR AO 2 (1988); and
c)
If private agricultural land, this shall be acquired in accordance with the
provisions of RA 6657 (DAR Adm. O. No. 13 [1990], item E, part II).
Effects of exemption
Sec. 10 of RA 6657 provides that exempted or excluded lands are removed from the
coverage of CARP. However, there are two (2) contending views on whether these exempted
or excluded lands are perpetually taken out from coverage of the CARP.
The first view is that lands exempted or excluded from the law are permanently taken out
from coverage of the CARP. The basis of this interpretation is the phraseology of Sec. 10
which states that exempted lands are "exempt from the coverage of the law." The legal
effect of this interpretation is that the owner can use and dispose the land as he deems fit
without the need for any clearance from DAR.
The second view is that excluded and exempted lands can be covered by CARP when the
reason for their exemption ceases to exist. Thus, when the reason for exemption ceases to
exist for lands exempt under the Luz Farms ruling or Sec. 10, as amended by RA
7881 (except lands with 18% slope), they are removed from the exemption and are treated
like any other agricultural land.
It must be remembered that the lands subject of exemption under Sec. 10 of RA 6657and
the Luz Farms ruling are considered agricultural lands as defined by Sec. 3 (c) of RA 6657,
that is, they are in fact suitable to agriculture and not classified as mineral, forest,
residential, commercial or industrial lands, but are exempt or excluded from CARP by reason
of their actual use and their necessity for other purposes. Thus, in the event that these lands
cease to be used or necessary for the purposes for which they are exempted, they are
removed from the application of Sec. 10 and are then subject to CARP coverage.

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The second view is anchored on the spirit and intent of the law to cover all agricultural
lands suitable to agriculture. Moreover, as RA 6657 is a social welfare legislation the rules of
exemptions and exclusions must be interpreted restrictively and any doubts as to the
applicability of the law should be resolved in favor of inclusion.
In either case, the security of tenure of tenants enjoyed prior to 15 June 1988 shall be
respected even when the lands are exempted. As to farmworkers, the exemption of the land
shall not cause the loss of the benefits to which they are entitled under other laws. In
addition, they are granted preference in the award of other lands covered by CARP (DAR
Adm. O. No. 13 [1990], part II).
Homesteads
In Alita vs. CA, the Supreme Court stated that homesteads are exempt from agrarian
reform.

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. In Patricio v. Bayog, 112
SCRA 45, it was held that:
The Homestead Act has been enacted for the welfare and protection of the
poor. The law gives a needy citizen a piece of land where he may build a modest
house for himself and family and plant what is necessary for subsistence and for
the satisfaction of life's other needs. The right of the citizens to their homes and to
the things necessary for their subsistence is as vital as the right to life itself. They
have a right to live with a certain degree of comfort as become human beings, and
the State which looks after the welfare of the people's happiness is under a duty to
safeguard the satisfaction of this vital right.

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In this regard, Sec. 6 of Article XIII of the 1987 Constitution provides:

Section 6.

The State shall apply the principles of agrarian reform or

stewardship, whenever applicable in accordance with law, in the disposition or

utilization of other natural resources, including lands of public domain under lease
or concession suitable to agriculture, subject to prior rights, homestead rights of
small settlers, and the rights of indigenous communities to their ancestral lands.
Moreover, Sec. 6 of RA 6657 contains a proviso supporting the inapplicability of PD 27 to
lands covered by homestead patents like those of the property in question, reading:
Section 6.

Retention Limits. . . . Provided further, That original homestead

grantees or their direct compulsory heirs who still own the original homestead at
the time of the approval of this Act shall retain the same areas as long as they
continue to cultivate said homestead.
xxx
xxx
xxx
While homestead lots are declared exempt under PD 27, they are not expressly declared
as such under RA 6657. However, Sec. 6 of RA 6657 provides that homesteaders are allowed
to retain the total homestead lot subject to the conditions provided in the same section and
as set DAR MC 4 (1991), to wit:
a)
That the original homestead grantee or his/her direct compulsory heirs still
own the land on 15 June 1988;
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 27 or retained under RA 6657 shall not be ejected therefrom but shall remain as
leaseholders therein.
Schedule of Implementation
Sec. 7 of RA 6657 lays out the schedule of acquisition and distribution of all agricultural
lands through a period of ten (10) years from the effectivity of the Act:
Phase
I

Lands Covered

Schedule

Rice 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;

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II

III-A

III-B

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

All alienable and disposable public agricultural

1992-1995
lands;

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

all public agricultural lands which are to be opened

for new development and resettlement;

and all private agricultural lands in excess of

fifty (50) hectares,

Landholdings above twenty-four (24)

hectares up to fifty hectares; and
Private agricultural lands with areas above the
retention limit up to 24 hectares

1998-1992

1994-1998

Though Sec. 7 of RA 6657 provides a fixed time table for the implementation of
the CARP law, this provision should be interpreted as merely directory, rather than
mandatory in character. This is the gist of DOJ Opinion No. 9 (1997). It has been held that
the difference between a mandatory and a directory provision is often determined on
grounds of expediency. Where a provision embodies a rule of procedure rather than one
of substance, the provision as to time will be regarded as directory only notwithstanding
the mandatory nature of the language used. Sec. 5 of RA 6657 is more procedural in
nature than substantive. The ten (10)-year period is merely a time frame given to DAR
for the acquisition and distribution of public and private agricultural lands covered by RA
6657. It is merely a guide to DAR in setting its priorities, and it is not, by any means, a
limitation of its authority. Hence, Sec. 5 of RA 6657 should not be construed as a
prescriptive period, the lapse of which bars the DAR from covering the land under CARP.
Thus, DAR need not wait for the full coverage of those lands in the first phase before
those in the succeeding phases could be covered. DAR may also proceed with the coverage
of lands in different phases simultaneously.
In view of the passing of the ten (10)-year period in 1998, Congress passed RA 8532(1998)
providing for the funding for land acquisitions for another ten (10) years.
Idle or abandoned lands
Sec. 22 of Art. XVIII of the 1987 Constitution and Sec. 18 (h) of EO 229 prioritizes the
immediate expropriation or acquisition of idle or abandoned lands.

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Sec 3 (e) of RA 6657 defines idle or abandoned land as "any agricultural land not
cultivated, tilled or developed to produce any crop nor devoted to any specific economic
purpose continuously for a period of three (3) years immediately prior to the receipt of
notice of acquisition by the government as provided under RA 6657. However land that has
become permanently or regularly devoted to non-agricultural purposes is not to be
considered as idle or abandoned. Neither can it be considered as abandoned or idle any land
which has become unproductive by reason of force majeure or any other fortuitous event,
provided that prior to such event, such land was previously used for agricultural or other
economic purpose."
Lands owned by government
To expedite the disposition of lands owned by the government, President Corazon C.
Aquino issued EO 407 (1990) directing all government instrumentalities, government
agencies, government owned and controlled corporations or financial institutions to transfer
to the Republic of the Philippines, through the DAR, all landholdings suitable for agriculture.
Sec. 3 of EO 407 (1990) likewise provides for the redistribution and award of fishponds,
pasturelands and other lands of public domain suitable for agriculture subject of cancelled or
amended lease agreement to the agrarian reform beneficiaries. EO 448 (1991) and EO
506 (1992) amended EO 407 by including all lands or portions thereof reserved by virtue of
presidential proclamations for specific public uses by the government, its agencies and
instrumentalities, and no longer actually, directly and exclusively used or necessary for the
purposes for which they have been reserved. These also excluded national parks and other
protected areas, proposed national parks, game refuge, bird sanctuaries, wild-life reserves,
wilderness areas and other protected areas, including old growth or virgin forests and all
forests above 1,000 meters elevation or above 50 percent slope until such time that they are
segregated for agricultural purposes or retained under the National Integrated Protected
Areas System.
Commercial farms
Sec. 11 of RA 6657 allowed the deferment of the coverage of commercial farms. Deferred
commercial farms shall be subject to immediate compulsory acquisition and distribution
after ten (10) years from the effectivity of RA 6657 on 15 June 1988. For new farms, the ten
(10)-year deferment will begin from the first year of commercial production and operation.
For a commercial farm to be qualified for deferment, it must have been planted to
commercial crop or devoted to commercial farming operations before 15 June 1988. DAR AO
16 (1988) provided a 60-day period for the filing of applications of deferment which lapsed
on 2 May 1989.
DAR AO 16 (1988) explicitly allows the DAR to automatically subject the lands to
redistribution when it determines that the purpose for which deferment is granted no longer
exists as when the particular farm areas ceases to be commercially productive. During the
deferment period, the DAR shall initiate steps to acquire the lands. Final land transfer to the

Page | 16

beneficiaries shall be effected at the end of the deferment period. The acquisition and
distribution of these deferred commercial farms are governed by DAR AO 9 (1998).
Retention
Sec. 4, Art. XIII of the 1987 Constitution subjects the distribution of agricultural lands for
agrarian reform to "reasonable retention limits as Congress may prescribe. Sec. 6 of RA
6657 operationalizes this mandate and observes the right of persons to own, or retain,
directly or indirectly public or private agricultural land, the size of which shall vary according
to factors governing a viable family-size farm in such as commodity produced terrain,
infrastructure, and soil fertility, but in no case shall exceed five (5) hectares.
The retention limits under Sec. 6 of RA 6657 covers all persons whether natural or
juridical. Juridical persons like corporations and partnerships are therefore subject to the five
(5)-hectare limit.
With respect to married couples, their maximum retention limit is determined by the
nature of their property relations. For marriages covered by the New Civil Code, in the
absence of an agreement for the judicial separation of property, spouses who own only
conjugal properties may retain a total of not more than five (5) hectares of such properties.
However, if either or both of them are landowners in their own respective rights (capital
and/or paraphernal), they may retain not more than five (5) hectares of their respective
landholdings. In no case, however, shall the total retention of such couple exceed ten (10)
hectares. (DAR Adm. O. No. 5 [2000], sec. 9 [g]).
For marriages covered by the Family Code, which took effect on 3 August 1988, a
husband owning capital property and/or a wife owning paraphernal property may retain not
more than five (5) hectares each provided they executed a judicial separation of properties
prior to entering into the marriage. In the absence of such an agreement, all properties
(capital, paraphernal and conjugal) shall be considered to be held in absolute community,
i.e., the ownership relation is one, and, therefore, only a total of five (5) hectares may be
retained. (DAR Adm. O. No. 5 [2000], sec. 9 [h]).
The five (5)-hectare retention limit applies to all lands regardless of how acquired (i.e., by
purchase, award, succession, donation) as the law does not distinguish. Thus, a child who
was awarded three (3) hectares as a preferred beneficiary under Sec. 6 of RA 6657and
subsequently acquires a five (5)-hectare landholding of his parent by succession can retain
only five (5) hectares of the total landholding.
Landowners have the obligation to cultivate directly or through labor administration, and
thereby make productive the area he retains. He is also prohibited from making any
constructions therein or commit it to purposes incompatible with its agricultural nature.
Before a landowner can commit the retained land to non-agricultural purposes, he must first
secure a conversion order from DAR, otherwise he can be held liable for premature
conversion (see DAR Adm. O. No. 1 [1999]).
Award to children

Page | 17

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 of RA 6657, but also all the other
qualifications of a beneficiary enumerated under Sec. 22 of RA 6657. Thus, he must also be
landless, a resident of the barangay or municipality where the land is located, and must
have the willingness, aptitude and ability to cultivate and make the land as productive as
possible. Moreover, he is subject to the same liabilities, responsibilities and limitations
imposed on all agrarian reform beneficiaries.
Exceptions to the 5-hectare retention limit
The five (5)-hectare retention limit under RA 6657 does not apply to original homestead
grantees or their direct compulsory heirs at the time of the approval of RA 6657 who
continue to cultivate the same, and to those entitled to retain seven (7) hectares under PD
27.
In the Association cases, the Supreme Court held that landowners who failed to exercise
their rights to retain under PD 27 can avail of their rights of retention under Sec. 6 of RA
6657 and retain only five (5) hectares. However, in the resolution of the Supreme Court on
the motion for consideration in the said case, the Court qualified that those who, prior to the
promulgation of RA 6657, complied with the requirements under Letter of Instruction (LOI)
Nos. 41, 45 and 52 regarding the registration of the landholdings, shall be allowed to enjoy
the seven (7) hectare retention limit. All those who refused to comply with the requirements
cannot, in view of the passage of CARL, demand that their retention limit be determined
under PD 27.
Thus, the following OLT owners are still entitled to retain seven (7) hectares even if they
exercised their right of retention under PD 27 after 15 June 1988:
a)

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

b)

Those who filed their applications before the deadline set (27 August 1985 as

provided by AO. 1 [1985]) whether or not they have complied with LOI Nos. 41, 45 or 52;

Page | 18

c)

Those who filed their applications after the deadline but complied with the

requirements of LOI 41, 45 or 52; and

d)

Heirs of a deceased landowner who manifested, while still alive, the intention to

exercise the right of retention prior to 23 August 1990 (the finality of the Supreme Court
decision in Association of Small Landowners vs. Hon. Secretary of DAR; supra ) (DAR Adm. O.
No. 4 [1991]).
Exercise of right of retention
While Sec. 6 of RA 6657 acknowledges the right of the landowners to choose the area to
be retained, it requires that the area be compact and contiguous, and shall be least
prejudicial to the entire landholding and the majority of the farmers therein (DAR Adm. O.
No. 5 [2000], sec 2 [b]).
Sec. 4 of DAR AO 5 (2000) provides that under the Compulsory Acquisition (CA) scheme,
the landowner shall exercise his right of retention within sixty (60) days from receipt of the
Notice of Coverage from DAR. Failure to exercise this right within the prescribed period
means that the landowner waives his right to choose which area to retain. Thereafter, the
Municipal Agrarian Reform Officer (MARO) shall designate the retained area for the
landowner.
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 under PD 27 and the
security of tenure of the farmers or farmworkers on the land prior to the approval of RA 6657
shall be respected (DAR Adm. O. No. 5 [2000], sec. 2 [c]).
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).

Page | 19

Sec. 10 of DAR AO 5 (2000) further provides that in case the tenant declines to enter into
leasehold and there is no available land to transfer, or if there is, the tenant refuses the
same, he may choose to be paid disturbance compensation by the landowner.
Where Certificates of Land Transfer (CLTs), Emancipation Patents (EPs) or Certificates of
Land Ownership Award (CLOAs) have already been issued on the land chosen by the
landowner as retention area, the DAR shall immediately inform the agrarian reform
beneficiaries (ARBs) concerned and provide them the opportunity to contest the landowner's
claim. Moreover, the DAR shall ensure that the affected ARBs, should they so desire, be
given priority in the distribution of other lands of the landowner or other lands identified by
the DAR for redistribution, subject to the rights of those already in the area (DAR Adm. O. No.
5 [2000], sec. 11)
Waiver of right of retention
Sec. 7 of DAR AO 5 (2000) provides that the following acts constitute waiver on the
landowner's right of retention:
a)
Executing an affidavit, letter or any other document duly attested by the
MARO, Provincial Agrarian Reform Officer (PARO) or Regional Director (RD) indicating
that he is expressly waiving his retention right over subject landholding;
b)
Signing of the Landowner-Tenant Production Agreement and Farmer's
Undertaking (LTPA-FU) or Application to Purchase and Farmer's Undertaking (APFU)
covering subject property;
c)
Entering into a Voluntary Land Transfer/Direct Payment Scheme (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 constitute estoppel by laches; and

g)
Doing such act or acts as would amount to a valid waiver in accordance with
applicable laws and jurisprudence.
Public Lands
Public lands pertain to all lands that were not acquired by private persons or
corporations either by grant or purchase. These lands are either (a) disposable (alienable)
public lands or (b) non-disposable public lands.

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CA 141 (1936), otherwise known as the "Public Land Act", governs the administration and
disposition of lands of the public domain. Sec. 9 thereof classifies alienable or disposable
lands of the public domain as (a) agricultural; (b) residential, commercial, industrial or for
similar productive purposes; (c) educational, charitable, or other similar purposes; or (d)
reservations for town sites and for public and quasi-public uses.
Non-disposable public lands or those not susceptible of private appropriation and include
the following: (a) timber lands which are governed by PD 705 (1975) or the Revised Forestry
Code; and (b) mineral lands which are governed by RA 7942 (1995) or the Philippine Mining
Act of 1995 and other related laws.
All lands of the public domain are under the exclusive jurisdiction of the DENR except
those placed by law and/or by executive issuances under the jurisdiction of other
government agencies. Under Sec. 3 and 5 of CA 141, the Secretary of Agriculture and
Natural Resources (now the Secretary of DENR) is the executive officer charged with carrying
out the provisions of the Public Land Act. It is empowered to prepare and issue such forms,
instructions, rules and regulations consistent with the Public Land Act. Sec. 6 ofCA 141 (see
also EO 192 [1987]) reserves the power to classify lands in the public domain into either
agricultural (disposable), timber or mineral lands to the President, with the recommendation
of the Secretary of DENR.
Under Sec. 4 of RA 6657, public and private agricultural lands and lands of the public
domain suitable for agriculture are covered by CARP. It provides, among others, that all
alienable and disposable lands of the public domain devoted or suitable or devoted to
agriculture (Sec 4 [a]) and all lands of the public domain in excess of the specific limits of
the public domain as determined by Congress (Sec. 4 [b]) shall be covered by CARP. It has
also been determined that public agricultural lands that are untitled and privately claimed
are covered by CARP. In response to a query by DAR, the Department of Justice issued
Opinion No. 176 (1992) which stated:
. . . Thus, it has been held that there should be no distinction in the application of the law
where non is indicated therein (SSS vs. City of Bacolod, 115 SCRA 412) . . . By said rule, the
term "private agricultural lands" in the aforementioned section should be interpreted as
including all private lands, whether titled or untitled. . . .
RA 6657 has created an overlapping of jurisdictions between the DENR and the DAR over
the disposition of these lands. RA 6657 mandates DAR to acquire and distribute these public
lands to agrarian beneficiaries while CA 141 vests upon the DENR the power to control,
survey, classification, lease, sale or any other form of concession or disposition and
management of the lands of the public domain.
To resolve the overlapping mandates of the DENR and DAR in the disposition and
distribution of public lands for CARP purposes, the two agencies issued Joint DAR-DENR MC 9
(1995) which recognizes that lands of the public domain are under the jurisdiction of the
DENR unless placed by law and/or by executive issuances under the jurisdiction of other

Page | 21

government departments or entities. Under the said circular, the disposition of nonregistrable 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 by EO 448 and 506.
Untitled public alienable and disposable lands are still within the exclusive jurisdiction of
DENR pursuant to CA 141. However, in accordance with DOJ Opinion No. 176 (1992), Joint
DAR-DENR MC 14 (1997) provides that all untitled public alienable and disposable lands are
deemed "private" if the criteria specified in RA 6940 for the determination of whether or not
a person has already acquired a recognizable private right over a landholding is met,
namely:
a)
Continuous occupancy and cultivation by oneself or through one's
predecessors-in-interest for at least thirty (30) years prior to the effectivity of RA
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 in RA 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.

Page | 22

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

Page | 23

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 8371 is a clear departure from earlier law and regulation for not only does it
expand the definition of ancestral lands but recognizes the right of the ICCs/IPs to own these
lands. National Commission on Indigenous Peoples (NCIP), a body created by RA 8371, is
vested, among others with the power and issue Certificates of Ancestral Domain/Land Titles
over ancestral lands.

CHAPTER 2
Agricultural Leasehold
Agricultural Tenancy
Page | 24

Definition and nature of agricultural tenancy

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

Gelos vs. Court of Appeals

208 SCRA 608 (1992)
Facts:
Rafael Gelos was employed by Ernesto Alzona and his parents as their laborer on a 25,000sq. 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

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of the work involved but the intention of the parties that determines the relationship
between them. As this Court has stressed in a number of cases, "tenancy is not a
purely factual relationship dependent on what the alleged tenant does upon the land.
It is also a legal relationship. The intent of the parties, the understanding when the
farmer is installed, and as in this case, their written agreements, provided these are
complied with and are not contrary to law, are even more important."
Classes of agricultural tenancy
Agricultural tenancy is classified into share tenancy and leasehold tenancy (M. A.
GERMAN, SHARE AND LEASEHOLD TENANCY, 13 [1995]).
Share tenancy means "the relationship which exists whenever two persons agree on a
joint undertaking for agricultural production wherein one party furnishes the land and the
other his labor, with either or both contributing any one or several of the items of
production, the tenant cultivating the land personally with aid of labor available from
members of his immediate farm household, and the produce thereof to be divided between
the landholder and the tenant." (Rep. Act No. 3844 [1963]. Sec. 166 [25]).
With the passage of RA 3844, share tenancy has been declared to be contrary to public
policy and abolished (Rep. Act No. 3844 [1963], sec. 4) except in the case of fishponds,
saltbeds, and lands principally planted to citrus, coconuts, cacao, coffee, durian and other
similar permanent trees at the time of the approval of said Act (Rep. Act No. 3844 [1963],
sec. 35). When RA 6389 (1971) was enacted, agricultural share tenancy has been
automatically converted to leasehold but the exemptions remained. It was only under RA
6657 when the exemptions were expressly repealed.
Leasehold tenancy exists when a person who, either personally or with the aid of labor
available from members of his immediate farm household undertakes to cultivate a piece of
agricultural land susceptible of cultivation by a single person together with members of his
immediate farm household, belonging to or legally possessed by, another in consideration of
a fixed amount in money or in produce or in both (Rep. Act No. 1199 [1954], sec. 4).
Under RA 6657, the only agricultural tenancy relation that is recognized is leasehold
tenancy. Said law expressly repealed Sec. 35 of RA 3844, making all tenanted agricultural
lands throughout the country subject to leasehold.
Leasehold tenancy may be established by operation of law, that is, through the abolition
of share tenancy under Sec. 4 of RA 3844; through the exercise by the tenant of his right to
elect leasehold; or by agreement of the parties either orally or in writing, expressly or
impliedly, which was the condition before 1972 (M.A. German, supra, at 27).
Leasehold relation is instituted in retained areas with tenant(s) under RA 6657 or PD
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

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retention (Rep. Act No. 6657 [1988], sec. 6). Leasehold relation also exists in all tenanted
agricultural lands that are not yet covered under CARP (DAR Adm. O. No. 5 [1993]).
The institution of leasehold in these areas ensure the protection and improvement of the
tenurial and economic status of tenant-tillers therein. (Rep. Act No. 6657 [1988], sec. 6).
Leasehold tenancy distinguished from civil law lease
In Gabriel vs. Pangilinan, 58 SCRA 590 (1974), the Supreme Court distinguished leasehold
tenancy from civil law lease.
There are important differences between a leasehold tenancy and a civil law lease.
The subject matter of leasehold tenancy is limited to agricultural land; that of civil law
lease may be either rural or urban property. As to attention and cultivation, the law
requires the leasehold tenant to personally attend to, and cultivate the agricultural
land, whereas the civil law lessee need not personally cultivate or work the thing
leased. As to purpose, the landholding in leasehold tenancy is devoted to agriculture,
whereas in civil law lease, the purpose may be for any other lawful pursuits. As to the
law that governs, the civil law lease is governed by the Civil Code, whereas leasehold
tenancy is governed by special laws (at 596).
Elements of Agricultural Tenancy
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)
and

There is personal cultivation or with the help of the immediate farm household;

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,
a de jure tenant. This is so because unless a person has established his status as a de
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])

Page | 27

In the case of Teodoro vs. Macaraeg, 27 SCRA 7 (1969), the Court found all the elements of
an agricultural leasehold relation contained in the contract of lease executed by the parties.

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

Page | 28

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 of Gelos vs. CA, 208 SCRA 608 (1992), as follows:
On the other hand, the indications of an employer-employee relationship are: 1) the
selection and engagement of the employee; 2) the payment of wages; 3) the power of
dismissal; and 4) the power to control the employee's conduct although the latter is
the most important element.
According to a well-known authority on the subject, tenancy relationship is
distinguished from farm employer-farm worker relationship in that: "In farm employerfarm 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

Page | 29

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 onethird 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

Page | 30

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

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

Page | 31

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

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

Page | 32

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
in Tiongson v. Court of Appeals, 130 SCRA 482, tenancy relationship can only be
created with the consent of the true and lawful landholder through lawful means and
not by imposition or usurpation. "So the mere cultivation of the land by usurper cannot
confer upon him any legal right to work the land as tenant and enjoy the protection of
security of tenure of the law (Spouses Tiongson vs. Court of Appeals, 130 SCRA 482)."
Successors-in-interest of the true and lawful landholder/owner who gave the consent are
bound to recognize the tenancy established before they acquired the agricultural land.

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. But this doctrine contemplates a
situation where an untenanted farm land is cultivated without the landowner's
knowledge or against her will or although permission to work on the farm was given,
there was no intention to constitute the worker as the agricultural lessee of the farm
land. The rule finds no application in the case at bar where the petitioners are
successors-in-interest to a tenanted land over which an agricultural leasehold has long
been established. The consent given by the original owners to constitute private
respondent as the agricultural lessee of the subject landholding binds private
respondents who, as successors-in-interest of the Spouses San Diego, step into the

Page | 33

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
Under DAR AO 5 (1993), cultivation is not limited to the plowing and harrowing of the
land, but also the husbanding of the ground to forward the products of the earth by general
industry, the taking care of the land and fruits growing thereon, fencing of certain areas, and
the clearing thereof by gathering dried leaves and cutting of grasses. In coconut lands,
cultivation includes the clearing of the landholding, the gathering of the coconuts, their
piling, husking and handling as well as the processing thereof into copra, although at times
with the aid of hired laborers.

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Meaning of "Personal Cultivation"

"Personal cultivation" exists when a person cultivates the land by himself and with the
aid available from his immediate farm household.
In Oarde vs. CA, et al., supra, the Court held that the element of personal cultivation is
essential for an agricultural leasehold. There should be personal cultivation by the tenant or
by his immediate farm household or members of the family of the lessee or other persons
who are dependent upon him for support or who usually help him in his activities
(Evangelista vs. CA, 158 SCRA 41). The law is explicit in requiring the tenant and his
immediate family to work the land (Bonifacio vs. Dizon, 177 SCRA 294), and the lessee
cannot hire many persons to help him cultivate the land (De Jesus vs. IAC, 175 SCRA 559).
In Gabriel vs. Pangilinan, supra, the Court held that the tenancy relation was severed when
the tenant and/or his immediate farm household ceased from personally working the
fishpond when he became ill and incapacitated.
Compensation in money and/or produce
In Matienzo 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 7hectare 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 of RA 1199, "the agricultural leasehold relation once established shall confer
upon the agricultural lessee the right to continue working on the landholding until such
leasehold relation is extinguished. The agricultural lessee shall be entitled to security of
tenure on his landholding and cannot be ejected therefrom unless authorized by the Court
for causes herein provided."
The Supreme Court has consistently ruled that once a leasehold relation has been
established, the agricultural lessee is entitled to security of tenure. The tenant has a right to
continue working on the land except when he is ejected therefrom for cause as provided by
law (De Jesus vs. IAC, 175 SCRA 559 [1989]).

Page | 35

Transfer of ownership or legal possession does not affect security of tenure.

In Tanpingco vs. IAC, 207 SCRA 653 (1992), the Court upheld the validity of donation but
the donee must respect the rights of the tenant and ordered the donee to pay the tenant
disturbance compensation.

Tanpingco vs. Intermediate Appellate Court

207 SCRA 653 (1992)
Facts:
In 1985, Tanpingco filed a complaint for payment of disturbance compensation against
Benedicto Horca, Sr. Tanpingco alleged that he is the tenant-lessee in Horca's riceland
under a leasehold contract; that he was asked to desist from working on the land
because it was already donated to the Ministry of Education, Culture and Sports; and
that he is willing to accept disturbance compensation or in the alternative to remain as
tenant-lessee of the subject land.
Issue:
Is the security of tenure of a tenant affected by the transfer of ownership or legal
possession of an agricultural land?
Held:
Under Art. 428 of the Civil Code, the owner has the right to dispose of a thing without
other limitations than those established by law. As an incident of ownership, therefore,
there is nothing to prevent a landowner from donating his naked title to the land.
However, the new owner must respect the rights of the tenant. Sec. 7 of RA No. 3844,
as amended, gives the agricultural lessee the right to work on the landholding once
the leasehold relationship is established. It also entitles him to security of tenure on
his landholding. He can only be ejected by the court for cause. Time and again, this
Court has guaranteed the continuity and security of tenure of a tenant even in cases
of a mere transfer of legal possession. As elucidated in the case 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 of Primero vs. Court of Agrarian Relations, 101 Phil. 675 (1957).

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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).
In Pineda vs. de Guzman, 21 SCRA 1450 (1967), the Supreme Court also held:
Section 49 of the Agricultural Tenancy Act, Republic Act 1199, as amended, enunciates
the principle of security of tenure of the tenants, such that it prescribes that the
relationship of landholder and tenant can only be terminated for causes provided by
law. The principle is epitomized by the axiom on land tenure that once a tenant,
always a tenant. Attacks on the constitutionality of this guarantee have centered on
the contention that it is a limitation on freedom of contract, a denial of the equal
protection of the law, and an impairment of or a limitation on property rights. The
assault is without reason. The law simply provides that the tenancy relationship

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between the landholder and his tenant should be preserved in order to insure the wellbeing 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 of RA 3844;
f)
To be indemnified for the costs and expenses incurred in the cultivation and for
other expenses incidental to the improvement of the crop in case the lessee
surrenders, abandons or is ejected from the landholding;
g)

To have the right of pre-emption and redemption; and

h)
To be paid disturbance compensation in case the conversion of the farmholding
has been approved (Rep. Act No. 3844 [1963], sec. 23, 24, 25, 11, 12, 36)
On the other hand, the lessee shall have the following responsibilities under Sec. 26 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.

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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 fide member (DAR Adm. O. No. 5 [1993]):
a)
To enter into a contract with the sugar central millers for the milling of the
sugarcane grown on the leased property;
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;

Page | 39

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 of RA 3844 provides that the lessor is prohibited to perform any of the following
acts:
a)
To dispossess the lessee of his/her landholding except upon authorization by
the Court;
b)
To require the lessee to assume, directly or indirectly, the payment of the taxes
or part thereof levied by the government on the land;

Page | 40

c)
To require the lessee to assume, directly or indirectly, any rent or obligation of
the lessor to a third party;
d)
To deal with millers or processors without written authorization of the lessee in
cases where the crop has to be sold in processed form before payment of the lease
rental;
e)
To discourage, directly or indirectly, the formation, maintenance or growth of
unions or organizations of lessees in his/her landholding; and
f)
For coconut lands, indiscriminate cutting of coconut trees will be deemed prima
facie evidence to dispossess the tenant of his/her landholding unless there is written
consent of the lessee and there is PCA certification, copy of the findings and
recommendations of which shall be furnished to affected tenants or lessees, or a
resolution from the Municipal Board allowing the cutting for valid reasons (DAR Adm.
O. No. 5 [1993] and DAR Adm. O. No. 19 [1989]).
Termination of Tenancy Relation
Causes for termination of leasehold relation
Section 8 of RA 3844 provides that agricultural leasehold relation shall be extinguished
by the following acts or omissions:
a)
Abandonment of the landholding without the knowledge of the agricultural
lessor;
b)
Voluntary surrender of the landholding by the agricultural lessee, written
notice of which shall be served three months in advance; or
c)
Absence of an heir to succeed the lessee in the event of his/her death or
permanent incapacity.
Conversion of the land to non-agricultural uses also extinguishes the leasehold relation
because the subject land is no longer an agricultural land and the purpose is no longer
agricultural production. However, under Sec. 16 of DAR AO 1 (1999), the tenant affected by
the conversion is entitled to disturbance compensation which must be paid within sixty (60)
days from the issuance of the order of conversion.
Abandonment
In the case of Teodoro vs. Macaraeg, supra, it was held that the word "abandon," in its
ordinary sense, means to forsake entirely, to forsake or renounce utterly. "The emphasis is
on the finality and the publicity with which some thing or body is thus put in the control of
another, and hence the meaning of giving up absolutely, with intent never again to resume
or claim one's rights or interests." In other words, the act of abandonment constitutesactual,
absolute and irrevocable desertion of one's right or property. . . . Likewise, failure to cultivate
the land by reason of the forcible prohibition to do so by a third party cannot also amount to
abandonment, for abandonment presupposes free will." (at 19-20; underscoring supplied).

Page | 41

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 of RA 3844, in case of death or permanent incapacity, the leasehold relation
continues between the lessor and the person who can cultivate the land personally, chosen
by the lessor within one month from such death or incapacity, from among the following:
a)

The surviving spouse;

b)

The eldest direct descendant by consanguinity;

c)

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

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The age requirement is applied under the presumption that all heirs/successors are
qualified.
The leasehold relation is not terminated by death or permanent incapacity of the
landholder-lessor. It binds his legal heirs (Rep. Act No. 3844 [1963], sec. 9).
Also, Sec. 10 of RA 3844 provides that the mere expiration of the term or period in a
leasehold contract nor by sale, alienation or transfer of the legal possession of the
landholding does not extinguished leasehold. In these cases, the transferee is subrogated to
the rights and substituted to the obligations of the lessor.
Dispossession of Tenants
Under Sec. 36 of RA 3844, dispossession of tenants may be authorized by the Court in a
judgment that is final and executory if after due hearing it is shown that:
a)
The lessee failed to substantially comply with the terms and conditions of the
contract or with pertinent laws unless the failure is caused by a fortuitous event or
force majeure;
b)
The lessee planted crops or used the land for a purpose other than what has
been previously agreed upon;
(Note: Under DAR AO 5 [1993], the lessee is now allowed to intercrop or plant
secondary crops after the rental has been fixed, provided the lessee shoulders the
expenses.)
c)
The lessee failed to adopt proven farm practices necessary to conserve the
land, improve its fertility, and increase its productivity taking into consideration the
lessee's financial capacity and the credit facilities available to him;
d)
There has been substantial damage, destruction or unreasonable deterioration
of the land or any permanent improvement thereon due to the fault or negligence of
the lessee;
e)
The lessee failed to pay lease rental on time except when such 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] of RA 3844, as amended by RA 6389, disturbance
compensation is equivalent to five [5] times the average of the gross harvest on his
landholding during the last five [5] preceding calendar years.)

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In the case of Garchitorena vs. Panganiban, 6 SCRA 338 (1962), it was held that when
non-payment of lease rentals occurs for several years, said omission has the effect of
depriving the landowner of the enjoyment of the possession and use of the land.
Under Sec. 36 (1) of RA 3844, as amended, a lessor who ejects his tenant without the
court's authorization shall be liable for:
a)

fine or imprisonment;

b)
damages suffered by the agricultural lessee in addition to the fine or
imprisonment for unauthorized dispossession;
c)

payment of attorney's fees incurred by the lessee; and

d)

the reinstatement of the lessee.

Determination of Lease Rentals

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

10 September 1971, the date of effectivity of RA 6389 for tenanted rice and
corn lands;

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

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

whichever is sooner, for all other agricultural lands after deducting the amount used
for seeds and the cost of harvesting, threshing, loading, hauling and processing
whichever is applicable (DAR Adm. O. No. 5 [1993]).
DAR AO 5 (1993) defines "normal harvest" as the usual or regular produce obtained from
the land when it is not affected by any fortuitous event like drought, earthquake, volcanic
eruption, and the like. If there had been no normal harvest, the estimated normal harvest
during the three (3) preceding agricultural years shall be considered as the normal harvest.
"Agricultural year" refers to the period of time required for raising a particular product,
including the preparation of the land, sowing, planting and harvesting of crops and,
whenever applicable, threshing of said crops: Provided, however, That in case of crops
yielding more than one harvest from one planting, "agricultural year" shall be the period
from the preparation of the land to the first harvest and thereafter from harvest to harvest.
In both cases, the period may be shorter or longer than a calendar year.
The law states that only the amount used for seeds and the cost of harvesting, threshing,
loading, hauling, and processing, whichever is applicable, are considered allowable
deductions from the normal harvest in order to determine the lease rental.
The lease rental shall cover the whole farmholding attended to by the lessee.
Computation of lease rental shall include both primary and secondary crops existing as of 15

Page | 44

June 1988. Secondary crops which are planted to an aggregate area of half a hectare or less
shall not be included in the computation of the lease rental (DAR Adm. O. No. 5 [1993]).
If the land has been cultivated for a period of less than three agricultural years prior to
15 June 1988, the initial rental shall be based on the average normal harvest during the
preceding agricultural years when the land was actually cultivated.
After the lapse of the first three (3) normal harvests, the final rental shall be based on the
average normal harvest during these three (3) preceding agricultural years.

CHAPTER 3
Land Acquisition
Registration of Landholdings and Landowners
Sec. 14 of RA 6657 requires all persons, natural or juridical, and government entities that
own or claim to own agricultural lands, whether, in their names or in the name of others, are
required, to file a sworn statement with the assessor's office, containing the following data:
a)

the description and area of the property;

b)

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

c)

the names of all tenants and farmworkers therein;

d)
the crops planted in the property and the area covered by each crop as of 1
June 1987;
e)
the terms of mortgages, lease, and management contracts subsisting as of 1
June 1987; and
f)
the latest declared market value of the land as determined by the city or
provincial assessor.
The registration drive, denominated as Listasaka II, is governed by Department of
Finance MC 5 (1988).
Effect of failure to register
Under Sec. 4 of EO 229 (1987), which originally provided for the compulsory registration
of agricultural landholdings, if the landowner fails to register within the prescribed period,
the government shall base the valuation of his property for landowner compensation
purposes on the City/Provincial Assessor's value.
The effects of non-registration provided in Sec. 40 of EO 229, however, are now deemed
superseded by Sec. 14 of RA 6657 which does not provide for such effects. In
theAssociation cases, the Supreme Court stated:

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

Page | 46

lands under PD 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 under PD 27 and EO 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, through PD 27, instituted the agrarian reform program and
placed all tenanted rice and corn lands under its coverage. On 17 July 1987, President
Aquino issued EO 228 which declared full ownership by qualified farmer beneficiaries of
lands they acquired by virtue of PD 27.
During the congressional deliberations, it was noted that as of 1987 or fourteen (14)
years of implementation of PD 27, approximately 547,000 hectares involving 397,896
beneficiaries had been left untouched. The inclusion of rice and corn lands under PD
27and EO 228 in the CARP is to be seen as a mere continuation of an unfinished business.
(Speech of Rep. Gillego, Congressional Deliberations, 6 October 1987).
Idle or abandoned land
The DAR is mandated to initiate the expropriation or acquisition of idle or abandoned
agricultural lands at the earliest possible time for distribution to farmer-beneficiaries of the
agrarian reform program (Const. Art. XVIII, sec 22; EO 229, sec 18[h]). Idle or abandoned
land refers to any agricultural land not cultivated, tilted or developed to produce any crop
nor devoted to any specific economic purpose continuously for a period of three (3) years
immediately prior to the receipt of notice of acquisition by the government as provided
under this Act, but not include land that has become permanently or regularly devoted to
non-agricultural purposes. It does not include land which has become unproductive by
reason of force majeure or any other fortuitous event, provided that prior such event, such
land was previously used for agricultural or other economic purpose (RA 6657, sec 3 [e]).
Private agricultural lands
Private agricultural lands within the context of RA 6657 refer to those lands devoted to
agricultural activity and not classified as residential, commercial or industrial owned by
persons, whether natural or juridical, other than the government or its instrumentalities.
Abandoned private agricultural lands, commercial farms and agricultural lands subject of
mortgage or foreclosure by natural or juridical persons, private banking or financial
institutions are special classes of private agricultural lands subject of acquisition or
distribution to farmer-beneficiaries.
Agricultural lands under mortgage or foreclosure

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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 lienholder/mortgagee. The significance of this distinction lies in the rights and obligations to
which the landowner and mortgagee are entitled and subjected to as enumerated in Sec. 8
and 9 of DAR AO 1 (2000). Thus, the creditor-mortgagee shall be considered as the
landowner for the purpose of covering the properties under CARP under two (2)
circumstances: (a) when the mortgagee is the purchaser in the foreclosure sale and the
redemption period has already expired where the right of redemption exists; or (b) when the
mortgagee is the purchaser in the foreclosure sale and said sale is confirmed by the court in
cases where only equity of redemption is provided (DAR Adm. O. No. 1 [2000], sec. 4).
On the other hand, the creditor is considered as a lien-holder or mortgagee if as of the
date the land transfer claim was received by the Land Bank of the Philippines (LBP) from the
DAR and either of the following circumstances obtain: the mortgage debt is not yet due and
demandable; or the mortgage debt is already due and demandable but the mortgagee has
not foreclosed on the property; or the mortgage has already been foreclosed but the period
to exercise the right of redemption has not expired or the foreclosure sale has not yet been
confirmed by the court in cases where there is only equity of redemption (DAR Adm. O. No. 1
[2000], sec. 5)
It is likewise important to state that mortgages and other claims registered with the
register of deeds shall be assumed by the government (when landholdings subject or
mortgage or claim is acquired for CARP purposes) up to an amount equivalent to the
landowner's compensation value as provided in Sec. 72 (b) of RA 6657. In other words, the
government shall assume the mortgage indebtedness not exceeding the just compensation
due the landowner. For instance, the debt secured by the mortgage is P100,000.00.

Page | 48

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 of RA 6657 or 15 June 1988. In the case of new farms, the ten (10)year period begins from the first year of commercial production and operation as determined
by DAR (Rep. Act No. 6657 [1988], sec. 11). Upon the expiration of the ten (10)-year
deferment period on 15 June 1998, the DAR issued AO 9 (1998), otherwise known as "Rules
and Regulations on the Acquisition, Valuation, Compensation and Distribution of Deferred
Commercial Farms." All commercial farms whose deferment expired as of 15 June 1998 shall
be subject to immediate acquisition and distribution under the CARP. Those whose
deferments have yet to expire will be acquired and distributed only upon expiration of their
respective deferment periods as originally determined by the DAR or earlier if the DAR
determines that the purpose for which it was deferred no longer exists and revokes its
deferment (DAR Adm. O. No. 9 [1998], sec. 2 [a]). All infrastructure facilities and
improvements including buildings, roads, machineries, receptacles, instruments or
implements permanently attached to the land which are necessary and beneficial to the
operations of the farm as determined by the DAR, and shall be subject to acquisition upon
the recommendation of the ARBs (DAR Adm. O. No. 9 [1998], sec. 2 [d]).
Commercial farms with expired deferment period shall be acquired through VOS, CA or
direct payment scheme. The acquisition of facilities and improvements as a general rule,
shall be encouraged through the direct payment scheme (DAR Adm. O. No. 9 [1998], sec.
24).
Corporate farms
Corporate farms are those owned or operated by corporations or other business
associations (Rep. Act No. 6657 [1988], sec. 29). Corporate farms may be acquired through
voluntary land transfer, VOS, CA and voluntary stock distribution plan (Rep. Act No.
6657[1988], sec. 31). It must be noted that corporate farm owners cannot avail of the tenyear deferment period under DAR AO 9 (1998). Only commercial farms are subject of
deferment. (Rep. Act No. 6657 [1988], sec. 11; DAR Adm. O. No. 9 [1998]).

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Lands owned by the State in proprietary capacity

Under Sec. 1 of EO 407 (1990), all government instrumentalities were directed to transfer
to the Republic of the Philippines through the DAR all landholdings suitable for agriculture.
The government instrumentalities directed to do so included government agencies,
government owned and controlled corporations or financial institutions such as the
Development Bank of the Philippines, Philippine National Bank, Republic Planters Bank,
Asset Privatization Trust, Presidential Commission on Good Government, Department of
Agriculture, State Colleges and Universities, Department of National Defense and others.
Modes of Acquisition of Private Agricultural Lands
CARP is founded on the right of landless farmers and regular farmers to own directly or
collectively the lands they till through the just distribution of all agricultural lands. To achieve
this end, a mechanism is provided in the law for the identification, acquisition, distribution of
agricultural lands. As earlier discussed, CARP covers both private and public agricultural
lands. Since the State owns the latter, they just need to be identified and distributed to the
beneficiaries. Private agricultural lands, upon the other hand, generally have to go through
the acquisition process before their ultimate distribution to the farmers.
In order for the acquisition process to be completed, several requisites must be satisfied.
First, the land should be privately owned and found suitable for agriculture. Second, there
are beneficiaries willing to take over the ownership of the land and make it more productive.
Third, the landowner is paid just compensation or deposit in cash or LBP bonds is made in
his name if the value is contested. Finally, title to the land is transferred in the name of the
Republic of the Philippines.
It must be clarified, however, that full payment of just compensation is not necessarily
required in Voluntary Land Transfer (VLT)/Direct Payment Scheme (DPS) because the terms
of payment of just compensation are governed by the mutual agreement of the parties, i.e.,
the farmer-beneficiary and the landowner. Likewise, under EO 407, the payment of just
compensation to the government instrumentality as landowner may come even after land
distribution, that is, thirty (30) days from the registration of the ownership documents by the
Register of Deeds in favor of the Department of Agrarian Reform (Exec. Order No.
407 [1990], sec. 1, par. 4).
In the same manner that full payment of just compensation is not always necessary to
complete acquisition, transfer of title to the Republic of the Philippines is not necessary in
VLT/DPS since the landholding is directly transferred from the landowner to the beneficiary.
The modes by which private agricultural lands may be acquired are as follows: Operation
Land Transfer (OLT), Voluntary Offer to Sell (VOS), Voluntary Land Transfer/ Direct Payment
Scheme (VLT/DPS), Compulsory Acquisition (CA), and Voluntary Stock Distribution in the case
of corporate farms.
Operation Land Transfer

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Operation Land Transfer (OLT) is a mechanism established for the implementation of PD

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

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In the case of Locsin vs. Valenzuela, 194 SCRA 195 (1991), the Supreme Court explained
the legal effect of land being placed under OLT as vesting ownership in the tenant. However,
in a subsequent case, Vinzons-Magana vs. Estrella, 201 SCRA 536 [1991], the High Tribunal,
citing Pagtalunan vs. Tamayo which predated the Locsin case, ruled that the mere issuance
of a certificate of land transfer does not vest ownership in the farmer/grantee. There seems
to be an inconsistency regarding the treatment of the legal effect of the placing of the
property under the Operation Land Transfer. This is because the issuance of a Certificate of
Land Transfer (CLT) over a landholding presupposes that the property has already been
covered under the OLT. Therefore, if indeed, as the Locsin doctrine enunciated, ownership of
the land is transferred to the farmer at the time the property is placed under OLT, then, it
necessarily follows the CLT, being an instrument issued subsequent to the coverage of the
land under OLT, is evidence of ownership. However, the latter case of VinzonsMagana disputes this conclusion.
In the case of Locsin vs. Valenzuela, 194 SCRA 195 (1991), the petitioners are owners of a
landholding which was subject to the lifetime usufructuary of private respondent. The
subject landholding was placed under the Operation Land Transfer. Petitioners filed a
collection suit against the private respondent claiming that the payments made by the
tenants in the subject properties should be considered as amortization payments for the
price of land and as such should belong to the landowners and not to the usufructuary. The
Court, upholding the petitioners contention, by construing PD No. 27 in relation to PD No. 57,
Department Circular No. 8, dated 1 April 1975 and EO No. 228 dated 17 July 1987, ruled that
under PD No. 27, the tenant-farmer became owner of the land as of 21 October 1972.
. . . Reading the foregoing provisions together, we observe that under Presidential
Decree No. 27, the basic statute, the tenant-farmer became owner of a family-size
farm of five (5) hectares or, if the land was irrigated, three (3) hectares, and that the
tenant-owner had to pay for the cost of the land within fifteen (15) years by paying
fifteen (15) equal annual amortization payments. Thus, it appears clear that ownership
over lands (like Lot No. 2-C-A-3) subjected to Operation Land Transfer moved from the
registered owner (the old landowner) to the tenants (the new landowners). The fifteen
(15) annual amortizations to be paid by the tenants-owners were intended to replace
the landholdings which the old landowners gave up in favor of the new landowners,
the tenants-owners. It follows that in respect of land subjected to Operation Land
Transfer, the 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

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"provisionally maintained"). It was in respect of lands not yet subjected to the terms
and effects of Operation Land Transfer that the leasehold system did continue to
govern the relationship between the "landowner and his tenant-tillers".
The exemption of the old landowner from the capital gains tax on the amortization
payments made to him by the tenants-purchasers, under Presidential Decree No. 57
(supra), underscores the fact, referred to above, that ownership or dominion over the
land moved immediately from landowner to tenant-farmer, rather than upon
completion of payment of the price of the land. In general, capital gains are realized
only when the owner disposes of his property. . . .
In the case of Pagtalunan vs. Tamayo, 183 SCRA 252 (1990), petitioner sought to
intervene in the expropriation proceedings filed by the Republic of the Philippines over the
subject parcel of land. Petitioner argues that he, being a bona fide tenant of and holder of
Certificate of Land Transfer covering the subject properties, is entitled to the proceeds of the
expropriation. The Supreme Court, in rejecting petitioner's contention, ruled that the
petitioner, being merely a CLT holder is not the owner of the subject property and thus, not
entitled to just compensation. In explaining the nature of the CLT, the Court stated that:
. . . However, a careful study of the provisions of Pres. Decree No. 27, and the
certificate of land transfer issued to qualified farmers, will reveal that the transfer of
ownership over these lands is subject to particular terms and conditions the
compliance with which is necessary in order that the grantees can claim the right of
absolute ownership over them.
Under Pres. Decree No. 266 which specifies the procedure for the registration of title to
lands acquired under Pres. Decree No. 27, full compliance by the grantee with the
abovementioned undertakings is required for a grant of title under the Tenant
Emancipation Decree and the subsequent issuance of an emancipation patent in favor
of the farmer/grantee [Section 2, Pres. Decree No. 226]. It is the emancipation patent
which constitutes conclusive authority for the issuance of an Original Certificate of
Transfer, or a Transfer Certificate of Title, in the name of the grantee.
The mere issuance of the certificate of land transfer does not vest in the
farmer/grantee ownership of the land described therein. The certificate simply
evidences the government's recognition of the grantee as the party qualified to avail
of the statutory mechanisms for the acquisition of ownership of the land tilled by him
as provided under Pres. Decree No. 27. Neither is this recognition permanent nor
irrevocable. Failure on the part of the farmer/grantee to comply with his obligation to
pay his lease rentals or amortization payments when they fall due for a period of two
(2) years to the landowner or agricultural lessor is a ground for forfeiture of his
certificate of land transfer [Section 2, Pres. Decree No. 816].
Clearly, it is only after compliance with the above conditions which entitle a
farmer/grantee to an emancipation patent that he acquires the vested right of
absolute ownership in the landholding a right which has become fixed and

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established, and is no longer open to doubt or controversy . . . . At best, the

farmer/grantee, prior to compliance with these conditions, merely possesses a
contingent or expectant right of ownership over the landholding. . . .
The Pagtalunan doctrine was reiterated in the case of Vinzons-Magana vs. Estrella, 201
SCRA 536 (1991). In this case, the petitioner assailed the constitutionality of LOI No. 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 the Pagtalunan case, the Court explained the nature of
the CLT, stating that it does not vest in the farmer/grantee ownership of the land described
therein. Therefore, there is no taking of property without payment of just compensation.
It is noted that in all three cases, the facts from which the controversy arose occurred
prior to the issuance of EO 228 of then President Aquino which declared that full ownership
to qualified beneficiaries of the lands covered by PD No. 27 as of 21 October 1972. Likewise,
all cases were promulgated after the issuance of EO No. 228 in 1987. Therefore, it cannot be
said that the reason behind the Locsin ruling declaring the effect of OLT as vesting
ownership in the tenant is the fact that EO 228, which categorically clarified the legal effect
of PD No. 27, was factored in the discussion of the case. Why then was EO No. 228 not
considered in the subsequent case of Vinzons-Magana when it was already in effect then?
The ponente instead referred to the pre-Locsin case of Pagtalunan vs. Tamayo. In so doing, it
ignored altogether the legal implications of the Locsin doctrine.
Voluntary Offer to Sell
Voluntary Offer to Sell (VOS) is a scheme whereby the landowners voluntarily offer their
agricultural lands for coverage regardless of phasing. It does not, however, mean that
landholdings voluntarily offered for sale are automatically accepted by DAR. A VOS may be
rejected if the landholding is not suitable for agriculture, or has a slope of more than
eighteen percent (18%) and is undeveloped. Likewise, said offer may be refused if there are
no takers or persons willing to be agrarian reform beneficiaries and, lastly, the only identified
ARBs are the qualified children of the landowner. [DAR A. O. No. 06 (1997)]
As a general rule, withdrawal of VOS shall no longer be allowed after the receipt by the
DAR of the letter offer for VOS, i.e., CARP Form No. 1. (DAR A.O. No. 06 [1997], II [A]).
However, DAR may allow the withdrawal of voluntary offers to sell if the withdrawal of VOS is
for the purpose of acquisition and compensation through the Voluntary Land Transfer/ Direct
Payment Scheme (VLT/DPS), provided, that the claim folder has not yet been forwarded to
the LBP for the computation of the land value. (DAR A.O. No. 06 [1997] II [A] 2nd par.). DAR
may also allow the withdrawal of VOS if the subject landholding is determined by DAR to be

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more suitable for a townsite, resettlement site or individual site needed to address a matter
of national interest or concern in calamity situation (DAR A.O. No. 06 [1997], II [C]).
In case lands voluntarily offered for sale are subsequently found to be outside the
coverage of CARP, such lands shall be reconveyed to the original transferors. The manner of
reconveyance is governed by A.O. No. 09, Series of 1997.
In the case of commercial farms, the offer to sell must have been submitted before the
expiration of the deferment period in order that their acquisition through VOS may be
allowed, otherwise the property shall be placed under compulsory acquisition (Section 8
[a]DAR A. O. No. 02-1998).
Landowners who voluntarily offer their lands for sale shall be entitled to an additional five
percent (5%) cash payment. It must be noted, however, that banks and other financial
institutions are not covered by said incentive. (Rep. Act No. 6657, [1988 ], Sec. 19)
Voluntary Land Transfer/ Direct Payment Scheme
Voluntary Land Transfer or Direct Payment Scheme (VLT/DPS) is a mode of acquisition
whereby the landowner and the beneficiary enter into a voluntary arrangement for the direct
transfer of the lands to the latter. Not all private agricultural lands may be subject of
voluntary land transfer. For instance, lands mortgaged with banking and/or financial
institutions cannot be the subject of VLT/DPS.
All notices for voluntary land transfer must be submitted to the DAR within the first year
of the implementation of the CARP. Negotiations between the landowners and qualified
beneficiaries covering any voluntary land transfer which remain unresolved after one (1)
year shall not be recognized and such land shall instead be acquired by the government and
transferred pursuant to the Comprehensive Agrarian Reform Law. [Rep. Act No. 6657(1988),
sec. 20.] It must be stressed that this should not be construed to mean that VLT/DPS is no
longer allowed after one year from the effectivity of R.A. 6657. It is submitted that VLT/DPS
may be entered into even beyond 15 June 1989, or one year after the effectivity of R.A. No.
6657. It is argued that that the exact moment when the one-year period under Section 20,
par (a) of R.A. No. 6657 within which notices of VLT/DPS may be filed commences from the
date when the land subject of the VLT/DPS is scheduled for acquisition and distribution
according to the various phases of implementation described under Section 7 and 11 and
the landowner is served a notice of acquisition of his landholding.
If the law intended that the one year period be reckoned from the approval or effectivity
of RA 6657, it would have expressly said so, as it did in the provisions on priorities (Sec. 7),
commercial farms (Sec. 11), and stock transfer option (Sec. 31). Instead, the law used the
phrase "within the first year of implementation of the CARP" which is at the time Section 16
is implemented relative to specific and distinct classes of agricultural lands. [Memorandum
of Asst. Sec. Peaflor for the Secretary, August 23, 1999, p. 6.]
Section 20 (b) of R.A. No. 6657 provides that the terms and conditions of the transfer
under this mode shall not be less favorable to the transferee than those of the government's

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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 noncompliance by either party and shall be duly recorded and its implementation monitored by
the DAR. [Rep. Act No. 6657 (1988), sec. 20.]
Direct payments in cash or in kind may be made by the farmer-beneficiary to the
landowner under terms to be mutually agreed upon by both parties, which shall be binding
upon them, upon registration with the approval by the DAR. Said approval should be
received by the farmer-beneficiary within thirty (30) days from the date of registration. In
the event they cannot agree on the price of land, the procedure for compulsory acquisition
as provided in Section 16 shall apply. The LBP shall extend financing to the beneficiaries for
purposes of acquiring the land. [Rep. Act No. 6657 (1988), sec. 21.]
A pressing issue respecting VLT/DPS is its application to commercial farms. One school of
thought espouses the theory that VLT/DPS cannot apply to commercial farms as Section 11
of R.A. No. 6657 specifically requires their ". . . immediate compulsory acquisition and
distribution . . ." beginning 15 June 1998. Hence, it is argued that commercial farms may be
acquired only through compulsory acquisition.
It is submitted that commercial farms may be acquired not only through compulsory
acquisition but through VLT/DPS as well.
There is no dispute that commercial farms whose deferments have expired as of 15 June
1998 are subject to immediate compulsory acquisition and distribution as provided in
Section 11 of R.A. No. 6657. It should be stressed, however, that all acquisitions under R.A.
No. 6657 are compulsory in nature, in the sense that the landowners whose agricultural
lands are covered by CARP have really no choice except to submit to the program.
The procedures for acquisition of private lands are provided for under Chapter V, Section
16 (a) to (f). The procedure for land acquisition are further elaborated by Chapter VI, Section
17 through Section 21. These provisions prescribe specific rules for valuation and payment
which include, among others, Section 20 on voluntary land transfer and Section 21 on direct
payment of beneficiaries. Thus, even as the process of compulsory acquisition under Section
16 is already in motion, the option available under Sections 20 and 21 may still be exercised.

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The foregoing framework of acquisition is the context within which the phrase "immediate
compulsory acquisition," as used in Section 11 should be understood.
The situation now is that before commercial farms could be compulsorily acquired and
distributed pursuant to Section 16, the preliminary steps for their acquisition have to be
continued or pursued, to wit: identification of beneficiaries, inspection or technical survey
and valuation. During this period, the landowners and the qualified beneficiaries may, by
reason of the options available under Section 20 and 21, manifest their intent to voluntarily
arrange for direct transfer and payment of the property. In short, the phrase "immediate
compulsory acquisition" under Section 11 of R.A. No. 6657, when taken in the context of the
procedures for acquiring lands under CARP, still includes VLT/DPS as an option for valuation
and payment of commercial farms subject of acquisition. [Memorandum of Asst. Sec.
Peaflor for the Secretary, August 23, 1999, pp. 2-5]
DPS involving commercial farms may be availed of any time during the acquisition
process, after the preparation of the master list but prior to the transmittal of the claim
folder to the LBP. If the notice of acquisition is served by the parties upon to the DAR prior to
the preparation of the master list, the notice shall be validated by the MARO with identified
ARBs included in the master list, in a referendum to be held for this purpose. Acquisition
under DPS of lands with liens and encumbrances may be allowed provided that the amount
corresponding to the mortgage over the subject landholding shall be deducted from the total
value of the land to be paid by the ARBs. Provided further that said agreement shall be upon
mutual consent of both the ARBs and the landowner, duly concurred with by the mortgagee
or lienholder. In case of delinquent real estate taxes, the ARBs may be allowed to assume
such liability to be deducted from the total value of the land. Upon mutual consent of the
ARBs and the landowner, duly concurred with by the mortgagor or the lienholder, the ARBs
may assume the mortgage, provided that such obligation shall not exceed the annual
amortization otherwise due to the land pursuant to Section 26 of RA 6657, if the subject
landholding was acquired under VOS or CA [DAR A. O. No. 09 (1998), Section 9 (b)].
Compulsory Acquisition
Compulsory acquisition is a mode whereby the land is expropriated by the State in
accordance with the procedure outlined in Section 16 of R.A. No. 6657.
All private agricultural lands which have become due under the phase of implementation
as provided in Section 7 of R.A. No. 6657 are 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

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Voluntary stock distribution is an alternative arrangement to the physical distribution of

lands wherein corporate owners voluntarily divest a portion of their capital stock, equity or
participation in favor of their workers or other qualified beneficiaries. Stock ownership is
based on the capital stocks of the corporation and is equivalent to the agricultural land
actually devoted to agricultural activities valued in relation to the total assets of the
corporation. (Rep. Act No. 6657 [1988], sec. 31 as implemented by DAR Adm. O. No. 10
[1988] and DAR Adm. O. No. 1 [1991])
To safeguard the rights of farmer-beneficiaries, corporate farms with a voluntary stock
distribution plan must comply with the following conditions:
1)
The books of the corporation or association shall be subject to periodic audit by
certified public accountants chosen by the beneficiaries;
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 by DAR Adm. O. No. 10 [1988]).
However, corporate farm owners cannot avail of voluntary stock distribution at present.
Section 31 of RA 6657 states that "if within two (2) years from the effectivity of CARP, the
land or stock transfer has not been made or the plan for such stock distribution has not been
approved by the Presidential Agrarian Reform Council (PARC) within the same period, the
agricultural land of the corporate owners or corporation shall be subject to compulsory
acquisition under existing DAR rules and regulations.
The Case of Hacienda Luisita
Hacienda Luisita, Inc. is a corporate farm owning a total of 4,916 hectares planted to
sugarcane located in Tarlac. In May 1988, it applied to avail of the stock distribution plan
under CARP. The application was approved in November 1988. The farm has a total of
355,531,462 shares of stocks with a par value of P1.00 per share. One-third of these shares
is subject for distribution to the 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

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The procedure for the acquisition of private agricultural lands as provided for in Sec.
16,RA 6657 are as follows:
a)
After having identified the land, the landowners and the beneficiaries, the DAR
shall send its notice to acquire the land to the owners thereof, by personal delivery or
registered mail, and post the same in a conspicuous place in the municipal building
and barangay hall of the place where the property is located. Said notice shall contain
the offer of the DAR to pay a corresponding value in accordance with the valuation set
forth in Sections 17 and 18, and other pertinent provisions hereof.
DAR identifies the land to be covered by CARP as well as the landowners and
beneficiaries thereof on the basis of a master list or inventory of landholdings prepared by
the field offices pursuant to the Land Acquisition and Distribution Tracing System
(LADTRACKS) and the CARP Scope Validation Project. Said master list in turn is obtained from
the LISTASAKA statements as verified or complemented by the records of the Register of
Deeds and Assessor's Offices, review of town plan and zoning ordinances, field surveys,
interviews and community consultations and general knowledge of the land ownership
pattern in the barangays or municipalities. The identification of lands is done by the DAR
Municipal Office (DARMO) which gathers documents such as OCT/TCT, tax declaration, copy
of the approved survey plan of the property and prepares the claim folder of the landowner.
Thereafter, the 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

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and Farmer's Undertaking (APFU).The DARMO shall forward the claim folder to DARPO for
review and completion of documents. The land is then surveyed. The claim folder is sent to
the Land Bank for valuation. At this stage, the DARPO sends the Notice of Land Valuation
and Acquisition to the Landowner (DAR A. O. No. 02 (1996) as amended by DAR A.O. No. 1
(1998).]
In the preliminary stage of the acquisition process, notice to the landowner is vital to the
validity of coverage and acquisition of the landholding. The Supreme Court had occasion to
discuss and stress the importance of these notices in the case of Roxas & Co. vs. CA, G.R.
No. 127876, December 17, 1999. In this case, petitioner Roxas and Co., a domestic
corporation owns three haciendas. Notices of acquisition informing the landowner that two
of the haciendas were being compulsorily acquired were sent by the DAR and served on the
administrator in his address in the hacienda. The administrator participated in the
acquisition proceedings as representative of the owner. Subject landholdings were acquired
by the DAR and subsequently distributed to the beneficiaries. The petitioner assailed the
validity of the acquisition proceedings on the ground, among others, that it was denied due
process as no notice of acquisition was ever served on it. The Supreme Court held that:
. . . the procedure in sending notices is important to comply with the requisites of due
process especially when the owner is a juridical entity.
. . . The Notice of Acquisition in Section 16 of the CARL is required to be sent to the
landowner by personal delivery or registered mail. Whether the landowner be a natural
or juridical person to whose address the Notice may be sent by personal delivery or
registered mail, the law does not distinguish. The DAR administrative orders also do
not distinguish. In the proceedings before the DAR the distinction between natural and
juridical persons in the sending of notices may be found in the Revised Rules of
Procedure of the DARAB. Service of pleadings before the DARAB is governed by
Section 6, Rule V of the DARAB Revised Rules of Procedure. Notices and Pleadings are
served on private domestic corporations or partnerships in the following manner:
"Section 6.
Service Upon Private Domestic or Partnership. If defendant is a
corporation organized under the laws of the Philippines or a partnership duly
registered service may be made on the president, manager, secretary, cashier, agent
or any of its directors or partners"
Similarly, the Revised Rules of Court of the Philippines, in Section 13, Rule 14 provides:
"Section 13. Service upon private domestic corporation or partnership. If the
defendant is a corporation organized under the laws of the Philippines or a partnership
duly registered, service may be made on the president, manager, secretary, cashier,
agent or any of its directors."
Summonses, pleadings and notices in cases against private domestic corporation
before the DARAB and the regular courts are served on the president, manager,

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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 Court should have not been applied since what is involved in this case is acquisition
proceedings which is administrative in nature. Moreover, it must be emphasized that the
DAR, in adjudicating agrarian reform matters, is not bound by technical rules of procedure.
(Sec. 50, R.A. 6657). What is important in administrative adjudication is the right to be
heard. Said requirement was substantially complied with in this case considering that the
administrator, who takes charge of the daily operations of the subject properties,
participated in the acquisition proceedings. Therefore, it cannot be argued that there was
denial of due process. Finally, the application of the DARAB Rules of Procedure is erroneous.
This is so since the matter of service of notice of acquisition does not fall within the
jurisdiction of the DARAB.
b)
Within thirty (30) days from the date of receipt of written notice by personal
delivery or registered mail, the landowner, his administrator or representative shall
inform the DAR of his acceptance or rejection of the offer.
c)
If the landowner accepts the offer of the DAR, the Land Bank of the Philippines
(LBP) shall pay the landowner the purchase price of the land within thirty (30) days
after he executes and delivers a deed of transfer in favor of the government and
surrenders the Certificate of Title and other muniments of title.
d)
In case of rejection or failure to reply, the DAR shall conduct summary
administrative proceedings to determine the compensation for the land requiring the
landowner, the LBP and other interested parties to submit evidence as to the just
compensation for the land, within fifteen (15) days from the receipt of the notice. After
the expiration of the above period, the matter is deemed submitted for decision. The
DAR shall decide the case within thirty (30) days after it is submitted for decision.

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

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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.

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(Association of Small Land Owners in the Philippines vs. Secretary of Agrarian Reform), 175
SCRA 343 (1989.)
It must be noted, however, that the opening of a trust account and issuance of a
certification from Land Bank that a certain sum has been earmarked for the landowner does
not constitute substantial compliance with Section 16(e) of R.A. No. 6657. In the case 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 to DAR A. O. No. 09-1990 is not equivalent to just compensation under R.A.
No. 6657. The Court nullified DAR A.O. No. 09-1990, ruling as follows:
. . . It is very explicit from Section 16 (e) that the deposit must be made only in "cash"
or in "LBP bonds." Nowhere does it appear nor can it be inferred that the deposit can
be made in any other form. If it were the intention to include a "trust account" among
the valid modes of deposit, that should have been made express, or at least, qualifying
words ought to have appeared from which it can be fairly deduced that a "trust
account" is allowed. In sum, there is no ambiguity in Section 16 (e) of R. A. No. 6657 to
warrant an expanded construction of the term "deposit." . . .
. . . The ruling in the Association of Small Landowners case [that payment of the just
compensation is not always required to made fully in money] merely recognized the
extraordinary nature of the expropriation to be undertaken under R. A. No. 6657
thereby allowing a deviation from the traditional mode of payment other than in cash.
It did not, however, dispense with the settled rule that there must be full payment of
just compensation before title to the expropriated property is transferred. . . .
What the Supreme Court nullified was merely the form in which the deposit was made,
i.e., the deposit in trust and not the deposit per se as payment to the landowners for the
expropriated lands. Thus, in effect, the Court in making such pronouncement, upheld the
validity of deposit per se as payment of just compensation.
f)
Any party who disagrees with the decision may bring the matter to the court of
proper jurisdiction for final determination.
In the case of Association of Small Landowners, the Supreme Court explained that the
determination of just compensation is a function addressed to the courts of justice. [175
SCRA 343 (1989)].
The operating procedures for the acquisition of private agricultural lands are outlined in the
following administrative issuances:

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

Acquisition of Agricultural Lands Subject of Voluntary Offer to Sell (VOS) and
Compulsory Acquisition (CA) Pursuant to R. A. 6657" as amended by DAR A. O. No. 298;

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

DAR A. O. No. 08, Series of 1997 entitled "Revised Rules on the Acquisition and
Distribution of Compensable Agricultural Lands Under VLT/DPS";

DAR A. O. No. 12, Series of 1990 entitled "Policy Guidelines and Operating
Procedures in the Identification and Acquisition of Idle and Abandoned Lands".
Reconstitution of Lost or Damaged Title
A pressing operational problem besetting agrarian reform implementors is the delay in
the acquisition and distribution of agricultural lands with lost or destroyed titles. To address
this concern, DAR Memorandum Circular No. 05, Series of 1994 was issued outlining the
procedures on the reconstitution of lost or destroyed titles.
Reconstitution of a certificate of title denotes restoration of the instrument which is
supposed to have been lost or destroyed in its original form and condition. The purpose of
the reconstitution of title or any document is to have the same reproduced, after proper
proceedings, in the same form they were when the loss or destruction occurred. (Heirs of
Pedro Pinote vs. Dulay 198 SCRA 12 [1990])
There are two types of reconstitution of titles: judicial and administrative. Judicial
reconstitution partakes of a land registration proceeding and is perforce a proceeding in
rem. (Republic vs. Intermediate Appellate Court, 157 SCRA 62 [1988]). Judicial reconstitution
is governed by Republic Act No. 26 in relation to Section 110 of P. D. No. 1529.
Administrative reconstitution of title is likewise governed by Republic Act No. 26, as
amended by Republic Act No. 6732. Under DAR Memorandum Circular No. 5 (1994), the
Department of Agrarian Reform (DAR), through the duly authorized DAR lawyer, may file a
petition for administrative or judicial reconstitution when the notice of coverage over
landholdings whose titles were lost or destroyed has already been issued.
As a general rule, the remedy for the reconstitution of lost or destroyed original copies of
certificates of titles in the offices of the Register of Deeds is the filing of a petition for judicial
reconstitution of title. However, administrative reconstitution of lost or destroyed original
copies of certificates of title may be availed of in case of substantial loss or destruction of
land titles due to fire, flood or other force majeure where the number of certificates lost or
damaged is at least ten (10) percent of the total number of titles in the custody of the
Register of Deeds but in no case shall the number of titles lost or damaged be less than five
hundred (500) as determined by the Administrator of the Land Registration Authority.
(Section 1, R.A. No. 6732 [1989]).
Detailed discussion of the procedures for the filing of petition for reconstitution are
provided for in R.A. No. 6732 as implemented by LRA Circular dated 26 July 1989, R.A. No.
26 as amended, LRA Circular No. 35 dated 13 June 1983 and DAR Memorandum Circular No.
05, Series of 1994.

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CHAPTER 4
Just Compensation
Definition
Just compensation means the equivalent for the value of the property at the time of its
taking. It means a fair and full equivalent for the loss sustained. All the facts as to the
condition of the property and its surroundings, its improvements and capabilities should be
considered. (Export Processing Zone Authority vs. Dulay, 149 SCRA 305 [1987]).
In the case of Association of Small Landowners in the Philippines, Inc. vs. Secretary of
Agrarian Reform, supra, the Supreme Court further explained the meaning of "just
compensation". It said:
Just compensation is defined as the full and fair equivalent of the property taken from
its owner by the expropriator. It has been repeatedly stressed by this Court that the
measure is not the taker's gain but the owner's loss. The word "just" is used to
intensify the meaning of the word "compensation" to convey the idea that the
equivalent to be rendered for the property to be taken shall be real, substantial, full,
ample.
As held in Republic of the Philippines v. Castellvi, there is compensable taking when
the following conditions concur: (1) the expropriator must enter a private property; (2)
the entry must be for more than a momentary period; (3) the entry must be under
warrant or color of authority; (4) the property must be devoted to public use or
otherwise informally appropriated or injuriously affected; and (5) the utilization of the
property for public use must be in such a way as to oust the owner and deprive him of
beneficial enjoyment of the property. All these are envisioned in the measures before
us (at 378, 379).
(T)he content and manner of the just compensation provided for in the 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

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Under Sec. 17 of RA 6657, the factors considered in the determination of just

compensation are:
a)

cost of acquisition;

b)

current value of like properties;

c)

nature of land;

d)

actual use;

e)

income;

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 of RA 6657 on just compensation do not provide hard-and-fast rules which
must be strictly adhered to by DAR and the LBP in determining just compensation.
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

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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
Market Value : P10,000

Capitalized Net Income : P24,900

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:

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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 farmerbeneficiaries
When the permanent but not yet fruit-bearing crops are introduced by the farmerbeneficiaries, 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

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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:

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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

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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:

RCPI Adjustment Factor =

Most Recent RCPI for the Month as of the Date

of Receipt of CF by LBP from DAR

RCPI for the Month Issued as of the Date/

Effectivity/Registration of the Valuation Input

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

Valuation of deferred commercial farms
The formulae provided under DAR AO 5 (1998) are used in the computation of valuation
for deferred commercial farms (DAR Adm. O. No. 9 [1998]).
Valuation of lands of corporate farms

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Agricultural lands owned by corporate farms are valued by considering the following
factors:
a)

factors for the determination of just compensation; and

b)
factors needed to stimulate the growth of cooperatives and participation of
worker-beneficiaries (Rep. Act No. 6657 [1988], sec. 17 in relation to DAR Adm. O. No.
5 [1998])
Valuation of lands planted to sugarcane
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 the Joint DARLBP MC 15 (1999).
Valuation of rubber plantations
Valuation of rubber plantations are governed by Joint DAR-LBP MC 7 and 8 (1999).
Under the old rubber land valuation guideline or the Land Valuation Guidelines No. 6
(1990), the recognized income of rubber plantations is based on processed crumb rubber.
Under one of the latest guidelines, the standard income approach to valuation, measures the
net income or productivity of the land based on the farm produce (in their raw forms) and
not on the entire agri-business income enhanced by the added value of farm products due to
processing. It appropriately determines the Capitalized Net Income of rubber plantations
based on the actual yield and farm gate prices of raw products (field latex and cuplump) and
the corresponding cost of production.
Furthermore, the growing market for old rubber trees which was not considered in the old
LVG is now considered.
There are also other several situations which are considered in the computation of just
compensation for rubber plantations. There are rubber claims pending with the Department
of Agrarian Reform Adjudication Board (DARAB) for reasons such as landowner's rejection of
the valuation but the plantation remains under the management of the landowner. Due to
the time gap between the original date of FI and the date of DARAB's order to recompute the
property (during which period, the age and productivity of the trees change), the valuation

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

Claims have been approved by the LBP and:

Landowner has executed a Deed of Assignment, Warranty and

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

Transfer Certificate of Title was already registered in the name of RP on

or before the issuance of the same administrative order; or

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 by RA 6657. The
DAR makes use of the determination of the land valuation and compensation by the LBP, in
the performance of its functions (Exec. Order. No. 405 [1990], sec. 1).
Public participation

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There are several provisions of laws which encourage public participation in the
determination of land valuation, namely:
a)

Sec. 3 of EO 129-A states:

. . . partnership between government and organization of farmers and farmworkers in

agrarian reform policy formulation, program implementation and evaluation shall be
institutionalized . . .
b)

Sec. 18 of RA 6657 provides:

The LBP shall compensate the landowners in such amount as may be agreed upon by the
landowner and the DAR and the LBP . . .
c)

DAR AO 14 (1990) emphasizes Sec. 47 of RA 6657 on BARC's

assistance in the initial determination of the value of the land.

Preliminary determination of just compensation cases
The summary administrative proceeding is conducted before the Provincial Agrarian
Reform Adjudicator if the compensation offered does not exceed two (2) million pesos; or
before the Regional Agrarian Reform Adjudicator if the government's offer is more than two
(2) million pesos but does not exceed five (5) million pesos; or before the Department of
Agrarian reform Adjudication Board if the offer is more than five (5) million pesos ( DAR Adm.
Order No. 8 [1993]).
Under DAR MC 1 (1995), valuation cases involving PD 27 lands are cognizable only by the
Secretary of DAR (reiterating Sec. 12 of PD 946 [1976]). But in the recent case of Land Bank
of the Phils. vs. CA, G.R. No. 128557, 29 December 1999, the Supreme Court declared that it
was an error for the Secretary of Agrarian Reform to issue DAR MC 1 (1995) directing the
DARAB to refrain from hearing valuation cases involving PD 27 lands. It is the DARAB which
has the authority to determine the initial valuation of lands involving agrarian reform
pursuant to Sec 1 (b), Rule II, 1994 Revised Rule of the DARAB although such valuation may
only be considered preliminary as the final determination of just compensation is vested in
the courts.
The PARAD's, RARAD's, or DARAB's summary administrative proceeding is merely a
preliminary determination of the just compensation due to the landowner. The landowner
has the right to question such preliminary determination of the Adjudication Board before
the Special Agrarian Courts.
"The determination made by the DAR is only preliminary unless accepted by all parties
concerned. Otherwise, the courts of justice will still have the right to review with finality the
said determination in the exercise of what is admittedly a judicial function" ( Association of
Small Landowners in the Philippines, Inc. vs. Secretary of Agrarian Reform, 175 SCRA 345
[1989], at p. 382).

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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
Courts qua Special Agrarian Courts have, according to Section 57 of the same law, original
and exclusive jurisdiction over: 1) "all petitions for the determination of just compensation to
land-owners," and 2) "the prosecution of all criminal offenses under . . . (the) Act (at
890). Vda. de Tangub vs. CA, 191 SCRA 885 (1990)
Although the proceedings are described as summary, the landowner and other interested
parties are nevertheless allowed an opportunity to submit evidence on the real value of the
property. But more importantly, such determination of just compensation by the DAR, as
earlier stated is by no means final and conclusive upon the landowner or any other
interested party for Section 16 (f) clearly provides: "Any party who disagrees with the
decision may bring the matter to the court of proper jurisdiction for final determination of
just compensation" Magana vs. Estrella, 201 SCRA 536 (1991).
In Phil. Veterans Bank vs. Court of Appeals, G.R. No. 132767, 18 January 2000, petitioner
Bank argued that the DAR Adjudicators have no jurisdiction to determine just compensation
for the taking of lands under CARP because such jurisdiction is vested in Regional Trial
Courts designated as Special Agrarian Courts. Hence, Petitioner could file its petition with
the RTC beyond the 15-day period of appeal from the decision of the DAR Adjudicator. The
RTC dismissed the petition of Petitioner for being filed beyond the 15-day period for appeal.
The Supreme Court reiterated its ruling in Republic vs. Court of Appeals, supra, and said:
. . . this rule is an acknowledgment by the DARAB that the power to decide just
compensation cases for the taking of lands under R.A. No. 6657 is vested in the courts. It is
error to think that, because of Rule XIII, S 11, the original and exclusive jurisdiction given to
the courts to decide petitions for determination of just compensation has already been
transformed into an appellate jurisdiction. It only means that, in accordance with settled
principles of administrative law, primary jurisdiction is vested in the DAR as an
administrative agency to determine in a preliminary manner the reasonable compensation
to be paid for the lands taken under the Comprehensive Agrarian Reform Program, but such
determination is subject to challenge in the courts.
The jurisdiction of the Regional Trial Courts is not any less "original and exclusive" because
the question is first passed upon by the DAR, as the judicial proceedings are not a
continuation of the administrative determination. For the matter, the law may provide that
the decision of the DAR is final and unappealable. Nevertheless, resort to courts cannot be

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foreclosed on the theory that courts are the guarantors of the legality of administrative
action.
Valuation of PD 27 Lands
Under Sec. 2 of EO 228, land valuation shall be based on the Average Gross Production
(AGP) as determined by the Barangay Committee on Land Production (BCLP). The formula is:
Rice Lands LV = AGP x 2.5 x P 35 *
Corn Lands LV = AGP x 2.5 x P 31**
*
1972

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

**

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

Lease rentals paid to the landowner by the farmer-beneficiary after 21 October 1972 shall
be considered as advance payment for the land.
The factor of government support price provided under EO 228 does not undervalue PD
27 lands. Under DAR AO 13 (1994), an increment of 6% yearly interest compounded
annually on lands covered by PD 27 and EO 228 is granted. The formula is:
(Computed land value using the original formula) x (1.06)n
where : n = number of years from date of tenancy up to effectivity date
The landowners qualified to receive the compensation based on the increment formula
are:
a)
Those whose lands are actually tenanted as of October 21, 1972 or thereafter
and Operation Land Transfer (OLT) covered;
b)
Those who opted for government financing thru LBP as the mode of
compensation; and
c)

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

For those who were partially paid, the yearly increment of 6% compounded annually shall
only be applied to the unpaid balance. According to the above mentioned administrative
issuance, the said grant of increment is reckoned from the effectivity date ofPD 27 or 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 of Benosa vs. CA, G.R. No. 122231, 27 November 1995, on the issue of
granting interest to the landowner, it was held:
It is settled that the landowners are entitled to legal interest on the amount payable
from the time the property was taken until full payment is made (National Power
Corporation vs. Angas, 208 SCRA 542; Commissioner of Public Highways vs. Burgos,

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

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The recognized rule indeed, is that title to the property expropriated shall pass from
the owner to the expropriator only upon full payment of the just compensation.
Jurisprudence on this settled principle is consistent both here and in other democratic
jurisdictions" (at 386, 388 and 389).
Cash Payment
Under Sec. 18 of RA 6657, the proportion of payment in cash, dependent on the
area/hectarage of the land valued is subject to the following:
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 of RA 6657,
these features are:
1)
Its market interest rates are aligned with 91-day treasury bill rates, net of
applicable final withholding tax, payable twice a year six months from date of issue
and every six months thereafter.
2)
One-tenth of the bond's face value matures every year from date of issue up to
the tenth year.
3)

The bond is fully guaranteed by the national government.

4)
The bond is non-denominated. Upon request, it can be split according to
amounts desired by the bondholder.
5)
The bonds are highly transferable and negotiable. Such LBP bonds may be used
by the landowner, his successors in interest or his assigns, up to the amount of their
face value, for any of the following:

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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% interestbearing 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

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captive market of landowners and to facilitate the speedy transfer of lands to the
tenant-farmers in support of the land reform program of the Government. They are not
ordinary commercial paper in that sense subject to discounting (at 498, 499 and 502).
Mode of Payment for PD 27 Landowners
The landowners shall be paid in any of the following modes, at their option (Exec. Order
No. 228 [1987], sec. 3):
a)
Bond payment over ten (10) years, with ten percent (10%) of the value of the
land payable immediately in cash, and the balance in the form of LBP bonds bearing
market rates of interest that are aligned with 90-day treasury bills rates, net of
applicable final withholding tax. One-tenth of the face value of the bonds shall mature
every year from the date of issuance until the tenth year.
The LBP bonds issued hereunder shall be eligible for the purchase of government
assets to be privatized.
b)
Direct payment in cash or in kind by the farmer-beneficiaries with the terms to
be mutually agreed upon by the beneficiaries and landowners and subject to the
approval of the DAR; and
c)

Other modes of payment as may be prescribed or approved by the PARC.

Under Sec. 9 of EO 229, landowners who voluntarily offer to sell their lands are given the
same incentive given to PD 27 landowners under EO 228, which is the exemption from the
payment of capital gains tax and other taxes and fees.

CHAPTER 5
Land Redistribution
Qualified Agrarian Reform Beneficiaries Under CARP
Section 22 of RA 6657 enumerates the groups of farmers and tillers who are qualified to
become beneficiaries of the Comprehensive Agrarian Reform Program. They are the
following:
(a)

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

(b)

Agricultural lessees and share tenants;

(c)

Regular farmworkers;

(d)

Seasonal farmworkers;

(e)

Other farmworkers;

(f)

Actual tillers or occupants of public lands;

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(g)

Collectives or cooperatives of the above beneficiaries; and

(h)

Others directly working on the land.

Section 22 also provides that "[t]he lands covered by the CARP shall be distributed as
much as possible to landless residents of the same barangay, or in the absence thereof,
landless residents of the same municipality", following the order of priority quoted above.
Qualifications of Agrarian Reform Beneficiary
According to Section 22 of RA 6657, to qualify as an agrarian reform beneficiary, one
must:
(a)

be landless;

(b)
be at least 15 years old or head of a family at the time the property was
transferred in the name of the Republic of the Philippines; and
(c)
have the willingness, ability, and aptitude to cultivate the land and make it as
productive as possible.
The requirements enumerated in Section 22 are the minimum or basic qualifications for a
farmer to become a beneficiary of land under the agrarian reform program.
Qualifications of landowner's children as preferred beneficiaries
As provided in Section 6, three (3) hectares of agricultural land may be awarded to each
child of the landowner, on the condition that he is at least 15 years of age at the time of the
award, and that he is actually tilling the land or directly managing the farm. "Directly
managing the farm" refers to the cultivation of the land through personal supervision under
the system of labor administration.
Children of landowners are classified as preferred beneficiaries, and the land awarded to
them does not form part of the retention right of the parent-landowners. The transfer of the
land to them is effected by the issuance of CLOAs.
The rules on payment for the value of the land by the Land Bank and the payment of
amortizations by the beneficiary do not apply in the case of preferred beneficiaries, unless
there has been a tenancy relationship between the parent-landowners and the children. In
the latter case, the Land Bank shall finance the acquisition of the property.
The rights and obligations of landowners' children as preferred beneficiaries are governed
by Memorandum Circular No. 4, Series of 1994.
"Landless Persons" Under CARL
Section 25 of RA 6657 provides that a landless person is one who owns less than three
(3) hectares of agricultural land. Section 7 also provides that an owner-tiller may still be
awarded another parcel of agricultural land under the program, provided that he is actually
cultivating that land, and only to the extent of the difference between the area of the land

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

Misuse of the land;

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

Illegal conversion of the land by the beneficiary;

(h)

Waiver of rights to awarded lands;

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(i)
and

Beneficiary's surrender of awarded land to landowner or other non-beneficiary;

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

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This rule also applies to voluntary land transfer/direct payment scheme. Even under this
scheme, it is not the landowner who determines who will be the beneficiaries. The
beneficiaries must qualify under the law, and it is still the MARO and the BARC who do the
screening.
Farmworker defined
A farmworker is defined by Section 3 (g), R.A. 6657 as a natural person who renders
service for value as an employee or laborer in an agricultural enterprise or farm regardless
of whether his/her companion is paid on a daily, weekly, monthly, or "pakyaw" basis. The
term includes an individual whose work has ceased because of a pending agrarian dispute
and who has not obtained a substantially equivalent and regular farm employment.
Special qualifications for farmworkers in commercial farms
Aside from the minimum qualifications in Section 22 of R.A. 6657, Section 4
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 of Administrative Order No. 9, Series of 1998, provides that the following shall
be grounds for the disqualification of potential beneficiaries:
a)

Mandatory retirement;

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

Dismissal for cause by final judgment;

d)

Waiver or refusal to be a beneficiary; and

e)
Violation of agrarian reform laws and regulations as determined with finality by
the proper tribunal or agency.
Questions have been raised on whether dismissal for cause distinguishes between just
and authorized causes as these two categories are defined in Presidential Decree No. 442,
otherwise known as the Labor Code of the Philippines.

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"Just cause" may consist in serious misconduct, willful disobedience of reasonable and
lawful orders of the employer, gross neglect and abandonment of duties, dishonesty and
loss of confidence of the employer in the employee, commission of crime or offense by the
employee against the person or immediate family of the employer, and analogous cases
(see LABOR CODE, Article 282).
"Authorized cause", on the other hand, may be one of the following: introduction of laborsaving devices, redundancy, retrenchment due to legitimate business losses, closure of
business, and ailment or disease of the employee (see LABOR CODE, Article 283).
Just cause is distinguished from authorized cause in the Labor Code because while just
causes have something to do with the moral depravity and fault of the employee,
termination for authorized causes is due to circumstances beyond the control of the
employee.
It is evident from the history of the provision of the administrative issuances on qualified
farmworkers that the intention is to distinguish between just and authorized causes. For one,
the list of qualifications in Section 4, Administrative Order No. 9, Series of 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 service for cause as a ground for disqualification. Retrenchment as a ground for
disqualification is listed as a separate item, namely, item (d). This shows that item (b) refers
only to dismissal for just causes, and does not include dismissal for authorized causes.
Administrative Order No. 6, Series of 1998 was eventually superseded by Administrative
Order No. 9, Series of 1998. The latter administrative order removed retrenchment as a
ground for disqualification. Only dismissal for cause (meaning just cause) has been retained.
Thirdly, Administrative Order No. 9, Series of 1998, item (h), Section 6, Article II, which
provides for the prioritization of beneficiaries, still includes retrenched workers among the
potential beneficiaries. The provision states:
The Beneficiary Screening Committee shall prioritize the potential ARBs pursuant to
Section 22 of R.A. 6657. They shall be ranked according to the length of their continuous
service in the commercial farm reckoned from June 15, 1988 up to the expiration of the
deferment period; residency, i.e. whether residing in the same barangay or
municipality;whether they have been validly retrenched, i.e. with approval of the Dept. of
Labor and Employment; the nature of their work, i.e. whether directly related to farm
activities, and such other factors as the Committee may deem appropriate. (Underscoring
supplied.)
Different Categories of Farmworkers

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Section 3, R.A. 6657 identifies these categories as follows:

(a)
Regular farmworker is a natural person who is employed on a permanent basis
by an agricultural enterprise or farm.
(b)
Seasonal farmworker is a natural person who is employed on a recurrent,
periodic, or intermittent basis by an agricultural enterprise or farm, whether as a
permanent or a non-permanent laborer, such as "dumaan" and "sacada".
(c)
Other farmworker is a farmworker who is neither a regular nor a seasonal
farmworker, such as a farmworker who performs farm activities but is not paid for his
or her labor.
DAR A.O. No. 9, Series of 1998, on the other hand, identifies two more categories:
(a)
Technical farmworker is a natural person employed by an agricultural enterprise or
farm, who is highly educated and trained and performs functions in scientific, engineering,
medical, teaching, and other fields, but who is not vested with managerial or supervisory
functions, such as chemists, agronomists, veterinarians, and soil analysts.
(b)
Managerial or supervisory farmworker is a natural person who is employed by an
agricultural enterprise or farm vested with powers and prerogatives (1) to lay down and
execute management policies; (2) to hire, transfer, suspend, layoff, recall, discharge, assign,
or discipline employees; and/or (3) to effectively recommend such managerial actions.
Categories of farmworkers qualified to become beneficiaries under CARP
Farmworkers who are directly working on the land at the time DAR conducts actual
investigation and documentation of the agricultural enterprise, whether as regular, seasonal,
or other farmworkers are qualified beneficiaries. Under A.O. No. 9, Series of 1998, however,
other farmworkers who are directly employed by the agri-business enterprise or corporation
may be considered as beneficiaries, provided they meet the basic qualifications prescribed
in Section 22.
Selection of Beneficiaries of Commercial Farms
Under A.O. No. 9, Series of 1998, there is a Beneficiary Screening Committee responsible
for the qualification, identification, and selection of agrarian reform beneficiaries for
acquired commercial farms. The Committee is composed of the following:
(1)

The Provincial Agrarian Reform Officer, as Chairman;

(2)

The Municipal Agrarian Reform Officer;

(3)
The Provincial Agrarian Reform Coordinating Committee (PARCCOM) Chairman
or his duly authorized representative;
(4)
The Barangay Agrarian Reform Council (BARC) Chairman or his duly authorized
representative from each of the barangays where the subject commercial farm is
situated; and

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(5)
The Barangay Chairman or his duly-authorized representative, from each of the
barangays where the subject commercial plantation is situated; as members.
The Committee comes up with a master list of qualified beneficiaries, and a waiting list of
those who possess the minimum qualifications and none of the disqualifications, but who
could not otherwise be accommodated in the updated master list.
Remedy of farmworker excluded from master list
A farmworker who is excluded from the masterlist may file a written protest with the
Beneficiary Screening Committee. The Committee Chairman shall furnish a copy of the
protest to the beneficiaries whose inclusion in the list is being questioned. The protestees
shall file their answer or comment on the protest, and the Chairman shall transmit the
records to the Regional Director for the latter's decision. The Regional Director shall resolve
the protest based on substantial evidence showing the qualification or disqualification of the
beneficiary subject of the protest. No motion for reconsideration of the decision of the
Regional Director shall be allowed, but such decision may be appealed to the Office of the
Undersecretary for Field Operations and Support Services, whose decision shall be final and
executory. Notwithstanding the appeal, the decision of the Regional Director shall not be
stayed.
Managerial and supervisory farmworkers
Managerial and supervisory farmworkers may qualify as CARP beneficiaries provided that
they have been identified as qualified beneficiaries prior to their promotion, and that they
give up their managerial or supervisory positions (see A.O. No. 9, Series of 1998). In the
case, however, of supervisory or managerial employees whose responsibilities do not
actually conform to the definition of supervisory or managerial farmworkers, there are two
views on the matter. One holds that supervisory and managerial employees of commercial
farms are disqualified from becoming beneficiaries since the laws and regulations specify the
rank and not the job description. The other view is that they are qualified so long as they are
directly working on the land, and possess all the qualifications and none of the
disqualifications for becoming an agrarian reform beneficiary.
It is our opinion that these so called "supervisory or managerial" employees can qualify
as beneficiaries. The definition of supervisory or managerial farmworkers in A.O. No. 9,
Series of 1998, provides that to be considered a supervisor or a manager, the farmworker
must be vested with the power to formulate and implement management policies; to hire,
fire, assign, and discipline employees; and/or to effectively recommend such managerial
actions.
Jurisprudence supports the view that this power is essential before an employee may be
considered as supervisory or managerial. In Franklin 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

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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 under R.A. 6657, following the order of priority set forth in the law.
There is a view that seasonal farmworkers are entitled "only to a just share of the fruits of
the land", but not to own land. This view finds support in Fortich vs. Corona, G.R. No.
131457, August 19, 1999, wherein the Supreme Court said:
Again, as expressed in the opinion of Mr. Martin, intervenors, who are admittedly not
regular but seasonal farmworkers, have no legal or actual and substantive interest
over the subject land inasmuch as they have no right to own land. Rather, their right is
limited only to a just share of the fruits of the land.
The Court based its observation on Article XIII, Section 4 of the Constitution, which
provides:
The State shall, by law, undertake an agrarian reform program founded on the rights
of farmers and regular farmworkers, who are landless, to own directly or collectively
the lands they till or, in the case of other farmworkers, to receive a just share of the
fruits thereof.
It is our view, however, that the fact that seasonal farmworkers may not have been given
a constitutional right does not mean that they do not have a statutory right. Congress, in
interpreting and implementing Article XIII, Section 4 of the Constitution enacted Section 22
of RA 6657 which explicitly includes seasonal farmworkers among the qualified beneficiaries.
Moreover, the observation made by the Supreme Court is only an obiter dictum and cannot
be made the basis for the loss or acquisition of legal rights. Moreover, even a collective or
cooperative of, among others, "seasonal farmworkers" and "other farmworkers" may be
awarded lands under the agrarian reform program.
Collectives or Cooperatives as Qualified Beneficiaries
A collective or cooperative composed of the beneficiaries listed in Sec. 22 (a) to (e) 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

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itself, be an awardee of land under CARP. Sec. 25 of R.A. 6657, in fact, provides that "(t)he
beneficiaries may opt for collective ownership, such as co-ownership or farmers cooperative
or some other form of collective organization".
Cooperatives refer to "organizations composed primarily of small agricultural producers,
farmers, farmworkers, or other agrarian reform beneficiaries who voluntarily organize
themselves for the purpose of pooling land, human, technological, financial, or other
economic resources, and operated on the principle of one member, one vote. A juridical
person may be a member of a cooperative, with the same rights and duties as a natural
person." (Section 3 [k] of R.A 6657).
The aggregate size of land that may be awarded to an association or a cooperative shall
not exceed the total number of members multiplied by the award ceiling of three hectares,
except where the Presidential Agrarian Reform Council (PARC) approves the award of an area
exceeding this limit. Thus, a cooperative composed of 25 members, for instance, can receive
a maximum award of 75 hectares. (see Sec. 25, R.A 6657)
Inclusion of names of members of collective or cooperative not mandatory
Memorandum Circular No. 24, Series of 1996, Memorandum Circular No. 14, Series of
1994, and Administrative Order No. 3, Series of 1993, governing the issuance of collective
CLOAs, expressly require the listing of the names of all members in the CLOA issued to a
collective or cooperative. The purpose of this requirement is to "protect a farmer-member
from possible summary and unjust separation by the cooperative or association" (Part IV-A1).
It is our view that inclusion in the CLOA of the names of all the members of a collective
or cooperative is not necessary in all cases. Where the CLOA is under co-ownership, the
names of all the co-owners (i.e. individual farmer-beneficiaries) should be listed in the
collective CLOA. However, where the CLOA is awarded in the name of the association or
cooperative, there is no need to include the names of the individual members thereof in the
collective CLOA. Sec. 25 of R.A. 6657, in fact, provides that "(t)itle to the property shall be
issued in the name of the co-owners or the cooperative or collective organization as the case
may be." (Underscoring supplied)
Women as Beneficiaries under CARP
Women are qualified to become agrarian reform beneficiaries in their own right, not only
as spouses of agrarian reform beneficiaries. For as long as a female farmer's rights have
vested and have been established separately from her husband's or her father's, she is
entitled to receive land under the program.
The term "vested right" has been defined in the case of Balboa vs. Farrales, G.R. No.
27059, February 14, 1928, as some right or interest in property which has become fixed and
established and is no longer open to doubt or controversy". The Supreme Court, citing
American cases, explained that "rights are vested when the right to enjoyment, present or

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prospective, has become the property of some particular person or persons as a present
interest".
Involved in the Balboa case was an application for homestead patent. During the
pendency of his application, however, the law granting him the right to such patent was
repealed. The Supreme Court upheld his claim, stating that at the time the law was
repealed, the applicant has complied with all the requirements for the issuance of a patent,
hence, his right to the patent has vested. "At least on that date," said the Court, "his right to
the land, as owner, ripened into a vested right. It was no longer expectant as depending on
some events or the performance of some conditions."
Other rights as beneficiaries have been granted to women through other DAR
administrative issuances. Under Memorandum Circular No. 10, Series of 1986, support
services in terms of loan assistance in an amount not to exceed three thousand pesos
(P3,000.00) has been guaranteed for qualified rural women's pre-cooperative groups.
Under Memorandum Circular No. 4, Series of 1992, a budget has been allocated for support
services that will empower women beneficiaries.
Under Part II.D of Administrative Order No. 2, Series of 1993, farmworkers who are
husband and wife may be separately entitled to three (3) hectares each provided that their
vested rights to the land have been duly established. Each of the spouses shall be issued a
separate CLOA.
Requirement for separate cultivation by spouses of beneficiaries
Under Memorandum Circular No. 18, Series of 1996, women who are spouses of agrarian
reform beneficiaries are required to also cultivate the land, aside from the cultivation
undertaken by her husband. We are of the opinion that separate cultivation must be required
of women only where they are recipients of land in their own right, and should no longer be
required of women whose spouses receive land under the program.
To require separate cultivation by spouses of male agrarian reform beneficiaries would
work against, rather than protect, the interests of women. This requirement fails to
recognize the role of women in the rural household, particularly in agrarian areas. Women
are usually given reproductive tasks, such as upbringing of children, household chores, and
other work having to do with the maintenance of the home. An additional burden of
cultivating the land would be harshly onerous upon women who are spouses of beneficiaries.
The Civil Code and the Family Code recognize that the role of women in traditional
families is the maintenance of the household. In both Codes, maintenance of the home is
recognized as the wife's contribution to the conjugal partnership of gains or to the absolute
community of property as to entitle her to one-half share of the marital partnership property.
As long as the wife works in the home, all properties received or acquired during the
subsistence of the marriage is considered part of the conjugal partnership of gains or of the
absolute community of property. There is no reason for R.A. 6657 to be given a different

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interpretation as regards the rights of women to land awarded to their spouses under the
Comprehensive Agrarian Reform Program.
Modes of Distribution: Individual vs. Collective Ownership
It is the policy of the CARP to establish owner-cultivatorship of economic-sized farms as
basis of Philippine agriculture. In line with this is the award of three hectares to the
individual beneficiaries as the distribution limit. With a view of equitable land distribution
and ownership, DAR is mandated to distribute agricultural lands to as many tenants and
farmworkers as possible. Furthermore, the distribution of land shall be made directly to
individual beneficiaries.
In general, lands shall be distributed directly to the individual worker beneficiaries. In
case it is not economically feasible and sound to divide the land then it shall be collectively
owned by the worker beneficiaries who shall form into a worker cooperative or association
which will deal with the corporation or business association. [Rep. Act No. 6657(1988) Sec.
29; DAR A.O. No. 10 (1990), II (B)]
The beneficiaries may opt for collective ownership such as co-ownership or farmer's
cooperative or some other form of collective organization. The total area that may be
awarded under a collective CLOA shall not exceed the total number of co-owners or
members of the cooperative or collective organization multiplied by the award limit of three
hectares except in meritorious cases as determined by the PARC, pursuant to Section 25
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
to E.O. No. 407 as amended. [Rep. Act No. 6657 (1988), sec. 25.]
Lands covered by collective CLOAs on a co-ownership basis shall be subdivided in
accordance with the actual occupancy of the ARBs, provided it does not exceed three (3)
hectares. Landholding covered by CLOAs in the name of cooperative or farmer's
organization, may, at the option of the organization, also be subdivided based on the share
of each member provided that the subdivision as determined by the DAR shall be
economically feasible. [DAR A. O. No. 03 (1993), III (E).] Subdivision of lands under collective
CLOA is governed by A.O. No. 03, Series of 1993.
Factors Considered in Land Distribution
In the equitable distribution of lands subject of CARP, actual occupancy of a tenant shall
be the basis of the award, provided it does not exceed three hectares. For untenanted lands,
all the farmworkers therein shall be considered as potential beneficiaries in the estate;
provided that the proportional share of each will not exceed three (3) hectares; otherwise,
additional ARBS, shall be considered. For unoccupied lands, each identified ARB may be
allowed the award ceiling of three hectares, provided that there are enough lands for
distribution under CARP in the barangay to accommodate others who are equally qualified
but who may not have been considered as awardees in such land under acquisition. In all

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cases, the aggregate award to an ARB shall not exceed the limit of three hectares and his
total land ownership as a result of the award shall not exceed three (3) hectares. (DAR A.O.
No. 10 [1990], II [D])
Distribution Procedure
The MARO, upon completion of land acquisition, validates the list of qualified
beneficiaries who were identified during the acquisition phase who are still present and
qualified to receive the land. Through a letter or CARP Beneficiary Certificate (CBC), the
identified ARBs are formally notified by the MARO that they have qualified to receive the
land. The ARBs are consulted by the MARO as to their preferred mode of distribution .
Thereafter the Land Distribution Folders are prepared and based on the ARBs preference and
submitted to the PARO.
Upon transmittal, the PARO reviews all documents and generates the Certificates of Land
Ownership Award (CLOAs). If the ARBs prefer individual parcels, the PARO requests the DENR
to conduct subdivision survey. The PARO then submits the CLOAs to the DAR Regional Office
which causes them to be signed by the Secretary. Lastly, the PARO registers the CLOAs with
the Register of Deeds and forwards the same to the MARO for distribution. (DAR A.O. No. 19
[1990]).
A compelling issue in respect to land distribution is the matter of physical possession by
DAR as a necessary prerequisite to its distribution to the ARBs. It is submitted that physical
possession is not necessary for land to be distributed. Nothing in R.A. No. 6657 requires 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.

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Provided that the landowner shoulders the cost of the transfer of his dwelling and the agreed
cost of other improvements introduced by the tenant-beneficiary on said homelot. [DAR A.O.
No. 12 [1991], II [C])
Distribution of Commercial Farms and Facilities
Commercial farms may be distributed collectively or individually. Qualified beneficiaries
shall be awarded a maximum of three (3) hectares or a minimum of one (1) hectare each in
case the land is not sufficient to accommodate them.
To expedite the acquisition, the commercial farms shall be initially distributed collectively
or under 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 17 DAR A.O. No. 2-1998)
Facilities and improvements acquired shall be distributed collectively, through a Deed of
Transfer which shall specify the names of the ARBs and duly annotated in the CLOAs
generated over the subject landholding where said facilities and improvements are found.
Areas where the facilities and landholdings are found are deemed common areas and shall
not be partitioned individually. (Section 28 DAR A.O. No. 02-98)
Collective CLOAS shall be generated within thirty (30) days upon receipt by the PARO of
the certified copy of the certificate of title in the name of the Republic of the Philippines.
In individual CLOAs shall be generated within thirty (30) days upon receipt of the
approved Segregation Plan (ASP). However in the case of individual distribution and
considering the time and financial constraints particularly in the conduct of individual
surveys, a collective CLOA may be generated in the interim over the subject landholding
(Section 18, DAR A.O. No. 02-1998)
CLOAs shall be registered immediately upon generation. (Section 20 DAR A.O. No. 02-98)
Distribution of Corporate Farms
The general rule is that corporate farms are distributed directly to the individual workerbeneficiaries. 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

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Pending final land transfer, corporate farms that own or operate under lease or
management contract and realize gross sales in excess of P5 million are mandated to
execute a production and profit sharing (PPS) plan provided under DAR AO No. 8 (1988). The
PPS plan is imposed in order to allow the farmworkers in corporate farms to realize an
improvement in their farm income pending final transfer of the farm.
All farmworkers in a corporate farm, whether classified as regular, seasonal, technical or
other farmworkers are entitled to PPS. On the other hand, managerial and supervisory
employees are excluded from entitlement to PPS. (DAR Adm. O. No. 8 [1988])
PPS are distributed to farmworkers, over and above the compensation they are currently
receiving, based on the following schedules:
1.
Three (3%) of Annual Gross Sales from 15 June 1988 until final land or
corporate stock transfer to the farmworker-beneficiaries is effected, provided that the
employer is not obligated to pay more than 100% of the regular annual compensation
of the farmworker-beneficiaries;
2.
In addition, 10% of net profit after tax, provided that in cases where the
retention right is allowed, the amount to be distributed shall be reduced by an amount
equivalent to the proportion of the retained area to the total land area. (DAR Adm. O.
No. [1988])
To ensure that corporate farm employers comply with the PPS provisions, the Secretary of
DAR or his authorized representatives shall have the power to order and administer
compliance with the PPS provisions and to require submission of reports, compel the
production of books and documents, compel answers to interrogatories, issue subpoena and
subpoena duces tecum, and enforce its writs through Sheriffs or other duly deputized
officers. Moreover, Sections 73 and 74 of RA 6657 regarding prohibited acts and omissions
and the penalties therefor, are applicable to any person or entity found to be violating any
PPS provision. (DAR Adm. O. No. 8 [1988])
Proof of Ownership of Awarded Lands
The Certificate of Land Ownership Award evidences the ARB's ownership in respect to
private agricultural lands covered under R.A. No. 6657 (Rep. Act No. 6657 [1988], sec. 24).
Ownership of public lands, upon the other hand, are evidenced by Free Patents.
Emancipation Patents is the ARBs proof of ownership of lands awarded under Operation Land
Transfer. Discussing the nature of an Emancipation Patent, the Supreme Court ruled in the
case of Vinzons-Magana vs. Estrella (201 SCRA 536 [1991]) that it is only compliance with
the prescribed conditions which entitles the farmer/grantee to an emancipation patent by
which he acquires the vested right of absolute ownership in the landholding a right which
has become fixed and established and is no longer open to doubt and controversy.
The pronouncement of the court respecting the impregnable character of an
Emancipation Patent should be qualified. The mere issuance of an Emancipation Patent does
not put the ownership of the ARB beyond attack and scrutiny. It must be noted thatP.D. No.

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946 vests the Court of Agrarian Relations (now the DAR Adjudication Board) jurisdiction over
cases involving the cancellation of emancipation patents issued under P.D. No. 266 (Pres.
Decree [1976], sec. 12 [g]). This only goes to show that ownership of awarded lands covered
by Emancipation Patents may be challenged. The aforecited Supreme Court ruling
presupposes that the issuance of emancipation patents to the ARB is not tainted with any
irregularity such that it acquires the character of indefeasiblity. TheVinzons- Magana ruling
must be appreciated in this context.
Rights and Obligations of Beneficiaries
Once a Certificate of Land Ownership Award has been issued to a beneficiary and
registered in his name, it serves as an evidence of title to the land, entitling the beneficiary
to occupy the land, cultivate it, and maintain possession of the same. cSIADH
An agrarian reform beneficiary is obliged to exercise the diligence of a good father of a
family in the use, cultivation, and preservation of the land and the improvements thereon.
His rights to the land, as well as to support services to which he may be entitled as a
beneficiary shall be forfeited in the event that he neglects, abandons, misuses, or sells the
land.
The beneficiary is also obliged to keep the land awarded to him intact, and he may not
subdivide the land in favor of his children or heirs. The three hectares have been identified
as an economic-sized family farm which must be preserved as a single operating unit to
promote the farm's economic viability. Even if the beneficiary dies, his heirs are not allowed
to divide the land into smaller units.
However, such heirs are entitled to receive the land by way of hereditary succession. This
means that the land may be transferred either to the spouse of the beneficiary, or in his or
her absence or incapacity, to the eldest child who meets the qualifications to be a CARP
beneficiary, particularly the requirement of willingness, aptitude, and ability to cultivate the
land and make it productive. The heir who succeeds to the land is under obligation to pay
the other heirs their legal shares in the property of the deceased beneficiary. In the absence
of qualified heirs or children, he land shall revert to the DAR, which shall identify a new
beneficiary the land.
A beneficiary is likewise obliged to comply with the provisions of R.A. 6657.Memorandum
Circular No. 19, Series of 1996, supra., provides for the grounds for perpetual disqualification
of agrarian reform beneficiaries. The grounds enumerated in this Memorandum Circular are
violations of various provisions of R.A. 6657 and administrative rules and regulations issued
pursuant to this law.
Protection of Rights of Member-Beneficiaries
The protection of rights of member-beneficiaries may be ensured in the articles of
incorporation and in the by-laws of the organization, which the member-beneficiaries
themselves enact and approve. Restrictions in the transfer of shares or membership rights,
by providing that such transfer shall be valid only if made in favor of another qualified

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beneficiary, may be adopted. The contract of membership may likewise contain provisions
ensuring that the rights of member-beneficiaries to ownership or other privileges as
members are protected.
The interests of farmer-members may also be adequately protected according to the exit
provisions in Republic Act No. 6938, otherwise known as the Cooperative Code. Articles 31
and 32 of the Code provides:
Art. 31.
Termination of Membership. (1) A member of a cooperative may, for
any reason, withdraw his membership from the cooperative by giving a sixty (60)-day
notice to the board of directors. The withdrawing member shall be entitled to a refund
of his share capital contribution and all other interests in the cooperative: Provided,
That such refund shall not be made if upon such payment the value of the assets of
the cooperative would be less than the aggregate amount of its debts and liabilities
exclusive of his share capital contribution.
(2)
The death, insanity, insolvency or dissolution of a member shall be considered
an automatic termination of membership.
(3)
A member may be terminated by a vote of the majority of all the members of
the board of directors for any of the following causes:
(a)

When a member has not 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

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Section 27 prohibits the sale, transfer, or conveyance of lands acquired by beneficiaries

under R.A. 6657 within ten (10) years from the date of award. This restriction on the
transferability of the land is annotated on the certificate of title in the Register of Deeds.
Lands awarded pursuant to E.O. 228 and P.D. No. 27 may be alienated only upon full
payment of amortizations on the purchase price.
However, the lands acquired under CARP may be alienated through hereditary
succession, or in favor of the government, the Land Bank, or other qualified beneficiaries
even before the expiration of the ten-year period. This provision presumes that the land to
be alienated has been fully paid for by the beneficiaries.
If the land has not yet been fully paid for, only the rights to the land may be sold,
transferred, or conveyed, and with prior approval of the DAR, and only to the heirs of the
beneficiary or to another beneficiary.
The buyer of agricultural land alienated under this section is still subject to the aggregate
ownership ceiling of five (5) hectares.
Mortgage of awarded land not equivalent to sale, disposition, or conveyance
Mortgage is a land transaction allowed by the law, and hence is not a sale, disposition, or
conveyance contemplated by the prohibition. The governing administrative issuance on land
transactions is DAR Administrative Order No. 1, Series of 1989. Section II.3.d provides:
The following are not prohibited transactions and may be registered by the Register of
Deeds without prior clearance from DAR:
d.

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

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

selling, disposing of, or conveying the awarded land, which are prohibited transactions.
Moreover, the framers of the law, in not expressly prohibiting mortgage, may have
anticipated circumstances in which the 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
(see Torres vs. Ventura, 187 SCRA 96, at 103).
Farmer-beneficiary
amortizations

may

alienate

even

without

complete

payment

of

The second paragraph of Section 27 of R.A. 6657 allows a farmer-beneficiary to transfer

or convey his rights to the land, provided that prior approval of the DAR has been obtained,
to any qualified heir of the beneficiary or to any other beneficiary. An essential condition of
such transfer or conveyance is that the transferee shall cultivate the land himself and
maintain its productivity as agricultural land. The failure to comply with this condition shall
result in the availability of the land for distribution to another qualified agrarian reform
beneficiary.
Disqualification of beneficiary who sold or transferred right to awarded land

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Section 73 (f) provides that the sale, transfer, or conveyance by a farmer-beneficiary of

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

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Under Administrative Order No. 2, Series of 1998, the basis of computation shall be the
cost of the land and the permanent improvements thereon.
Pursuant to the mandate of the law that the payments shall be made affordable to the
beneficiaries, however, Administrative Order No. 2, Series of 1998 provides that the
amortizations may be reduced to:
(1)

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

(2)

5% of the AGP for the fourth and fifth years

(3)
10% of the AGP for the sixth to thirtieth years, if this amortization ceiling is
lower than the regular amortization.
The annual gross production is defined as the peso value of the annual yield/produce per
hectare of the land awarded to farmer-beneficiaries, which is reflected in the valuation
portion of the Claim Valuation and Processing Form.
In the case of VLT/DPS, for the purposes of computing the regular amortization, the AGP
shall be that agreed upon by the parties during the proceedings for the determination of just
compensation, and shall not be changed throughout the period for payment of the value of
the land.
The ceiling on the payments for lands voluntarily offered or compulsorily acquired shall
be the same. This is pursuant to the provision that, although the terms and conditions of the
VLT/DPS shall be mutually agreed upon by the landowners and the farmer-beneficiaries,
these should not be less favorable to the ARB that those that would prevail had the land
been acquired by the government compulsorily (see Section 20 [b], R.A. 6657).
Effect of default in payment by beneficiary
In the case of land acquired under the VLT/DPS scheme, the land may be repossessed in
case the beneficiary fails to pay an aggregate of three (3) consecutive annual amortizations
from the date of receipt of the amortization schedule, except if loss of crops occurs due to
fortuitous event or force majeure. Section 19 (c) provides that the voluntary agreement
entered into by the landowners and the beneficiaries under VLT/DPS shall include sanctions
for non-compliance by either party, subject to the approval by the DAR.
In the case of land voluntarily offered for sale or compulsorily acquired, the failure of the
beneficiary to pay at least three (3) annual amortizations to the Land Bank gives the bank
the right to foreclose the land, with the exception of loss of crops due to force majeure. In
both cases, the beneficiary shall be permanently disqualified from becoming a beneficiary
again.
Failure to pay due to fortuitous event
If the default is occasioned by natural calamity and/or force majeure, or any other
instance when the failure to produce is not due to the fault of the farmer, the scheduled
amortization payment is limited to the maximum amount of 10% of the annual gross

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production (see Section IV, A.O. No. 2, Series of 1992). The default due to fortuitous event
shall not result in the permanent disqualification of the beneficiary.
Effect of higher valuation
The amount of regular annual amortization is not affected in case the landowner is
granted by the courts a higher valuation than that pegged by the DAR/LBP/BARC during the
valuation process. The only effect of this change is to increase government assistance or
subsidy.
Repossessed land does not revert to former landowner
In case awarded land is repossessed by the government, the DAR shall cancel the CLOA
issued to the beneficiary, and transfer the land to either of the following:
a)
A qualified heir of the beneficiary who shall assume the balance of the value of
the land; or
b)
In the absence of a qualified heir, a new qualified beneficiary who, as a
condition for such transfer, is willing to abide by the terms of the existing VLT/DPS
agreement, and who will pay for the entire value of the land.
Beneficiary in default will not forfeit payments
If the land is sold to a new beneficiary other than an heir of the former beneficiary, the
landowner shall refund the payments to the latter, in one lump sum or in installments, and
shall pay for the improvements made by the former beneficiary, less the lease rentals for the
duration of his use of the land and other charges allowed by law.
Assistance to farmer-beneficiaries in making payments
Administrative Order No. 2, Series of 1998 defines "assistance to farmers" as follows:
(a)
The difference between the regular annual amortization (based on the amount
paid or approved for payment to the landowner) and the affordable amount during the
first five (5) years after the award of the land to the ARBs where the affordable amount
is lower that the regular amortization;
(b)
The difference between the regular annual amortization and ten percent (10%)
of the AGP during the 6th to 30th year, whenever such 10% AGP is lower that the
regular amortization; and
(c)

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

Production and Profit Sharing

Under Sections 13 and 32 of RA 6657, individuals or entities owning agricultural lands
and operating under lease or management contract are required to execute production and
profit-sharing plan with their farmworkers or farmworkers' organization, pending final

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distribution of the land or implementation of the stock distribution scheme. The provisions
under AO 8 (1988) governs production and profit sharing plan under RA 6657.
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
management contract, production venture or other similar arrangement;
2)

lease,

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 under RA 6657, covered
employers shall pay the difference to the farmworkers.
Non-compliance with the provisions on production and profit-sharing is a violation
covered by the provisions on prohibited acts and omissions and the penalties therein under
Sections 73 and 74 of RA 6657.
The enforce the above mandate, DAR through its Secretary or authorized representatives
has the following powers:

Page | 102

1)
To order and administer compliance with the Production and Profit-Sharing
provisions of RA 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 under R.A. No. 6657 are 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 of R.A. No. 6657. It must be emphasized that tax exemptions are to be
strictly construed against the taxpayer. Therefore, any transaction not expressly enumerated
in Section 66 of R.A. No. 6657 should be construed as not included in the tax-exempt
provision of the law. (Memorandum of Asst. Sec. Peaflor for the Secretary, 06 April 2000)
Standing Crops
Section 28 provides that the landowner is entitled to retain his or her share in the
standing crops unharvested at the time the DAR shall take possession of the land under the
compulsory acquisition scheme, and shall be given reasonable time to harvest the same to
the extent of the share pertaining to him/her.
Standing crops refer only to those crops existing at the time DAR takes possession of the
land.

Page | 103

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

Page | 104

government organizations; cooperatives or associations of beneficiaries; government-owned

or controlled corporations and other entities (Section 6 DAR A. O. No. 2-1999) It must be
noted that the beneficiaries referred to include holders of Emancipation Patents (EPs) of
Certificates of Land Ownership Awards (CLOAs). Qualified beneficiaries of agricultural lands
for distribution under the agrarian reform program may also avail of the same provided that
the land is distributed to the beneficiaries before an agribusiness agreement is executed.
Small landowners may engage in joint economic enterprises involving their retained areas.
(Section 4, DAR A.O. No. 2-1999)
In a joint economic enterprise, ownership of land remains with the beneficiaries. Only the
use thereof, where necessary, is conveyed. The purposes for which a joint economic
enterprise is to be established are production, processing and marketing of products, or
introduction, maintenance, rehabilitation or upgrading of agricultural capital assets,
infrastructure or facilities, or provision of management expertise, technology, equipment
and other services to beneficiaries. The equity and interest of the parties to a joint economic
enterprise depend on the nature of enterprise and extent of participation. Parties hall
exercise shared responsibility and co-determination on matters affecting the viability of land
and income of beneficiaries. The parties shall agree on the period and cause the annotation
of the agreement on the titles of the properties. (Section 6, DAR A.O. No. 2-99)
Types of Joint Economic Enterprises
Joint Venture
In a joint venture, the beneficiaries contribute use of the land together with the facilities
and improvement while the investor provides capital and technology for production,
processing and marketing of goods, or for construction, rehabilitation, upgrading of
agricultural capital assets, infrastructure and facilities. The joint venture has a personality
separate and distinct from the parties. The equity of beneficiaries in a joint venture depends
on the value of use of land and improvements at the minimum, equal to lease rental. The
equity of the beneficiaries is not subject to dilution. The joint venture is to be managed
jointly by the investors and the ARBs. The beneficiaries are given a fixed number of seats in
its board of directors corresponding to their equity interest. The beneficiaries and/or their
dependents are to be given preference for employment in the joint venture.
Production, Processing and Marketing Agreement
In a production, processing and marketing agreement, the beneficiaries engage in
production and processing of agricultural products and directly sell them to the investor who
provides loans and technology. Incorporated in said agreement is a price review mechanism
taking into consideration industry practice, prevailing market prices and other appropriate
factors.
Build Operate Transfer Scheme
In a build-operate-transfer scheme, the investor builds or rehabilitates facilities and
improvements necessary to make the lands productive and directly operates the same for a

Page | 105

certain period. The facilities and improvements are constructed at the investor's own
expense, and he shall not be allowed to access, for this purpose, government funds that
would, otherwise be available as financing or capital for beneficiaries. In said scheme, the
beneficiaries receive reasonable rent for the use of land. Upon expiration of the agreed
period, ownership of the facilities and other improvements is consolidated in the name of
the beneficiaries.
Management Contract
In a management contract beneficiaries hire the services of a contractor with managerial
skills and capability to manage and operate the farm in exchange for a fixed wage and/or
commission. The beneficiaries, in turn provide labor. All income from the operation of the
farm accrue exclusively to the ARBs. In this arrangement, a human resource development
program for the members of the cooperative, association or federation is to be implemented
to facilitate transfer of technology and management techniques to enable them to directly
manage and operate the farm.
Service Contract
In a service contract, beneficiaries engage for a fee the services of a contractor for
mechanized land preparation, cultivation, harvesting, post-harvest operations and other
activities. The service contractors may include other ARBs with necessary equipment and
facilities for mechanized farm operations. Beneficiaries who wish to engage in service
contracting but with limited financial capability may avail of loan facilities or credits
pursuant to Section 35 of R.A. No. 6657 as amended.
Lease Contract
In a lease contract, beneficiaries bind themselves to give investor enjoyment or use of
their land for a price certain and for a definite period. In this arrangement, the investor
provides capital to operate the farm, construct facilities and other improvements, process
and market agricultural products. The lessee may either be a former landowner or other
investors. However, under Section 44 of R.A. No. 6657, as amended by R.A. No. 7905,
leaseback arrangements should be the last resort. This means that the ARBs and the
investor (former landowner) must first consider other types of agribusiness arrangements
before deciding on a lease. The lessee/investor is to give priority to qualified and willing
ARBs and their dependents for employment in the enterprise. In such cases, the ARBs are to
be treated as employees of the lessee/investor and are entitled to the mandated minimum
wage and other economic benefits granted under the Labor Code and other existing laws.
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

Page | 106

arrangement may provide for leaseback, followed by a contract growing, and finally, joint
venture.
Other Schemes
Other schemes refer to other agribusiness arrangements or schemes that optimize the
operating size of distributed lands for agricultural production consistent with existing laws
and regulations. (Section 7, DAR A.O. No. 2-99)

CHAPTER 6
Adjudication of Agrarian Reform Matters
Jurisdiction of DAR
Sec. 50 of RA 6657 provides that the DAR is vested with primary jurisdiction to determine
and adjudicate agrarian reform matters and shall have exclusive jurisdiction over all matters
involving the implementation of agrarian reform, except those falling under the exclusive
jurisdiction of the DA and the DENR. In the exercise of its jurisdiction, DAR shall not be bound
by technical rules of procedure and evidence but shall proceed to hear and decide all cases,
disputes or controversies in a more expeditious manner, employing all reasonable means to
ascertain the facts of every case in accordance with justice and equity and the merits of the
case.
Adjudication of agrarian reform matters involves the exercise by the DAR Secretary of its
exclusive jurisdiction over agrarian law implementation (ALI) cases or the exercise by the
DAR Adjudication Board (DARAB) of its jurisdiction under the 1994 DARAB Revised Rules of
Procedure. Petitions for the determination of just compensation to landowners and the
prosecution of all criminal offenses under RA 6657 falls within the original and exclusive
jurisdiction of the Special Agrarian Courts (SACs).
Restraining orders or injunctions issued by regular courts
Any restraining order or injunction issued by courts against DAR pursuant to the
implementation of CARP is null and void as it violates the express provisions of Sec. 55 and
68 of RA 6657. Sec. 55 provides that no court in the Philippines shall have jurisdiction to
issue any restraining order or writ of preliminary injunction against the PARC or any of its
duly authorized or designated agencies in any case, dispute or controversy arising from,
necessary to, or in connection with the application, implementation, enforcement, or
interpretation of agrarian laws. On the other hand, Sec. 68 states that no injunction,
restraining order, prohibition or mandamus shall be issued by the lower courts against DAR,
DA, DENR and DOJ in their implementation of CARP.
ALI Cases
Under DAR AO 6 (2000), ALI cases refer to those agrarian cases falling under the
exclusive jurisdiction of the DAR Secretary. These cases strictly involve the administrative

Page | 107

implementation of RA 6657 and other agrarian laws, rules and regulations. These cases
include the following:
a)
Classification and identification of landholdings for coverage under CARP,
including protests or oppositions thereto and petitions for lifting of coverage;
b)

Identification, qualification or disqualification of potential 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 of PD 816, including the
issuance, recall or cancellation of EPs or CLOAs not yet registered with the Register of
Deeds;
e)

Exercise of the right of retention by the landowner;

f)
Application for exemption under Section 10 of RA 6657 as implemented byDAR
AO 13 (1990);
g)
Application for exemption
implemented by DAR AO 6 (1994);
h)

pursuant

to DOJ

Opinion

No.

44

(1990) as

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

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

Right of the ARBs to homelots;

m)

Disposition of excess area of the FBs landholdings;

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

Increase of awarded area awarded by the farmer-beneficiary;

Conflict of claims in landed estates and settlements; and

q)
Such other matters not mentioned above but strictly involving the
administrative implementation of RA 6657 and other agrarian laws, rules and
regulations as determined by the Secretary. (DAR Adm. O. No. 6 [2000], sec. 2).
In the adjudication of ALI cases, the Secretary or his authorized representative may
exercise quasi-judicial powers granted under Section 50 of RA 6657. He or his authorized
representative shall have the power to summon witnesses, administer oaths, take

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testimony, require submission of reports, compel the production of books and documents
and answers to interrogatories and issue subpoena, and subpoena duces tecum and to
enforce its writs through sheriffs or other duly deputized officers. He or his authorized
representative shall likewise have the power to punish direct and indirect contempts in the
same manner and subject to the same penalties as provided in the Rules of Court.
Likewise, the Regional Director or the DAR official having jurisdiction over the case, shall,
motu propio or at the instance of a party, have the authority to issue a Cease and Desist
Order or Status Quo Order pending the resolution of the case in the following instances:
a)

where grave or irreparable damage will result to the parties;

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

Page | 109

five (5) hectares and below situated within the provinces of Cavite, Laguna, Batangas, Rizal
and Quezon (CALABARZON) which are now delegated to the concerned Regional Director. 1
Conversion
Jurisdiction over applications for conversion shall pertain to the DAR officials authorized
to approve or disapprove applications for conversion of agricultural lands to non-agricultural
uses pursuant to Sec. 22 of DAR AO 1 (1999) (DAR Adm. O. No. 6 [2000], sec. 9).
Other ALI Cases
The jurisdiction over other ALI cases shall generally pertain to the Regional Directors,
except those cases specifically delegated to other DAR officials under existing rules and
regulations, or those that may subsequently be promulgated by the Secretary (DAR Adm. O.
No. 6 [2000], sec. 11).
Flashpoint Cases
Flashpoint cases are ALI cases which fall within the jurisdiction of the Regional Director or
the Director of the Bureau of Agrarian Legal Assistance (BALA) and determined or certified
by the Secretary or the Head Executive Assistant which (a) threatens to disrupt the status
quo in a particular area and endanger life and limb as a result of the use of force from either
the landowners' side or 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

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(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) of RA
6657;
b)
Securities and Exchange Commission (SEC) if it involves an intracorporate dispute;
c)
Cooperative Development Authority (CDA) if it involves an intracooperative dispute; or
d)
National Labor Relations Commission (NLRC) if it involves employeremployee 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])

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Sec. 14 of DAR AO 6 (2000) provides that the filing of an application for exemption,
exclusion, conversion, retention or protest against coverage shall have the following effects
in so far as land acquisition and distribution are concerned:
a)
If the application or petition is filed before the issuance of the notice of
coverage, the notice of coverage shall not be issued until the application or petition is
finally resolved;
b)
If the application, protest or petition is filed after issuance of the notice of
coverage, the DAR may proceed with the processing of the claimfolder
notwithstanding the pendency of the application, protest or petition in accordance with
the activities outlined under DAR AO 2 (1996), as amended. The processing of the
claimfolder may be suspended by the PARO if upon proper review and evaluation of
the Field Investigation Report (FIR) submitted by the MARO, and upon personal
verification of the allegations in the application, protest or petition, it is determined
that the subject landholding is in fact exempted or excluded from CARP coverage.
Otherwise, the PARO may forward the claimfolder to the LBP for further processing.
c)
In case the application, protest or petition is filed while the claimfolder is
pending with LBP, or where the claimfolder has been forwarded by the PARO
notwithstanding such application, protest or petition, the LBP shall continue with the
processing of the land compensation claim, except that the Certification of 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 of DAR AO 6 (2000), petitions for lifting of notice of coverage shall be filed
within thirty (30) days from receipt of the Notice of Coverage by the affected party. Failure
by the affected party to file the protest or petition within the prescribed period shall be
deemed a waiver of his right thereto. If the action is filed after the expiration of the thirty
(30)-day period, the protest or petition shall no longer be entertained or shall be summarily
dismissed by the MARO or the PARO, except in the following instances:
a)
the protest or petition is based on allegations that subject landholding is
exempted from CARP coverage under DAR AO 6 (1994); or
b)
upon evaluation of pertinent documents and based on the physical conditions
obtaining in the property, it is determined by DAR that the subject landholding is
exempted from CARP coverage pursuant to DAR AO 13 (1990), DAR AO 9 (1993),DAR
AO 3 (1995) and DAR MC 34 (1997) notwithstanding the issuance of the Notice of
Coverage.

DARAB Cases

Page | 112

DAR Adjudication Board (DARAB)

The creation of DARAB was mandated under EO 129-A (1987) which aims at reorganizing
and strengthening the DAR. The DARAB was created under the Office of the Secretary of the
DAR and is given the powers and functions to adjudicate specific agrarian reform cases.
Before the creation of the DARAB, the Courts of Agrarian Relations (CAR) had the original
and exclusive jurisdiction over agrarian reform matters. PD 946 (1976) entitled
"Reorganizing the Courts of Agrarian Relations, Streamlining their Procedures and for Other
Purposes," gave the CARs original and exclusive jurisdiction over agrarian reform matters,
except those that fall under the jurisdiction of the Secretary of the DAR. With the passage
of BP 129 (1980) or the Judiciary Reorganization Act, the CARs were integrated into the RTCs
and the jurisdiction of the former was vested in the latter courts. However, with the
promulgation of EO 229 (1987), entitled "Providing the Mechanisms for the Implementation
of the Comprehensive Agrarian Reform Program (CARP)," the RTCs were divested of their
special jurisdiction to try agrarian reform matters.
Under EO 229 (1987), the DAR is vested with primary jurisdiction to determine and
adjudicate agrarian reform matters and has the exclusive jurisdiction over all matters
involving the implementation of agrarian reform, except those that fall under the exclusive
jurisdiction of the DA and the DENR. This is also clearly provided in Sec. 50 of RA 6657.
In Machete vs. Court of Appeals 250 SCRA 176 (1995), private respondent Celestino
Villalon filed a complaint for collection of back rentals and damages before the Regional Trial
Court against the petitioners. The complaint alleged that the parties entered into a leasehold
agreement with respect to the private respondent's landholdings in Bohol. Petitioners moved
to dismiss the complaint on the ground of lack of jurisdiction of RTC over the subject matter.
Petitioners alleged that the subject matter of the complaint falls squarely within the
jurisdiction of the DAR in the exercise of its quasi-judicial powers. The Supreme Court
declared the dispute to be agrarian in nature and therefore outside the jurisdiction of the
RTC. The Supreme Court held that:
Section 17 of EO 229 vested the DAR with quasi-judicial powers to determine and
adjudicate agrarian reform matters as well as exclusive original jurisdiction over all matters
involving implementation of agrarian reform except those falling under the exclusive original
jurisdiction of the Department of Agriculture and the Department of Environment and
Natural Resources in accordance with law. Executive Order 129-A, while in the process of
reorganizing and strengthening the DAR, created the Department of Agrarian Reform
Adjudication Board (DARAB) to assume the powers and functions with respect to the
adjudication of agrarian reform cases" (at 179, 180).
In an earlier case, Quismundo vs. CA, 201 SCRA 609 (1991), the Supreme Court explained in
detail the purpose for the creation of the quasi-judicial body, to wit:
Executive Order No. 229, which provides for the mechanism for the implementation of
the Comprehensive Agrarian Reform Program instituted by Proclamation No. 131,

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

Page | 114

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

Ualat vs. Judge Ramos

265 SCRA 345 (1996)
Facts:
Complainants filed an administrative case against respondent Judge Ramos for taking
cognizance of the illegal detainer case filed by their landowner against them. It was
shown that the respondent judge had knowledge of a previously filed DARAB case and
the fact that the illegal detainer case falls within the exclusive jurisdiction of the DAR.
Despite the separate affidavits of the complainants containing allegation of landlordtenant relationship, the respondent judge took cognizance of the illegal detainer case.
Issue:
Was the action of Judge Ramos proper?
Held:
The Supreme Court in finding the respondent Judge liable for ignorance of the law
opined: "As can be readily seen from the answer filed by complainants Sabio and Ualat
in the civil case, they alleged the existence of an agrarian tenancy relationship
between themselves and the landowner. Additionally, in the proceedings before
respondent Judge, complainants were even represented by a lawyer from the DAR.
These matters should have been sufficient to put respondent Judge on notice that
complainants were claiming protection under our agrarian laws. At that point, he ought
to have realized that there existed a genuine issue involving agricultural tenancy
among the parties with respect to the subject property. Knowledge of existing agrarian
legislation and prevailing jurisprudence on the subject, together with an ordinary
degree of prudence would have prompted respondent Judge to refer the case to the
DAR for preliminary determination of the real nature of the parties' relationship, as
required by law" (at 357).
However, DARAB has no jurisdiction with respect to agrarian matters involving the
prosecution of all criminal offenses under RA 6657 and the determination of just
compensation for landowners (Rep. Act No. 6657 [1988], sec. 57). Jurisdiction over said

Page | 115

matters are lodged with the Special Agrarian Courts (SACs). The Court of Appeals and
Supreme Court maintain their appellate jurisdiction over agrarian cases decided by DARAB.
In this regard, the Supreme Court in the case of Vda. de Tangub vs. CA, 191 SCRA 885
(1990) held that:
The Regional Trial Courts have not, however, been completely divested of jurisdiction
over agrarian reform matters. Section 56 of RA 6657, on the other hand, confers
"special jurisdiction" on "Special Agrarian Courts", which are Regional Trial Courts
designated by the Supreme Court at least one (1) branch within each province to
act as such. These Regional Trial Courtsqua Special Agrarian Courts have, according to
Section 57 of the same law, original and exclusive jurisdiction over: 1) "all petitions for
the determination of just compensation to land-owners," and 2) "the prosecution of all
criminal offenses under . . . (the) Act" (at 890).
Barangay Agrarian Reform Committee (BARC)
This is originally the Barangay Agrarian Reform Council created under EO 229 (1987).RA
6657 changed the nomenclature of BARC from "council" to "committee" and expanded its
scope of functions. It is through the organization of the BARCs that the implementation of
CARP is envisioned to be truly community based where the public can participate in
decision-making and resolution of agrarian reform disputes.
This committee is composed of the following:
a)

Representative/s of farmer and farmworker beneficiaries;

b)

Representative/s of farmer and farmworker non-beneficiaries;

c)

Representative/s of agricultural cooperatives;

d)

Representative/s of other farmer organizations;

e)

Representative/s of the Barangay Council;

f)

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

g)

Representative/s of Landowners;

h)

DA Official assigned to the area;

i)

DENR Official assigned to the area;

j)
DAR Agrarian Reform Technologist assigned to the area who shall act as the
Secretary; and
k)
19).

Land Bank of the Philippines representative (Exec. Order No. 229 [1987], sec.

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Sec. 46 and 47 of RA 6657 defined the BARC functions in addition to those provided under
Sec. 19 of EO 229. DAR AO 14 (1990) provides for the guidelines in the formation,
organization and strengthening of the BARCs.
Primary and Exclusive Original and Appellate Jurisdiction of DARAB
Sec. 1, Rule II of the DARAB Revised Rules and Procedures provides that the Board has
primary and exclusive jurisdiction, both original and appellate, to determine and adjudicate
all agrarian cases including but not limited to the following:
a)
All agrarian disputes involving the implementation of the CARP under RA
6657, EOs 228, 229, and 129-A, RA 3844 as amended by RA 6389, PD 27 and other
agrarian laws and their implementing rules and regulations;
b)
Cases involving rights and obligations of persons, whether natural or juridical,
engaged in the management, cultivation and use of all agricultural lands covered by
the CARP and other agrarian laws;
c)
Cases involving the valuation of land, and the preliminary determination and
payment of just compensation, fixing and collection of lease rentals, disturbance
compensation, amortization payments and similar disputes concerning the functions of
the LBP;
d)
Cases involving the annulment or cancellation of lease contracts or deeds of
sale or their amendments involving lands under the administration and disposition of
the DAR or LBP;
e)
Cases arising from or connected with membership or representation in
compact farms, farmers' cooperative and other registered farmers' associations or
organizations, related to lands covered by the CARP and other agrarian laws;
f)
Cases involving the sale, alienation, mortgage, foreclosure, preemption and
redemption of agricultural lands under the coverage of the CARP or other agrarian
laws;
g)
Cases involving the issuance, correction and cancellation of Certificates of
Landownership Award (CLOAs) and Emancipation Patents (EPs) which are registered
with the Land Registration Authority;
h)
Cases previously falling under the original and exclusive jurisdiction of the
defunct Court of Agrarian Relations under Section 12 of PD 946, except sub-paragraph
(Q) thereof and PD 815;
i)
And such other agrarian cases, disputes, matters or concerns referred to it by
the Secretary of the DAR.
DARAB's Jurisdiction over Agrarian Disputes

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The Supreme Court, in several cases, had the occasion to explain what is an agrarian
dispute case for DARAB to try and adjudicate.
In the case of Machete vs. CA, 250 SCRA 176 (1995), the private respondents asked for
collection of back rentals and damages before the RTC while the petitioners moved for the
dismissal of the case because of lack of jurisdiction. The Court ordered the transmittal of the
case to DARAB and ruled that:
Section 3, par. (d), of RA 6657 defines the term "agrarian dispute" as referring to any
controversy relating to tenurial arrangements, whether leasehold, tenancy, stewardship or
otherwise, over lands devoted to agriculture, including disputes concerning farm workers'
associations or representation of persons in negotiating, fixing, maintaining, changing or
seeking to arrange terms or conditions of such tenurial arrangements (at 182).
In the case of Central Mindanao University vs. DARAB, 215 SCRA 86 (1992), on the issue
of jurisdiction of the DARAB in ordering the petitioner to segregate its 400 hectares land and
including it under the CARP for distribution to qualified beneficiaries, the Court opined:
Under Section 4 and Section 10 of RA 6657, it is crystal clear that the jurisdiction of
the DARAB is limited only to matters involving the implementation of CARP. More
specifically, it is restricted to agrarian cases and controversies involving lands falling
within the coverage of the aforementioned program. It does not include those which
are actually, directly and exclusively used and found to be necessary for, among such
purposes, school sites and campuses for setting up experimental farm stations,
research and pilot production centers, etc. (at 99). Sec. 17 of EO 129-A is merely a
repetition of Sec. 50 of RA 6657. There is no doubt that the DARAB has jurisdiction to
try and decide any agrarian dispute in the implementation of the CARP. An agrarian
dispute is defined by the same law as any controversy relating to tenurial rights
whether leasehold, tenancy, stewardship or otherwise over lands devoted to
agriculture (at 100).
In Isidro vs. CA, 228 SCRA 503, one of the issues raised is the jurisdiction of the MTC in
taking cognizance of a case involving an agricultural land. The petitioner refused to vacate
the land despite the demand of the private respondent. The Supreme Court held that there
exists no tenurial relations between the parties, to wit:
An agrarian dispute refers to any controversy relating to tenurial arrangements,
whether leasehold, tenancy, stewardship or otherwise, over lands devoted to
agriculture, including disputes concerning farmworkers associations or representation
of persons in negotiating, fixing, maintaining, changing or seeking to arrange terms or
conditions of such tenurial arrangements. It includes any controversy relating to
compensation of lands acquired under RA 6657 and other terms and conditions of
transfer of ownership from landowners to farmworkers, tenants and other agrarian

Page | 118

reform beneficiaries, whether the disputants stand in the proximate relation of farm
operator and beneficiary, landowner and tenant, or lessor and lessee (at 510).
Cases under the Court of Agrarian Relations
DARAB has jurisdiction over cases previously falling under the original and exclusive
jurisdiction of the defunct Court of Agrarian Relations under PD 946 (1976), except subparagraph (Q) thereof and PD 815 (1975). The sub-paragraph (Q) exception under this cited
provision refers only to cases involving violations of the penal provisions of RA 1199, as
amended. Hence, the other provisions of RA 1199, as amended, still fall within the
jurisdiction of DARAB. Included in DARAB's jurisdiction is Section 21 of RA 1199, as amended,
which provides that:
Section 21. Ejectment; Violation; Jurisdiction. All cases involving the dispossession
of a tenant by the landholder or by a third party . . . .
The 'third party' mentioned in the said sec. 21 should be construed to mean a person
who is neither landholder or tenant, but who acts for, openly, secretly, or factually for the
landholder. For instance, a sheriff enforcing an execution sale against the landholder; or a
purchaser or transferee of the land, or a mere dummy of the landowner (De Luna v. CA, 221
SCRA 703 [1993]).
Jurisdiction of the Regional Adjudicator (RARAD) and the Provincial Adjudicator
(PARAD)
Sec. 2, Rule II of the DARAB Revised Rules and Procedures provides that the RARAD and
the PARAD has concurrent original jurisdiction with the Board to hear, determine and
adjudicate all agrarian cases and disputes, and incidents in connection therewith, arising
with their assigned territorial jurisdiction.
The RARAD is the Executive Adjudicator in his/her region directly responsible to the
Board. He/she shall:
1)

Direct supervision over the PARADs;

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

Adjudicate agrarian disputes and land valuation cases;

4)

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

by reason of PARADs disqualification or inhibition;

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.

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The RARAD has concurrent original jurisdiction with the PARAD.

Appellate Jurisdiction of the Board
Under Sec. 5, Rule II of the DARAB Revised Rules and Procedures, the Board has the
jurisdiction to review all the decisions of the Adjudicators. However, under DAR MC 7 (1991),
reiterating Sec. 1, par. (c) of the Revised DARAB Rules and Procedures, it is emphasized that
DARAB has no jurisdiction over cases involving annulment or cancellation of orders and
decisions of the Secretary.
Not all
Under DAR
jurisdiction
appealable

decisions or orders of the PARAD and RARAD are reviewable by the Board.
AO 8 (1993), the PARADs, RARADs and DARAB has original and exclusive
in the preliminary determination of just compensation cases which are
only to the Special Agrarian Courts.

Mediation/Conciliation at Barangay Level

The BARC does not function as an adjudicator at the barangay level. The BARC is
mandated to mediate and conciliate agrarian disputes at the barangay level. In a
mediation/conciliation, BARC's objective is to persuade the contending parties to settle their
dispute amicably. The BARC does not act as an adjudicator.
It is the responsibility of the BARC to promote a speedy and cost-free administration of
justice, prevent a dispute from going out of the barangay level to DARAB level, and help the
landowners and farmer-beneficiaries commit themselves in complying with their
agreements. This in turn is envisioned to help in the efficient and successful implementation
of the CARP.
Where the land in dispute straddles two (2) or more barangays or the parties involved
reside in different barangays, the BARC of the barangay where the biggest portion of the
property lies, shall have the authority to conduct the mediation or conciliation proceedings,
unless for convenience and accessibility and upon agreement of parties such proceedings
should be held in another barangay within the municipality or adjacent municipality where
the land in dispute is located (DARAB Revised Rules and Procedures [1994] Rule III, sec. 3)
Under the DARAB Revised Rules and Procedures, DARAB can take cognizance of an
agrarian dispute even without the BARC Certification if:
1)

The dispute does not involve any of the following:

a)

Valuation lands to determine just compensation for landowners;

b)
One of the parties is a public or private corporation, partnership,
association or juridical person, or a public officer/employee wherein the dispute
relates to the performance of his official functions;
c)
Issue involved is an administrative implementation of agrarian laws and
policies; and

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d)
Cases determined by the
mediation/conciliation or compromise.

Secretary

as

beyond

the

ambit

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 of RA 6657 provides that the SACs shall have original and exclusive jurisdiction
over all petitions for the determination of just compensation to landowners and the
prosecution of all criminal offenses under RA 6657.
In Republic vs. Court of Appeals, 758 SCRA 263 (1996), the Supreme Court held that "any
effort to transfer the original and exclusive jurisdiction to the DAR adjudicators and to
convert the original jurisdiction of the RTCs into appellate jurisdiction would be contrary to
Section 57 of RA 6657 and therefore would be void."

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

CHAPTER 7
Land Use Conversion
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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 of RA 7160 (1991) or the "Local Government Code of 1991," a city or
municipality may authorize the reclassification of agricultural lands and provide for the
manner of their utilization or disposition under the following circumstances:
a)
when the land ceases to be economically feasible and sound for agricultural
purposes as determined by the DA; or
b)
where the land shall have substantially greater economic value for residential,
commercial, or industrial purposes, as determined by the sanggunian concerned.
Said Act mandates that the reclassification should be made after conducting public
hearing and that it shall be limited to the following percentage of the total agricultural land
area at the time of the passage of the ordinance: (a) for highly urbanized and independent
component cities, fifteen percent (15%); (b) for component cities and third class
municipalities, ten percent (10%); and (c) for fourth to sixth class municipalities, five percent
(5%): Provided, further, that agricultural lands distributed to agrarian reform beneficiaries
pursuant to RA 6657 shall not be affected by the said reclassification and the conversion of
such lands into other purposes shall be governed by Section 65 of said Act. This percentage
ceiling on the land area which the LGUs can reclassify is not absolute. The President may,

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when public interest so requires and upon recommendation of the National Economic and
Development Authority (NEDA), authorize a city or municipality to reclassify lands in excess
of the limits cited above (Rep. Act No. 7160 [1991], sec. 20 [b]).
Also, LGUs are mandated to exercise such authority in accordance with MC 54 (1993) of
the Office of the President entitled "Prescribing the Guidelines Governing Section 20 of RA
7160, otherwise known as the Local Government Code of 1991, Authorizing Cities and
Municipalities to Reclassify Agricultural Lands Into Non-agricultural Uses." Under these
Guidelines, the following types of agricultural lands shall not be covered:
a)
Agricultural lands distributed to agrarian reform beneficiaries subject to Sec.
65 of RA 6657;
b)
Agricultural lands already issued a notice of coverage or voluntarily offered for
coverage under CARP;
c)
Agricultural lands identified under AO 20 (1992), as non-negotiable for
conversion.
On the other hand, the power of the DAR to approve or disapprove land use conversion
applications is exclusive (Exec. Order No. 129-A [1982], sec. 5[e]; see OP Memorandum
Circular No. 54, Sec. 4, [1993] Book IV, Title XI, Chapter 1, sec. 3 [13]; RA 6657 [1988[, sec.
65). It is distinct from the power of LGUs to reclassify agricultural land under Section 20 of
the Local Government Code.
This is evident in Sec. 20 (e) of RA 7160 which provides: "Nothing in this Section shall be
construed as repealing, amending or modifying in any manner the provisions of RA 6657." In
his commentary, Sen. Aquilino Q. Pimentel, principal author of the Local Government Code
of 1991, stated as follows:
Sanggunian Power to Reclassify Not to Convert. This is one section of the Code which
evoked a lot of discussion among the members of the Conference Committee. The
proposal to allow local governments to reclassify land and provide for the manner of
their utilization or disposition was made by Congressman Pablo Garcia of Cebu, who
argued that the central government has no business dictating to the local
governments how to classify land within their jurisdiction. Some legislators, however,
felt that to allow local governments to reclassify land may open the door to a
nationwide frustration of the goals of the agrarian reform law.
Congressman Garcia disputed the argument by pointing out that the power he had
sought to invest the local governments with was not to convert land for any purpose
contrary to the provisions of the Comprehensive Agrarian Reform Law but merely to
"reclassify" land. (A.Q. Pimentel, Jr., The Local Government Code of 1991, The Key to
National Development 111).
DAR's role in the reclassification process is the issuance of a certification that the lands
sought to be reclassified are not distributed or not covered by a notice of coverage or not

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voluntarily offered for coverage under CARP. This certification must be secured by the
sanggunian concerned prior to the enactment of an ordinance reclassifying the agricultural
land (OP Memorandum Circular No. 54, [1993], sec. 2 (b) (2)).
After the reclassification by the LGU, a DAR conversion clearance shall still be required
prior to actual change of use of the land as explicitly provided in OP Memorandum Circular
No. 54 (1993), to wit:
"actions on applications for land use conversion shall remain as the
responsibility of DAR". (Sec. 4; Underscoring supplied.)
The case of Fortich, et al. v. Corona, et al., G.R. No. 131457 (19 August 1999) illustrates
the confusion between reclassification and conversion. In said case, a statement was made
that LGUs have authority to convert or reclassify agricultural lands without DAR approval.
The Supreme Court resolved two (2) separate motions for reconsideration filed by
respondents and intervenors of the Court's resolution dated 17 November 1998 as well as
their motion to refer the case to the Court en banc. The Supreme Court stated that "(t)he
crux of the controversy is the validity of the "Win-Win" Resolution dated 7 November 1997 of
the Office of the President which is "void and of no legal effect considering that the March
29, 1996 decision of the Office of the President had already become final and executory
even prior to the filing of the motion for reconsideration which became the basis of the said
"Win-Win" Resolution." (at 5).
The DAR clarified its position on this issue through a Memorandum of the DAR Secretary
dated 13 October 1999, to wit:
It should be stressed that the motions in Fortich were denied on the ground that the
"win-win" resolution is void and has no legal effect because the decision approving the
conversion has already become final and executory. This is the ratio decidendi or
reason of the decision. The statement that LGUs have authority to convert or reclassify
agricultural lands without DAR approval is merely a dictum or expression of the
individual views of the ponente or writer of the Resolution of August 19, 1999. It does
not embody the Court's determination and is not binding.
Expropriated Lands Not Subject to DAR Conversion Clearance
Agricultural lands expropriated by LGUs pursuant to the power of eminent domain need
not be subject of DAR conversion clearance prior to change in use. This was the Court's
pronouncement in Province of Camarines Sur vs. CA, 222 SCRA 173 (1993).

Province of Camarines Sur vs. Court of Appeals

222 SCRA 173 (1993)

Facts:

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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: . . .

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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
Under Sec. 4 and 5 of EO 129-A (1987), the DAR is mandated to "approve or disapprove
the conversion, restructuring or readjustment of agricultural lands into non-agricultural
uses." It authorizes DAR to "have exclusive authority to approve or disapprove conversion of
agricultural land for residential, commercial, industrial, and other land uses as may be
provided for by law." Also, Sec. 4 of OP MC 54 (1993), provides that "action on application for
land use conversion on individual landholdings shall remain as the responsibility of the
DAR, . . . , pursuant to RA No. 6657 and EO 129-A."
Moreover, RA 6657 provides:
Section 65. Conversion of Lands. After the lapse of five (5) years from its award,
when the land ceases to be economically feasible and sound for agricultural purposes,
if the locality has become urbanized and the land will have greater economic value for
residential, commercial or industrial purposes, the DAR upon application of the
beneficiary or the landowner, with due notice to the affected parties, and subject to
existing laws, may authorized the reclassification or conversion of the land and its
disposition; Provided, That the beneficiary shall have fully paid his obligations.
In the case of Roxas v. CA, G.R. No. 127876, 16 December 1999, the authority of the DAR
to approve or disapprove conversion was reiterated by the Court:

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Respondent DAR's failure to observe due process in the acquisition of petitioner's

landholdings does not ipso facto give this Court the power to adjudicate over
petitioner's application for conversion of its haciendas from agricultural to nonagricultural. 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 in DOJ Opinion No. 44 (1990):
Being vested with exclusive original jurisdiction over all matters involving the
implementation of agrarian reform, it is believed to be the agrarian reform law's
intention that any conversion of a private agricultural land to non-agricultural uses
should be cleared before hand by the DAR. True, the DAR's express power over land
use conversion is limited to cases in which agricultural lands already awarded have,
after five years, ceased to be economically feasible and sound for agricultural
purposes, or the locality has become urbanized and the land will have a greater
economic value for residential, commercial or industrial purposes. But to suggest that
these are the only instances when the DAR can require conversion clearances would
open a loophole in R.A. No. 6657, which every landowner may use to evade
compliance with the agrarian reform program. Hence, it should logically follow from
the said department's express duty and function to execute and enforce the said
statute that any commercial or industrial property should first be cleared by the DAR.
xxx
xxx
xxx
Based on the foregoing premises, we reiterate the view that with respect to
conversions of agricultural lands covered by RA No. 6657 to non-agricultural uses, the
authority of DAR to approve such conversion may be exercised from the date of the
law's effectivity on June 15, 1988. This conclusion is based on a liberal interpretation of
R.A. No. 6657 in the light of DAR's mandate and the extensive coverage of the
agrarian reform program. (Underscoring supplied.)
DAR Officials Authorized to Issue Conversion Orders
Under Sec. 22 (a) of DAR AO 1 (1999), the following DAR officials shall approve or
disapprove applications for land use conversion:
a)

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

b)
The duly authorized Undersecretary for areas above five (5) hectares but not
more than fifty (50) hectares;

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c)
The Secretary for areas of more than fifty (50) hectares, except for those highly
restricted from conversion which shall be subject to his approval regardless of the
area.
For purposes of determining the appropriate approving authority, the total area for
conversion shall refer to the aggregate area of all applications regardless of the number of
applications and the nature of the proposed project where (a) the properties are owned by
the same person or entity or the owners of which are represented by the same person or
entity; and (b) the properties are located in the same barangay or adjacent barangays within
the same municipality/ies or city/ies. In case the subject land is adjacent to an area
previously issued with conversion order, the foregoing test shall be applied to determine the
appropriate approving authority (DAR Adm. O. No. 1 [1999], sec. 22 [b] and [c]).
Scope of Land Use Conversion
Under DAR AO 1 (1999), the following agricultural lands are subject to DAR's conversion
authority:
a)
Those to be converted to residential, commercial, industrial, institutional and
other non-agricultural purposes;
b)
Those to be devoted to another type of agricultural activity such as livestock,
poultry, and fishpond the effect of which is to exempt the land from CARP coverage;
c)
Those to be converted to non-agricultural use other than that previously
authorized; and
d)
Those reclassified to residential, commercial, industrial, or other nonagricultural uses on or after the effectivity of RA 6657 on June 15, 1988 pursuant to
the Local Government Code.
Sec. 3 (b) of DAR AO 1 (1999) states that the change in use of land from one agricultural
activity to another use which would exempt the land from CARP coverage under Sec. 10
of RA 6657 and DOJ Opinion No. 44 [1990] requires conversion clearance. Hence,
landowners of agricultural lands devoted to coconuts must first secure a conversion
clearance from DAR if they want to convert the same to poultry farm or fishpond.
Also, DAR AO 1 (1990) requires landowners to secure another conversion clearance if the
change that will be undertaken is not what has been authorized in a previous conversion
order. In short, if DAR issues a conversion order authorizing the landowner to change the use
of the property from agricultural use, e.g. coconut plantation to a memorial park, the owner
cannot develop the property into a residential subdivision without getting another
conversion clearance specifically allowing the residential use of the land.
Agricultural lands outside DAR's conversion authority
The following lands do not require DAR conversion clearance or are not subject to
conversion:

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a)
Agricultural lands reclassified to non-agricultural uses prior to 15 June 1988
(DAR Adm. O. No. 1 [1999], sec. 3 (d) and DOJ Opinion No. 44, [1990]). (These lands
are subject to DAR exemption clearance);
b)
Agricultural lands considered non-negotiable for conversion (DAR Adm. O. No.
1 [1999], sec. 4);
c)
Lands within the Strategic Agriculture and Fisheries Development Zones
(SAFDZs) which are subject to the five (5) year moratorium period beginning 10
February 1998 up to 9 February 2003 (Rep. Act No. 8435 [1997], sec. 9; DA Adm. O.
No. 6 [1998], rule 9). (Except as to 5% thereof).
Areas highly restricted from conversion
Under Sec. 2 (b) and 5 of DAR AO 1 (1999), areas highly restricted from conversion refer
to the following:
a)
Irrigable
commitment;

lands

not

covered

by

irrigation

projects

with

firm

funding

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)
law.

Environmentally critical areas as determined by the DENR in accordance with

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

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a)
Agricultural lands within protected areas designated as such under the
National Integrated Protected Areas System including watershed and recharged
acquifers, as determined by the DENR;
b)
All irrigated lands, as delineated by the DA and/or NIA, where water is available
to support rice and other crop production;
c)
All irrigated lands where water is not available for rice and other crop
production but are within areas programmed for irrigation facility rehabilitation by the
DA and/or NIA; and
d)

All agricultural lands with irrigation facilities operated by private organizations.

Conversion moratorium under RA 8435

Under RA 8435, the following lands within the SAFDZs are not eligible for conversion for a
period of five (5) years starting on 10 February 1998 until 9 February 2003:
a)

All irrigated lands;

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

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

The 5-year conversion moratorium is not absolute. Five percent (5%) of said lands within
SAFDZs may be converted upon compliance with existing laws, rules and regulations. DAR
and DA, upon the recommendation of the Regional and National SAFDZ Committees, shall
jointly determine the maximum 5% equivalent to the total area of land eligible for
conversion. (DAR Adm. O. No. 1 [1999], sec. 7 (b), (c ); DA Adm. O. No. 6, [1998], rule 9.5.2).
Upon expiration of the moratorium, conversion may be allowed, if at all, on a case to case
basis, subject to existing laws, rules and regulations on land use conversion (DAR Adm. O.
No. 1 [1999], sec. 7 [d]).
Lands within SAFDZs
SAFDZs refer to Strategic Agriculture and Fisheries Development Zones. They are areas
within the Network of Protected Areas for Agricultural and Agro-industrial Development
(NPAAAD) identified for production, agro-processing and marketing activities to help develop
and modernize, with the support of the government, the agriculture and fisheries sectors in
an environmentally and socio-culturally sound manner (Rep. Act No. 8435 [1997], sec. 4).
Lands within SAFDZs shall be identified by the DA on the basis of the criteria prescribed
in RA 8435.
Priority development areas for conversion
Under Sec. 6 of DAR AO 1 (1999), the following are priority development areas for
conversion:

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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 under EO 184, series of 1994;

e)

Agricultural areas intended for ECOZONE projects pursuant to RA 7916.

Conversion of agricultural lands within priority development areas requires DAR

clearance. However, the period within which to process and evaluate applications involving
lands within these areas is shorter. Processing of applications is conducted within 13 days
from submission of complete set of documentary requirements. Also, an environmental
compliance certificate is not a pre-condition to the approval of the conversion application;
instead, it forms part of the conditions of the order of conversion where applicable.
SHOPC
Under present guidelines, socialized housing projects are
development areas. (DAR Memo. Circular No. 9 [1999], sec. 1 [1.6].)

considered

priority

Under DAR AO 2 (2000), Mass Housing Desks shall be created at the CLUPPI which shall
be responsible for the receipt, processing and disposition of all applications for conversion
for socialized and low-cost housing projects.
Applicants for conversion involving socialized and low-cost housing projects are exempt
from the posting of cash bond, submission of Certification of Eligibility for Conversion from
DA and Environmental Compliance Certificate from DENR. (DAR Adm. O. No. 2 [2000], sec. 3)
Likewise, applications for conversion involving socialized and low-cost housing projects
shall be processed for a period of thirteen (13) working days upon receipt of the completed
application pursuant to Sec. 1 of EO 258 (2000). (DAR Adm. O. No. 2 [2000], sec. 4)
Criteria for Conversion
Under Sec. 8 of DAR AO 1 (1999), the following criteria shall guide the resolution of
applications for conversion:
1)
Conversion may be allowed if the land subject of application is not among
those considered non-negotiable for conversion;
2)
Conversion may be allowed under the following cases, in accordance with
Section 65 of RA 6657:
a)
when the land has ceased to be economically feasible and sound for
agricultural purposes; or

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b)
the locality has become urbanized and the land will have greater
economic value for residential, commercial, industrial or other non-agricultural
purposes.
3)
Conversion of lands within SAFDZs shall take into consideration the following
factors:
a)
The conversion is consistent with the natural expansion of the
municipality or locality, as contained in the approved physical framework and
land use plan;
b)
The area to be converted is not the only remaining food production area
of the community;
c)
The conversion shall not hamper the availability of irrigation to nearby
farmlands;
d)

Areas with low productivity will be accorded priority for conversion; and

e)
Sufficient disturbance compensation shall be given to the farmers whose
livelihoods are negatively affected by the conversion.
4)
Conversion may be allowed when the environmental impact assessment or
initial environmental examination, as may be appropriate, shall have determined that
it shall not adversely affect air and water quality and the ecological stability of the
area.
Under the previous guidelines, conversion may be allowed if the land has been
reclassified by the LGUs to non-agricultural uses, but said criterion has been deleted under
the present guidelines. That the land has been reclassified to non-agricultural use as per
zoning certification remains one of the factors to consider in resolving whether to approve or
disapprove an application for conversion. It is not an indispensable condition, however, for
the approval of the application. Thus, conversion may be allowed even if the property has
not yet been reclassified to non-agricultural use if the conditions under RA 6657 or RA
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

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

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

c)
Surety equivalent to 15% of the total zonal value of the land (DAR Adm. O. No.
1 [1999], sec. 15 [c).
The performance bond shall be forfeited in favor of the government in case of violation of
the conditions of the conversion order such as non-payment of disturbance compensation,
failure to develop or complete the project within the period prescribed, etc. (DAR Adm. O.
No. 1 [1999], sec. 15, last par.)
Disturbance Compensation
Under RA 3844, disturbance compensation is given only to de jure tenants. However,
under the present conversion guidelines, tenants, farmworkers, or bona fide occupants who
will be affected by the conversion of the property to non-agricultural uses are all entitled to
disturbance compensation (DAR Adm. O. No. 1 [1999], sec. 15 [a]).
Disturbance compensation, in cash or in kind or both, shall be paid by the landowner or
developer, as may be appropriate, in such amounts or under such terms as may be mutually
agreed upon between the affected tenants, farmworkers or occupants and the landowner or
developer but it should not be less than five (5) times the average of the gross harvests on
their landholding during the last five (5) preceding calendar years. Any agreement for the
payment between them shall be subject to DAR's approval and compliance monitoring (DAR
Adm. O. No. 1 [1999], sec. 15 (a)).
Payment of disturbance compensation or compliance with the terms and conditions of the
approved agreement must be made within sixty (60) days from the date of approval of the
application for conversion (DAR Adm. O. No. 1 [1999], sec. 15 [b]).

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In case of disagreement between the parties, the issue on disturbance compensation

may be brought by either of them before the DAR Adjudication Board for resolution (DAR
Adm. O. No. 1 [1999], sec. 15 [c]).
Protests and Oppositions
Sec. 21 of DAR AO 1 (1999) states that the DAR admits protest or opposition against any
application for conversion which is resolved by the approving authority simultaneously with
the application. It may be filed by any person who will be displaced or directly affected by
the proposed land use conversion such as occupants, tenants, farmworkers, identified
beneficiaries, bona fide residents of adjoining properties or communities against the
application with the DAR Regional Office or Central Office, as appropriate (DAR Adm. O. No. 1
[1999], sec. 18 and 19).
The protest must be in writing and filed within fifteen (15) days from the date of posting
of the Notice of Application. However, if the oppositor is an identified beneficiary under the
agrarian reform program of the land applied for and who failed to file a written protest within
the said period due to fraud, accident, mistake or excusable neglect, he shall have the right
to intervene at any time during the pendency of the application.
Protests or oppositions may be filed on the following grounds:
a)

The area applied for is non-negotiable for conversion;

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

Misrepresentation or concealment of material facts;

d)

Illegal/premature conversion;

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

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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 to RA 8371.
Effect on tenants, farmworkers or occupants of property
Upon payment of disturbance compensation or compliance with the terms and conditions
of the agreement for disturbance compensation, the tenants, farmworkers or occupants are
expected to give up all their rights over the land such as possession, tenancy, etc., in favor
of the landowner or developer.
In Gonzales v. CA, 174 SCRA 398, it was held that an agricultural leasehold cannot be
established on land which has been converted to residential use.
Grounds for Revocation/Withdrawal/Cancellation of Conversion Order
Under Sec. 35 of DAR AO 1 (1999), a petition for cancellation/revocation/withdrawal of
the order of conversion may be filed at the instance of DAR or any aggrieved party on the
following grounds:
a)
Misrepresentation or concealment of facts or circumstances material to the
grant of conversion;
b)

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

c)

Lack of jurisdiction of the approving authority;

d)

Non-compliance with the agreement on disturbance compensation;

e)

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

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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 noncompliance with the agreement on disturbance compensation;
b)
The petition must be filed with 90 days from discovery of such facts but not
beyond the period for development stipulated in the order if the basis is noncompliance with the conditions of the order, conversion to use other than that
authorized, or any other violation of relevant rules and regulations of DAR;
c)
Where the ground is lack of jurisdiction, the petition shall be filed with the
Secretary at any time.
In the event the conversion order is cancelled or withdrawn, the land subject thereof shall
revert to the status of agricultural lands and shall be subject to CARP coverage as
circumstances may warrant. (Sec. 37, AO 1 (1999)).

CHAPTER 8
Prohibited Acts and Omissions
Preliminary Considerations
RA 6657, RA 8435 and RA 3844 are the primary sources of prohibited acts and omissions
under the agrarian reform program which are criminal in nature and punishable with fine and
imprisonment, or both. As a rule, the prosecution of these acts does not preclude the DAR
from pursuing administrative cases against the offenders for the same acts or on the basis
of the same facts.
Other acts and omissions in violation of agrarian laws are also administratively
sanctioned. As the principal agency tasked with the implementation of CARP, the DAR is
vested with the power to establish and promulgate operational policies, rules and
regulations for agrarian reform implementation (see Exec. Order No. 129-A (1987), sec. 4
[c]). Moreover, Sec. 50 of RA 6657 vests DAR with the primary jurisdiction to determine and
adjudicate agrarian reform matters and exclusive original jurisdiction over all matters
involving the implementation of agrarian reform.
Prohibited Acts and Omissions by Landowners under RA 6657
Sec. 73 of RA 6657 enumerates acts and omissions which are criminally punishable.
Other provisions of RA 6657 proscribing certain acts and omissions not included in Sec. 73
are subject to administrative regulation or sanctions.

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1.

Ownership and Possession of Land Beyond Allowable Limits

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

Offender is any person, natural or juridical;

b)
Person owns or possess agricultural lands in excess of retention limit or
award ceilings, except in the case of collective ownership by farmer
beneficiaries; and
c)
The purpose of ownership or possession is to circumvent the provisions
of RA 6657;
2)

Prohibited Sale, Transfer, Conveyance or Change in the Nature of the Land

Sec. 73(e) of RA 6657 also prohibits "The sale, transfer, conveyance or change of the
nature of lands outside urban centers and city limits either in whole or in part after the
effectivity of this Act. The date of the registration of the deed of conveyance in the Register
of Deeds with respect to titled lands and the date of the issuance of the tax declaration to
the transferee of the property with respect to unregistered lands, as the case may be, shall
be conclusive for the purpose of this Act." CIHTac
Elements:
a)

The offender is any person;

b)

The person either effects the

c)

i.

sale, transfer or conveyance of the land; or

ii.

change the nature of the land.

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 of RA 6657 also provides that the sale, disposition, lease,
management contract or transfer of possession of private lands executed by the original
owner in violation of RA 6657 shall be null and void. The sale or disposition, however, is not
totally void. Part I (B) of DAR AO (1989) provides that the sale or disposition of agricultural

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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 of RA 6657; and

ii.

to dispossess tenant farmers tilling the land.

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

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

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 of RA 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;

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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 of RA 8435 penalizes ". . . the undertaking of any development activity, the
results of which modify or alter the physical characteristics of the agricultural lands to
render them suitable for 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)
land;

The development activity modifies or alters the physical characteristics of the

e)
and

The land development renders the land suitable for non-agricultural purposes;

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) of DAR AO 1 (1999) defines unauthorized conversion as "the act of changing
the current use of the land from agricultural (e.g. riceland) to another agricultural use (e.g.
livestock) without an order of conversion from DAR, or changing the use of the land other
than that allowed under the order of conversion issued by DAR." There are, thus, two (2)
ways to commit unauthorized conversion.
Elements of the First Type:
a)

Offender is any person, i.e., landowner, developer or any other person;

b)
The person changes the current use of an agricultural land into another
agricultural purpose; and
c)

The change of use was done without an order of conversion from DAR.

Elements of the Second Type:

a)

Offender is any person, i.e., landowner, developer, or any other person;

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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 of DAR AO 1 (1999) also provides for administrative
sanctions against certain acts in connection with the grant of conversion application by
landowners or their duly authorized representatives. These include the following:
a)
Misrepresentation or concealment of material facts in conversion
application;
b)
and

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

c)

Non-compliance with the agreement on disturbance compensation.

Prohibited Acts and Omissions by Beneficiaries under RA 6657

1.

Sale, Transfer, Conveyance of Rights Acquired as a Beneficiary

Sec. 73 (f) of RA 6657 prohibits "The sale, transfer or conveyance by a beneficiary of the
right to use or any other usufructuary right over the land he acquired by virtue of being a
beneficiary, in order to circumvent the provisions of this Act."
Elements:
a)

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)
6657.

The act is motivated by the design to circumvent the provisions of R.A.

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

The offender is an agrarian reform beneficiary;

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b)
He/she sells, transfers or conveys the right to use or any other
usufructuary right over his land without legal basis;
c)
The subject land was acquired by him/her by virtue of being a beneficiary
under RA 6657 or PD 27/EO 228; Provided that lands acquired under PD 27/EO
228 can be transferred upon full payment of amortizations. In the case of lands
awarded under CARP, the land can be transferred ten (10) years after the
registration of the CLOA; and
d)
The act is motivated by the design to circumvent the provisions of RA
6657, PD 27 and other agrarian laws.
2.

Misuse or Diversion of Financial Aid and Support Services

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

The beneficiary was granted financial aid and other support services;

b)

The beneficiary either:

3.

i.

misuses the financial aid and support services; or

ii.

diverts such aid or services for other purposes.

Misuse of the Land

Par. 4, Sec. 22 of RA 6657 provides that any beneficiary guilty of negligence or misuse of
the land or any support extended to him shall forfeit his right to continue as such
beneficiary. Misuse of the land is administratively sanctioned under DAR MC 19 (1996).
Part III, Item (A) of DAR AO 2 (1994) defines misuse of the land as "any act causing
substantial and unreasonable damage on the land, and causing the deterioration and
depletion of the soil fertility and improvements thereon. It also includes the act of knowingly
planting, growing, raising of any plant which is the source of a dangerous drug, as defined
under PD 1683 (1980)." Under the definition, there are two ways of committing this offense.
Elements of the First Type:
a)

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.

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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 in PD 1683.
4.

Continuous Neglect or Abandonment of Awarded Lands

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

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

The material misrepresentation of qualifications provided under Sec. 22 of RA 6657 and

other agrarian reform laws is administratively sanctioned under Item A (3), Part I of DAR MC
19 (1996).
Elements:
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 under RA 6657 or 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) of DAR MC 19 (1996) provides that "default in the obligation of the ARBs
to pay the aggregate of three (3) consecutive amortizations to the landowner in the case of
awarded lands under voluntary land transfer/direct payment scheme, except in cases of
fortuitous events and force majeure" is administratively sanctioned. The administrative rule

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is based on Sec. 26, RA 6657 which 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)
7.

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

Failure to Pay Amortizations to LBP

Similarly, the failure to pay amortizations to LBP is penalized under DAR MC 19

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

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 of MC 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) of MC 19 (1996).
Elements:
a)

Offender is a beneficiary;

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

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c)

Such surrender is without legal authority or clearance from DAR.

Prohibited Acts and Omissions by Other Persons under RA 6657

1.

Forcible Entry and Unlawful Detainer

Sec. 73 (b) of RA 6657 provides that "The forcible entry or illegal detainer by persons who
are not qualified beneficiaries under this Act to avail themselves of the rights and benefits of
the Agrarian Reform Program" is a prohibited act that is criminally punishable.
Elements:
a)
Offender is any person who is not qualified to become an agrarian reform
beneficiaries;
b)
He/she deprives the owner, or legal representatives or any assigns of the said
owner, the right of possession thereof either through the following acts:
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) of RA 6657 penalized the "[w]illful prevention or obstruction by any association
or entity of the implementation of the CARP."
Elements:
a)
Offender may be a landowner, beneficiary or any other person, natural or
juridical; and
b)
CARP.

The person commits acts to prevent or obstructs the implementation of the

Prohibited Acts by Agricultural Lessees and Lessor under RA 3844

RA 3844 enumerates 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 of RA 3844 states that "[n]o deed of sale of agricultural land under cultivation by
an agricultural lessee or lessees shall be recorded in the Registry of Property unless
accompanied by an affidavit of the vendor that he has given the written notice required in

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Section eleven of this Chapter or that the land is not worked by an agricultural lessee."
Failure to comply with this provision is criminally punishable under Sec. 167(1) of RA 3844.
Elements:
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)
and

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

c)
Such recording was effected without the necessary Affidavit by vendor that he
has given prior written notice of the sale to the agricultural lessor as required by Sec.
7 of RA 3844.
2.

Unlawful Disposition of Lessee

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

3.

a)

Offender is an agricultural lessor;

b)

Offender dispossess the agricultural lessee of his landholding; and

c)

Dispossession is without authorization from the Court.

Inducement to Execute or Enter into a Share Tenancy Contract

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

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

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

Sec. 167(2) of RA 3844 provides "Any person who executes an affidavit as required by
Section thirteen of Chapter I, knowing the contents thereof to be false, shall be punished by
a fine not exceeding one thousand pesos or imprisonment of not more than one year, or
both, in the discretion of the court."
Sec. 13 of RA 3844 requires that prior to the registration of the sale or transfer of land in
the Registry of Property, the landowner must execute an affidavit that written notice of the
sale or transfer was made to the agricultural lessor as required under Sec. 7 of RA 3844.
Elements:
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 of RA 3844.
5.
Acts Violating Farmworker's Rights to Self-Organization and to Engage in Other
Concerted Activities
Sec. 167 (4) of RA 3844 penalizes "Any person who willfully violates the provisions of
Sections forty and forty-one of this Code shall be punished by a fine of not less than one
hundred pesos nor more than one thousand pesos or by imprisonment of not less than one
month nor more than one year, or both such fine and imprisonment, in the discretion of the
court. If any violation of Sections forty and forty-one of this Code is committed by a
corporation, partnership or association, the manager or, in his default, the person acting as
such when the violation took place shall be criminally responsible."
Sec. 40 of RA 3844 recognizes the farmworkers' right to self-organization, and provides
that "the farm workers shall have the right to self-organization and to form, join or assist
farm workers' organizations of their own choosing for the purpose of collective bargaining
through representatives of their own choosing: Provided, That this right shall be exercised in
a manner as will not unduly interfere with the normal farm operations. Individuals employed
as supervisors shall not be eligible for membership in farm workers' organizations under
their supervision but may form separate organizations of their own."
Sec. 41 of RA 3844 likewise recognizes the right of farmworkers to engage in concerted
activities, to wit: "The farm workers shall also have the right to engage in concerted
activities for the purpose of collective bargaining and other mutual aid or protection. For the

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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 of RA 3844; or

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

Acts Violative of the Right of Farmworkers to a Minimum Wage

Sec. 167 (5) of RA 3844 provides "Any person who willfully violates the provisions of
Section 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 of RA 3844 protects the farmworkers right to a minimum wage and provides that
"[n]otwithstanding any provision of law or contract to the contrary, farm workers in farm
enterprises shall be entitled to at least P3.50 a day for eight hours' work: Provided, That this
wage may, however, be increased by the Minimum Wage Board as provided for in Republic
Act Numbered Six hundred and two."
Elements:
a)

Offender is 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 3844 or determined by the Minimum Wage Board.
By Agricultural Lessees
1.

Cultivation of Another Farmland without Consent of Lessor

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

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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) of RA 3844 declares 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 of DAR 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
Prohibited Acts or Omissions
under RA 6657
one

Penalty
Imprisonment of not less than one (1) month to not
more than three (3) years or a fine of not less than
thousand pesos (1,000.00) and not more than fifteen
thousand pesos (P15,000.00), or both, at the

discretion
of the court. (Sec. 74, RA 6657)
Premature Conversion
under RA 8435

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

equivalent to one hundred percent (100%) of the
government's investment cost, or both, at the

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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,
and 31 (1) of RA 3844

Inducement to Execute
or Enter into a Share
Tenancy Contract
(Sec. 167 [2], RA 3844)
Making untruthful statements
in affidavit required under
in
Sec. 13, RA 3844
(Sec. 167 (3), RA 3844)
Acts Violating Farmworker's
than
Rights to Self-organization
and to Engage in Other
such
Concerted Activities
(Sec. 167[4], RA 6657)
Acts Violative of the Right
of Farmworkers to a
than
Minimum Wage (Sec.
167[5], RA 3844)

Fine not exceeding one thousand pesos or

imprisonment not exceeding one year or both in the
discretion of the court (RA 3844, Sec. 167 (1).)
Fine not exceeding five thousand pesos with
subsidiary imprisonment in accordance with the
Revised Penal Code (Sec. 167 [2], RA 3844)

Fine not exceeding one thousand pesos or

imprisonment of not more than one year, or both,
the discretion of the Court (Sec. 167 (3), RA 3844)

Fine of not less than one hundred pesos nor more

one thousand pesos or by imprisonment of not less
than one month nor more than one year, or both
fine and imprisonment, in the discretion of the court
(Sec. 167 [4], RA 6657).
Fine of not more than two thousand pesos, or upon
second conviction, to imprisonment of not more
one year or both such fine and imprisonment, in the
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 Omissions
Administrative Sanction
Under MC 19 (1996)
Cancellation of EPs/CLOAs and
disqualification of Agrarian Reform Beneficiaries (see MC 19 s. 1996, Part I).
Under AO 1 (1999)
for the land use conversion;

perpetual

1.

Cancellation or withdrawal of the authorization

2.

Blacklisting

of

the

applicant,

developer,

orrepresentative;

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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 with Sec.
16 hereof. (A.O. 1 s. 1999, Sec. 49)
Jurisdiction Over Violation of Agrarian Laws
The power and duty to hear and try cases involving the criminal acts enumerated
underRA 6657, RA 8435 and RA 3844 and other relevant agrarian laws belongs to the
Special Agrarian Courts. HcaATE
With respect to administrative offenses, the DAR shall have jurisdiction over the same by
virtue of its express primary jurisdiction to determine and adjudicate agrarian reform
matters and exclusive original jurisdiction over all matters involving the implementation of
agrarian reform.

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