March 2, 2004

DAR OPINION NO. 07-04

Atty. Eladio S. Pasamba
4th Floor CDC Bldg.
1195 Ma. Orosa St.
Ermita, Manila

Dear Atty. Pasamba:

This refers to your letter requesting for opinion in behalf of your client, Mr. Victor A. Consunji, whether the latter's proposed development plan of his property into a farmlot subdivision will require a DAR Conversion Order or a DAR Clearance where you posed the following queries, to wit:

1)        Is the subdivided lot, when sold with one head of cattle retain its exempt status?

2)        Is there a need for a DAR Conversion Order or a DAR Clearance to develop and to sell the subdivided lots to individual lot buyers? What is the procedure of securing a DAR Clearance?

3)        Alternatively, can you sell this through VLT/DPS, whereby your lot buyers will receive a CLOA title?

You stated that Mr. Consunji is the registered owner of a parcel of land consisting of 50 hectares covered by TCT Bi, 65483 situated in Brgy. Biao Joaquin, Municipality of Calinan, Davao City; that his property is devoted to cattle ranching and has the necessary Order of Exemption in an Order dated 28 August 2002; that the ranch is planted with fruit bearing trees to provide shades to the cattle as well as additional revenue for the operation; and that it is the plan of your client to subdivide his property into fifty (50) lots of one (1) hectare; and that the subdivided lots will be sold to the public with one head of cattle for every hectare sold.   cHaADC

Anent your first and second query, pertinent are the following DAR opinions and guidelines:

1.         DAR Opinion No. 10, Series of 2001

"As defined in DAR Administrative Order No. 1, Series of 1999 (Revised Rules and Regulations on the Conversion of Agricultural Lands to Non-Agricultural Uses), "land use conversion" refers to the act or process of changing the current use of a piece of agricultural land into some other use as approved by DAR. On the other hand, a "farmlot subdivision" had been defined under the Human Settlements Regulatory Commission (now Housing and Land Use Regulatory Board) Rules and Regulations Implementing Farmlot Subdivision Plan as "a planned community intended primarily for intensive agricultural activities, and secondarily for housing.

If your farmlot subdivision falls squarely within the cited definition, the fact that there is a housing requirement is an indication to change the use of an agricultural land to residential and this is covered by the definition of "land use conversion." The slightest change in the agricultural land use to some other non-agricultural use (which in this case is residential), no matter how minimal the area to be covered by such change and even if housing is a secondary purpose, will be interpreted as land use conversion as defined in the cited DAR A.O. As such, there is a need to apply for a conversion clearance from the DAR and the procedures are provided in DAR A.O. 1, S. of 1999. . . .

Additionally, Section 2 (C1) of the above mentioned HLURB Rules and Regulations provides that a clearance from the Department of Agrarian Reform is required from applicants of farmlot subdivisions."

2.         3rd Paragraph of the Letter of Then BALA Director Federico L. Melocoton Dated 11 November 2002

"The Human Settlements and Regulatory Commission (now Housing and Land Use Regulatory Board) Rules and Regulations Implementing Farmlot Subdivision Plan defines "farmlot subdivision" as "a planned community intended primarily for intensive agricultural activities and secondarily for housing". Hence, if the farmlot subdivision falls squarely within the aforecited definition, there would be a change in the use of the land necessitating application for a DAR conversion clearance.

3.         Penultimate Paragraph of DAR Opinion No. 11, Series of 2001

"It should be emphasized that DOJ Opinion No. 44, series of 1994 is the only ground for exemption which does not require a conversion order/clearance. All other grounds for CARP-exemption of agricultural land provided under R.A. No. 6657 always require a conversion order clearance whenever its use is changed from agricultural to non-agricultural."

4.         2nd Paragraph, Page 3 of DAR Opinion No. 03, Series of 2003

"Moreover, it bears noting that aforesaid exemption does not include or contemplate exemption orders or clearances issued not in pursuance of DOJ 44 or Section 3 (c) of R.A. No. 6657 in relation to DAR Administrative Order No. 6, Series of 1994 (Guidelines for the Issuance of Exemption Clearances based on Sec. 3 (c) of RA 6657 and the Department of Justice (DOJ) Opinion No. 44 Series of 1990) such as those exempted pursuant to DAR Administrative Order No. 13, Series of 1990 (Rules and Procedures Governing Exemption of Lands from CARP Coverage Under Section 10, RA 6657), DAR Administrative Order No. 9, Series of 1993 [Rules and Regulations Governing the Exclusion of Agricultural Lands Used for Livestock, Poultry and Swine Raising from the Coverage of the Comprehensive Agrarian Reform Program (CARP)] and DAR Administrative Order No. 3, Series of 1995 [Rules and Regulations Governing the Exemption/Exclusion of Fishpond and Prawn Farms from the Coverage of the Comprehensive Agrarian Reform Law (CARL), Pursuant to Republic Act (R.A.) No. 6657, as amended by R.A. No. 7881]. The lands under the latter enumerated exemptions may revert to agricultural if they are no longer actually, directly and exclusively used for the purpose for which they were exempted. Thus, they would still necessitate a conversion clearance should they later be converted to other non-agricultural uses such as residential, commercial or industrial."

5.         Page 2, 2nd to 5th Paragraphs, DAR Opinion No. 18, Series of 2003

"From the aforequoted provisions of R.A. No. 6657, it is clear that all private lands devoted to or suitable for agriculture in excess of the 5-hectare retention limit shall be acquired under the Comprehensive Agrarian Reform Program (CARP) for distribution to qualified agrarian reform beneficiaries (as defined and contemplated under existing agrarian laws, rules and regulations) and not to "weekend farmers".

It is the spirit and intent of the law to cover all agricultural lands devoted to or suitable for agriculture. Moreover, since R.A. No. 6657 is a social welfare legislation, the rules on exemptions, exclusions and/or conversions must be interpreted restrictively and any doubt as to the applicability of the law should be resolved in favor of inclusion. Thus, the subject agricultural landholding which is beyond the 5-hectare retention area, if not converted, may be acquired under the CARL for distribution to agrarian reform beneficiaries.   TCcIaA

If we are to opine, as requested, that portions of the proposed farmlot subdivision devoted to agricultural use will no longer require a conversion clearance, we would in effect be saying that they are not coverable under CARP contrary to the spirit and intent of the law (R.A. No. 6657) to cover all agricultural lands devoted to or suitable for agriculture.

Accordingly, given all the foregoing, an application for conversion and a DAR conversion order duly issued on the merits shall still be required."

6.         Article III.D of DAR Administrative Order No. 09, Series of 1993

"The MARO shall conduct a continuing review and verification of excluded lands to ascertain which of the areas or portions thereof are no longer used for livestock, poultry and swine raising purposes. If the area or portion thereof is no longer used for livestock, poultry and swine raising, the area or portion involved shall automatically revert to the category of agricultural land, and shall be covered under CARP pursuant to A.O. No. 9, series of 1990, as amended by A.O. No. 1, Series of 1992, on land acquisition and distribution, and Section V of this Administrative Order."

Given the foregoing, if subject properties are to be developed into a farmlot subdivision under such facts and circumstances as planned, said lands will in effect revert to agricultural since they will no longer be actually, directly and exclusively used for the purpose for which they were exempted (i.e., livestock). Thus, they may be covered under the Comprehensive Agrarian Reform Program (CARP). Accordingly, conversion clearance is necessary if said landholdings are to be converted into a farmlot subdivision.

As regards your 3rd query, the subject properties may possibly, if warranted, be sold through VLT/DPS but only to qualified agrarian reform beneficiaries (ARBs) as defined and contemplated under existing agrarian laws, rules and regulations and, provided, further, that the provisions of DAR Administrative Order No. 08, Series of 2003 [2003 Guidelines on the Acquisition and Distribution of Compensable Agricultural Lands Under Voluntary Land Transfer/Direct Payment Scheme (VLT/DPS)] shall be observed.   TIDHCc

Thank you for communicating with us and we hope to have clarified the matters.

Very truly yours,

(SGD.) RICARDO S. ARLANZA
Undersecretary for Policy, Planning and Legal Affairs Office