DOJ OPINION NO. 075, s. 1998
June 18, 1998

Secretary Ernesto D. Garilao
Department of Agrarian Reform
Elliptical Road, Diliman
Quezon City

S i r :

        This has reference to your request for opinion of whether the amendment of certain provisions of the Comprehensive Agrarian Reform Law (CARL) of 1988 (R. A. No. 6657) by R. A. No. 7881 (1995) would modify this Department's Opinion No. 53, s. 1989, regarding the maximum size of the land that may be covered by a fishpond lease agreement (FLA) which may be issued to a qualified applicant.

        In the above-mentioned Opinion, it was noted that although the last sentence of the first paragraph of Section 3 Article XII of the 1987 Philippine Constitution provides that the maximum size of the disposable public agricultural land that may be allowed through lease to each qualified Filipino is 500 hectares, the second paragraph thereof mandates that the size of the land of the public domain which may be leased be subject to the requirements of agrarian reform, among other things, as determined by law. It was stressed that this requirement of agrarian reform has been implemented with the enactment of R. A. No. 6657, which, pursuant to Section 1 thereof, urges the State to encourage and undertake "the just distribution of all agricultural lands, subject to priorities and retention limits," and which, pursuant to Section 6 thereof, restricts a person's right to own or retain any public agricultural land to an area not exceeding five hectares and three hectares for each child subject to certain conditions. Thus, it was held that the fishpond lease agreement (FLA) which may be issued to any qualified applicant cannot cover an area exceeding the size prescribed in Section 6 of R. A. No. 6657 mentioned above.

        On the other hand, R. A. No. 7881, which was approved by Congress on February 20, 1995, insofar as pertinent, provides:

SEC. 1.         Section 3, Paragraph (b) of Republic Act No. 6657 is hereby amended to read as follows:

"SEC. 3.        Definitions. — For the purpose of this act, unless the context indicates otherwise:

"(b)   Agriculture, Agricultural Enterprises or Agricultural Activity means the cultivation of the 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."

SEC. 2.         Section 10 of Republic Act No. 6657 is hereby amended to read as follows:

"SEC. 10.      Exemptions and Exclusions. —

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"(b)   Private lands actually, directly, and exclusively used for prawn farms and fishponds shall be exempt from the coverage of this Act: Provided, That said prawn farms and fishponds have not been distributed and Certificate of Land Ownership Award (CLOA) issued to agrarian reform beneficiaries under the Comprehensive Agrarian Reform Program.

"In cases where the fishponds or prawn farms have been subjected to the Comprehensive Agrarian Reform Law, by voluntary offer to sell, or commercial farms deferment or notices of compulsory acquisition, a simple and absolute majority of the actual  regular workers or tenants must consent to the exemption within one (1) year from the effectivity of this Act. When the workers or tenants do not agree to this exemption, the fishponds or prawn farms shall be distributed collectively to the worker-beneficiaries or tenants who shall form a cooperative or association to manage the same.

"In cases where the fishponds or prawn farms have not been subjected to the Comprehensive Agrarian Reform Law, the consent of the farm workers shall no longer be necessary, however, the provision of Section 32-A hereof on incentives shall apply."

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SEC. 3. Section 11, Paragraph 1 is hereby amended to read as follows:

"SEC. 11.      Commercial Farming. — Commercial farms, which are private agricultural lands devoted to saltbeds, fruit farms, orchards, vegetable and cut-flower farms, and cacao, coffee and rubber plantations, shall be subject to immediate compulsory acquisition and distribution after ten (10) years from the effectivity of this Act. In the case of new farms, the ten-year period shall begin from the first year of commercial production and operation, as determined by the DAR. During the ten-year period, the Government shall initiate steps necessary to acquire these lands, upon payment of just compensation for the land and the improvements thereon, preferably in favor of organized cooperatives or associations, which shall thereafter manage the said lands for the workers-beneficiaries."

SEC. 4.         There shall be incorporated after Section 32 of Republic act No. 6657 a new section to read as follows:

"SEC. 32-A. Incentives. — Individuals or entities owning or operating fishponds and prawn farms are hereby mandated to execute within six (6) months from the effectivity of this Act, an incentive plan with their regular fishpond or prawn farm workers or fishpond or prawn workers' organization, if any, whereby seven point five percent (7.5%) of their net profit 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 in such ponds over and above the compensation they currently receive.

"In order to safeguard the right of the regular fishpond or prawn farm workers under the incentive plan, the books of the fishpond or prawn farm owners shall be subject to periodic audit or inspection by certified public accountants chosen by the workers.

"The foregoing provision shall not apply to agricultural lands subsequently converted to fishponds or prawn farms provided the size of the land converted does not exceed the retention limit of the landowner."

        The Supreme Court has ruled that "(t)he above-mentioned provisions of R. A. No. 7881 expressly state that fishponds and prawn farms are excluded from the coverage of CARL," (Resolution of the Supreme Court En Banc in Atlas Fertilizer Corporation vs. The Honorable Secretary of the Department of Agrarian Reform, G. R. No. 93100 and in Philippine Federation of Fishfarm Producers, Inc. vs. The Honorable Secretary of the Department of Agrarian Reform, G. R. No. 97855, promulgated on June 19, 1997) In view thereof, a person's right to own or retain any fishpond or prawn farm is not subject to the restrictions imposed by the CARL, particularly Section 6 thereof. It follows that an FLA involving a land exceeding the size prescribed in Section 6 of R. A. No. 6657 may already be issued to any qualified applicant.

        In fine, this Department's Opinion No. 53, s. 1989, is modified insofar as it subjects FLAs to the restrictions imposed by the CARL, specifically Section 6 thereof.

Very truly yours,

(SGD.) SILVESTRE H. BELLO III

Secretary