December 23, 1998
DAR ADMINISTRATIVE ORDER NO. 09-98
SUBJECT : Rules and Regulations on the Acquisition, Valuation, Compensation and Distribution of Deferred Commercial Farms
(a) All commercial farms whose deferment expired as of June 15, 1998 shall be subject to immediate acquisition and distribution under the Comprehensive Agrarian Reform Program (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 Department of Agrarian Reform (DAR), or earlier if the DAR determines that the purpose for which it was deferred no longer exists and revokes its deferment;
(b) As a general rule, acquired commercial farms shall be distributed to qualified beneficiaries based on the order of priority prescribed under Section 22 of RA 6657. Those who have worked longest on the land shall be given preference;
(c) The landowner, whether individual or corporate, shall have the right to retention pursuant to Section 6 of RA 6657;
(d) All infrastructure facilities and improvements including buildings, roads, machinery, 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 agrarian reform beneficiaries (ARBs);
(e) In general, lands shall be distributed directly to individual worker-beneficiaries. However, in case it is not economically feasible and sound to divide the land, then it shall be owned collectively by the worker-beneficiaries who shall form a workers cooperative or association which will deal with the corporation or business association;
(f) Determination of just compensation for commercial farms shall include not only the land but also the facilities and improvements introduced by the landowner. It may take into account the type of commercial crops planted (e.g. banana, pineapple, rubber) and such other relevant factors consistent with agrarian laws, rules and regulations;
(g) Lands acquired and distributed under compulsory acquisition or voluntary offer to sell shall be paid by the agrarian reform beneficiaries subject to the affordability provisions of Section 26 of RA 6657 and other implementing rules and regulations;
(h) The landowner shall retain his share of any standing crops unharvested at the time the DAR shall take possession of the land and who shall be given reasonable time to harvest the same; and
(i) Beneficiaries of distributed commercial farms shall have full freedom to choose the type of agribusiness venture arrangement that will maintain the economic viability and productivity of the farm, the freedom to market their products or enter into appropriate marketing arrangements, and the freedom to avail of the services of individuals, associations or non-government organizations who will assist them in negotiating for the most advantageous agribusiness venture arrangement, enterprise development, and capability building.
(a) Agricultural Enterprise 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 reasons another whether natural or judicial (Sec. 3 [b], RA 6657, as amended by Sec. 1, RA 7881).
(b) Build-Operate-Transfer (BOT) Scheme refers to a contractual arrangement entered into pursuant to RA 6957, as amended, whereby the project proponent undertakes the construction, including financing, of a given infrastructure facility and the operation and maintenance thereof for an agreed period of time, but not to exceed twenty-five (25) years, subject to extension.
(c) Commercial Farms are private agricultural lands devoted to salt beds, fruit farms, orchard, vegetables and cut-flower farms, cacao, coffee and rubber plantations (Sec. 11, R.A. 6657, as amended by Sec. 3, R.A. 7881).
(d) Compulsory Acquisition is the mandatory acquisition of agricultural lands, including facilities and improvements necessary for agricultural production, as may be appropriate, for distribution to qualified beneficiaries upon payment of just compensation.
(e) Contract Growing/Growership Arrangement is an agribusiness arrangement whereby the ARBs own the land and commit, either collectively through their cooperative or individually, to produce certain crops for an investor or agribusiness firm that contracts to buy the produce at pre-arranged terms.
(f) Deferment Period refers to the ten (10) year period counted from the start of commercial production and operation as provided in Sec. 11 of R.A. 6657 whereby the acquisition and distribution of commercial farms has been postponed.
(g) Direct Payment Scheme is a mode of acquiring land wherein direct payment in cash or in kind is made by the ARB to the landowner under terms mutually acceptable to both parties and approved by DAR.
(h) Farmworker refers to a natural person who renders service for value as an employee or laborer in an agricultural enterprise or farm regardless of whether his compensation is paid on a daily, weekly, monthly or "pakyaw" basis. The term includes an individual whose work has ceased as a consequence of, or in connection with, a pending agrarian dispute and who has not obtained a substantially equivalent and regular farm employment. (Section 3[g] of R.A. 6657).
(i) Joint Venture Agreement is an agribusiness venture whereby a company is organized and co-owned by an investor and the agrarian reform beneficiaries through their cooperatives or associations. The investor may provide the management and marketing skills, technology infrastructure, and capital while the ARBs' contribution/participation in the joint venture includes labor, the usufructuary rights to the land, and capital, infusion, if available.
(j) Lease Arrangement is an agribusiness scheme whereby the ARB's, through their cooperative or farmworkers' association, enter into a contract of lease with the landowner/investor. The lessee shall have farm control and operations within an agreed period of time but not to exceed ten (10) years, subject to extension upon mutual agreement of both parties. The lease rental shall not be less than the amortization to be paid by the ARBs to the Land Bank of the Philippines (LBP) pursuant to DAR Administrative Order No. 6, Series of 1998, and other pertinent laws, rules and regulation.
(k) Management Contract is an agribusiness arrangement whereby the ARBs, or their cooperative/organization, hire the services of the landowner or an investor to manage and operate the farm in exchange for fixed wages or commission.
(l) Other Farmworkers are those who does not fall under paragraphs [g], [h] and [i] of R.A. 6657, i.e., the definitions of farmworker, regular farmworker, and seasonal farmworker. (Sec. 3 [j], R.A. 6657).
(m) Regular Farmworker is a natural person who is employed on a permanent basis by an agricultural enterprise or farm (Sec. 3 [h], R.A. 6657).
(n) Seasonal Farmworker is a natural person 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", sacada and the like (Sec. [i], R.A. 6657).
(o) Standing Crops refer to the harvestable agricultural produce or a portion thereof (e.g., fruits, sap, root) normally harvested for such particular crop growing on the land at the time DAR takes possession thereof.
(p) Voluntary Offer to Sell is a scheme whereby the landowner voluntarily offers his agricultural land including facilities and improvements necessary for agricultural production, if any, for distribution to qualified beneficiaries.
Selection of Beneficiaries
(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: Provided, That farmworkers who have worked longest on the land continuously shall be given priority.
(a) Mandatory retirement;
(b) Optional retirement or resignation: Provided, That there is no case filed by the farmworker or prospective beneficiary questioning such retirement or resignation;
(c) Dismissal for cause by final judgment as prescribed under labor laws;
(d) Waiver or refusal to be a beneficiary; or
(e) Violation of agrarian reform laws and regulations as determined with finality after proper proceedings by appropriate tribunal or agency.
(a) Beneficiary Screening Committee. — A Beneficiary Screening Committee shall be created composed of the following:
(1) Provincial Agrarian Reform Officer (PARO) who shall act as Chairman;
(2) Municipal Agrarian Reform Officer (MARO), as member;
(3) Provincial Agrarian Reform Coordinating Committee (PARCCOM) Chairman or his duly-authorized representative, as member;
(4) Barangay Agrarian Reform Council (BARC) Chairman or his duly-authorized representative from each of the barangays where the subject commercial plantation is situated, as member(s); and
(5) Barangay Chairman or his duly-authorized representative, from each of the barangays where the subject commercial plantation is situated, as member(s).
(b) Notice to Potential Beneficiaries. — Upon effectivity of this Order, the PARO concerned shall post a list of commercial farms whose deferments have already expired together with a notice inviting all interested farmworkers in said commercial farms to be listed as potential beneficiaries, and directing them to submit proofs of their qualifications within 30 days from posting. The posting of the list and notice shall be made in conspicuous places within the subject property, barangay and municipality, where the property is located.
(c) Preparation and Posting of Preliminary List. — The Beneficiary Screening Committee shall, upon expiration of 30 days after posting of the list/notice, prepare a preliminary list of potential beneficiaries on the basis of those have filed applications for agrarian reform beneficiary in the prescribed form (Annex 1: Application Form for ARB).
(1) Application subscribed and sworn to before any official authorized to administer oaths; showing age, date of birth, residence, length of service, or date of employment among others;
(2) Proof of employment; and
(3) Such other proofs necessary to establish that the applicant has all the qualifications and none of the disqualifications to be an agrarian reform beneficiary.
(d) Public Hearings. — Within 15 days from the posting of the preliminary list, the Beneficiary Screening Committee shall conduct public hearings for the purpose of examining and cleansing the preliminary list of beneficiaries. As much as practicable, the public hearings shall be conducted after regular working hours at a place to be determined by the Committee preferably outside the commercial farm under acquisition.
(1) Original or certified copy of notice of dismissal or retrenchment;
(2) Original copy of waiver as beneficiary under oath;
(3) Original or certified copy of resignation letter;
(4) Original or certified copy of decision, order or ruling by a court, quasi-judicial body, or administrative agency; and
(5) Such other proofs that will establish the qualifications or disqualifications of the potential beneficiary.
(e) Preparation of Updated List and Waiting List. — Within 15 days from the last public hearing, the Beneficiary Screening Committee shall prepare an updated list of potential beneficiaries on the basis of the proofs presented during the public hearings and taking into consideration the order of priority prescribed in Section 22 of R.A. 6657. A waiting list which shall contain the names of those who possess the minimum qualifications and none of the disqualifications, but who could not otherwise be accommodated in the updated list, shall also be prepared. The updated list and the waiting list shall again be posted in conspicuous places of the subject property, barangay and municipality.
(f) Resolution of Protests. — Any interested party may, within ten (10) days from posting of the updated list/waiting list, file a protest in writing with the Beneficiary Screening Committee on the qualifications or disqualification of those appearing on the said lists. Within three (3) days from receipt of the protest, the Chairman of the Committee shall furnish a copy thereof, together with the supporting evidence, to the beneficiary whose qualification is under question, with a directive for him to answer or comment within an inextendible period of 10 days from receipt. Upon expiration of the 10-day period, the Chairman shall, with or without the protestee's answer or comment, immediately transmit the records to the Regional Director. The Regional Director shall resolve the case within 15 days from receipt on the basis of substantial evidence showing the qualification or disqualification of the beneficiary subject of the protest, and furnishing a copy of the order/decision to the Beneficiary Screening Committee. No motion for reconsideration shall be allowed from the order or decision of the Regional Director, but the same may be appealed to the Undersecretary for Field Operations and Support Services whose decision shall be final and executory. The appeal, however, shall not stay the execution of the order of the Regional Director.
(g) Preparation of Master List. — After the Regional Director resolved any and all protests concerning the qualifications or disqualification of those appearing on the updated list/waiting list, the Beneficiary Screening Committee shall prepare a masterlist of beneficiaries who shall be the recipients of the commercial farm under acquisition. The masterlist shall be posted in conspicuous places of the subject property, barangay and municipality. In the event a beneficiary whose inclusion in the list is on appeal with the Undersecretary for Field Operations and Support Services is ordered excluded from the masterlist, his name shall be stricken off from the list and replaced with those on the updated list or, if not available, from those on the waiting list following the order of priority appearing on said lists.
(h) Prioritization of Beneficiaries. — 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.
Acquisition, Valuation, Compensation and Distribution of Land
a) Voluntary Offer to Sell/Compulsory Acquisition
In order that acquisition of deferred commercial farm through voluntary offer to sell may be allowed, the offer to sell must have been submitted before the expiration of the deferment period, otherwise, the property shall be placed under compulsory acquisition.
b) Direct Payment Scheme
1) Upon mutual agreement of both the landowner and the majority of all qualified agrarian reform beneficiaries, and approved by the DAR, direct payment of deferred commercial farms placed under CARP coverage may be allowed.
2) The area of the land to be transferred to the beneficiaries shall not be less than the area which the government would otherwise acquire for redistribution through CA or VOS.
3) The terms and conditions of the DPS shall include the immediate transfer of possession and ownership of the land in favor of the identified beneficiaries. The Certificates of Land Ownership Award (CLOAs) shall be issued to the individual ARBs, or their cooperative or association, as may be appropriate, with proper annotations.
a) Voluntary Offer to Sell/Compulsory Acquisition
1) 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 (Form A) originally submitted with the approved deferment application. However, for record purposes, the landowner shall be served a Notice of Expiration of Deferment (Annex 2) which shall contain a reminder of his right to retention, should he wish to exercise the same;
2) In general, the procedure for acquisition shall follow DAR Administrative Order No. 01, Series of 1998, as amended by DAR Administrative Order No. 02, Series of 1996, entitled "Revised Rules and Procedures Governing the Acquisition of Agricultural Lands Subject of Voluntary Offer to Sell and Compulsory Acquisition Pursuant to Republic Act No. 6657", subject to certain modifications intended to expedite the process as provided herein.
3) The specific steps are as follows:
Steps Responsible Activity Forms/Documents
(Steps 1-12 for Lands Subject of Voluntary Offer to Sell)
1 LO Submits voluntary offer to sell over CARP Form No. 01
landholdings before expiration of (Letter Offer)
2 DARMO Acknowledges voluntary offer within CARP Form No. 01.a-
seven (7) days upon receipt of offer DCF-1
(Steps 3-12 for Lands Subject of Compulsory Acquisition)
3 DARMO Secures/reviews deferment folder of The folder should contain,
deferred commercial farm subject of among others, the
Ö Deferment Order
Ö Name of LO
Ö Title/TD No.
Ö Vicinity Map/Plan
4 DARMO Posts Deferment Order previously CARP Form No. 06
issued which shall now serve, for the (Certification of Posting
purpose of covering the subject Compliance)
commercial farm, as Notice of Coverage,
for seven (7) days in the barangay and
municipal hall where property is located
thereafter, issues Certificate of
5 DARMO Schedules Field Investigation and CARP Form No. 02
sends Notice thereof to BARC, DENR, (Notice to Conduct Field
DA, LBP, LO and prospective ARBs Investigation)
at least two weeks in advance
6 DARMO Conducts joint field investigation of
property with LBP, DENR, DA, LO,
BARC and prospective ARBs.
7 DARMO Prepares FIR and Land Use Map CARP Form No. 03
jointly with LBP and BARC (Field Investigation
Report); and CARP Form
(Report on Modifications
in Land Use)
8 DARMO Selects qualified ARBs from Masterlist CARP Form No. 04
of Beneficiaries prepared by (Application to Purchase
Beneficiary Screening Committees and Farmer's
and causes signing of APFUs. Undertaking)
In the event the beneficiary selection process becomes contentious and is delayed for more than thirty (30) days after the preparation of the Updated and Waiting Lists, the MARO concerned shall forward the claim folder, without the APFU's, to the PARO for submission to Land Bank for valuation: Provided, that the actual release of payment to the landowner shall only be effected upon submission of the APFU's by the DAR and the request for payment.
9 DARMO Forwards claim folder to DARPO CARP Form No. 07 (CF
10 DARPO Receives claim folder and forwards
to DAR-LBP Pre-Processing Unit
(PPU) for review/evaluation of
documents. Gathers lacking documents,
11 DARPO Expedites survey activities and ensures Approved subdivision or
that segregation/subdivision survey segregation plan (ASP)
returns are completed and approved with technical description.
by DENR-LMS pursuant to existing
12 DAR-LBP- Forwards CF to LBP-LVLCO together CARP Form No. 08
PPU with the ASP, if applicable. (Memorandum Request
to Value the Land)
b) Direct Payment Scheme
1) The landowner and qualified beneficiaries of the commercial farm subject of coverage may, upon mutual agreement, opt for the direct payment scheme at 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.
2) Acquisition under DPS of lands with liens or 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 realty taxes, the ARBs may be allowed to assume such liability to be deducted from the total value of the land.
3) Upon mutual consent of the ARBs and the landowner, duly concurred with by the mortgagor or 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 subject landholding was acquired under VOS or CA.
4) The following procedures shall be followed in availing of the direct payment scheme:
Step Responsible Person Activity Forms/Documents
1 Landowner Jointly notifies the DAR of their DPS-DCF Form No. 03
and Qualified intent to avail of Direct Payment (LO/FB Notice of DPS)
Farmworker Scheme (DPS)
The notice to avail of the DPS may be served by both parties to the DAR any time during the acquisition process, but prior to the transmittal of the claim folder to the LBP. However, if served prior to the preparation of the Master List, the notice shall be validated by the MARO with the identified ARBs included in the Master List, in a referendum to be held for this purpose.
2 MARO Secures/reviews deferment folder The folder should
of deferred commercial farm contain, among others,
subject of coverage. the following:
Ö Deferment Order
Ö Name of LO
Ö Title/TD No.
Ö Vicinity Map/Plan
(Steps 3-5 are to be accomplished in case the Joint Field Investigation has not yet been conducted)
3 DARMO Schedules the conduct of Field CARP Form No. 02
Investigation and sends Notice (Notice to Conduct
thereof to BARC, DENR, DA Field Investigation)
and prospective ARBs at least
two weeks in advance
4 DARMO Conducts joint field investigation
of property with DENR, DA, LO,
BARC and prospective ARBs.
5 DARMO Prepares FIR and Land Use Map CARP Form No. 03
jointly with BARC (Field Investigation
Report); and CARP
Form No. 03-DCF-02
Modifications in Land
6 DARMO Selects qualified ARBs from Masterlist of Qualified
Masterlist of Beneficiaries ARBs
prepared by Beneficiary
7 MARO Conducts referendum between DPS-DCF Form No.
LO and identified ARBs on the 03 (Report on the
proposed DPS. The DAR shall Conduct of
ensure that the ARBs are fully Referendum)
aware of and understand the
options available to them in land
distribution. The majority of all the
ARBs should agree to the proposed
8 LO, ARBs LO and ARBs negotiate on the DPS-DCF Form No. 04
and MARO purchase price and other terms of (Memorandum of
the DPS; MARO ensures that Understanding re
the same are beneficial and Direct Payment Scheme)
acceptable to both parties.
9 MARO Forwards DPS folder to DARPO CARP Form No. 07-A
(DPS Folder Transmittal
10 DARPO Receives DPS folder and reviews/
evaluates documents; gathers
lacking documents, if any; approves
proposed DPS, if documents are in
(a) As a general rule, DAR Administrative Order No. 5, Series of 1998 entitled "REVISED RULES AND REGULATIONS GOVERNING THE VALUATION OF LANDS VOLUNTARILY OFFERED OR COMPULSORILY ACQUIRED PURSUANT TO REPUBLIC ACT NO. 6657", shall apply in the determination of just compensation for deferred commercial farms.
(b) In the case of DPS, the applicable purchase price for such land shall be mutually agreed upon by both parties, but in no case higher than the prevailing market value.
(a) In case of lands voluntarily offered or compulsorily acquired, the following procedures shall apply:
Step Responsible Person Activity Action/Documents
1 LBP-LVLCO Receives and evaluates the CF for
completeness, consistency and
document sufficiency. Gathers
additional valuation documents, if
2 LBP-LVLCO Determines land valuation based Claim Valuation and
on valuation inputs Processing Form (CVPF)
3 LBP-LVLCO Prepares and sends Memo of CARP Form No. 9
Valuation, Claim Folder Profile, (Memorandum of
and Valuation Summary (MOV- Valuation and Claim
CFPVS) to PARO. Folder Profile and
4 DARPO Receives LBP's MOV-CFPVS
and ascertains completeness of the
data and information therein.
5 DARPO Sends Notice of Land Valuation CARP Form No. 10
and Acquisition to LO by personal (Notice of Land Valuation
delivery with proof of service or and Acquisition)
registered mail with return card,
attaching copy of MOV-CFPVS
and inviting LO's attention to the
submission of documents required
for payment of claim.
6 DARPO Posts copy of the Notice of Land CARP Form No. 11
Valuation and Acquisition (NLVA) (Certificate of Posting
for at least seven (7) working days Compliance)
on the bulletin board of the
provincial capitol, municipal and
barangay halls where the property is
located and issues a Certificate of
7 LO Replies to Notice of Land Valuation CARP Form No. 10.a
and Acquisition and submits (LO's Reply to NLVA)
documents required for payment of
(If LO accepts, proceed to A)
(If LO rejects, proceed to B)
A. Where LO accepts the Land Valuation
8 DARPO Upon receipt of LO's Letter of CARP Form No. 12
Acceptance, sends Memorandum to Request to Pay)
LBP to prepare Deed of Transfer
and pay the LO.
9 LBP-LVLCO Prepares DOT for LO to execute CARP Form No. 13
LBP-HO and deposits compensation proceeds (Deed of Transfer)
in the name of LO in cash and in
bonds. The entire deposit may be
withdrawn by LO; however, the
actual release of the same shall only
be effected upon LO's submission of
all documentary requirements.
10 LO Executes DOT and submits CARP Form No. 13
payment requirements to LBP (Deed of Transfer)
within seven (7) working days.
11 LBP Should the LO fail to submit the CARP Form No. 16
required documents within seven (Notice of LO's Non-
(7) working days from LBP receipt Compliance with
of the DAR Request to Pay, notifies Requirements)
DAR of such failure by LO and also
issues to DAR the Certification of
12 LBP Upon completion of payment CARP Form No. 17
requirements within seven (7) (Certification of
working days, immediately prepares Payment)
payment and issues to DAR
Certification of Payment
13 Department Requests ROD to transfer the CARP Form No. 18
of Agrarian Certificate of Title covering subject (Request to Issue TCT in
Reform property in favor of RP; favor of RP)
simultaneously forwards copy of
Certification of Payment to
DARMO with instructions to take
over physical possession of the land.
14 LBP Forwards DOT together with the CARP Form No. 13
owner's duplicate of title and ASP (Deed of Transfer),
(if applicable) to ROD for Certified copy of ASP
registration and its technical
description approved by
DENR, if property is only
partially covered by
15 ROD Registers DOT and issues TCT in
the name of RP, then forwards
owner's duplicate certificate of title
to PARO and certified copy of the
owner's duplicate certificate of title
to LBP, then proceeds with
generation and registration of CLOA.
16 LBP-LVLCO Prepares payment release form LBP Payment Release
LBP-HO upon LO's compliance with all the Form
requirements for payment. In case
the land is encumbered, pays the
mortgagee-bank/creditor upon LO's
request and pays the balance of the
proceeds to the LO.
B. Where LO Rejects the Land Valuation
8 DARPO If the LO rejects the offered price CARP Form No. 10.a
or fails to reply within thirty (30) (LO's Reply to NLVA)
days from receipt of the Notice of
Land Valuation and Acquisition, CARP Form No. 15
forwards to LBP the Request to (Request to Deposit)
Deposit compensation proceeds in
cash and in bonds in the name of
9 DARPO Requests the DARAB/RARAD/ CARP Form No. 14
PARAD to conduct administrative (Advice to DARAB/
proceedings, furnishing a copy each RARAD/PARAD)
of the LO's Letter of Rejection,
Notice of Land Valuation and
Acquisition, and LBP's Memorandum
10 LBP-LVLCO Deposits compensation proceeds in CARP Form No. 17
LBP-HO the name of the LO and issues (Certification of Deposit)
Certification of Deposit to DAR
through the PARO, copy furnished
The entire deposit may be CARP Form No. 17.a
withdrawn by the LO; however, (Confirmation of
actual release of the same shall be Coverage and Transfer for
subject to LO's submission of all Claims of Individual LOs -
requirements for payment and still pending with DARAB)
execution of Confirmation of
Coverage and Transfer.
11 DARPO Upon receipt of the Certification CARP Form No. 18
of Deposit from LBP, transmits (Request to Issue TCT in
the same to Register of Deeds the Name of RP)
concerned, including the approved
segregation/subdivision plan of subject
property, if partially covered, and
simultaneously requests ROD to issue
TCT in the name of RP; and forwards
copy of above Certification to
DARMO with instructions to take
over physical possession of the land.
12 ROD Issues new TCT in the name of New TCT in the name of
RP and forwards owner's duplicate RP and owner's duplicate
certificate of title in the name of copy of title in the name
RP to PARO, and certified copy of RP
of the owner's duplicate of title
to LBP-LVO, then proceeds with
generation and registration of
13 DARPO Forwards to DARMO certified Certified copy of TCT in
copy of TCT in the name of RP the name of RP
with instructions to proceed with
distribution of the same in favor
of qualified ARBs.
14 DARPO Upon receipt of the Certificate of CARP Form No. 17.c
Finality of DARAB Order, requests (Confirmation of
LBP to pay LO in accordance with Coverage & Transfer for
DARAB Decision; requests LBP to Claims of Individual LOs-
prepare Confirmation of Coverage Already decided by
and Transfer for LO to accomplish. DARAB
In case LO still rejects DARAB CARP Form No. 17.d
Decision, he may go to the Special (Confirmation of
Agrarian Court (SAC) for final Coverage & Transfer for
determination of just compensation. Claims of Corporate LOs-
already decided by
15 LBP-LVLCO Prepares payment release form LBP Payment Release
LBP-HO upon LO's compliance with all Form
requirements for payment. In case
the land is encumbered, pays
mortgagee-bank/creditor upon LO's
request and pays balance of the
proceeds to LO.
(b) In the case of DPS, the following procedures shall apply:
Step Responsible Person Activity Actions/Documents
1 DARPO Notifies both LO and ARBs of the DPS-DCF Form No. 05
approval of the proposed DPS. (Notice of Approval of
If DPS is disapproved, sends DPS-DCF Form No. 05-a
corresponding notice to LO and (Notice of Disapproval of
ARBs, specifying therein the DPS)
reasons for disapproval, as well as
the documents and/or activities
required to facilitate approval.
After the lapse of three (3) months
from date of submission of the DPS
MOU (DPS-DCF Form No. 04)
but the requirements for approval
are still not duly complied with,
compulsory acquisition of subject
landholding shall be immediately
2 DARPO Reviews purchase price agreed DPS-DCF Form No. 05
upon in the MOU (DPS-DCF (Notice of Approval of
Form No. 04) and either approves DPS)
or disapproves proposed DPS. or,
DPS-DCF Form No. 05-a
Should there be no agreement on (Notice of Disapproval of
purchase price, after three (3) DPS)
months from the date of submission
of the MOU, compulsory acquisition
of subject landholding shall be
3 DARPO Expedites survey activities and Approved subdivision or
ensures that segregation/subdivision segregation plan (ASP)
survey returns are completed and with technical description.
approved by the DENR-LMS
pursuant to existing guidelines.
4 LO Executes Deed of Transfer in DPS-DCF Form No. 06
favor of the ARBs, duly witnessed (Deed of Transfer)
by PARO and MARO
5 DARPO Forwards DOT to ROD with request CARP Form. No. ___
to generate title in favor of ARBs (Request to Generate
CLOA in favor of ARBs)
(a) Voluntary Offer to Sell/Compulsory Acquisition
(1) The LBP shall compensate the landowner in such amount as may be agreed upon pursuant to Sections 17 and 18 of RA No. 6657, or as may be finally determined by the court as just compensation for the land, facilities and improvements.
(2) The compensation shall be paid in any of the modes specified in Section 18 of RA 6657. For lands voluntarily offered, an additional incentive of 5% cash payment shall be paid to the landowner, other than banks and financial institutions, pursuant to Section 19 of RA 6657.
(b) Direct Payment Scheme
(1) Payment under DPS for the land may be made by the ARB in cash or in kind to the landowner, under terms mutually agreed upon by them, and which shall be indicated in the Memorandum of Agreement (DPS-DCF Form No. 04) duly approved by the DAR.
(2) The MOA, upon approval of the DAR, shall form an integral part of the Deed of Transfer (DPS-DCF Form No. 06) which shall be executed by the landowner in favor of the ARBs.
(3) For landholdings acquired under DPS, the MOA shall be binding to the parties immediately upon registration of the DOT by the ROD, and the subsequent generation of CLOAs in favor of the ARBs.
(4) Further, the ARBs shall be eligible to borrow from the Land Bank through its regular loan portfolio, an amount equal to eighty-five percent (85%) of the selling price of the land that they have acquired pursuant to RA 7905. The remaining cost of the land shall be paid directly to the LO by the ARBs. The Joint DAR-LBP Policy Committee shall draw up the necessary guidelines for the availment of this loan.
(5) Other alternative modes of payment under the DPS, in cash or in kind, shall be encouraged subject to the approval and monitoring provisions prescribed in this Order.
(1) Amortizations for lands voluntarily offered or compulsorily acquired shall be paid by the ARB to the Land Bank in thirty (30) annual installments at six percent (6%) per annum. The annual amortization shall start one year from the date of CLOA registration.
(2) The payments by the ARBs for the first three (3) years shall be two and a half percent (2.5%) of annual gross production (AGP) and five percent (5%) of AGP for the fourth and fifth years. To further make the payments affordable, the ARBs shall pay ten percent (10%) of AGP or the regular amortization, whichever is lower, from the sixth (6th) to the thirtieth (30th) year.
(3) The LBP shall, within one year from the date of registration of the CLOA, furnish the ARBs the schedule of amortizations computed based on the abovecited provisions of R.A. 6657. Such amortization schedule shall be based on benchmark gross production figures, which shall later be adjusted to reflect actual production performance of the subject landholding.
(3) Payment terms under the DPS shall be mutually agreed upon by the LO and ARBs, as approved by the DAR, and as contained in the Memorandum of Agreement executed by and among the parties, but in no case shall the period exceed fifteen (15) years. Interest rates per annum shall not exceed current mandated rates for agricultural loans.
(4) In case of payment options availed of under Section 13(b)(5) above, the amount financed by LBP shall be paid by the ARBs subject to existing guidelines of the LBP on loan repayment schedule.
Acquisition, Valuation, Compensation and Distribution of Facilities and Improvements
(a) The majority of all the ARBs shall manifest in writing to the DAR, through the MARO, their intention to acquire the facilities and improvements which are necessary and essential to farm operations, copy furnished the LO.
(b) The MARO shall then facilitate negotiations between the ARBs and the LO on the terms and conditions of acquisition and payment, but which negotiations shall not exceed three (3) months from receipt of the ARBs' offer by the LO, otherwise, said facilities and improvements shall be acquired compulsorily.
(c) While the negotiations are in progress, the ARBs and the LO may execute an interim agreement on the use and rental of the facilities and improvements.
(d) In case of failure of negotiations, or where no agreement is reached after the three-month period, the DAR shall compulsorily acquire the facilities and improvements. Disputes in the ownership of the facilities and improvement shall not be a bar to their compulsory acquisition.
(e) Any disagreements on the valuation of the facilities and improvements shall be resolved by the DARAB, at the instance of either the LO, ARBs, or DAR.
(a) The facilities and improvements shall be valued by the Land Bank of the Philippines in accordance with pertinent DAR administrative issuances.
(b) For facilities and improvements covered under DPS, the purchase price shall be mutually agreed upon by the LO and ARBs, but in no case higher than the value computed based on pertinent DAR administrative issuances.
(c) However, at the option of the landowner, duly concurred with by the ARBs, DAR and LBP, the services of an independent appraiser may be availed of to ascertain the present value of the facilities or improvements to be acquired, at the account of the landowner. Such agreement may either be at the cost of the LO or both LO and ARBs, but in either case, a Memorandum of Understanding shall be executed (DPS-DCF Form No. 07).
(d) Upon agreement on the valuation and approval of the DPS for the facilities and improvements, the LO shall then execute a Deed of Transfer for said properties in favor of the ARBs.
(e) The Deed of Transfer covering said facilities and improvements shall be duly annotated in the CLOAs for the landholdings where said facilities or improvements are found.
(a) Payment for facilities and improvements compulsorily acquired or under direct payment shall be amortized in equal installments over the remaining useful life of said facilities and improvements. Further, in case of direct payment, and upon mutual consent of the ARBs and LO, the ARBs may opt for a payment period shorter than the remaining useful life of the facilities and improvements, provided that said payment, in addition to the land amortization, shall not exceed the net production income to be derived by the ARBs.
(b) In case of payment options availed of under Section 13(b)(5) above, the amount financed by the LBP shall be paid by the ARBs subject to existing guidelines of the LBP on loan repayment.
(c) For facilities and improvements acquired under DPS, the MOA shall be binding to the parties immediately upon annotation of the deed of transfer (DOT) in the CLOAs from the landholdings where the facilities and improvements are found.
Operation and Management Schemes for Distributed Commercial Farms
(a) Joint Venture Arrangement;
(b) Lease Arrangement;
(c) Contract Growing/Growership Arrangement;
(d) Management Contract; or
(e) Build-Operate-Transfer Scheme.
(a) Contracting Parties
(1) Agreements or contracts pertaining to agribusiness venture arrangements in distributed commercial farms may be executed by and between the qualified ARBs and the investor or former landowner.
(2) Only qualified ARBs who have been awarded the title to the distributed area subject of the agribusiness venture arrangement may qualify to enter into such contract. In no case can a potential ARB, prior to the award of the land and the subsequent receipt of the CLOA, be allowed to enter into an agribusiness venture arrangement.
(3) Any qualified investor or former landowner may enter into an agribusiness venture arrangement with the qualified ARBs: Provided, That they are able to prove their financial and technical capability to meet their duties and obligations under the proposed arrangement, as evidenced by the relevant financial and income statement: Provided, further, That the former landowner or operator of the commercial farm shall be given priority.
(4) The qualified investor may be any individual, partnership or corporation with established financial and technical capabilities duly registered with the Securities and Exchange Commission, as may be appropriate.
(5) A former landowner may enter into an agribusiness venture arrangement provided he has no outstanding obligations with the qualified ARBs. Specifically for distributed commercial farms, labor obligations such as separation pay and other benefits should have been paid by the landowner to the former farmworkers-ARBs before he may qualify as contracting party to the agribusiness venture arrangement.
(b) Consent of Affected ARBs
(1) The consent of all identified ARBs for the acquired commercial farm concerning the terms and conditions of the proposed arrangement is necessary for it to be valid and binding.
(2) Where it is the cooperative or association which will enter into agreement, said consent shall be secured in writing from the concerned ARBs, through the Board of Directors or other duly authorized signatories to the agreement, subject to the existing guidelines of the cooperative or association in the grant of authority to enter into such contracts or agreements, and subject, further, to the provisions of the Cooperative Code or Corporation Code, as may be applicable.
(c) Object of Agribusiness Venture Arrangements
(1) The agreement covering the proposed agribusiness venture arrangement shall specify the object thereof.
(2) In the case of JVA, the contract shall provide only for the usufructuary rights to the land, but not the transfer of ownership of the land itself, valued at prevailing market rates, but not lower than the amortization cost thereof.
(d) Essence of Agribusiness Venture Arrangements
(1) Consistent with the objective of RA 7905 entitled "AN ACT STRENGTHENING THE IMPLEMENTATION OF THE COMPREHENSIVE AGRARIAN REFORM PROGRAM, AND FOR OTHER PURPOSES," agribusiness venture arrangements are aimed to optimize the operating size for agricultural production and also to promote agricultural security of tenure and security of income to beneficiaries.
(2) It is expressly understood, therefore, that qualified ARBs and the investor enter into agreement for the agribusiness venture arrangement to achieve the above objective. Specifically, the ARBs shall have access to the physical (land and/or facilities) and human resources (labor) necessary for agricultural production, while the investor has the means and capability to provide the necessary financial, technical and/or managerial inputs towards an improved production and marketing of the agriculture produce.
(3) In the case of lease arrangements, provisions for the use of the land by the ARBs who will not be hired by the investor, or who will otherwise be retrenched or retired during the lifetime of the agreement, corresponding to the subject ARB's actual share of the land subject of the lease arrangement, shall be included in the contract.
(e) Period of Agreement
(f) Price Review Mechanism
(1) The price for the services or goods to be delivered as specified in the agribusiness venture arrangement shall be based on fair and prevailing market rates.
(2) In the case of lease arrangements, the rental rate shall be based on lease determination guidelines, existing or that which may be formulated for this purpose, but in no case less than the amortizations due on the land.
(3) Contracts on lease arrangements shall include a rental rate review or adjustment mechanism.
(4) All contracts on agribusiness venture arrangements shall include provisions for price review or adjustment mechanism, as may be appropriate, and as applied for each industry. However, such price review mechanism may be waived upon mutual consent of both ARBs and investors.
(g) Arbitration Clause
(a) In the event the ARBs cannot immediately agree on what operation and management scheme to adopt (whether full individual/cooperative takeover or AVA), or during the pendency of the processing of the proposed agribusiness venture arrangement, a transitory period not to exceed one year from the date of award of the land may be allowed.
(b) During said transitory period, any agreement existing between the former landowner, corporation or business association and the workers' cooperative or association prior to the acquisition of the land shall be respected until such time, not to exceed one year, that the ARBs are able to take full control and management of the land, or an agribusiness venture arrangement is implemented, as the case may be.
(c) However, considering that the ARBs are already the owners of the land during the transitory period, they shall be paid the corresponding amount for the use of the land, which shall not be less than the amortization cost of the land. Such amount shall be indicated in the Interim Agreement which shall be executed on the date of award of the CLOA, by and between the concerned parties, duly approved by the DAR Regional Director.
(d) The ARBs shall also be paid production and profit share, as computed based on Section 32 of RA 6657 and pertinent rules and regulations thereof, during the transitory period.
(e) Further, the Interim Agreement shall provide for ARB representation and involvement in farm management operations, as well as free and open access to pertinent records.
(f) The Interim Agreement is automatically terminated as soon as an AVA agreement takes effect, or the ARBs assume full control and management of the farm, as the case may be.
(g) In case of full individual or cooperative takeover, a 15-day written notice is required to be served by the ARBs or ARB cooperative/association to the existing management, indicating their intention, prior to actual and physical take over of said farm operations and management.
(SGD.) HORACIO R. MORALES JR.
Published in Two (2) National Newspapers
of general circulation:
1. PHILIPPINE DAILY INQUIRER
2. MANILA BULLETIN
Date of Publication — December 25, 1998