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August 18, 1997




SUBJECT  : Policy Guidelines on Joint Venture Agreements Between DAR and Other Interested Parties and on the Processing of Applications for Lease Back Arrangements, Joint-Venture Agreements and Other Schemes that may be recommended by the PARCCOM to the PARC


        By virtue of the power and functions of the PARC under Sec. 37 of R.A. 6657 to "formulate policies to ensure that support services to farmer beneficiaries shall be provided at all stages of land reform", the PARC Executive Committee hereby issues this Policy Order for compliance by all parties concerned:

 I.       Statement of Policies and Objectives of Agrarian Reform

        It is the policy of the State to recognize "the right of the farmers and regular farmworkers, who are landless, to own directly or collectively the lands they till (Sec. 4, Art. XIII, Constitution) and to establish "owner-cultivatorship of economic-size farms as the basis of Philippines agriculture" (Sec. 2, R.A. 6657; Sec. 2, (1), R.A. 3844, as amended).

        The objectives of agrarian reform and owner-cultivatorship are as follows:

1.         "to enhance" the "dignity" of the farmers and farmworkers (Sec. 2, R.A. 6657; Sec. 2, (2), R.A. 3844, as amended).

2.         to "improve the quality of their lives through greater productivity" (Sec. 2, R.A. 6657; Sec. 2, (3), R.A. 3844, as amended).

3.         "to create truly viable social and economic structure in agriculture" (Sec. 2, (3), R.A. 3844, as amended).

4.         "to make the farmers more independent, self-reliant, and responsible citizens, and a source of genuine strength in our democratic society" (Sec. 2, (6), R.A. 3844, as amended), and "to divert landlord capital in agriculture to industrial development" (Sec. 2, (1), R.A. 3844, as amended; Sec. 2, R.A. 6657).

        In order to strengthen the implementation of the foregoing policies and objectives of agrarian reform, R.A. No. 7905 entitled "An Act to Strengthen the Implementation of the Comprehensive Agrarian Reform Program, and for other Purposes" was enacted on February 23, 1995. It contains, among other things, provisions on support services and functions of the PARCCOM.

 II.      Pertinent Provisions of R.A. 7905

        As amended by Section 1 of R.A. 7905, Section 35 of R.A. 6657 now reads as follows:

"SEC. 35.      Creation of Support Services Office. There is hereby created the Office of Support Services under the DAR to be headed by an Undersecretary.

"The 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:

"1)     Irrigation facilities, especially second crop or dry season irrigation facilities;

"2)     Infrastructure development and public works projects in areas and settlements that come under agrarian reform, and for this purpose, the preparation of the physical development plan of such settlements providing suitable barangay sites, potable water and power resources, irrigation systems, seeds and seedling banks, post harvest facilities, and other facilities for a sound agricultural development plan. 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 scheme;   cHAaCE

"3)     Government subsidies for the use of irrigation facilities;

"4)     Price support and guarantee for all agricultural produce;

"5)     Extending to small landowners, farmers and farmers' organizations the necessary credit, like concessional and collateral-free loans, for agro-industrialization based on social collaterals like the guarantees of farmers' organizations;

"6)     Promoting, developing and extending financial assistance to small and medium-scale industries in agrarian reform areas;

"7)     Undertake research, development and dissemination of information on agrarian reform, plants and crops best suited for cultivation and marketing, and low-cost and ecologically sound farm inputs and technologies to minimize reliance on expensive and imported agricultural inputs;

"8)     Development of cooperative management skills through intensive training;

"9)     Assistance in the identification of ready markets for agricultural produce and training in the other various aspects of marketing;

"10)   Conduct an effective information dissemination system through the Department of Agriculture to promote marketing and minimize spoilage of agricultural produce and products;

"11)   Create a credit guarantee fund for agricultural landowners that will enhance the collateral value of agricultural lands that are affected or will be affected by coverage under the agrarian reform program; and

"12)   Administration, operation, management and funding support services programs and projects including pilot projects and models related to agrarian reform as developed by the DAR."

        Section 3 of R.A. No. 7905 amends Section 44 of R.A. No. 6657, certain pertinent provisions of which now read as follows:

"Section 44.   Provincial Agrarian Reform Coordinating Committee (PARCCOM) . . .

"The PARCCOM shall coordinated and monitor the implementation of the CARP in the province. It shall provide information on the provisions of the CARP, guidelines issued by the PARC and on the progress of the CARP in the province; in addition, it shall:

"a)     Recommend to the PARC the following:

xxx                      xxx                      xxx

"3)     Continuous processing of applications for the lease back arrangements, joint-venture agreements and other schemes that will optimize the operating size for agricultural production and also promote both security of tenure and security of income to farmer beneficiaries, Provided, That lease back arrangements should be the last resort."

 III.    Operational Guidelines for OSS and PARCCOMs

        The Office of Support Services (OSS)of the Department of Agrarian Reform (DAR) and the Provincial Agrarian Reform Coordinating Committees (PARCCOMs), shall, in performing their functions, orient their decisions, actuations and recommendations towards the defense and vigorous promotion of the policies and objectives of agrarian reform as laid out herein.   TaISEH

A.        Office of Support Services

1.         The OSS shall always implement vigorously all its thirteen (13) functions enumerated in Article 35 and all its five (5) functions enumerated in Article 37, of R.A. 6657, as amended.

2.         The OSS shall also extend those support services under Sections 35 and 36 of R.A. 6657, as amended, that pertain to the affected landowners in the implementation of the State policy and objectives "to divert landlord capital in agriculture to industrial development" in accordance with Section 2 of R.A. No. 3844, as amended.

3.         Under the authority of the DAR to enter, at its own discretion, into contracts with interested private parties on long-term basis or through joint venture agreements, the OSS shall study any proposals that may be submitted for such contracts, agreements or schemes for favorable or unfavorable recommendation to the DAR Secretary who shall act on the same according to the policies formulated by the PARC under Sec. 37 of R.A. 6657, as amended.

B.        Provincial Agrarian Reform Coordinating Committee

        The PARCCOM has the function and authority, at its sound direction, to recommend to the PARC the continuous processing of applications duly submitted for leaseback arrangements, joint venture agreements and other schemes that will optimize the operating size for agricultural production and also promote both security of tenure and security of income to farmer beneficiaries.

        In pursuit of these functions, the PARCCOMs shall be guided by the following:

1.         That first of all, it must ascertain whether or not the OSS has thoroughly performed its functions of providing all the support services enumerated in Sections 35 and 37 of R.A. 6657. In this, the PARCCOM as a coordinative body must work through its Executive Officer-PARO who in turn is the Chairman/Presiding Officer of the PARCCOMs implementing arm in the PCIT.

            If the OSS has failed to provide the beneficiaries the needed support services as mandated by the Constitution and the laws, the PARCCOM shall coordinate with the PCIT through the DAR-PARO to insure that said services are provided accordingly.

2.         The PARCCOM shall refrain from making favorable recommendation if the terms and conditions of the proposed agreement, arrangement or scheme

a.         will in any way violate or lessen the farmer beneficiaries' right to owner-cultivatorship or security of tenure as when another party takes over the possession or cultivation of the land or management of the farm;

b.         will in any way lessen the dignity of the farmer beneficiaries by demoting them to the position of farmworkers or employees;

c.         will in any way deprive the beneficiaries of the opportunity to develop their self-reliance and sense of responsibility by securing for and by themselves such support services as concessional loans and extension services, technology, management and marketing skills, etc., and build up their competence to set up their own processing plants and marketing networks with the help of the OSS and other government agencies which are mandated by the law to extend such assistance to them;

d.         will in any way tolerate malpractices of some persons in government by encouraging the farmer/farmworker beneficiaries to seek such support services and assistance from other parties who may inflict the old feudal economic, social, and political costs upon the beneficiaries, unless the latter are first prepared to take care of themselves with government assistance;   STDEcA

e.         will jeopardize the beneficiaries' independence and compromise their security of income by making them too dependent on other parties for the marketing of their crops or on just one crop.

4.         For the proper performance of its mandated task of monitoring the implementation of the CARP in the province and in making recommendations to the PARC, the PARCCOM with assistance from its Provincial CARP Implementing Team (PCIT) and PARC when necessary, shall conduct an inquiry into the actual progress of stock-sharing arrangements entered into by corporate landowners and their qualified agrarian reform beneficiaries, under Sec. 31 of R.A. No. 6657, as amended. Such inquiry shall be as complete as possible, including, among other things, the number of beneficiaries involved at the start of the agreement and how many of them are still in the farm, how many of them have since then died or become disabled and how their shares of stock have been disposed of, the extent by which the beneficiaries have paid for their shares of stock, whether the income of the beneficiaries have since then increased or decreased, etc.

5.         For the same purpose as stated above the PARCCOM, with assistance from PCIT and PARC, when necessary, shall also conduct an inquiry into the progress of existing leaseback, joint venture, contract growing and other schemes, arrangements or agreements, as in the banana, pineapple, coffee, high value crops and other plantations, and determine whether the original number of beneficiaries are still on the land and working thereon, and whether their income has increased or decreased and their standard of living has improved or worsened, how many of them have sold their land to whom and why, etc. etc.

6.         The PARCCOM, with assistance from PCIT and PARC, when necessary, shall also make a thorough on whether steps have been taken before 1998, as mandated by Sec. 11 of R.A. No. 6657, to acquire commercial farms in favor of the beneficiaries thereon and to prepare said beneficiaries to take over the management of said farms under the said Section and Section 2 of R.A. No. 6657, whether, pending final land transfer, the provisions of Sec. 32 of the same law on production sharing are being faithfully observed, and if not, to recommend appropriate action to ensure their observance.

7.         The PARCCOM, with assistance from PCIT and PARC when necessary, shall also conduct an inquiry on whether decisions are already made or being made as to which commercial and corporate farms shall be distributed to the individual beneficiaries, which of them shall be transferred to the cooperatives or associations. Application of guidelines 1-3 would require that these cooperatives or associations shall be trained first in management before the farm is finally transferred to them, under the mandates of Sections 11, 29 and 32 of R.A. No. 6657.

8.         The PARCCOM may favorably recommend a lease back arrangement only after the land concerned has been fully transferred to the beneficiaries and when the PARCCOM has exhausted the application of the foregoing guidelines. Such arrangement shall also be freely agreed to by all the beneficiaries affected, and after all its terms and conditions as well as their rights under the law have been explained to them.

 IV.    Evaluation and Approval of Applications

        All applications for lease back arrangement, joint venture agreements and other schemes recommended by the PARCCOM to the PARC Executive Committee shall be evaluated by a Task Force which will be formed under the supervision of the DAR-SSO. In turn, the DAR-SSO shall be providing the PARC ExCom with regular update on the progress of activities being undertaken by the Task Force.

        This Policy Order shall serve as the basis by DAR and other concerned agencies/parties in the formulation of detailed guidelines for the processing of joint venture agreements which may be entered into between DAR and other interested private parties and the processing of lease back arrangements, joint venture agreements and other schemes that may be recommended by the PARCCOM to the PARC.

        This Policy Order takes effect immediately.

        Diliman, Quezon City, 18 August 1997.


Chairman, PARC Executive Committee
and Secretary, DAR


Department of Agrarian Reform
Elliptical Road, Diliman
Quezon City, Philippines
Tel. No.: (632) 928-7031 to 39

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