(NAR) VOL. 10 NO. 1 / JANUARY - MARCH 1999
ARTICLE I
General Provisions
SECTION 1. Coverage. — This Administrative Order shall apply to all commercial farms as defined under Section II of RA 6657, as amended by Section 3 of RA 7881.
SECTION 2. Statement of Policies. — The acquisition, valuation, compensation distribution, operation and management of deferred commercial farms shall be governed by the following policies:
SECTION 3. Definition of Terms. — As used in this Order, the following terms shall be defined as follows:
ARTICLE II
Selection of Beneficiaries
SECTION 4. Qualifications of Beneficiaries. — Agrarian reform beneficiaries for acquired commercial farms must have the following qualifications:
SECTION 5. Grounds for Disqualification. — The following shall constitute as grounds for disqualification of potential beneficiaries of acquired commercial farms;
SECTION 6. Procedure for Selection of Beneficiaries. — The selection of qualified beneficiaries for acquired commercial farms shall subscribe to the following procedures:
a. Beneficiary Screening Committee. — A Beneficiary Screening Committee shall be created composed of the following:
The Beneficiary Screening Committee shall be responsible for the qualification, identification and selection of agrarian reform beneficiaries for acquired commercial farms. In the performance of its tasks, the Committee may invite representatives from the landowners, peoples' or non-government organizations and/or such other groups or entities as may be necessary as resource persons.
- Provincial Agrarian Reform Officer (PARO) who shall act as Chairman;
- Municipal Agrarian Reform Officer (MARO), as member;
- Provincial Agrarian Reform Coordinating Committee (PARCCOM) Chairman or his duly-authorized representative, as member;
- 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
- Barangay Chairman or his duly-authorized representative, from each of the barangays where the subject commercial plantation is situated, as member(s).
The Committee shall then post copies of the preliminary list of beneficiaries in conspicuous places of the subject property, barangay and municipality. The list shall contain an invitation to all interested parties to appear at a public hearing at the designated place and time.
- 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;
- Proof of employment; and
- Such other proofs necessary to establish that the applicant has all the qualifications and none of the disqualifications to be an agrarian reform beneficiary.
The Beneficiary Screening Committee shall rule on petitions or requests in writing for the inclusion/exclusion of potential beneficiaries either during or after the public hearings as it may deem appropriate.
- Original or certified copy of notice of dismissal or retrenchment;
- Original copy of waiver as beneficiary under oath;
- Original or certified copy of resignation letter;
- Original or certified copy of decision, order or ruling by a court, quasi-judicial body, or administrative agency; and
- Such other proofs that will establish the qualifications or disqualifications of the potential beneficiary.
SECTION 8. Mode of Acquisition. — Commercial farms with expired deferment period shall be acquired either through voluntary offer to sell (VOS), compulsory acquisition (CA), or direct payment scheme (DPS).
SECTION 9. Procedure for Acquisition. — The acquisition of deferred commercial farms shall be governed by the following procedures:
Steps |
Responsible Agency/Unit |
Activity |
Forms/Documents (Requirements) |
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(Steps 1-12 for Lands Subject of Voluntary Offer to Sell) |
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1 |
LO |
Submits voluntary offer to sell over landholdings before expiration of deferment period |
CARP Form No. 01 (Letter Offer) |
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2 |
DARMO |
Acknowledges voluntary offer within seven (7) days upon receipt of offer |
CARP Form No. 01. a-DCF-1 (Acknowledgment) |
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(Steps 3-12 for Lands Subject of Compulsory Acquisition) |
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3 |
DARMO |
Secures/reviews deferment folder of deferred commercial farm subject of coverage |
The folder should contain, among others, the following: - Deferment Order - Name of LO - Title/TD No. - Area - Location - Vicinity Map/Plan |
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4 |
DARMO |
Posts Deferment Order previously issued which shall now serve, for the purpose of covering the subject commercial farm, as Notice of Coverage, for seven (7) days in the barangay and municipal hall where property is located thereafter, issues Certificate of Posting Compliance. |
CARP Form No. 06 (Certification of Posting Compliance) |
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5 |
DARMO |
Schedules Field Investigation and sends Notice thereof to BARC, DENR, DA, LBP, LO and prospective ARBs at least two weeks in advance |
CARP Form No. 02 (Notice to Conduct Field Investigation) |
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6 |
DARMO |
Conducts joint field investigation of property with LBP, DENR, DA, LO, BARC and prospective ARBs. |
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7 |
DARMO |
Prepares FIR and Land Use Map jointly with LBP and BARC |
CARP Form No. 03 (Field Investigation Report); and CARP Form No. 03-DCF-02 (Report on Modifications in Land Use) |
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8 |
DARMO |
Selects qualified ARBs from Masterlist of Beneficiaries prepared Beneficiary Screening Committees by and Farmer's and causes signing of APFUs. |
CARP Form No. 04(Application to Purchase Undertaking) |
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Note: 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. |
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9 |
DARMO |
Forwards claim folder to DARPO |
CARP Form No. 07 (CF Transmittal Memorandum) |
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10 |
DARPO |
Receives claim folder and forwards to DAR-LBP Pre-Processing Unit (PPU) for review/evaluation of documents. Gathers lacking documents, if any. |
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11 |
DARPO |
Expedites survey activities and ensures that segregation/subdivision survey returns are completed and approved by DENR-LMS pursuant to existing guidelines |
Approved subdivision or segregation plan (ASP) with technical description. |
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12 |
DAR-LBP- PPU |
Forwards CF to LBP-LVLCO together with the ASP, if applicable. |
CARP Form No. 08 (Memorandum Request to Value the Land) |
b. Direct Payment Scheme
Step |
Responsible Person Agency/Unit |
Activity |
Forms/Documents (Requirements) |
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1 |
Landowner and Qualified Farmworker Beneficiaries |
Jointly notifies the DAR of their intent to avail of Direct Payment Scheme (DPS) |
DPS-DCF Form No. 03 (LO/FB Notice of DPS) |
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Note: 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. |
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2 |
MARO |
Secures/reviews deferment folder of deferred commercial farm subject of coverage. |
The folder should contain, among others, the following: Deferment Order Name of LO Title/TD No. Area Location Vicinity Map/Plan |
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(Steps 3-5 are to be accomplished in case the Joint Field Investigation has not yet been conducted) |
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3 |
DARMO |
Schedules the conduct of Field Investigation and sends Notice thereof to BARC, DENR, DA and prospective ARBs at least two weeks in advance |
CARP Form No. 02 (Notice to Conduct Field Investigation) |
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4 |
DARMO |
Conducts joint field investigation of property with DENR, DA, LO, BARC and prospective ARBs. |
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5 |
DARMO |
Prepares FIR and Land Use Map jointly with BARC |
CARP Form No. 03 (Field Investigation Report); and CARP Form No. 03-DCF-02 (Report on Modifications in Land(Use) |
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6 |
DARMO |
Selects qualified ARBs from Masterlist of Beneficiaries prepared by Beneficiary Screening Committees. |
Masterlist of Qualified ARBs |
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DPS-DCF Form No. 03 (Report on the Conduct of Referendum) |
7 |
MARO |
Conducts referendum between LO and identified ARBs on the proposed DPS. The DAR shall ensure that the ARBs are fully aware of and understand the options available to them in land distribution. The majority of all the ARBs should agree to the proposed DPS. |
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8 |
LO, ARBs and MARO |
LO and ARBs negotiate on the purchase price and other terms of the DPS; MARO ensures that the same are beneficial and acceptable to both parties. |
DPS-DCF Form No. 04(Memorandum of Understanding re Direct Payment Scheme) |
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9 |
MARO |
Forwards DPS folder to DARPO |
CARP Form No. 07-A(DPS Folder Transmittal Memorandum) |
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10 |
DARPO |
Receives DPS folder and reviews/ evaluates documents; gathers lacking documents, if any; approves proposed DPS, if documents are in order. |
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B. Valuation
SECTION 10. Determination of Just Compensation. —
SECTION 11. Responsibility for Valuation. — The process of valuation must involve agrarian reform beneficiaries and their organizations, the Barangay Agrarian Reform Committees, the landowner concerned, the Department of Agrarian Reform, and the Land Bank of the Philippines.
SECTION 12. Procedures for Valuation. —
Step |
Responsible Person Agency/Unit |
Activity |
Forms/Documents (Requirements) |
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1 |
LBP-LVLCO |
Receives and evaluates the CF for completeness, consistency and document sufficiency. Gathers additional valuation documents, if necessary. |
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2 |
LBP-LVLCO |
Determines land valuation based on valuation inputs |
Claim Valuation and Processing Form (CVPF) |
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3 |
LBP-LVLCO |
Prepares and sends Memo of Valuation, Claim Folder Profile, and Valuation Summary (MOV- CFPVS) to PARO. |
CARP Form No. 9 (Memorandum of Valuation and Claim Folder Profile and Valuation Summary |
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4 |
DARPO |
Receives LBP's MOV-CFPVS and ascertains completeness of the data and information therein. |
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5 |
DARPO |
Sends Notice of Land Valuation and Acquisition to LO by personal delivery with proof of service or 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. |
CARP Form No. 10 (Notice of Land Valuation and Acquisition) |
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6 |
DARPO |
Posts copy of the Notice of Land Valuation and Acquisition (NLVA) for at least seven (7) working days on the bulletin board of the provincial capitol, municipal and barangay halls where the property is located and issues a Certificate of Posting Compliance. |
CARP Form No. 11 (Certificate of Posting Compliance) |
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7 |
LO |
Replies to Notice of Land Valuation and Acquisition and submits documents required for payment of compensation claim |
CARP Form No. 10.a(LO's Reply to NLVA) |
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(If LO accepts, proceed to A) (If LO rejects, proceed to B) |
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A. Where LO accepts the Land Valuation |
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DARPO |
Upon receipt of LO's Letter of Acceptance, sends Memorandum to LBP to prepare Deed of Transfer and pay the LO. |
CARP Form No. 12 (Request to Pay) |
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9 |
LBP-LVLCO LBP-HO |
Prepares DOT for LO to execute and deposits compensation proceeds 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. |
CARP Form No. 13 (Deed of Transfer) |
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10 |
LO |
Executes DOT and submits payment requirements to LBP within seven (7) working days. |
CARP Form No. 13 (Deed of Transfer) |
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11 |
LBP |
Should the LO fail to submit the required documents within seven (7) working days from LBP receipt Compliance with of the DAR Request to Pay, notifies DAR of such failure by LO and also issues to DAR the Certification of Deposit. |
CARP Form No. 16 (Notice of LO's Non- Requirements) |
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12 |
LBP |
Upon completion of payment requirements within seven (7) working days, immediately prepares payment and issues to DAR Certification of Payment |
CARP Form No. 17(Certification of Payment) |
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13 |
Department of Agrarian Reform |
Requests ROD to transfer the Certificate of Title covering subject property in favor of RP; simultaneously forwards copy of Certification of Payment to DARMO with instructions to take over physical possession of the land. |
CARP Form No. 18 (Request to Issue TCT in favor of RP) |
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14 |
LBP |
Forwards DOT together with the owner's duplicate of title and ASP(if applicable) to ROD for registration |
CARP Form No. 13(Deed of Transfer), Certified copy of ASP and its technical description approved by DENR, if property is only partially covered by CARP. |
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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. |
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16 |
LBP-LVLCO LBP-HO |
Prepares payment release form upon LO's compliance with all the 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. |
LBP Payment Release Form |
B. Where LO Rejects the Land Valuation |
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8 |
DARPO |
If the LO rejects the offered price or fails to reply within thirty (30) days from receipt of the Notice of Land Valuation and Acquisition, forwards to LBP the Request to Deposit compensation proceeds in cash and in bonds in the name of the LO. |
CARP Form No. 10.a (LO's Reply to NLVA) CARP Form No. 15 (Request to Deposit) |
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DARPO |
Requests the DARAB/RARAD/ PARAD to conduct administrative proceedings, furnishing a copy each of the LO's Letter of Rejection, Notice of Land Valuation and Acquisition, and LBP's Memorandum of Valuation. |
CARP Form No. 14(Advice to DARAB/ RARAD/PARAD) |
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10 |
LBP-LVLCO LBP-HO |
Deposits compensation proceeds in the name of the LO and issues Certification of Deposit to DAR through the PARO, copy furnished the LO. |
CARP Form No. 17 (Certification of Deposit) |
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The entire deposit may be withdrawn by the LO; however, actual release of the same shall be subject to LO's submission of all requirements for payment and execution of Confirmation of Coverage and Transfer. |
CARP Form No. 17.a(Confirmation of Coverage and Transfer for Claims of Individual LOs - still pending with DARAB) |
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11 |
DARPO |
Upon receipt of the Certification of Deposit from LBP, transmits the same to Register of Deeds 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. |
CARP Form No. 18 (Request to Issue TCT in the Name of RP) |
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12 |
ROD |
Issues new TCT in the name of RP and forwards owner's duplicate certificate of title in the name of RP to PARO, and certified copy of the owner's duplicate of title to LBP-LVO, then proceeds with generation and registration of CLOA. |
New TCT in the name of RP and owner's duplicate copy of title in the name of RP |
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13 |
DARPO |
Forwards to DARMO certified copy of TCT in the name of RP with instructions to proceed with distribution of the same in favor of qualified ARBs. |
Certified copy of TCT in the name of RP |
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14 |
DARPO |
Upon receipt of the Finality of DARAB Order, requests LBP to pay LO in accordance with Certificate DARAB Decision; requests LBP to of prepare Confirmation of Coverage and Transfer for LO to accomplish. In case LO still rejects DARAB Decision, he may go to the Special Agrarian Court (SAC) for final determination of just compensation. |
CARP Form No. 17.c (Confirmation of Coverage & Transfer for Claims of Individual LOs- Already decided by DARAB CARP Form No. 17.d (Confirmation of Coverage & Transfer for Claims of Corporate LOs- already decided by DARAB) |
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15 |
LBP-LVLCO LBP-HO |
Prepares payment release form upon LO's compliance with all 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. |
LBP Payment Release Form |
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(b) In the case of DPS, the following procedures shall apply: |
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Step |
Responsible Person Agency/Unit |
Activity |
Actions/Documents (Requirements) |
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1 |
DARPO |
Notifies both LO and ARBs of the approval of the proposed DPS. |
DPS-DCF Form No. 05(Notice of Approval of DPS) or, |
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If DPS is disapproved, sends corresponding notice to LO and ARBs, specifying therein the reasons for disapproval, as well as the documents and/or activities required to facilitate approval. |
DPS-DCF Form No. 05-a (Notice of Disapproval of DPS) |
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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 resumed. |
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2 |
DARPO |
Reviews purchase price agreed upon in the MOU (DPS-DCF Form No. 04) and either approves or disapproves proposed DPS. |
DPS-DCF Form No. 05(Notice of Approval of DPS) or, DPS-DCF Form No. 05-a (Notice of Disapproval of DPS) |
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Should there be no agreement on purchase price, after three (3) months from the date of submission of the MOU, compulsory acquisition of subject landholding shall be immediately resumed. |
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3 |
DARPO |
Expedites survey activities and ensures that segregation/subdivision survey returns are completed and approved by the DENR-LMS pursuant to existing guidelines. |
Approved subdivision or segregation plan (ASP) with technical description. |
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4 |
LO |
Executes Deed of Transfer in favor of the ARBs, duly witnessed by PARO and MARO |
DPS-DCF Form No. 06 (Deed of Transfer) |
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5 |
DARPO |
Forwards DOT to ROD with request to generate title in favor of ARBs |
CARP Form. No. ___(Request to Generate CLOA in favor of ARBs) |
C. Compensation
SECTION 13. Manner of Payment. —
(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.
SECTION 14. Issuance of Proof of Payment. — For lands voluntarily offered or compulsorily acquired, the LBP shall issue the Certification of Deposit within fifteen (15) days upon receipt of the Request to Deposit from DAR, in case of non-acceptance by the LO of the valuation, but in no case to exceed ninety (90) days from the date of receipt of the LO of the Notice of Land Valuation and Acquisition.
In case of acceptance of the valuation, the LBP shall immediately issue the Certification of Payment, within seven (7) working days from execution of the DOT, but in no case to exceed sixty (60) days from the date of receipt of the LO of the Notice of Land Valuation and Acquisition.
With respect to payments under the DPS, the ARBs shall, upon effectivity of the MOA specified under Section 13(b) above, open an account in any government depository in the name of the landowner. All payments to the landowner shall be made through said account, and the corresponding deposit slips shall serve as proof of payment by the ARBs.
SECTION 15. Period of Payment of Land Amortization. —
(a) Land
(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.
(4) 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.
(5) 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.
SECTION 16. Monitoring of Payments. — For lands, voluntarily offered or compulsorily acquired, the LBP shall submit periodic reports to the DAR on the amortizations made by the ARBs.
For lands acquired under DPS, the ARBs shall furnish the DAR copies of their deposit slips representing payments made to the account of the LO. The DAR, through the MARO, shall keep a ledger to reflect said payments. The MARO shall submit quarterly reports of the payments to the PARO for monitoring and evaluation purposes.
D. Distribution
SECTION 17. Mode of Distribution. — 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 case the beneficiaries desire to partition the land, DAR shall first determine whether it is economically feasible and sound to divide the land, in coordination with the Department of Agriculture and other concerned agencies.
Thereafter, the beneficiaries may, by a 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 18. Generation of CLOAs. — 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 Republic of the Philippines.
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 19. Standing Crops. — The landowner shall retain his share of any standing crops unharvested at the time the DAR shall take possession of the land pursuant to Section 16 of R.A. 6657. The DAR, through the PARO, shall take possession of the land immediately upon the issuance of RP title therefor. Upon taking possession, the PARO and the MARO concerned shall inventory the unharvested standing crops, and shall give the landowner reasonable time to harvest the same.
SECTION 20. Registration of CLOAs and Installation of Beneficiaries. — CLOAs shall be registered immediately upon generation. The PARO shall install or cause the installation of the beneficiaries in the commercial farm within seven (7) days from registration of the CLOA.
SECTION 21. Model Farms. — Commercial farms designated as model farms pursuant to Section 7 of RA 8435, otherwise known as the "Agriculture and Fisheries Modernization Act of 1997", shall be acquired and distributed collectively to ensure economic scale production. The landowner shall be given the right of first refusal to enter into any appropriate alternative venture arrangement with the agrarian reform beneficiaries therein.
SECTION 22. Resolution of Disputes. — Any and all disputes arising from the acquisition, valuation and distribution of commercial farms shall be resolved in accordance with existing agrarian laws and regulations applicable on the matter. However, considering that the intent of the law is to immediately acquire and distribute these commercial farms, such disputes shall be accorded the highest priority and shall be expeditiously disposed of.
ARTICLE IV
Acquisition, Valuation, Compensation and Distribution of
Facilities and Improvements
SECTION 23. Coverage. — All infrastructure, facilities and improvements including buildings, roads, machinery, receptacles, and instruments or implements permanently attached to the land which are necessary and beneficial to the operation of the commercial farm shall be subject to acquisition, upon the written request to the DAR of a majority of all identified ARBs, following the procedures prescribed in Sec. 25 hereof.
SECTION 24. Mode of Acquisition. — As a general rule, acquisition of facilities and improvements shall be encouraged through the direct payment scheme.
SECTION 25. Procedures for Acquisition. — The following procedures for the acquisition of facilities and improvements shall be followed:
(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.
SECTION 26. Valuation. —
(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.
SECTION 27. Period of Payment by the ARBs. —
(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.
SECTION 28. Distribution. — 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 landholdings 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.
ARTICLE V
Operation and Management Schemes for Distributed
Commercial Farms
SECTION 29. Types of Agribusiness Venture Arrangements. — The qualified ARBs or their cooperative/association in distributed commercial farms may enter into any, but not limited, to the following agribusiness venture arrangements:
(a) Joint Venture Arrangement;
(b) Lease Arrangement;
(c) Contract Growing/Growership Arrangement;
(d) Management Contract; or
(e) Build-Operate-Transfer Scheme.
The qualified ARBs or their cooperative/association may also opt for a combination of two or more of the above schemes, or any other operation and management schemes they may choose in collaboration with the proposed investor. However, lease arrangement shall be the least preferred scheme.
SECTION 30. Essential Elements of Agribusiness Venture Arrangements. — The agribusiness venture arrangements shall contain the following minimum requirements:
(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
The agribusiness venture arrangement shall be for such period as may be mutually agreed upon by the contracting parties.
(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
Agribusiness venture agreements shall include provisions for mediation/conciliation and arbitration as a means of resolving disputes arising from the interpretation or enforcement thereof. Mediation/conciliation may be undertaken by duly trained DAR mediators or conciliators acceptable to both parties. Arbitration shall be conducted pursuant to RA 876 otherwise known as the "Philippine Arbitration Law." These alternative dispute resolution strategies shall first be availed of before the parties may seek judicial relief. The costs of arbitration shall be shouldered by the contracting parties.
Any and all disputes arising from the interpretation or implementation of agribusiness venture agreements involving commercial farms shall be considered as an agrarian dispute within the jurisdiction of the DAR.
(h) Effectivity
The agribusiness venture agreement shall take effect as stipulated by the parties, unless the DAR Secretary disapproves the same within 30 days from receipt of a copy of the agreement. Any of the contracting parties shall furnish a certified copy of the agreement to the Office of the Secretary within five (5) days from execution thereof, copy furnished the DAR regional office.
SECTION 31. Operation and Management of Facilities and Improvements. — Facilities and improvements subject of acquisition shall be owned collectively and the land where said facilities and improvements are found shall be considered as common areas. The facilities and improvements shall be operated and managed by a cooperative, association or corporation duly organized by the ARBs in whose favor the land was awarded.
SECTION 32. Monitoring and Evaluation. — The Office of Support Services at DAR Central Office shall institute a system of monitoring and evaluation of ongoing agribusiness venture arrangements. It shall ensure, through the appropriate field offices, that the terms and conditions of the agreement are faithfully complied with. Annual on-site evaluation of areas with existing AVAs shall be conducted by the OSS, and a report thereon submitted to the PARC Executive Committee, through the Office of the Undersecretary for Field Operations and Support Services.
SECTION 33. Transitory Period. —
(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.
ARTICLE VI
Final Provisions
SECTION 34. Repealing Clause. — The provisions of DAR Administrative Order No. 6, Series of 1998 and all other orders, circulars or issuances inconsistent herewith are hereby repealed or modified accordingly.
SECTION 35. Separability Clause. — In the event any of the provisions of this Order is declared unconstitutional, the validity of the other provisions shall not be affected by said declaration.
SECTION 36. Effectivity. — This Order shall take effect ten (10) days after publication in two (2) newspapers of general circulation.
Adopted: 23 Dec. 1998
(SGD.) HORACIO R. MORALES JR.
Secretary