October 10, 1994

DAR OPINION NO. 83-94

Director Lourdes T . Posadas

Auditor-in-Charge

National Development Company

Producers Bank Bldg.

317 Sen. Gil J. Puyat

Makati, Metro Manila

Dear Auditor Posadas:

We write in connection with the NDC agricultural lands at Inabaan Norte, Rosario, La Union (The Inabaan Plantations) and at AKLE, Sapang Bulak, DRT, Bulacan subject of your return endorsements to Ms. Ma. Guia V. Reverente of the NDC Assets Management Group dated 11 October 1993 and 27 January 1994, respectively. As gleaned from said endorsements, you hold the view that the divestment/disposal of said properties should be made strictly in accordance with COA Circular No. 89-296 dated 27 January 1989 which, in Section V thereof, lists down public auction and sale thru negotiation as the primary modes of disposal/divestment recognized by the Commission on Audit. In view of your position as expressed in said endorsements, our Municipal Agrarian Reform Officer at Santo Tomas, La Union and Ms. Reverente of NDC have requested DAR opinion regarding the transfer of subject properties to qualified beneficiaries pursuant to RA 6657 (Comprehensive Agrarian Reform Law or CARL) under the Voluntary Land Transfer/Direct Payment Scheme (VLT/DPS).

DAR submits that COA Circular No. 89-296 does not apply in the acquisition and distribution of subject lands to qualified beneficiaries pursuant to CARL, because the same covers disposal/divestment decided upon by the agency or unit head, whereas, the acquisition and distribution to qualified beneficiaries of lands owned by the government devoted to or suitable for agriculture is mandated by law, specifically, RA 6657 [Sec. 4(c) and Sec. 7 paragraph 2]. Agricultural lands identified as falling under CARL coverage, such as the lands under consideration are acquired and distributed pursuant to the provisions of RA 6657. Moreover, Section 20 of CARL allows landowners to enter into voluntary arrangements for the direct transfer of lands to qualified beneficiaries, while Section 21 provides that direct payment in cash or in kind may be made by the farmer-beneficiary to the landowner under terms to be mutually agreed upon by both parties, which shall be binding upon them, upon registration with and approval by the DAR. Furthermore, CARL outlines in Sec. 22 thereof the order of priority to be observed in the selection of qualified beneficiaries on the land, with the proviso that actual tenant-tillers in the landholding shall not be ejected or removed therefrom.

With specific reference to the 5.9369-hectare NDC property at Bulacan, since the occupants have opted to enter into a Voluntary Land Transfer/Direct Payment Scheme (VLT/DPS) agreement with NDC under Sections 20 and 21 of R.A. 6657, we believe that neither the rules on public auction nor sale thru negotiation are applicable. Please note that acquisition of the property is clearly mandated by law, and that VLT/DPS Agreement only refers to the mode by which the beneficiaries have chosen to pay the compensation on the land. Should said proposal not be accepted by NDC, the property will still be covered under CARL, but compensation shall be determined in accordance with the formula provided in DAR Administrative Order No. 6, Series of 1992. If NDC is not satisfied with the valuation of its property, a case may be filed questioning the same before the Provincial Adjudicator of Bulacan. Should NDC still not be satisfied with the decision of the DAR Adjudication Board, it may petition the Special Agrarian Court to resolve the issue of valuation.

As regards the 186-hectare portion of the Inabaan Plantations, MARO Rodulfo Galaraga reports that the same has been programmed for distribution pursuant to CARL; that the farmers in the area who are members of the Inabaan Norte Agricultural Multi-Purpose Cooperative, Inc. have opted to acquire the same thru the Voluntary Land Transfer/Direct Payment Scheme under Sections 20 and 21 of CARL; that 103 hectares of said area is planted to trees and is moderately suitable for crop production but highly suitable for tree-planting, while the rest (83 hectares) is described thus:

"Gently dipping plateau and summit scarp slope. Average relative height of about 200 meters, elongated slope length having varied slope steepness. The summit and gently dipping plateau is flat to undulating while scarp zone is above 18% slope. Moderately deep soils, often called infiltration zone. Sparsely vegetated with teak trees of about 5600 trees, 18 years old of age. Shrubs also visible and patches of rootcrops and vegetables is also planted on the early part of rainy season. It compromises of about 45% of the VLT area of 83 hectares. It is classified as moderate to marginally suitable for crop production. It is suitable for tree crop specially in the scarp zone being groomed by the cooperative to develop as water shade area."

The Soil Investigation Report prepared and submitted to DAR by the Office of the Provincial Agricultural Officer of La Union states that the terrace rice paddies of Lot 1 (portion) and Lot 2 of the Inabaan Plantation Farms are best suited for the planting of diversified crops while the hilly portion — Lot Nos. 3, 4 & 5 — is best suited as an orchard.

As for NDC, Ms. Reverente states in her letter to DAR that the LBP declined to finance the acquisition allegedly due to its non-productivity and rolling and hilly terrain; that the members of the Inabaan Multi-Purpose Cooperative who are the identified beneficiaries thereof have offered to purchase the property through the Direct Payment Scheme under Section 21 of CARL; and that the NDC Board has approved the transfer of the property under said scheme.

The members of the Cooperative, in Resolution No. 4 dated 27 June 1994, have requested DAR assistance relative to the acquisition and distribution to them under CARL of said property and have expressed their willingness to be beneficiaries thereof and to develop the same.

As said 186-hectare land is agricultural, and the Cooperative has manifested its desire to acquire the same under the Voluntary Land Transfer/Direct Payment Scheme of CARL, said acquisition and distribution shall be undertaken. As in the Bulacan property, however, NDC and the Cooperative may enter into an agreement on the mode of payment for the property, failing which, an alternative mode of compensation shall be arranged.

We hope that we have clarified matters relative to the CARP coverage of the aforementioned properties.

Very truly yours,

(SGD.) HECTOR D. SOLIMAN
Assistant Secretary
Legal Affairs Office

Copy furnished:

Ms. Ma. Guia Reverente

Manager

Asset Management Group

National Development Company

Producers Bank Bldg.

371 Sen. Gil J. Puyat Ave.

Makati, Metro Manila

USEC Renato Padilla

DARCO

The Regional Director

DAR, San Fernando

La Union

PARO Renato Flores

DAR, San Fernando

La Union

MARO Rodulfo Galaraga

DAR, Sto. Tomas

La Union

Mr. Alejandro P. Rivera, Sr.

Chairman

Inabaan Norte Agricultural

Multi-Purpose Cooperative, Inc.

Rosario, La Union