September 29, 2000
DAR OPINION NO. 23-00
Ms. Hortensia L. Starke
President
Hortensia Laguda, Inc.
#33 Mt. Caraballo Street
Fairmount Hills Subdivision
Antipolo, Rizal
Dear Ms. Starke:
This refers to your letter signifying your intention to avail of the Profit Sharing and Joint Venture Scheme of CARP (Comprehensive Agrarian Reform Program) involving the 169.3714-hectare Hacienda Bino in Kabankalan, Negros Occidental and the 355-hectare rubber lands in Makilala and Kidapawan, North Cotabato. Specifically, the two (2) aspects of the scheme that you intend to carry out are the following:
1. 10% of agricultural land shall be given to the CARP beneficiaries in equal proportion; and
2. 10% of the shares of stocks shall be given in a new corporation that will be organized to include the landowner, Hortensia Laguda, Inc., the worker-beneficiaries, and a third investor-financier party
You state that Hacienda Bino was sent notices of coverage under CARP on March 20, 1998 and June 17, 1998; that CLOAs have been issued to 59 workers for the 129.6738 hectares and another CLOA will be issued for the remaining 39.6976 hectares; that it was already reclassified as non-agricultural by an Ordinance duly approved and signed by the Sangguniang Panglungsod and the Mayor of Kabankalan City on February 1998; that inspite of the Ordinance, the DAR still proceeded to cover the same and issued CLOAs on March 1998 for the reason that you have not applied for conversion, but in truth and in fact your application for conversion was returned to you by the DAR Regional Director of Iloilo as it was sent in too late; that you want now to avail of the said option similar to the one adopted by Mr. Eduardo Cojuangco which you believe will benefit CARP beneficiaries and the Philippine economy as well; that it is now your plan not to go into agriculture because of the non-agricultural classification of your hacienda by the Municipality of Kabankalan; and that out of the 136 beneficiaries, 77 are very much interested in a joint venture with the landowner into non-agricultural land uses.
As regards the 355 hectares of rubber lands in Makilala and Kidapawan, North Cotabato, you wish to go on a joint venture agreement with a Malaysian Company which will provide all the financing for land development, maintenance, harvesting, processing, research, management and export of the high value fruits for a period to be agreed upon but not less than 30 years. Likewise, the CARP beneficiaries and their children will have priority in employment in the new company without cost to them.
Anent the first aspect of the scheme, we are not in accord with your proposal to give merely 10% of agricultural lands to the CARP beneficiaries as this is not in conformity with the provisions of R.A. No. 6657 (the Comprehensive Agrarian Reform Law or CARL). What the law mandates under said Act is that the DAR, being the lead implementing agency in agrarian reform, shall acquire and redistribute to qualified farmer-beneficiaries all agricultural lands falling outside the 5-hectare retention of landowners. In this regard, since Hortensia Laguda, Inc. is a corporation, it is entitled to a retention limit of only five (5) hectares and the rest shall be distributed to qualified farmer-beneficiaries.
As regards the second aspect of the scheme in relation with the first, it appears that there is an intention to transfer ownership of the land from the agrarian beneficiaries (who are already owners by reason of the issuance of the CLOAs) to the new corporation that will be organized, or to retain ownership of the land with the previously deemed landowner, Hortensia Lagunda, Inc. The Comprehensive Agrarian Reform Law (CARL), Section 27 thereof, explicitly prohibits the transfer of an awarded land or a portion thereof within ten (10) years from award except through hereditary succession or to the government or to the Land Bank of the Philippines or to other qualified beneficiaries. The provisions of Executive Order No. 228, dated 17 July 1987 and DAR Administrative Order No. 08, Series of 1995, when taken together, provide that ownership of lands acquired by a farmer-beneficiary may be transferred after full payment of the amortizations, provided the following shall be observed:
a) that the productivity of the land shall be maintained;
b) that the buyer will not exceed the aggregate landownership ceiling provided by law; and
c) that the ownership ceiling of five (5) hectares shall be imposed.
It is clear therefore that it is not possible to transfer the awarded lands to the Joint Venture Corporation because of the attendant or eventual non-observance, in effect, of the prohibitions and conditions provided for under the provisions of R.A. No. 6657 and A.O. No. 8, Series of 1995. If and when after the lapse of the ten-year prohibitory period laid down in Section 27 of R.A. No. 6657 the beneficiaries decide to transfer their awarded lands, the 5-hectare landownership ceiling shall still be imposed upon the transferee. Moreover, any change in the nature of the awarded lands' use shall not be allowed except with the approval of the DAR under its rules on conversion or exemption.
Very truly yours,
(SGD.) FEDERICO A. POBLETE
Undersecretary for Legal Affairs, and Policy and Planning
Copy furnished:
Antoinette R. Raquiza
Head Executive Assistant
This Department