February 11, 1999

DAR OPINION NO. 13-99

MEMORANDUM REPORT

FOR             :       HORACIO R. MORALES, JR.
                           Secretary

THRU          :        DANILO T. LARA
                           Undersecretary for Legal Affairs
                           and Policy and Planning
                           WILFREDO M. PEÑAFLOR
                           Assistant Secretary
                           Legal Affairs Office

SUBJECT    :      Status of CARP Covered Properties Subject of Acquisition by the Cagayan Economic
                          Zone Authority (CEZA) Pursuant to R.A. No. 7922, Otherwise Known as the
                          "Cagayan Special Economic Zone Act of 1995".

This refers to the ocular inspection/investigation conducted on the 800-hectare landholding project of CEZA, portions of which are CARP covered and are still due for coverage (196 hectares) located at Sta. Ana, Cagayan.

The investigation was conducted in view of the request of Atty. Rodolfo O. Reyes, Administrator and CEO of CEZA for a dialogue with the Secretary, to tackle matters regarding the status of operations in the Sta. Ana Regional Agri-Industrial Growth Center (SARAIGC).

It was observed that in the proposed site, there were no visible developments whatsoever and that the agricultural condition of the subject landholdings is still maintained. Likewise, the farmer beneficiaries are still in place. Per our inquiry with PARO Araceli Follante, there are about 127 hectares which are subjected to Compulsory Acquisition with Notice of Coverage, 50 hectares are under Voluntary Offer to Sell (VOS) and 9.3 hectares are GFI lands. These are mostly cultivated as pineapple plantations. Their claimfolders are now pending with the MARO Office of Sta. Ana, Cagayan.

Per the PARO's recommendations and report, those estates with approved final survey where Certificates of Landownership Award (CLOAs) had been generated, registered and issued will be cancelled before the DARAB provided, however, that the disturbance compensation must be paid to the farmer occupants thereon pursuant to R.A. No. 3844, as amended; that as far as the landowners are concerned, they interpose no objection to the coverage of their lands provided they are properly compensated; and that the DAR reserves the right to cover portions of the SARAIGC if within three (3) years from the issuance of the Order of Conversion, there is no development yet over the area.

We believe that while the DAR recognizes that land use conversion is necessary, there are those productive agricultural lands that must be preserved exclusively for agricultural purposes. In the case of the subject CEZA project site, we submit that those portions which are found to be irrigated shall not be eligible for conversion.

DAR Administrative Order No. 7, Series of 1997 in relation with Presidential Administrative Order No. 363, Series of 1997 provides, quote:

"VI.      Policies and Guidelines

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3.         The following areas shall not be subject to or non-negotiable for conversion:

a)         Protected areas designated under the National Integrated Protected Areas (NIPAS), including, watershed and recharged areas of aquifers, as determined by the Department of Environment and Natural Resources (DENR), pursuant to RA 7586 (1992);

b)         All irrigated lands, as delineated by the Department of Agriculture (DA), and/or the National Irrigation Authority (NIA) under the Network of Protected Areas for Agriculture, where water is available to support rice and other crop production, and all irrigated lands where water is not available for rice and other crop production but are within areas programmed for irrigation facility rehabilitation by the DA and the NIA, pursuant to Presidential Administrative Order No. 20 (1992);

For this purpose; the Network of Protected Areas for Agriculture (as of 1991), as determined by the DA and/or NIA shall serve as guide in determining non-negotiable areas.

c)         All irrigable lands already covered by irrigation projects with firm funding commitments, as delineated by the DA and/or NIA; and

d)         All agricultural lands with irrigation facilities operated by private organizations.

In all cases, applications for conversion involving lands protected from and non-negotiable for conversion shall not be given due course. (emphasis supplied)

4.         The following areas shall be classified as highly restricted from conversion:

a)         Lands classified as Highly Restricted from Conversion' in the Network of Protected Areas for Agriculture as delineated by the DA, as follows:

a.1.      Irrigable lands without irrigation projects with firm funding commitments;

a.2.      Agro-industrial croplands, or lands presently planted to industrial crops that support the economic viability of existing agricultural infrastructure and agro-based enterprises; and

a.3       Highlands, or areas located in elevations of 500 meters or above and have the potential for growing semi-temperate and usually high value crops.

b)         Lands issued a Notice of Acquisition/Valuation under the agrarian reform program or subject of a perfected agreement between the landowner and the beneficiaries under the Voluntary Land Transfer (VLT) or Direct Payment Scheme (DPS) under CARP;

c)         Areas identified as environmentally critical as determined by the DENR, pursuant to PD 1586 (1978) and its implementing rules and regulations.

Lands falling under this classification may only be converted upon compliance with existing laws and submission of the following:

a)         Social Benefit-Cost Analysis approved by the DA; and

b)         Environmental Impact Assessment (EIA) and/or Environmental Clearance Certificate (ECC) for lands falling under 4.c) above.

Conversion of priority areas under Executive Order No. 124 (1993), as identified below, and under the PEZA Law, may be allowed and given priority provided these areas do not fall within the areas non-negotiable for conversion. (emphasis supplied):

a)         Specific sites in regional agri-industrial centers/regional industrial centers (RAICs/RICs) identified by the Department of Trade and Industry (DTI) and the Department of Agriculture (DA);

xxx                      xxx                      xxx"

The abovecited provisions stemmed from the principle that prime agricultural lands should rightfully be considered a finite natural resource, further depletion of which would threaten national food security. Thus, the CEZA project site shall be subject to the aforecited provisions of law.

As regards, however, to the farmer beneficiaries affected and whose landholdings fall outside those highly restricted from conversion or non-negotiable for conversion, they must first be paid disturbance compensation which should not be less than five (5) times the average of the annual gross value of the harvest on their actual landholdings during the last five (5) preceding calendar years. In addition thereto, the DAR shall exert efforts to see to it that free homelots and assured employment are provided by the applicant/developer.

Finally, it must be noted that per DAR Memorandum Circular No. 1, Series of 1999, the issuance of land use conversion clearances and certifications shall be temporarily suspended pursuant to the Office of the President Memorandum dated 28 December 1998 until such time that the DAR issues its new/revised rules and regulations on land conversion.

Respectfully submitted:

(SGD.) FLORENCE A. ADOLFO

Attorney II

(SGD.) AVELINO M. ABIOG, JR.
Attorney II

NOTED BY:

(SGD.) ATTY. RUBEN B. ALBAN

Chief, LRSD

(SGD.) RUBEN JOEL A. PUERTOLLANO

Director, BALA