November 10, 1999
DAR OPINION NO. 74-99
Mr. ANTHONY B. SASIN
Chairman-Excom
Pilipino Banana Growers
& Exporters Association, Inc.
145 Rizal Street, Davao City
Dear Mr. Sasin:
This refers to your letter dated 07 October 1998 concerning area allocations for banana plantations under LOI 790 endorsed to this Department by Director C.O. Angeles, Legal Services Department, Board of Investments (BOI), by a letter dated 19 February 1999.
Specifically, you are inquiring on the following concerns, to wit:
1. What is the effect of the change to LOI 790?
2. Who now holds the area allocation? If the BOI registered company still holds the allocation, can it develop the other areas to cover the areas that have already been transferred to beneficiaries?
3. Does the full implementation of CARL now render LOI 790 moot and academic?
Under existing laws (Section 11 of Republic Act No. 6657, as amended by Section 3 of R.A. No. 7881), commercial farms shall be subject to immediate compulsory acquisition and distribution after ten (10) years from effectivity of the Comprehensive Agrarian Reform Law (CARL). Meanwhile, the Government (DAR) shall initiate steps necessary to acquire said lands and, upon payment of just compensation for the land and the improvements thereon, distribute them preferably in favor of organized cooperatives or associations which shall thereafter manage the said lands for the worker-beneficiaries. For new farms, the landowners were allowed the chance to recover their investments and insulate them from possible disruptions in operations and productivity by prescribing that the ten-year deferment period shall be made to commence only on their first year of commercial production and operation.
Nevertheless, all commercial farms whose deferment expired as of June 15, 1998, shall be subject to immediate acquisition and distribution under CARP pursuant to the aforecited laws and DAR Administrative Order No. 09, Series of 1998, Rules and Regulations on the Acquisition, Valuation, Compensation and Distribution of Deferred Commercial Farms.
Thus, since LOI No. 790, which allows the development of additional banana plantation areas over the total acreage previously authorized under E.O. No. 58 is not inconsistent with the aforecited Section 11 of Republic Act No. 6657, as amended, it remains in full force and effect. The only perceived possible effect, by the coverage of commercial farms (devoted to banana plantation) pursuant to the Comprehensive Agrarian Reform Program (CARP) whose deferment had expired, is the mandated change in their ownership and management as adverted to above.
Be it that as it may, a BOI registered company may still hold on to the area allocation under LOI 790 where the qualified agrarian reform beneficiaries (ARBs) or their cooperative/association will enter into an agribusiness venture arrangement (e.g., Joint Venture Agreement, Lease Arrangement and Management Contract) with the company as provided for under Section 29 of DAR Administrative Order No. 9, Series of 1998.
In fine, LOI 790 was not repealed by Republic Act No. 6657. It was only modified to some extent as discussed and explained above.
We hope to have clarified the matters with you.
Very truly yours,
(SGD.) FEDERICO A. POBLETE
Undersecretary for Legal Affairs, and Policy and Planning
Copy furnished:
C.O. Angeles
Director, Legal Services Department
Board of Investments
385 Gil J. Puyat Avenue
Makati City