EXEMPTION (FISHPOND)

I.  INTRODUCTION

        This template is a guide for cases in relation to an application for exemption of lands actually, directly, and exclusively used for prawn farms and fishponds as of March 12, 1995.

II.  CHECKLIST OF DOCUMENTARY REQUIREMENTS

        Under A.O. 3, Series of 1995, the following documents, attached as Annexes to the said Administrative Order, are required to prove exemption:

[  ]   Excl. Form No. 3, Report of Findings and Recommendations — This contains the recommendation of the PARO and MARO on whether or not the application should be approved or disapproved.

/           However, this recommendation should not be accepted in isolation of other evidence. This should be considered as secondary evidence.

[  ]  Certified true copy of the business permit issued by the concerned agency (the BFAR) OR proof of ownership of fishpond or prawn farm as of 12 March 1995.

[  ]  Certified true copies of tax returns (Individual or Corporate, whichever applies) covering the three (3) calendar years immediately preceding 8 March 1995.

[  ]  Financial audited statements audited by a certified public accountant,covering the three (3) calendar years immediately preceding 8 March 1995.

[  ]  Certified true copy of the Certificate of Registration issued by the SEC if applicant is a corporation — issued as of 12 March 1995.

[  ]  Location plan or vicinity map of the property and indicate the area used as a fishpond.

[  ]  Sketch plan of the area.

[  ]  Profit incentive plan.

        For lands which have not been distributed and Certificate of Land Ownership Award (CLOA) has not yet been issued.

        For lands wherein no CLOA has been issued but the land has already been subjected to the CARL by Voluntary Offer to Sell (VOS) or are under the Commercial Farm Deferment (CFD) or for which Notices of Land Acquisition (NOA) have already been issued under the Compulsory Acquisition Scheme.

[  ]  Look at the OCI Report. It must contain statements on whether the property has been subject to VOS, CFD, or has already been covered by an NOA.

If the land has already been subjected to VOS, CFD, or an NOA has been issued, it can only be exempted if there is consent of a simple and absolute majority of the actual regular workers or tenants within one (1) year from 12 March 1995.

[  ]  Proof of Consent: Exc. Form No. 5, Exclusion Transmittal Memo and Proof of Consent (showing signatures of actual regular workers or tenants)

/           Make sure that the tenants/actual regular workers who signed are the same as those whose names appear on the OCI Report (Excl. Form No. 2) and on the Profit Incentive Plan submitted by the landowner as part of his application.

III.  JURISDICTION

1.  Exemption on the ground that the land is actually, directly, and exclusively used for prawn farms/fishponds is an ALI case. The Regional Director shall be the first deciding authority.

2.  Appeals from the decision of the Regional Director will be before the Secretary, who has the exclusive prerogative over the case.

IV.  STANDING

        The following persons can file the application for exemption:

a.  The landowner/s; OR

b.  The authorized representative of the landowner/s.

V.  TIMELINESS

1.  If a Notice of Coverage has not yet been issued, the Application for Exemption can be filed any time.

2.  If filed prior to 31 October 2009: Under  Memorandum Circular No. 10, series of 2004 (Clarificatory Guidelines on Non-acceptance of Application for Exemption, Exclusion, Protest, Opposition, or Petition for Lifting of CARP Coverage), if a Notice of Coverage has already been issued, the Application for Exemption must be filed within the 60-day period from receipt of Notice of Coverage.

3.  If filed on or after 31 October 2009: Under Paragraph 14 of Part IV. A. of A.O. No. 2, Series of 2009, the landowner has thirty (30) days from receipt or date of Notice of Coverage to Apply for Exemption.

VI.  DECISION

        (Basis: Administrative Order No. 03, series of 1995 and R.A. No. 6657, as amended)

        Approve only if the following elements exist as of 12 March 1995:

1.  The landholding is actually, directly, and exclusively used for prawn farms and fishponds, AND

2.  It has/have not been distributed to the farmer beneficiaries and Certificate of Land Ownership Award (CLOA) have not yet been issued.

        CONTENTIOUS ISSUES

1.  Should the land be exempted if it was ADE used for prawn farms and fishponds as of 12 March 1995 but the CLOA was issued only after 12 March 1995?

        Yes, but subject to the Rules on the Indefeasibility of Titles. Although lands devoted to prawn farms or fishponds which have already been distributed to ARBs with the corresponding CLOAs issued, being a consummated transaction, shall no longer be exempt from coverage under the CARP — the CLOAs should be distributed as of the time of 12 March 1995 for it not to be exempted.  However, this Rule is not absolute. The Rules on Cancellation states that CLOAs shall be deemed indefeasible after a lapse of one year.

2.  No. Lands devoted to prawn farms or fishponds which have already been distributed to ARBs with the corresponding CLOAs issued, being a consummated transaction, shall no longer be exempt from coverage under the CARP (IIB, Administrative Order No. 03, Rules and Regulations Governing the Exemption/Exclusion of Fishpond and Prawn Farms from the Coverage of the Comprehensive Agrarian Reform Law [CARL], Pursuant to Republic Act No. 6657, as amended by Republic Act No. 7881)

3.  If the land is not entirely ADE used for prawn farms/fish ponds, what should the Order of Exemption cover? An exemption of the entire land or only the one devoted to prawn farms/fish ponds?

        Only the portion devoted to prawn farms/fish ponds are to be exempted. Again, it is useful to apply the principles observed in tax exemption cases. It must be noted that the law allows for the exemption of lands devoted to prawn farms/fishponds because of the assumption that these lands can no longer be devoted for agricultural purposes. The classification of the land or the nature of the business of the owner is not the vital element on which the Application must rest. It is the fact that the land is actually, directly, and exclusively used for prawn farms/fish ponds. Hence, if parts of the land are not devoted for the purpose, this should not be included in the area to be exempted. The DAR forms, particularly the Investigation Report, even requires an indication of the actual area devoted for fishponds/prawn farms.

        Lung Center vs. QC, cited above states: Unfortunately, the Lung Center of the Philippines failed to prove that the entirety of its real property is actually, directly, and exclusively used for charitable purposes. A part of the hospital is being used for the treatment of patients, but a relative portion is being leased to private individuals for their clinics and canteen and by the Elliptical Orchids and Garden Center. "Accordingly, we hold that the portions of the land leased to private entities as well as those parts of the hospital leased to private individuals are not exempt from such taxes. On the other hand, the portions of the land occupied by the hospital and portions of the hospital used for its patients, whether paying or non-paying are exempt from real property taxes."

VII.  APPEALS

1.  Appeal with the Regional Director (Paragraph 5, AO 3 series 1995, referring to AO 9 series 1994)

A.  When to Appeal

•   A Memorandum of Appeal shall be filed within 15 days from receipt of Order and payment of filing fee.

•   Motion for Reconsideration must be filed within 15 days from receipt of decision.

B.  Where to Appeal

•   Appeal shall be filed with the Regional Director

2.  Pauper litigants are exempted from appeal fee.

VIII.  APPLICABLE PRINCIPLES, LAWS, RULES, POLICIES, JURISPRUDENCE

1.  LEGAL PROVISIONS

        Section 10, par. b of Republic Act 9700

(b)  Private lands actually, directly and exclusively used for prawn farms and fishponds shall be exempt from the coverage of this Act: Provided, That said prawn farms and fishponds have not been distributed and Certificates of Land Ownership Award (CLOA)s issued under the Agrarian Reform Program.

        In cases where the fishponds or prawn farms have been subjected to the Comprehensive Agrarian Reform Law, by voluntary offer to sell, or commercial farms deferment or notices of compulsory acquisition, a simple and absolute majority of the actual regular workers or tenants must consent to the exemption within one (1) year from the effectivity of this Act. When the workers or tenants do not agree to this exemption, the fishponds or prawn farms shall be distributed collectively to the worker-beneficiaries or tenants who shall form a cooperative or association to manage the same.

        In cases where the fishponds or prawn farms have not been subjected to the Comprehensive Agrarian Reform Law, the consent of the farmworkers shall no longer be necessary; however, the provision of Section 32-A hereof on incentives shall apply.

2.  IMPLEMENTING RULES AND REGULATIONS

        Administrative Order No. 03, series of 1995: Rules and Regulations Governing the Exemption/Exclusion of Fishpond and Prawn Farms from the Coverage of the Comprehensive Agrarian Reform Law (CARL), Pursuant to Republic Act No. 6657, as amended by Republic Act No. 7881.

3.  JURISPRUDENCE

        Lung Center of the Philippines vs. Quezon City, et al., G.R. No. 144104, 29 June 2004:

        What is meant by actual, direct and exclusive use of the property for charitable purposes is the direct, immediate, and actual application of the property itself to the purposes for which the charitable institution is organized.