March 10, 1998
DAR OPINION NO. 34-98
FREDERICK GOMENDOZA
President
Gromix Poultry Farm
892 8th Avenue West, Grace Park
Caloocan City
Dear Mr. Gomendoza:
This refers to your letter dated 17 February 1998 seeking for legal opinion regarding the exemption of the two (2) properties owned by Gromix Poultry Farm situated at Barrio Batya, Bocaue, Bulacan.
You state that Planters Development Bank required you to secure exemption clearance from the Department of Agrarian Reform to prove that the two properties you owned are not covered by the Comprehensive Agrarian Reform Program (CARP), to wit: TCT No. T-310381(m) with an area of 13,978 square meters and TCT No. T-300262 (m) with an area of 7,0001 square meters with a total area of 20,979 square meters; that said properties are the only landholdings you own and the same have not exceeded the five (5) hectare retention limit under R.A. No. 6657; that it is your belief the subject properties are exempt from CARP coverage; and that as a condition the bank requires you to obtain an exemption clearance or a legal opinion from the DAR to secure the mortgaged collateral.
Section 6 of R.A. No. 6657 (Comprehensive Agrarian Reform Law) expressly provides: "except as otherwise provided in this Act, no person may own or retain, directly or indirectly, any public or private agricultural land . . . but in no case shall retention by the landowner exceed five (5) hectares". Corollarily, although the aggregate area of the subject landholdings does not exceed the maximum ceiling of five (5) hectares, landowners are still mandated to file an application for retention with the DAR Office having jurisdiction over their landholdings for the purpose of issuance of a Certificate of Retention. This is pursuant to DAR Administrative Order No. 11, Series of 1990 which requires that landowners must execute an affidavit as to the aggregate area of their landholdings to prevent possible circumvention of R.A. No. 6657.
On the other hand, concerning the allegation that the parcels of land are devoted to piggery although under the Tax Declaration of Real Property they are classified as agricultural, DAR Administrative Order No. 9, Series of 1993 qualifies that only private agricultural lands or portions thereof exclusively, directly and actually used for livestock, poultry and swine raising as of 15 June 1988 (effectivity of the R.A. No. 6657) shall be excluded from the coverage of the CARP. Thereafter, any act of the landowner to change or convert his agricultural land to livestock, poultry and swine raising after 15 June 1988, with intent to avoid the application of R.A. No. 6657 to his landholdings, shall be considered invalid and illegal and shall not effect the coverage of his landholding under CARP. The abovementioned pronouncement is in line with the Supreme Court decision in the case of "Luz Farms vs. Honorable Secretary of the DAR" (G.R. No. 86889, 04 December 1990) which excludes live stock, poultry and swine raising from CARP coverage on the ground that these activities are no longer agricultural. In this regard, an application for exemption shall be filed and must be duly approved by DAR pursuant to the aforesaid guideline before the subject landholdings could be legally considered as exempt from CARP coverage.
From the foregoing, an application for retention or a petition for exemption may be filed as might be warranted under the factual conditions and actual use or classification of the landholdings in issue.
Finally, it is worth noting here that pursuant to Section 71 of R.A. No. 6657, it provides that "banks and other financial institutions allowed by law to hold mortgage rights or security Interests in agricultural lands to secure loans and other obligations of borrowers, may acquire titles to these mortgaged properties, regardless of area, subject to existing laws on compulsory transfer of foreclosed assets and acquisition as prescribed under Section 16 of this Act.
We hope to have clarified the matter with you.
Very truly yours,
(SGD.) ARTEMIO A. ADASA, JR.
Undersecretary for Legal Affairs, and Policy and Planning
Copy furnished:
Atty. Raymundo Santos Senga
Vice-President
Planters Development Bank
314 Sen. Gil Puyat Avenue
Makati City