April 23, 1998

DAR OPINION NO. 52-98

ROMULO DEIPARINE

21 Molave St.

Lahug, Cebu City

Dear Mr. Deiparine:

This has reference to your letter addressed to the DAR Secretary dated 28 November 1995 through Atty. Jose C. Llames, then Regional Director of DAR Region VII, which was indorsed subsequently to DAR Central Office seeking opinion on whether labor administration or profit sharing arrangement is legally feasible as an alternative tenurial option in lieu of physical land distribution.

You state that you are the owner of a 197.3698 hectare coconut land, situated at Toledo City; and that to preclude physical distribution of the subject landholdings to qualified farmer-beneficiaries, you presented several proposals as alternative options which according to you are acceptable to them. As per Provincial Agrarian Reform Office Status Report dated 10 January 1996, however, said landholdings have already been covered and issued CLOAs in favor of qualified farmer-beneficiaries thereat, or with LBP land valuation, while other portions are undergoing compulsory acquisition processing pursuant to R.A. No. 6657.

Section 6 of R.A. No. 6657 is very explicit in providing that: "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. Three (3) hectares may be awarded to each child of the landowner, subject to the following qualifications: 1) that he is at least fifteen (15) years age; and 2) that he is actually tilling the land or directly managing the farm". The abovementioned provision together with other pertinent provisions of R.A. No. 6657 (e.g., Section 73(a)) clearly restrict and limit the retention area and landownership ceiling of agricultural lands to only five (5) hectares without providing any alternative option to prevent actual land transfer and distribution thereof to qualified farmer-beneficiaries. In other words, labor administration cannot be resorted to as a subterfuge to spare a CARP covered property from distribution. The express provision of law directing the acquisition and distribution of agricultural lands in excess of the retention area cannot be subordinated to nor rendered nugatory by any agreement purportedly to be entered into by and between the landowner on one hand and the farmer-beneficiaries on the other hand, because the same constitutes circumvention of the Program and is not sanctioned in this jurisdiction. The law mandates the acquisition of agricultural lands to effect a more equitable distribution and ownership thereof, with due regard to the rights of landowners to just compensation and to the ecological needs of the nation, in order to provide farmers and farmworkers with the opportunity to enhance their dignity and improve the quality of their lives through greater productivity of the agricultural lands they till.

On the issue of production and profit sharing arrangement as an alternative option to land distribution, the same may no longer be availed of at this time. Section 13 of R.A. No. 6657 expressly provides that "any enterprise adopting the scheme provided in Section 32 or operating under a production venture, lease, management contract or other similar arrangement and any farm covered by Section 8 and 11 hereof is hereby mandated to execute within ninety (90) days from the effectivity of this Act, a production-sharing plan, under guidelines prescribed by the appropriate government agency". Thus, the law clearly mandates the execution of a production sharing plan within ninety (90) days from the effectivity of R.A. No. 6657 (i.e., 15 June 1988). This time frame is likewise reiterated in DAR Administrative Order No. 08, Series of 1988 (copy attached) to underscore said provision of law. Considering the considerable passage of time that has already elapsed from the effectivity of R.A. No. 6657, a belated proposal of profit sharing arrangement is no longer feasible at this time. Besides, production and profit sharing is merely a transitory arrangement/period pending eventual final land transfer of the land to farmer beneficiaries (Section 32, R.A. No. 6657)

Thank you and we hope to have clarified the matters with you.

Very truly yours,

(SGD.) ARTEMIO A. ADASA, JR.

Undersecretary for Legal Affairs, and Policy and Planning

Copy furnished:

Regional Director

DAR Region VII

COACO Bldg. Cuenco Avenue

Mabolo, Cebu City

The Provincial Agrarian Reform Officer

Cebu City

The Municipal Agrarian Reform Officer

Toledo City