August 1, 1996

DAR OPINION NO. 62-96

Memorandum

FOR             :     JAIME ARISTOTLE B. ALIP
                                Asst. Secretary for Support Services

SUBJECT    :     Request for Opinion Re Lease of CARP Lands

This refers to your request for legal opinion on the provisions of the draft Administrative Order re Implementing Guidelines on Agribusiness Investment and Marketing Arrangements in Agrarian Reform Areas and Settlements per R.A. 6657, as amended by R.A. 7905.

You state that the proposed guidelines shall be applicable to both foreign and local investors wishing to engage in agricultural production and processing. Your specific query is on the period of the agricultural land lease if so allowed under CARP. We understand that the Malaysian investors who attended the 3rd RP-Malaysia Joint Commission meeting requested that the lease period be extended beyond 50 years.

The pertinent provision is found in Section 4 of R.A. No. 7652 entitled "An Act allowing the Long Term Lease of Private Lands by Foreign Investors", to wit:

"Sec. 4(1)      No lease contract shall be for a period exceeding fifty (50) years, renewable once for a period of not more than twenty-five (25) years."

Under the aforequouted provision, it is clear that the maximum period for the initial contract is 50 years, with a maximum renewal period of 25 years. This means that the initial lease contract cannot cover a period exceeding 50 years. The parties are, however, allowed, by law to agree on a renewal period of not more than 25 years. Moreover, with specific reference to CARP lands, it is submitted that the DAR is vested with jurisdiction to review the lease agreements, taking into consideration the interest of the beneficiaries. In this connection, we advise that subject draft guidelines be referred to the Guidelines Drafting Committee thru the Policy and Strategic Research Service, Attn.: Mr. Nicanor Gabasa, for deliberation.

As regards your request for a point person on matters requiring legal opinion and legal research, the Legal Section of the Legislative Research and Statistics Division of the Bureau of Agrarian Legal Assistance will be glad to render the necessary assistance.

Very truly yours,

(SGD.) LORENZO R. REYES

OIC-Undersecretary
LAFMA