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AGR ARIAN R EFOR M LAW AND JURISPR UDENC E (A DAR-UNDP SAR DIC PUBL ICATION

AGRARIAN LAW AND JURISPRUDENCE

PR EFACE

This book has inauspicious beginnings. The original intent of the UNDP-SARDIC project, which eventually borethis book, was to map out special areas for policy reform in agrarian reform law. But as the project team delveddeeper into the subject, the long unaddressed need for an organized and systematic presentation of agrarian law andexisting jurisprudence was again put to fore. In response to that problem, the project team and the UNDP-SARDICproject decided to widen the scope of the project and, thus, what came of it was not only a map of the difficultproblem areas in the law's implementation but also this book. TcHCDI

Any foray into the complicated, and often contentious, arena that is agrarian reform law necessitates a completeand well-grounded grasp of the basics. If anything, our study revealed that, even after decades, agrarian reform lawremains vastly misunderstood and under-appreciated not only by stakeholders but by agrarian reform lawimplementors themselves.

This is largely due to the dearth of materials on the matter. Over the years, laws and their implementing ruleshave been refined and promulgated to reflect the lessons learned and the changing times. Simultaneously, theSupreme Court issued rulings that elucidate and interpret the law, as well as repudiate portions thereof. The rightsand obligationsof the different stakeholders have been constantly redefined and readjusted.

Despite these exciting developments, however, there has been little done to mesh all these pieces of knowledgeinto an organized whole.

This book is an effort towards that end.

In a nutshell, this book is a humble attempt in summing up years of agrarian reform law implementation. Thisbook intends to reach out to all sectors and stakeholders to heighten their understanding and appreciation of theagrarian reform in the Philippines, and hopefully help refine the terms of the ongoing debates among them. Thisbook hopes to appeal to both familiar and unfamiliar on the subject. It attempts to present, in an academic fashion,all relevant agrarian reform laws, DAR implementing rules, and pertinent judicial declarations on the matter.Hopefully, this will provide a holistic framework for understanding agrarian law.

Extra effort was also exerted to demonstrate agrarian reform in action by giving concrete illustrations anddiscussion from an operational perspective. Interspersed with the theoretical discussions are the various operational issues and difficulties that DAR implementors faced or are still facing.

The authors would like to thank

the UNDP-SARDIC project management team for providing the financial and logistic support to see thisproject through.

the members of DAR's management committee who shared with the project team their invaluable insightsand experience in agrarian reform implementation. Their contribution in making this book complete andinsightful is immeasurable.

the DAR-PPLAO support staff for providing administrative and secretariat support; and

Antonio Ramos who served as auditor for this project.

This is but a first step. We derive inspiration from the words of T.S. Eliot:

We shall not cease from exploration

And the end of all our exploring

Will be to arrive where we started

And know the place for the first time

[From "Little Gidding"]

THE AUTHORS

C HAPTER 1

Coverage of the Comprehensive Agrarian Reform Program

The Comprehensive Agrarian Reform Program

The Comprehensive Agrarian Reform Program (CARP) is implemented by Republic Act No. 6657 (1988)otherwise known as the "Comprehensive Agrarian Reform Law". Prior to its enactment on 10 June 1988, PresidentCorazon C. Aquino issued Proclamation No. 131 (1987) instituting a comprehensive agrarian reform program, andExecutive Order No. 229 (1987) providing the mechanics for its implementation. RA 6657 took effect on 15 June1988.

While expressly repealing specific provisions of prior enactments on agrarian reform, RA 6657 provides that theprovisions of RA 3844 (1963), Presidential Decree No. 27 (1972) and PD 266 (1973), EO 228 (1987) and EO 229(1987) and other laws not inconsistent with it shall have suppletory effect.

RA 6657 was enacted pursuant to the constitutional mandate enshrined in Section 4, Art. XIII of the 1987Constitution, which provides:

SEC. 4. The State shall, by law, undertake an agrarian reform program founded on the right of farmers andregular farmworkers, who are landless, to own directly or collectively the lands they till or, in the case of otherfarmworkers, to receive a just share of the fruits thereof. To this end, the State shall encourage and undertake thejust distribution of all agricultural lands, subject to such priorities and reasonable retention limits as the Congressmay prescribe, taking into account ecological, developmental, or equity considerations, and subject to the paymentof just compensation. In determining retention limits, the State shall respect the right of small landowners. The Stateshall further provide incentives for voluntary land-sharing.

The constitutionality of RA 6657 has been upheld in Association of Small Landowners v. Secretary of AgrarianReform, 175 SCRA 342 (1989) and companion cases. The Supreme Court held that the requirement of public usehas already been settled by the Constitution itself. It noted that "[n]o less than the 1987 Charter calls for agrarian

reform which is the reason why private agricultural lands are to be taken from their owners, subject to the prescribedretention limits." (at 378)

While RA 6657 itself has been held constitutional, the Supreme Court in a subsequent case, Luz Farms v.Secretary of Agrarian Reform, 192 SCRA 51 (1990), declared unconstitutional Sec. 3 (b), 10 and 11 thereof in so faras they include lands devoted to the raising of livestock, swine and poultry within its coverage. As a result of thisruling, Congress enacted RA 7881 (1995) amending these provisions and incorporating new provisions to existingones. The amendments adopted the Luz doctrine by removing livestock, swine and poultry farms from CARPcoverage.

Scope of CARP

The Constitution in Sec. 4, Art. XIII, mandates the just distribution of all agricultural lands, subject to suchpriorities and reasonable retention limits that the Congress may prescribe, taking into account ecological,developmental or equity considerations and subject to the payment of just compensation.

Prior to RA 6657, the operative law on land distribution was PD 27 (1972). However, PD 27 is limited in scope,covering only tenanted private agricultural lands primarily devoted to rice and corn operating under a system ofshare-crop or lease tenancy, whether classified as landed estate or not. The constitutional provision thereforeexpanded the scope of agrarian reform to cover all agricultural lands.

RA 6657 operationalized this constitutional mandate and provides in Sec. 4 thereof that the CARP shall cover,regardless of tenurial arrangement and commodity produced, all public and private agricultural lands, as provided inProclamation No. 131 and EO 229 including other lands of the public domain suitable for agriculture. Morespecifically, the following lands are covered by CARP:

a) All alienable and disposable lands of the public domain devoted to or suitable for agriculture;

b) All lands of the public domain in excess of the specific limits as determined by Congress in Sec. 4(a) of RA 6657;

c) All other lands owned by the government devoted to or suitable for agriculture; and

d) All private lands devoted or suitable for agriculture regardless of the agricultural products raisedor that can be raised thereon (Rep. Act No. 6657 [1988], Sec. 4).

Definition of agricultural land

Sec. 3 (c) of RA 6657 defines agricultural lands as follows:

(c) Agricultural Land refers to land devoted to agricultural activity as defined in thisAct and not classifiedas mineral, forest, residential, commercial or industrial land.

Sec. 3 (b) of RA 6657, as amended by RA 7881 (1995), defines "agricultural activity" as follows:

(b) Agriculture, Agriculture Enterprise or Agricultural Activity means cultivation of soil, planting of crops,growing of fruit trees, including the harvesting of such farm products, and other farm activities and practicesperformed by a farmer in conjunction with such farming operations done by persons whether natural orjuridical.

In Natalia v. DAR, 225 SCRA 278 (1993), the Supreme Court held:

Section 4 of RA 6657 provides that the CARL "shall cover, regardless of tenurial arrangement and commodityproduced, all public and private agricultural lands." As to what constitutes "agricultural land," it is referred to as"land devoted to agricultural activity as defined in this Act and not classified as mineral, forest, residential,commercial or industrial land." The deliberations of the Constitutional Commission confirm this limitation."Agricultural lands" are only those lands which are "arable and suitable agricultural lands" and "do not includecommercial and industrial lands" (at 282, 283).

Agricultural lands reclassified by local governments into "forestconservation zones"

Agricultural lands reclassified by local government units (LGUs) into "forest conservation zones" even prior tothe effectivity of CARL do not become forest land under Sec. 3 (c) of RA 6657 as to be exempted from CARPcoverage.

It should be noted that under the Constitution, lands of the public domain are classified into agricultural, forest ortimber, mineral lands and national parks (CONST ., Art. XII, Sec. 3). These classifications are called primaryclassifications or "classification in the first instance." The same provision of the Constitution also provides thatagricultural lands of the public domain may be further classified according to the uses to which they may be devoted.This further classification of agricultural land is referred to as secondary classification. The responsibility overprimary classification of lands of the public domain is vested in the President who exercises such power upon therecommendation of the Department of Environment and Natural Resources (DENR) (Com. Act No. 141 [1936], Sec.6; EO 192 [1987]) . On the other hand, the authority to reclassify agricultural lands into residential, commercial orindustrial is lodged, among others, in cities and municipalities (Rep. Act No. 7160 [1991], Sec. 20).

The group of lands referred to in Sec. 3 (c) of RA 6657 as non-agricultural ( i.e., mineral, forest, residential,commercial or industrial) is a mix of primary and secondary classifications. Forest and mineral lands are, under theConstitution and Commonwealth Act No. 141 (1936), primary classifications, while the rest are secondaryclassifications.

Reclassification by LGUsof agricultural lands into "forest conservation zones" does not have the effect ofconverting such lands into forest lands as to be exempted from CARP. Firstly, an agricultural land is already aprimary classification and, hence, can only be subjected to secondary classification. Secondly, LGUs have noauthority or power to make primary classifications considering that such power is the sole prerogative of thePresident exercising such power upon the recommendation of the DENR.

The forest (or mineral) land referred to in Sec. 3 (c) of RA 6657 is therefore to be understood as referring toforest (or mineral) land declared to be such by the President/DENR and not by the LGUs. DAR AdministrativeOrder No. 1 (1990) makes this qualification in its definition of "agricultural land," as follows:

. . . Agricultural land refers to those devoted to agricultural activity as defined in R.A. 6657 and not classified asmineral or forest by the Department of Environment and Natural Resources (DENR) and its predecessor agencies,and not classified in town plans and zoning ordinances as approved by the Housing and Land Use Regulatory Board(HLURB) and its preceding competent authorities prior to 15 June 1988 for residential, commercial or industrial use.

Agricultural lands reclassified LGUs into residential, commercial orindustrial

Taking into consideration the effectivity of the law, the secondary classifications mentioned in Sec. 3 (c) of RA6657 are treated according whether they were classified as such before or after the effectivity of the law on 15 June1988.

If the agricultural land was classified as residential, commercial or industrial by the LGU and approved by theHousing and Land Use Regulatory Board (HLURB), or its predecessor agencies, prior to 15 June 1988, the land will

be recognized as so classified under Sec. 3 (c) of RA and is therefore not covered by CARP. However, an exemptionclearance from DAR is still necessary to confirm or declare its exempt status. (DAR Adm. O. No. 6 [1994]).

This is based on Department of Justice Opinion No. 44 (1990) which provides that with respect to the conversionof agricultural lands covered by RA 6657 to non-agricultural uses, the authority of the DAR to approve suchconversion may be exercised from the date of its effectivity or on 15 June 1988. Thus, all lands already classified ascommercial, industrial or residential before that date no longer need any conversion clearance from the DAR.

If an agricultural land is reclassified after 15 June 1988, the provisions on land conversion under CARL and itsimplementing rules will apply (Rep. Act No. 6657 [1988], sec. 65; DAR Adm. O. No. 1 [1999]).

Conversion prior to 15 June 1988 through presidential proclamation binding before DAR

The reasoning in DOJ Opinion No. 44 (1990) was validated by the Supreme Court in Natalia v. DAR, supra. Thiscase involved the question of whether or not lands already classified for residential, commercial or industrial use, asapproved by HLURB and its precursor agencies, prior to 15 June 1988 are covered by CARP. SDHCac

Natalia Realty, Inc. vs. Department of Agrarian Reform 225 SCRA 278 (1993)

Facts:

Petitioner Natalia Realty, Inc. is the owner of a 125.0078-ha land set aside by Presidential Proclamation No.1637 (1979) as townsite area for the Lungsod Silangan Reservation. Estate Developers and InvestorsCorporation (EDIC), the developer of the area, was granted preliminary approval and locational clearancesby the then Human Settlements Regulatory Commission (HSRC) for the establishment of the Antipolo HillsSubdivision therein. In November 1990, a Notice of Coverage was issued by DAR on the undevelopedportion of the landholding. The developer filed its objections and filed this case imputing grave abuse ofdiscretion to respondent DAR for including the undeveloped portions of its landholding within the coverageof CARP.

Issue:

Are lands already classified for residential, commercial or industrial use, and approved by HLURB and itsprecursor agencies prior to 15 June 1988, covered by RA 6657?

Held:

Sec. 4 of RA 6657 states that the CARL covers "regardless of tenurial arrangement and commodity produced,all public and private and agricultural lands" and as per the transcripts of the Constitutional Commission,"agricultural lands" covered by agrarian reform refers only to those which are "arable and suitable lands" and"do not include commercial, industrial and residential lands." The land subject of the controversy has beenset aside for the Lungsod Silangan Reservation by Proclamation No. 1637 prior to the effectivity of RA 6657and in effect converted these lands into residential use. Since the Natalia lands were converted prior to 15June 1988, DAR is bound by such conversion, and thus it was an error to include these within the coverageof CARL.

Exemptions and Exclusions

Sec. 10 of RA 6657, as amended by RA 7881 (1995), specifically enumerates the exemptions and exclusionsfrom CARP, as follows:

a) Lands actually, directly or exclusively used for parks and wild-life, forest reserves, reforestation,fish sanctuaries and breeding grounds, watersheds and mangroves (Rep. Act No.6657 [1988] , sec. 10 [a], asamended by Rep. Act No. 7881 [1995]).

b) Private lands actually, directly and exclusively used for prawn farms and fishponds: Provided,That said prawn farms and fishponds have not been distributed and Certificate of Land Ownership Award(CLOA) issued to agrarian reform beneficiaries (ARBs) under CARP (Sec. 10 [b]).

c) Lands actually, directly and exclusively used and found to be necessary for national defense,school sites and campuses, including experimental farm stations operated by public or private schools foreducational purposes, seeds and seedling research and pilot production center, church sites and conventsappurtenant thereto, mosque sites and Islamic centers appurtenant thereto, communal burial grounds andcemeteries, penal colonies and penal farms actually worked by the inmates, government and private researchand quarantine centers and all lands with eighteen percent (18%) slope and over, except those alreadydeveloped (Sec. 10 [c]).

Lands devoted to raising of livestock, swine and poultry. The Luz Farms Case.

Before its amendment by RA 7881, Sec. 3(b) of RA 6657 included in its definition of agricultural activity the"raising of livestock, poultry or fish". Likewise, the original Sec. 11 of RA 6657 on commercial farming providedthat "lands devoted to commercial livestock, poultry and swine raising shall be subject to compulsory acquisitionwithin ten (10) years from the effectivity of the Act." However, the Supreme Court in Luz Farms vs. Secretary ofAgrarian Reform, supra, held that Sec. 3 (b) and Sec. 11 of RA 6657 (along with Sec. 13 and 32) areunconstitutional in far as they include the raising of livestock and swine in the coverage of CARP.

Luz Farms vs. Secretary of the Department of Agrarian Reform 192 SCRA 51 (1990)

Facts:

Petitioner Luz Farms is a corporation engaged in livestock and poultry business. It seeks to nullify Sec. 3 (b)and Sec. 11 of RA 6657 in so far as they apply to livestock and poultry business.

Held:

Sec. 3 (b) and Sec. 11 of RA 6657 are unconstitutional in so far as they include lands devoted to raisinglivestock, swine and poultry within its coverage. The use of land is incidental to but not the principal factoror consideration of productivity in this industry. The Supreme Court held that:

The transcripts of deliberations of the Constitutional Commission of 1986 on the meaning of the word"agricultural," clearly show that it was never the intention of the framers of the Constitution to includelivestock and poultry industry in the coverage of the constitutionally-mandated agrarian reform program ofthe government.

The Committee adopted the definition of "agricultural land" as defined under Section 166 of RA 3844, asland devoted to any growth, including but not limited to crop lands, saltbeds, fishponds, idle and abandonedland (Record, CONCOM, August 7, 1986, Vol. III, p. 11).

The Supreme Court noted that the intention of the Committee to limit the application of the word"agriculture" is further shown by the proposal of Commissioner Jamir to insert the word "arable" todistinguish this kind of agricultural land from such lands as commercial and industrial lands and residentialproperties. The proposal, however, was not considered because the Committee contemplated that agricultural

lands are limited to arable and suitable agricultural lands and therefore, do not include commercial, industrialand residential lands (Record, CONCOM, 7 August 1986, Vol. III, p. 30) .

Moreover, in his answer to Commissioner Regalado's interpellation, Commissioner Tadeo clarified that theterm "farmworker" was used instead of "agricultural worker" in order to exclude therein piggery, poultry andlivestock workers (Record, CONCOM, August 2, 1986, Vol. II, p. 621).

DAR AO 9 (1993) imposes two (2) conditions in order that these lands may be exempted: (a) that the land orportion thereof is exclusively, directly, or actually used for livestock, poultry and swine raising as of 15 June 1988;and (b) the farm must satisfy the ratios of land, livestock, poultry and swine, as follows:

cattle, carabao and horse raising maximum of 1 head to 1 hectare; 21 heads for every 1.7815hectares of infrastructure

sheep and goat raising 7 heads to 1 hectare; 147 heads for every 0.7205 hectare ofinfrastructure

swine raising 21 heads of hogs for every 0.5126 hectare of infrastructurepoultry raising 500 layers for every 0.53 hectare of infrastructure or 1000

boilers for every 1.428 hectares of infrastructure

Fishponds and prawn ponds

With the amendment of Sec. 3 (c), 10 and 11 of RA 6657 by RA 7881, fishponds and prawnponds are alsoexempted from the coverage of CARP, provided that said lands have not been distributed to ARBs and no CLOAshave been issued.

To be exempted, the agricultural land must have been actually, directly and exclusively used for prawn farms andfishponds as of 12 March 1995, the date of effectivity of RA 7881. To avail of the exemption, a landowner or hisauthorized representative still has to file a written application for land exemption/exclusion with the DAR ProvincialOffice (DAR Adm. O. No. 3 [1995]).

In cases were the fishponds or prawn farms have been subjected to CARP, by voluntary offer to sell, commercialfarms deferment or notice of compulsory acquisition, they can be exempt from CARP if a simple and absolutemajority of the actual regular workers or tenants consent to the exemption within one (1) year from the effectivity ofRA 7881 or on 12 March 1995. In cases where the fishponds or prawnponds have not been subjected to CARP, theconsent of the farm workers shall no longer be necessary (Rep. Act No. 6657 [1988], sec. 10[b], as amended).

Sec. 4 of RA 7881 also amended RA 6657 by introducing a new provision mandating the introduction of anincentive plan for employees of all fishponds and prawn farms. Operators and entities owning or operatingfishponds and prawn farms are directed to execute within six (6) months from its effectivity an incentive plan withtheir regular fishpond or prawn farm worker's organization, if any, whereby seven point five percent (7.5%) of netprofits before tax from the operation of the fishpond or prawn farms are distributed within sixty (60) days at the endof the fiscal year as compensation to regular and other pond workers over and above their current compensation.This incentive plan requirement, however, does not apply to agricultural lands subsequently converted to fishpondsor prawn farms provided that the size of the land converted does not exceed the retention limit of the landowner.

Lands used for academic or educational use. The CMU case.

In Central Mindanao University vs. DARAB, 215 SCRA 85 (1992), the Supreme Court passed upon theexemption of lands directly, actually and exclusively used and found to be necessary for school sites and campuses,including experimental farm stations operated by public or private schools for educational purposes provided forunder Sec. 10 of RA 6657, as amended.

Central Mindanao University vs. Department of Agrarian Reform Adjudication Board 215 SCRA 86 (1992)

Facts:

On 16 January 1958, President Carlos Garcia issued Proclamation No. 467 reserving for the MindanaoAgricultural College, now the CMU, a piece of land to be used as its future campus. In 1984, CMUembarked on a project titled "Kilusang Sariling Sikap" wherein parcels of land were leased to its facultymembers and employees. Under the terms of the program, CMU will assist faculty members and employeegroups through the extension of technical know-how, training and other kinds of assistance. In turn, theypaid the CMU a service fee for use of the land. The agreement explicitly provided that there will be notenancy relationship between the lessees and the CMU.

When the program was terminated, a case was filed by the participants of the "Kilusang Sariling Sikap" fordeclaration of status as tenants under the CARP. In its resolution, DARAB, ordered, among others, thesegregation of 400 hectares of the land for distribution under CARP. The land was subjected to coverage onthe basis of DAR's determination that the lands do not meet the condition for exemption, that is, it is not"actually, directly, and exclusively used" for educational purposes.

Issue:

Is the CMU land covered by CARP? Who determines whether lands reserved for public use by presidentialproclamation is no longer actually, directly and exclusively used and necessary for the purpose for whichthey are reserved?

Held:

The land is exempted from CARP. CMU is in the best position to resolve and answer the question of whenand what lands are found necessary for its use. The Court also chided the DARAB for resolving this issue ofexemption on the basis of "CMU's present needs." The Court stated that the DARAB decision stating that forthe land to be exempt it must be "presently, actively exploited and utilized by the university in carrying outits present educational program with its present student population and academic faculty" overlooked thevery significant factor of growth of the university in the years to come. SHECcT

The CMU case is unique as it involves land transferred by the state to CMU through PD 467 which provided forits commitment to a specific use and purpose. Thus, the said land was already set aside for a specific purpose and, ineffect, was taken outside the coverage of agrarian reform by law. It is submitted that a more accurate basis for theexemption should have been that the exclusive use of the land both present and future has been determined bylaw, and not because of the determination of the CMU of what it needs and how it intends to use it.

In ruling that the CMU is in the best position to determine the use of the land and not DAR, the Supreme Courtseems to have overlooked EO 407 (1990), as amended by EO 448 (1991) , which provides that DAR is vested withthe power to determine whether lands reserved for public uses by presidential proclamation is no longer actually,directly and exclusively used and necessary for the purpose for which they are reserved. Said EO provides that:

Sec. 1-A. All lands or portions thereof reserved by virtue of Presidential proclamations for specific publicuses by the government, its agencies and instrumentalities, including government-owned or controlledcorporations suitable for agriculture and no longer actually, directly and exclusively used or necessary forthe purposes for which they have been reserved, as determined by the Department of Agrarian Reform incoordination with the government agency or instrumentality concerned in whose favor the reservation wasestablished, shall be segregated from the reservation and transferred to the Department of Agrarian Reformfor distribution to qualified beneficiaries under the Comprehensive Agrarian Reform Program.

Thus, DAR in coordination with the agency or department involved, can determine whether the purpose or usefor which the lands reserved continues to exist and therefore establish if they continue to be exempt from CARPcoverage.

The Supreme Court's statement that lands of universities and academic institutions need not be actually, directlyand exclusively used for educational or research purposes at the time of the effectivity of the RA 6657 to be exemptfrom CARP also fails to consider Sec. 10 of RA 6657. Sec. 10 is explicit that only those lands that are "actually,directly, and exclusively" used and found necessary for the uses enumerated therein are exempt from CARPcoverage. A literal interpretation of the provision implies that the exemption applies only to those lands alreadycommitted for the enumerated purposes at the date of the effectivity of law on 15 June 1988. Thus, agricultural landacquired by academic institutions for academic, educational, or research purposes after 15 June 1988, or thoseowned by them but not committed exclusively, actually, and directly to the abovementioned uses before or on suchdate, are covered by CARP. For its exclusion from acquisition and distribution, and for its commitment to saidpurposes, the institution may file before DAR for clearance to convert these lands into non-agricultural use.

Lands with 18% slope

Lands with 18% slope or over are exempt from CARP coverage unless these are found to be agriculturallydeveloped as of 15 June 1988.

This rule on exemption is based on PD 705 (1975), or the "Revised Forestry Code of the Philippines," whichprovides that lands with a slope of 18% or over are generally reserved as forest lands. Sec. 15 thereof states that "noland of the public domain eighteen per cent (18%) in slope or over shall be classified as alienable and disposable"and that "lands eighteen per cent (18%) in slope or over which have already been declared as alienable anddisposable shall be reverted to the classification of forest lands by the Department Head, to form part of the forestreserves, unless they are already covered by existing titles or approved public land application, or actually occupiedopenly, continuously, adversely and publicly for a period of not less than thirty (30) years as of the effectivity of thisCode, where the occupant is qualified for a free patent under the Public Land Act.

If the land has 18% slope or over and is agriculturally developed as of 15 June 1988, the same shall be allocatedto the qualified applicants in the following manner:

a) If land is classified as forest land, and therefore is inalienable and indisposable, this shall beallocated by the DENR under its Integrated Social Forestry Program;

b) If classified as alienable and disposable, this shall be allocated by the Land Management Bureau-DENR and DAR pursuant to the provisions of CA 141 and the Joint DAR-DENR AO 2 (1988); and

c) If private agricultural land, thisshall be acquired in accordance with the provisionsof RA 6657(DAR Adm. O. No. 13 [1990], item E, part II).

Effects of exemption

Sec. 10 of RA 6657 provides that exempted or excluded lands are removed from the coverage of CARP.However, there are two (2) contending views on whether these exempted or excluded lands are perpetually taken outfrom coverage of the CARP.

The first view is that lands exempted or excluded from the law are permanently taken out from coverage of theCARP. The basis of this interpretation is the phraseology of Sec. 10 which states that exempted lands are "exemptfrom the coverage of the law." The legal effect of this interpretation is that the owner can use and dispose the land ashe deems fit without the need for any clearance from DAR.

The second view is that excluded and exempted lands can be covered by CARP when the reason for theirexemption ceases to exist. Thus, when the reason for exemption ceases to exist for lands exempt under the LuzFarms ruling or Sec. 10, as amended by RA 7881 (except lands with 18% slope), they are removed from theexemption and are treated like any other agricultural land.

It must be remembered that the lands subject of exemption under Sec. 10 of RA 6657 and the Luz Farms rulingare considered agricultural lands as defined by Sec. 3 (c) of RA 6657, that is, they are in fact suitable to agricultureand not classified as mineral, forest, residential, commercial or industrial lands, but are exempt or excluded fromCARP by reason of their actual use and theirnecessity for other purposes. Thus, in the event that these lands ceaseto be used or necessary for the purposes for which they are exempted, they are removed from the application of Sec.10 and are then subject to CARP coverage.

The second view is anchored on the spirit and intent of the law to cover all agricultural lands suitable toagriculture. Moreover, as RA 6657 is a social welfare legislation the rules of exemptions and exclusions must beinterpreted restrictively and any doubts as to the applicability of the law should be resolved in favor of inclusion.

In either case, the security of tenure of tenants enjoyed prior to 15 June 1988 shall be respected even when thelands are exempted. As to farmworkers, the exemption of the land shall not cause the loss of the benefits to whichthey are entitled under other laws. In addition, they are granted preference in the award of other lands covered byCARP (DAR Adm. O. No. 13 [1990], part II) .

Homesteads

In Alita vs. CA, the Supreme Court stated that homesteads are exempt from agrarian reform.

Alita vs. Court of Appeals 170 SCRA 706 (1989)

Facts:

Subject matter of the case consists of two (2) parcels of land acquired by respondents' predecessors-in-interest through homestead patent under the provisions of CA 141. Respondents wanted to personallycultivate these lands, but the petitioners refused to vacate, relying on the provisions of PD 27 and PD 316and appurtenant regulations issued by the then Ministry of Agrarian Reform.

Issue:

Are lands obtained through homestead patent covered under PD 27?

Held:

No. While PD 27 decreed the emancipation of tenants from the bondage of the soil and transferring to themownership of the land they till, the same cannot be invoked to defeat the very purpose of the enactment of the PublicLand Act or CA 141. In Patricio v. Bayog, 112 SCRA 45, it was held that:

The Homestead Act has been enacted for the welfare and protection of the poor. Thelaw gives a needy citizen a piece of land where he may build a modest house for himself andfamily and plant what is necessary for subsistence and for the satisfaction of life's other needs.The right of the citizens to their homes and to the things necessary for their subsistence is asvital as the right to life itself. They have a right to live with a certain degree of comfort as

become human beings, and the State which looks after the welfare of the people's happiness isunder a duty to safeguard the satisfaction of this vital right.

In this regard, Sec. 6 of Article XIII of the 1987 Constitution provides:

Section 6. The State shall apply the principles of agrarian reform or stewardship,whenever applicable in accordance with law, in the disposition or utilization of other naturalresources, including lands of public domain under lease or concession suitable to agriculture,subject to prior rights, homestead rights of small settlers, and the rights of indigenouscommunities to theirancestral lands.

Moreover, Sec. 6 of RA 6657 contains a proviso supporting the inapplicability of PD 27 to lands covered byhomestead patents like those of the property in question, reading:

Section 6. Retention Limits. . . . Provided further, That original homestead granteesor their direct compulsory heirs who still own the original homestead at the time of the approvalof this Act shall retain the same areas as long as they continue to cultivate said homestead.

xxx xxx xxx

While homestead lots are declared exempt under PD 27, they are not expressly declared as such under RA 6657.However, Sec. 6 of RA 6657 provides that homesteaders are allowed to retain the total homestead lot subject to theconditions provided in the same section and as set DAR MC 4 (1991), to wit:

a) That the original homestead grantee or his/her direct compulsory heirs still own the land on 15June 1988;

b) The original homestead grantee or his or her compulsory heirs cultivate the land as of 15 June1988 and continue to cultivate the same.

It also provides that the tenants of lands covered by homestead patents exempted from PD 27 or retained underRA 6657 shall not be ejected therefrom but shall remain as leaseholders therein.

Schedule of Implementation

Sec. 7 of RA 6657 lays out the schedule of acquisition and distribution of all agricultural lands through a periodof ten (10) years from the effectivity of the Act:

Phase Lands Covered Schedule

I Rice and corn lands under Presidential 1988-1992Decree No.27;

all idle or abandoned lands; all private lands voluntarily offered by the owners

for agrarian reform; all lands foreclosed by the government financial

institutions; all lands acquired by the Presidential Commission

on Good Government (PCGG); and all other lands owned by the government devoted

to or suitable for agriculture

II All alienable and disposable public agricultural 1992-1995

lands; all arable public agricultural lands under agro-

forest, pasture and agricultural leases alreadycultivated and planted to crops in accordance;

all public agricultural lands which are to be openedfor new development and resettlement;

and all private agricultural lands in excess offifty (50) hectares,

III-A Landholdings above twenty-four (24) 1998-1992hectares up to fifty hectares; and

III-B Private agricultural lands with areas above the 1994-1998retention limit up to 24 hectares

Though Sec. 7 of RA 6657 provides a fixed time table for the implementation of the CARP law, thisprovision should be interpreted as merely directory, rather than mandatory in character. This is the gist of DOJOpinion No. 9 (1997). It has been held that the difference between a mandatory and a directory provision isoften determined on grounds of expediency. Where a provision embodies a rule of procedure rather than one ofsubstance, the provision as to time will be regarded as directory only notwithstanding the mandatory nature ofthe language used. Sec. 5 of RA 6657 is more procedural in nature than substantive. The ten (10)-year period ismerely a time frame given to DAR for the acquisition and distribution of public and private agricultural landscovered by RA 6657. It is merely a guide to DAR in setting its priorities, and it is not, by any means, alimitation of its authority. Hence, Sec. 5 of RA 6657 should not be construed as a prescriptive period, the lapseof which bars the DAR from covering the land under CARP.

Thus, DAR need not wait for the full coverage of those lands in the first phase before those in the succeedingphases could be covered.DAR may also proceed with the coverage of lands in different phases simultaneously.

In view of the passing of the ten (10)-year period in 1998, Congress passed RA 8532 (1998) providing for thefunding for land acquisitions for another ten (10) years.

Idle or abandoned lands

Sec. 22 of Art. XVIII of the 1987 Constitution and Sec. 18 (h) of EO 229 prioritizes the immediate expropriationor acquisition of idle or abandoned lands.

Sec 3 (e) of RA 6657 defines idle or abandoned land as "any agricultural land not cultivated, tilled or developedto produce any crop nor devoted to any specific economic purpose continuously for a period of three (3) yearsimmediately prior to the receipt of notice of acquisition by the government as provided under RA 6657. Howeverland that has become permanently or regularly devoted to non-agricultural purposes is not to be considered as idle orabandoned. Neither can it be considered as abandoned or idle any land which has become unproductive by reason offorce majeure or any other fortuitous event, provided that prior to such event, such land was previously used foragricultural or other economic purpose."

Lands owned by government

To expedite the disposition of lands owned by the government, President Corazon C. Aquino issued EO 407(1990) directing all government instrumentalities, government agencies, government owned and controlledcorporations or financial institutions to transfer to the Republic of the Philippines, through the DAR, alllandholdings suitable for agriculture. Sec. 3 of EO 407 (1990) likewise provides for the redistribution and award offishponds, pasturelands and other lands of public domain suitable for agriculture subject of cancelled or amendedlease agreement to the agrarian reform beneficiaries. EO 448 (1991) and EO 506 (1992) amended EO 407 byincluding all lands or portions thereof reserved by virtue of presidential proclamations for specific public uses by the

government, its agencies and instrumentalities, and no longer actually, directly and exclusively used or necessary forthe purposes for which they have been reserved. These also excluded national parks and other protected areas,proposed national parks, game refuge, bird sanctuaries, wild-life reserves, wilderness areas and other protected areas,including old growth or virgin forests and all forests above 1,000 meters elevation or above 50 percent slope untilsuch time that they are segregated for agricultural purposes or retained under the National Integrated ProtectedAreas System.

Commercial farms

Sec. 11 of RA 6657 allowed the deferment of the coverage of commercial farms. Deferred commercial farmsshall be subject to immediate compulsory acquisition and distribution after ten (10) years from the effectivity of RA6657 on 15 June 1988. For new farms, the ten (10)-year deferment will begin from the first year of commercialproduction and operation.

For a commercial farm to be qualified for deferment, it must have been planted to commercial crop or devoted tocommercial farming operations before 15 June 1988. DAR AO 16 (1988) provided a 60-day period for the filing ofapplications of deferment which lapsed on 2 May 1989.

DAR AO 16 (1988) explicitly allows the DAR to automatically subject the lands to redistribution when itdetermines that the purpose for which deferment is granted no longer existsas when the particular farm areas ceasesto be commercially productive. During the deferment period, the DAR shall initiate steps to acquire the lands. Finalland transfer to the beneficiaries shall be effected at the end of the deferment period. The acquisition anddistribution of these deferred commercial farms are governed by DAR AO 9 (1998) .

Retention

Sec. 4, Art. XIII of the 1987 Constitution subjects the distribution of agricultural lands for agrarian reform to"reasonable retention limits as Congress may prescribe. Sec. 6 of RA 6657 operationalizes this mandate andobserves the right of persons to own, or retain, directly or indirectly public or private agricultural land, the size ofwhich shall vary according to factors governing a viable family-size farm in such as commodity produced terrain,infrastructure, and soil fertility, but in no case shall exceed five (5) hectares.

The retention limits under Sec. 6 of RA 6657 covers all persons whether natural or juridical. Juridical personslike corporations and partnerships are therefore subject to the five (5)-hectare limit.

With respect to marr ied couples, their maximum retention limit is determined by the nature of their propertyrelations. For marriages covered by the New Civil Code, in the absence of an agreement for the judicial separationof property, spouses who own only conjugal properties may retain a total of not more than five (5) hectares of suchproperties. However, if either or both of them are landowners in their own respective rights (capital and/orparaphernal), they may retain not more than five (5) hectares of their respective landholdings. In no case, however,shall the total retention of such couple exceed ten (10) hectares. (DAR Adm. O. No. 5 [2000], sec. 9 [g]).

For marriages covered by the Family Code, which took effect on 3 August 1988, a husband owning capitalproperty and/or a wife owning paraphernal property may retain not more than five (5) hectares each provided theyexecuted a judicial separation of properties prior to entering into the marriage. In the absence of such an agreement,all properties (capital, paraphernal and conjugal) shall be considered to be held in absolute community, i.e., theownership relation is one, and, therefore, only a total of five (5) hectares may be retained. (DAR Adm. O. No. 5[2000], sec. 9 [h]).

The five (5)-hectare retention limit applies to all lands regardless of how acquired (i.e., by purchase, award,succession, donation) as the law does not distinguish. Thus, a child who was awarded three (3) hectares as apreferred beneficiary under Sec. 6 of RA 6657 and subsequently acquires a five (5)-hectare landholding of hisparent by succession can retain only five (5) hectares of the total landholding.

Landowners have the obligation to cultivate directly or through labor administration, and thereby makeproductive the area he retains. He is also prohibited from making any constructions therein or commit it to purposesincompatible with its agricultural nature. Before a landowner can commit the retained land to non-agriculturalpurposes, he must first secure a conversion order from DAR, otherwise he can be held liable for prematureconversion (see DAR Adm. O. No. 1 [1999]).

Award to children

If a landowner has children, three (3) hectares may be awarded to each subject to the following qualifications:

a) that he is at least fifteen (15) years old as of 15 June 1988; and

b) that he is actually tilling the land or directly managing it (Rep. Act No. 6657 [1988], sec. 6).

DAR MC 4 (1994) defined the term "directly managing" as the cultivation of the land through personalsupervision under the system of labor administration. DHcESI

The award to the child is not to be taken from the retained land of the landowner and is awarded to the child inhis own right as a beneficiary. Thus, the award is not automatic. The child is merely given a preference over otherbeneficiaries.

As the right of the child is derived from his being a beneficiary, he must not only meet the requirements ofpreference laid out in Sec. 6 of RA 6657, but also all the other qualifications of a beneficiary enumerated under Sec.22 of RA 6657. Thus, he must also be landless, a resident of the barangay or municipality where the land is located,and must have the willingness, aptitude and ability to cultivate and make the land as productive as possible.Moreover, he is subject to the same liabilities, responsibilities and limitations imposed on all agrarian reformbeneficiaries.

Exceptions to the 5-hectare retention limit

The five (5)-hectare retention limit under RA 6657 does not apply to original homestead grantees or their directcompulsory heirs at the time of the approval of RA 6657 who continue to cultivate the same, and to those entitled toretain seven (7) hectares under PD 27.

In the Association cases, the Supreme Court held that landowners who failed to exercise their rights to retainunder PD 27 can avail of their rights of retention under Sec. 6 of RA 6657 and retain only five (5) hectares.However, in the resolution of the Supreme Court on the motion for consideration in the said case, the Courtqualified that those who, prior to the promulgation of RA 6657, complied with the requirements under Letter ofInstruction (LOI) Nos. 41, 45 and 52 regarding the registration of the landholdings, shall be allowed to enjoy theseven (7) hectare retention limit. All those who refused to comply with the requirements cannot, in view of thepassage of CARL, demand that their retention limit be determined under PD 27.

Thus, the following OLT owners are still entitled to retain seven (7) hectares even if they exercised their right ofretention under PD 27 after 15 June 1988:

a) Those landowners who complied with the requirement of either LOI 41, 45 or 52;

b) Those who filed theirapplications before the deadline set (27 August 1985 as provided by AO. 1 [1985])whether or not they have complied with LOI Nos. 41, 45 or 52;

c) Those who filed theirapplications after the deadline but complied with the requirements of LOI 41, 45 or52; and

d) Heirs of a deceased landowner who manifested, while still alive, the intention to exercise the right ofretention prior to 23 August 1990 (the finality of the Supreme Court decision in Association of Small Landownersvs. Hon. Secretary of DAR; supra) (DAR Adm. O. No. 4 [1991]) .

Exercise of right of retention

While Sec. 6 of RA 6657 acknowledges the right of the landowners to choose the area to be retained, it requiresthat the area be compact and contiguous, and shall be least prejudicial to the entire landholding and the majority ofthe farmers therein (DAR Adm. O. No. 5 [2000], sec 2 [b]).

Sec. 4 of DAR AO 5 (2000) provides that under the Compulsory Acquisition (CA) scheme, the landowner shallexercise his right of retention within sixty (60) days from receipt of the Notice of Coverage from DAR. Failure toexercise this right within the prescribed period means that the landowner waives his right to choose which area toretain. Thereafter, the Municipal Agrarian Reform Officer (MARO) shall designate the retained area for thelandowner.

Under the Voluntary Offer to Sell (VOS) scheme, the right of retention shall be exercised at the time the land isoffered for sale. The offer should specify and segregate the portion covered by VOS and the portion applied forretention; otherwise, the landowner shall be deemed to have waived his right of retention over the subject property (DAR Adm. O. No. 5 [2000], sec. 4).

As a matter of policy, all rights acquired by the tenant-farmers under PD 27 and the security of tenure of thefarmers or farmworkers on the land prior to the approval of RA 6657 shall be respected (DAR Adm. O. No. 5 [2000],sec. 2 [c]).

In case the area selected by the landowner or awarded for retention by the DAR is tenanted, the tenant has two (2)options:

a) To remain as a lessee. If he chooses to remain in the area retained, he shall be considered a leaseholder and shall lose his right to be a beneficiary; or

b) Be a beneficiary in the same or another agricultural land with similar or comparable features.

The tenant must exercise either option within one (1) year after the landowner manifests his choice of the area forretention, or from the time the MARO has chosen the area to be retained by the landowner, or from the time an orderis issued granting the retention (DAR Adm. O. No. 5 [2000], sec. 10).

Sec. 10 of DAR AO 5 (2000) further provides that in case the tenant declines to enter into leasehold and there isno available land to transfer, or if there is, the tenant refuses the same, he may choose to be paid disturbancecompensation by the landowner.

Where Certificates of Land Transfer (CLTs), Emancipation Patents (EPs) or Certificates of Land OwnershipAward (CLOAs) have already been issued on the land chosen by the landowner as retention area, the DAR shallimmediately inform the agrarian reform beneficiaries (ARBs) concerned and provide them the opportunity to contestthe landowner's claim. Moreover, the DAR shall ensure that the affected ARBs, should they so desire, be givenpriority in the distribution of other lands of the landowner or other lands identified by the DAR for redistribution,subject to the rights of those already in the area (DAR Adm. O. No. 5 [2000], sec. 11)

Waiver of right of retention

Sec. 7 of DAR AO 5 (2000) provides that the following acts constitute waiver on the landowner's right of retention:

a) Executing an affidavit, letter or any other document duly attested by the MARO, ProvincialAgrarian Reform Officer (PARO) or Regional Director (RD) indicating that he is expressly waiving hisretention right over subject landholding;

b) Signing of the Landowner-Tenant Production Agreement and Farmer's Undertaking (LTPA-FU)or Application to Purchase and Farmer 's Undertaking (APFU) covering subject property;

c) Entering into a Voluntary Land Transfer/Direct Payment Scheme (VLT-DPS) agreement asevidenced by a Deed of Transfer over the subject property;

d) Offering the subject landholding under VOS scheme and failure to indicate his retained area;

e) Signing/submission of other documents indicating consent to have the entire property covered,such as the form letter of the LBP on the disposition of the cash and bond portions of a land transfer claimfor payment, and the Deed of Assignment, warranties and undertaking executed in favor of the LBP;

f) Performing acts which constitute estoppel by laches; and

g) Doing such act or acts as would amount to a valid waiver in accordance with applicable laws andjurisprudence.

Public Lands

Public lands pertain to all lands that were not acquired by private persons or corporations either by grant orpurchase. These lands are either (a) disposable (alienable) public lands or (b) non-disposable public lands.

CA 141 (1936), otherwise known as the "Public Land Act", governs the administration and disposition of landsof the public domain. Sec. 9 thereof classifies alienable or disposable lands of the public domain as (a) agricultural;(b) residential, commercial, industrial or for similar productive purposes; (c) educational, charitable, or other similarpurposes; or (d) reservations for town sites and for public and quasi-public uses.

Non-disposable public lands or those not susceptible of private appropriation and include the following: (a)timber lands which are governed by PD 705 (1975) or the Revised Forestry Code; and (b) mineral lands which aregoverned by RA 7942 (1995) or the Philippine Mining Act of 1995 and other related laws.

All lands of the public domain are under the exclusive jurisdiction of the DENR except those placed by lawand/or by executive issuances under the jurisdiction of other government agencies. Under Sec. 3 and 5 of CA 141,the Secretary of Agriculture and Natural Resources (now the Secretary of DENR) is the executive officer chargedwith carrying out the provisions of the Public Land Act. It is empowered to prepare and issue such forms,instructions, rules and regulations consistent with the Public Land Act. Sec. 6 of CA 141 (see also EO 192 [1987])reserves the power to classify lands in the public domain into either agricultural (disposable), timber or minerallands to the President, with the recommendation of the Secretary of DENR.

Under Sec. 4 of RA 6657, public and private agricultural lands and lands of the public domain suitable foragriculture are covered by CARP. It provides, among others, that all alienable and disposable lands of the publicdomain devoted or suitable or devoted to agriculture (Sec 4 [a]) and all lands of the public domain in excess of thespecific limits of the public domain as determined by Congress (Sec. 4 [b]) shall be covered by CARP. It has alsobeen determined that public agricultural lands that are untitled and privately claimed are covered by CARP. Inresponse to a query by DAR, the Department of Justice issued Opinion No. 176 (1992) which stated:

. . . Thus, it has been held that there should be no distinction in the application of the law where non is indicatedtherein (SSS vs. City of Bacolod, 115 SCRA 412) . . . By said rule, the term "private agricultural lands" in theaforementioned section should be interpreted as including all private lands, whether titled or untitled. . . .

RA 6657 has created an overlapping of jurisdictions between the DENR and the DAR over the disposition ofthese lands. RA 6657 mandates DAR to acquire and distribute these public lands to agrarian beneficiaries while CA141 vests upon the DENR the power to control, survey, classification, lease, sale or any other form of concession ordisposition and management of the lands of the public domain.

To resolve the overlapping mandates of the DENR and DAR in the disposition and distribution of public landsfor CARP purposes, the two agencies issued Joint DAR-DENR MC 9 (1995) which recognizes that lands of thepublic domain are under the jurisdiction of the DENR unless placed by law and/or by executive issuances under thejurisdiction of other government departments or entities. Under the said circular, the disposition of non-registrablelands of the public domain is the exclusive responsibility of the DENR under its various programs (i.e., theIntegrated Social Forestry). In this instance, the role of the DAR is to assist the DENR in identifying and screeningof farmer beneficiaries. The responsibility and authority of DAR to distribute public lands shall be limited to thefollowing:

a) Lands proclaimed by the President as DAR Resettlement Projects and placed under theadministration of the DAR for distribution to qualified farmer beneficiaries under CARP;

b) Lands which are placed by law under the jurisdiction of DAR; and

c) Lands previously proclaimed for the various government departments, agencies andinstrumentalities and subsequently turned over to the DAR pursuant to EO 407 (1990), as amended by EO448 and 506.

Untitled public alienable and disposable lands are still within the exclusive jurisdiction of DENR pursuant to CA141. However, in accordance with DOJ Opinion No.176 (1992), Joint DAR-DENR MC 14 (1997) provides that alluntitled public alienable and disposable lands are deemed "private" if the criteria specified in RA 6940 for thedetermination of whether or not a person has already acquired a recognizable private right over a landholding is met,namely:

a) Continuous occupancy and cultivation by oneself or through one's predecessors-in-interest for atleast thirty (30) years prior to the effectivity of RA 6940 on 16 April 1990;

b) The land must have been classified as alienable and disposable for at least thirty (30) years prior tothe effectivity on 16 April 1990;

c) One must have paid the real estate tax thereon; and

d) There are no adverse claims on the land.

For these privately claimed public alienable and disposable lands, the DENR first issues a Free Patent toqualified applicants for the retained area of not more than five (5) hectares. The DAR shall then cover the excessarea and issue a CLOA or EP and distribute these to qualified beneficiaries. TcCDIS

For untitled public alienable and disposable lands which are tenanted and with claimants not qualified under thecriteria specified in RA 6940, the disposition shall be under the jurisdiction of the DENR.The role of the DAR inthis case is limited to the documentation and protection of the leasehold arrangement between the public landclaimant and the tenants.

If the alienable and disposable land is not tenanted but has actual farm occupants, and the public land claimantlacks the requisite thirty (30)-year possession, these shall be under the jurisdiction of the DENR and the appropriatetenurial instrument shall be applied.

It is submitted, however, that these alienable and disposable lands that are privately claimed by claimants whoare not qualified under the criteria set under RA 6940 (1990) should be turned over to DAR for distribution underCARP. As these claimants/tenants are mere occupants and can not be granted Free Patents by the DENR, these landshould instead be committed for agrarian purposes.

A recently issued DENR MC 22 (1999) entitled "DENR Jurisdiction over all Alienable ad Disposable Lands ofthe Public Domain," seems to abrogate or set aside Joint DAR-DENR MC 14 (1997). It directs all RegionalExecutive Directors to strictly exercise DENR's jurisdiction over all alienable and disposable lands of the publicdomain, including those lands not specifically placed under the jurisdiction of other government agencies, andprepare the same for disposition to qualified and legitimate recipients under the People's Alliance for theRehabilitation of Environment of the Office of the Secretary of the DENR.

This recent issuance impliedly prohibits the turnover of alienable and disposable lands to CARP, and thus,effectively removes remaining public alienable and disposable lands out of the scope of CARP. While merely anadministrative order that can not overturn legislation on the matter, DENR MC 22 (1999) poses another roadblockwhich if not corrected or legally challenged in court can derail the already delayed coverage of public agriculturallands. Sec. 7 of RA 6657 explicitly provides that alienable and disposable public agricultural lands are among thepriority lands for distribution. Needless to say, the political implications of government's reluctance to commitpublic agricultural lands for agrarian ends in the face of its relentlessexpropriation of private landholdings is serious.

Ancestral Lands

Sec. 9 of RA 6657 defines ancestral lands as those lands that include, but not limited to, lands in actual,continuous and open possession of an indigenous cultural community and its members. Sec. 3 (b) of RA 8371 (1997)or the "Indigenous Peoples Rights Act of 1997," has a more encompassing definition, to wit:

Sec. 3. Definition of Terms. . . .

b). Ancestral Lands Subject to Section 56 hereof, refers to lands occupied, possessed and utilized byindividuals, families, and clans who are members of the ICCs/IPs (indigenous culturalcommunities/indigenous peoples) since time immemorial, by themselves or through their predecessors-in-interests, under claims of individual or traditional group ownership continuously, to the present, except wheninterrupted by war, force majeure or displacement by force, deceit, stealth or as a consequence ofgovernment projects and other voluntary dealings entered into by government and privateindividuals/corporations, including, but not limited to, residential lots, rice terraces or paddies, privateforests, swidden farms and treelots;

Policy for ancestral lands under CARP

CARP ensures the protection of the right of ICCs/IPs to their ancestral lands to ensure their economic, social andcultural well being. Systems of land ownership, land use, and modes of settling land disputes of the ICCs/IPs shallbe recognized and respected in line with principles of self-determination and autonomy.

The Presidential Agrarian Reform Committee (PARC), notwithstanding any law to the contrary, has the power tosuspend the implementation of the CARP with respect to ancestral lands for the purpose of identifying anddelineating such lands. It shall also respect laws on ancestral domain enacted by the respective legislators ofautonomous regions, subject to the provisions of the Constitution and the principles enunciated in RA 6657 andother national laws.

However, the full protection of the rights of the ICCs/IPs to theirancestral lands under CARP is hampered byvarious legal constraints. For one, while Sec. 9 respects or protects the rights of the ICCs/IPs to their ancestral landsas means to protect their economic, social and cultural well-being, its definition of ancestral lands is circumscribedby the limitation that the Torrens System shall be respected. This is a fundamental legal setback to the rights ofICCs/IPs. It should be noted that the vested rights of these communities to ancestral lands have been recognized to

have pre-existed the Regalian Doctrine which underlie the government's perspective to full ownership and controlover natural resources as well as the current legal system that regulates private property rights.

CARP involves alienable and disposable lands only while ancestral lands of ICCs/IPs encompass forest andmineral lands and other lands of the public domain which are by definition inalienable and indisposable. Thus, thebenefit of being awarded CLOAs over ancestral lands to these ICCs/IPs are limited to private agricultural lands andpublic agricultural lands transferred to DAR.

In any case, to promote and protect the rights of the ICCs/IPs over ancestral lands situated in inalienable andindisposable public lands, DAR issues member/s of the ICCs who are engaged in agricultural activities over the saidlands CARP Beneficiary Certificate (CBC). Though these do not vest title, it likewise recognizes the claim of theICC over these lands and allows them to access support services from DAR.

RA 8371 (1997) has a more expansive definition of ancestral domains and ancestral lands which includes landsthat are legally determined as indisposable and inalienable public lands. RA 8371 is a clear departure from earlierlaw and regulation for not only does it expand the definition of ancestral lands but recognizes the right of theICCs/IPs to own these lands. National Commission on Indigenous Peoples (NCIP), a body created by RA 8371, isvested, among others with the power and issue Certificates of Ancestral Domain/Land Titles over ancestral lands.

C HAPTER 2

Agricultural Leasehold

Agricultural Tenancy

Definition and nature of agricultural tenancy

Agricultural tenancy is defined as "the physical possession by a person of land devoted to agriculture, belongingto or legally possessed by another for the purpose of production through the labor of the former and of the membersof his immediate farm household in consideration of which the former agrees to share the harvest with the latter orto pay a price certain or ascertainable, whether in produce or in money, or both." (RA 1199 [1954], sec. 3)

In Gelos vs. CA, 208 SCRA 608 (1992), the Supreme Court held that agricultural tenancy is not a purely factualrelationship. The written agreement of the parties is far more important as long it is complied with and not contraryto law.

Gelos vs. Court of Appeals 208 SCRA 608 (1992)

Facts:

Rafael Gelos was employed by Ernesto Alzona and his parents as their laborer on a 25,000-sq. m farmland. Theyexecuted a written contract which stipulated that as hired laborer Gelos would receive a daily wage of P5.00. Three(3) years later, Gelos was informed of the termination of his services and was asked to vacate the property. Gelosrefused and continued working on the land. Alzona filed a complaint for illegal detainer. The lower court foundGelos as tenant of the property and entitled to remain thereon as such. The decision was reversed by the Court ofAppeals. DHACES

Issue:

What is the nature of the contract between Gelos and Alzona?

Held:

The parties entered into a contract of employment, not a tenancy agreement. The agreement is a lease ofservices, not of the land in dispute. . . . The petitioner would disavow the agreement, but his protestations areless than convincing.His wife's testimony that he is illiterate is belied by his own testimony to the contraryin another proceeding. Her claim that they were tricked into signing the agreement does not stand up againstthe testimony of Atty. Santos Pampolina, who declared under his oath as a witness (and as an attorney andofficer of the court) that he explained the meaning of the document to Gelos, who even read it himself beforesigning it. . . . Gelos points to the specific tasks mentioned in the agreement and suggests that they are thework of a tenant and not of a mere hired laborer. Not so. The work specified is not peculiar to tenancy. Whata tenant may do may also be done by a hired laborer working under the direction of the landowner, as in thecase at bar. It is not the nature of the work involved but the intention of the parties that determines therelationship between them. As this Court has stressed in a number of cases, "tenancy is not a purely factualrelationship dependent on what the alleged tenant does upon the land. It is also a legal relationship. Theintent of the parties, the understanding when the farmer is installed, and as in this case, theirwrittenagreements, provided these are complied with and are not contrary to law, are even more important."

Classes of agricultural tenancy

Agricultural tenancy is classified into share tenancy and leasehold tenancy (M. A. GERMAN, SHARE ANDLEASEHOLD TENANCY, 13 [1995]).

Share tenancy means "the relationship which exists whenever two persons agree on a joint undertaking foragricultural production wherein one party furnishes the land and the other his labor, with either or both contributingany one or several of the items of production, the tenant cultivating the land personally with aid of labor availablefrom members of his immediate farm household, and the produce thereof to be divided between the landholder andthe tenant." (Rep. Act No. 3844 [1963]. Sec. 166 [25]) .

With the passage of RA 3844, share tenancy has been declared to be contrary to public policy and abolished (Rep.Act No.3844 [1963], sec. 4) except in the case of fishponds, saltbeds, and lands principally planted to citrus,coconuts, cacao, coffee, durian and other similar permanent trees at the time of the approval of said Act (Rep. ActNo. 3844 [1963], sec. 35). When RA 6389 (1971) was enacted, agricultural share tenancy has been automaticallyconverted to leasehold but the exemptions remained. It was only under RA 6657 when the exemptions wereexpressly repealed.

Leasehold tenancy exists when a person who, either personally or with the aid of labor available from membersof his immediate farm household undertakes to cultivate a piece of agricultural land susceptible of cultivation by asingle person together with members of his immediate farm household, belonging to or legally possessed by, anotherin consideration of a fixed amount in money or in produce or in both (Rep. Act No. 1199 [1954], sec. 4) .

Under RA 6657, the only agricultural tenancy relation that is recognized is leasehold tenancy. Said law expresslyrepealed Sec. 35 of RA 3844, making all tenanted agricultural lands throughout the country subject to leasehold.

Leasehold tenancy may be established by operation of law, that is, through the abolition of share tenancy underSec. 4 of RA 3844; through the exercise by the tenant of his right to elect leasehold; or by agreement of the partieseither orally or in writing, expressly or impliedly,which was the condition before 1972 (M.A. German, supra, at 27).

Leasehold relation is instituted in retained areas with tenant(s) under RA 6657 or PD 27 who opts to choose toremain therein instead of becoming a beneficiary in the same or another agricultural land with similar or comparablefeatures. The tenant must exercise his option within one (1) year from the time the landowner manifests his choiceof the area for retention (Rep. Act No. 6657 [1988], sec. 6) . Leasehold relation also exists in all tenanted agriculturallands that are not yet covered under CARP (DAR Adm. O. No.5 [1993]).

The institution of leasehold in these areas ensure the protection and improvement of the tenurial and economicstatus of tenant-tillers therein. (Rep. Act No. 6657 [1988] , sec. 6).

Leasehold tenancy distinguished from civil law lease

In Gabriel vs. Pangilinan, 58 SCRA 590 (1974) , the Supreme Court distinguished leasehold tenancy from civillaw lease.

There are important differences between a leasehold tenancy and a civil law lease. The subject matter ofleasehold tenancy is limited to agricultural land; that of civil law lease may be either rural or urban property.As to attention and cultivation, the law requires the leasehold tenant to personally attend to, and cultivate theagricultural land, whereas the civil law lessee need not personally cultivate or work the thing leased. As topurpose, the landholding in leasehold tenancy is devoted to agriculture, whereas in civil law lease, thepurpose may be for any other lawful pursuits. As to the law that governs, the civil law lease is governed bythe Civil Code,whereas leasehold tenancy is governed by special laws (at 596).

Elements of Agricultural Tenancy

The following are the essential requisites for the existence of a tenancy relation:

a) The parties are the landholder and the tenant;

b) The subject is agricultural land;

c) There is consent by the landholder for the tenant to work on the land, given either orally or inwriting, expressly or impliedly;

d) The purpose is agricultural production;

e) There is personal cultivation or with the help of the immediate farm household; and

f) There is compensation in terms of payment of a fixed amount in money and/or produce. (Carag vs.CA, 151 SCRA 44 [1987]; Gabriel vs. Pangilinan, 58 SCRA 590 [1974]; Oarde vs. CA, 280 SCRA 235[1997]; Qua vs. CA, 198 SCRA 236 [1991])

The Supreme Court emphasized in numerous cases that "(a)ll these requisites must concur in order to create atenancy relationship between the parties. The absence of one does not make an occupant of a parcel of land, or acultivator thereof, or a planter thereon, a de jure tenant. This is so because unless a person has established his statusas a de jure tenant, he is not entitled to security of tenure nor is he covered by the Land Reform Program of theGovernment under existing tenancy laws." (Caballes v. DAR, 168 SCRA 254 [1988])

In the case of Teodoro vs. Macaraeg, 27 SCRA 7 (1969), the Court found all the elements of an agriculturalleasehold relation contained in the contract of lease executed by the parties.

Teodoro vs. Macaraeg 27 SCRA 7 (1969)

Facts:

Macaraeg had been the lessee of the property of Teodoro for the past seven (7) years when he was advisedby the latter to vacate the property because it would be given to another tenant. Thereafter, a new tenant wasinstalled who forbade Macaraeg from working on the riceland. On the other hand, Teodoro denied thatMacaraeg was his tenant and claimed that he had always leased all of his 39-hectare riceland under civillease. He further claimed that after the expiration of his "Contract of Lease" with Macaraeg in 1961, thelatter did not anymore renew his contract.

Held:

The Contract of Lease between the parties contains the essential elements of a leasehold tenancy agreement.The landholding in dispute is unmistakably an agricultural land devoted to agricultural production. Morespecifically, the parties stipulated that "the property leased shall be used or utilized for agricultural enterpriseonly." Furthermore, the parties also agreed that the farmland must be used for rice production as could beinferred from the stipulation that "the rental of nine (9) cavans of palay per hectare for one agricultural year .. . must be of the same variety (of palay) as that produced by the LESSEE."

The land is definitely susceptible of cultivation by a single person as it is of an area of only four and a half (4-1/2) ha. This court has held that even a bigger area may be cultivated personally by the tenant, singly orwith the help of the members of his immediate farm household.

From the stipulation that "the rental must be of the same variety as that produced by the LESSEE," it canreasonably be inferred that the intention of the parties was that Macaraeg personally work the land, which hedid as found by the Agrarian Court, thus: "In the instant case, petitioner (Macaraeg) cultivated thelandholding belonging to said respondent (Teodoro) for the agricultural year 1960-61 in consideration of afixed annual rental." (italics supplied) Moreover, there is no evidence that Macaraeg did not personallycultivate the land in dispute. Neither did Teodoro allege, much less prove, that Macaraeg availed of outsideassistance in the cultivation of the said riceland.

Teodoro is the registered owner of the disputed landholding and he delivered the possession thereof toMacaraeg in consideration of a rental certain to be paid in produce. Evidently, there was a valid leaseholdtenancy agreement. Moreover, the provision that the rental be accounted in terms of produce 9 cavans perhectare is an unmistakable earmark, considering the other stipulations, that the parties did actually enterinto a leasehold tenancy relation (at 16-17; underscoring supplied) .

Agricultural tenancy relation is different from farm employer-farm employee relation. The Court clarified thedifference in the case of Gelos vs. CA, 208 SCRA 608 (1992), as follows:

On the other hand, the indications of an employer-employee relationship are: 1) the selection andengagement of the employee; 2) the payment of wages; 3) the power of dismissal; and 4) the power tocontrol the employee's conduct although the latter is the most important element.

According to a well-known authority on the subject, tenancy relationship is distinguished from farmemployer-farm worker relationship in that: "In farm employer-farm worker relationship, the lease is one oflabor with the agricultural laborer as the lessor of his services and the farm employer as the lessee thereof. Intenancy relationship, it is the landowner who is the lessor, and the tenant the lessee of agricultural land. Theagricultural worker works for the farm employer and for his labor he receives a salary or wage regardless ofwhether the employer makes a profit. On the other hand, the tenant derives his income from the agriculturalproduce or harvest." (at 614)

Parties : landholder and tenant

Tenant defined.

A tenant is "a person who by himself, or with the aid available from within his immediate household, cultivatesthe land belonging to or possessed by another, with the latter's consent for purposes of production, sharing theproduce with the landholder or for a price certain or ascertainable in produce or in money or both, under theleasehold tenancy system." (Rep. Act No. 1199 [1954], sec. 5 (a)).

An overseer of a coconut plantation is not considered a tenant.

Zamoras vs. Su, Jr.

184 SCRA 248 (1990)

Facts:

Zamoras was hired by Su as overseer of his coconut land in Dapitan City. Zamoras was tasked to have theland titled in Su's name. He was also "assigning portions of the land to be worked by tenants, supervising thecleaning, planting, care and cultivation of the land, the harvesting of coconuts and selling of the copra." Ascompensation, he was paid salary of P2,400 per month plus 1/3 of the proceeds of the sales of the copra. Sugot another 1/3 of the proceeds while the other third went to the tenants. In 1981, Su obtained a loan fromAnita Hortellano and the latter was authorized by Su to harvest the coconuts. Meanwhile, he informedZamoras that he was being temporarily laid-off until the loan is settled. Zamoras filed a case for illegaltermination and breach of contract before the Regional Arbitration Branch of the Ministry of Labor. TheLabor Arbiter held that Zamoras' dismissal was without just cause and ordered Zamoras reinstatement. Onappeal, the National Labor Relation Commission reversed the Labor Arbiter by holding that there is noemployee-employer relation existing between the parties but a landlord-tenant relation hence jurisdictionrests with the agrarian court. Zamoras assailed the decision of NLRC.

Held:

The NLRC's conclusion that a landlord-tenant relationship existed between Su and Zamoras is not supportedby the evidence which shows that Zamoras was hired by Su not as a tenant but as overseer of his coconutplantation. As overseer, Zamoras hired the tenants and assigned their respective portions which theycultivated under Zamoras' supervision. The tenants dealt directly with Zamoras and received their one-thirdshare of the copra produce from him. The evidence also shows that Zamoras, aside from doingadministrative work for Su, regularly managed the sale of copra processed by the tenants. There is noevidence that Zamoras cultivated any portion of Su's land personally or with the aid of his immediate farmhousehold.

The following circumstances indicate an employer-employee relationship between them: 1. Zamoras wasselected and hired by Su as overseer of the coconut plantation. 2. His duties were specified by Su. 3. Sucontrolled and supervised the performance of his duties. He determined to whom Zamoras should sell thecopra produced from the plantation. 4. Su paid Zamoras a salary of P2,400 per month plus one-third of thecopra sales every two months as compensation for managing the plantation."

There is no tenancy relation because the element of personal cultivation does not exist.

Castillo vs. CA 205 SCRA 529 (1992)

Facts:

Alberto Ignacio filed a complaint for injunction against Castillo alleging that he is the agricultural tenant ofthe latter. He claims that Castillo allowed him to construct a rest house in the property and that, thereafter,Castillo started cutting fruit-bearing trees on the land and filled with adobe stones the area intended forvegetables. On the other hand, Castillo denied that Ignacio was his tenant but that the latterwas only a"magsisiga" of the landholding and that he did not ask permission from Ignacio when he constructed his resthouse. The trial court found no tenancy relationship between the parties but this was reversed by the Court ofAppeals.

Held:

The element of personal cultivation is absent in this case. The alleged tenant "is a businessman byoccupation and this is his principal source of income. He manufactures hollow blocks. He also has a piggeryand poultry farm as well as a hardware store on the land adjoining the subject land. To add to that, therespondent farms the riceland of one Dr. Luis Santos. It is thusevident that the working hours of therespondent as a businessman and his other activities do not permit him to undertake the work and obligationsof a real tenant. This is further supported by the undisputed fact that the respondent cannot even personallyperform the work of a smudger because on 22 October 1986, the respondent hired some 20 people who arenot members of his family to cut and burn the grass in the premises of the subject land." (at 535-536) .

An owner tilling his own agricultural land is not a tenant within the contemplation of the law (Baranda vs.Baguio, 189 SCRA 194 (1990).

In Oarde vs. CA, et al., 280 SCRA 235 (1997), certifications of tenancy/non-tenancy issued by DAR are notconclusive.

"The certifications issued by administrative agencies or officers that a certain person is a tenant are merelyprovisional and not conclusive on courts, as ruled by this Court in Cuao vs. Court of Appeals, citingPuertollano vs. IAC. Secondly, it is well-settled that the "findings of or certifications issued by the Secretaryof Agrarian Reform, or hisauthorized representative, in a given locality concerning the presence or absenceof a tenancy relationship between the contending parties is merely preliminary or provisional and is notbinding upon the courts." (at 246)

Landholder-lessor

A landholder-lessor is defined as "any person, natural or juridical, either as owner, lessee, usufructuary or legalpossessor of agricultural land, who lets, leases or rents to another said property for purposesof agriculturalproduction and for a price certain or ascertainable either in an amount of money or produce." (Rep. Act No. 1199[1954], sec. 42). Thus, consent need not be necessarily given personally by the registered owner as long as theperson giving the consent is the lawful landholder as defined by law.

Bernas vs. Court of Appeals 225 SCRA 119 (1993)

Facts:

Natividad Deita is the owner of a 5,831-sq m property which she entrusted to her brother, Benigno, so thathe could use the fruits thereof to defray the cost of his children's education in Manila. The property wasleased by Bernas pursuant to a production sharing arrangement executed between Bernas and Benigno.Natividad played no part in this arrangement. In 1985, the lots were returned by Benigno to his sister butwhen the owners sought to take possession, Bernas refused to relinquish the property. Bernas was claimingthat he was an agricultural lessee entitled to security of tenure. Natividad filed an action for recovery ofpossession. The trial court ruled in favor of Bernas but this was subsequently reversed by the CA.

Issue:

Is consent by a legal possessor, even if without the consent of landowner, sufficient to create tenancyrelationship?

Held:

Yes. As legal possessor of the property, Benigno had the authority and capacity to enter into an agriculturalleasehold relation with Bernas. "The law expressly grants him, as legal possessor, authority and capacity toinstitute an agricultural leasehold lessee on the property he legally possessed." (at 125-126)

Subject is agricultural land

For agricultural tenancy to exist, the subject of the agreement must be an agricultural land.

RA 6657 defines the term "agricultural land" as "land devoted to agricultural activity as defined in this Act andnot classified as mineral, forest, residential, commercial or industrial land." (see discussion on scope of CARP,Chapter I). Under RA 3844, "agricultural land" refers to land devoted to any growth, including but not limited tocrop lands, salt beds, fish ponds, idle land and abandoned land.

The area of agricultural land that a lessee may cultivate has no limit, but he should cultivate the entire area leased.The three (3) hectare limit under RA 6657 applies only to the award that may be given to the agrarian reformbeneficiary.

Consent by landholder

As discussed earlier, consent must be given by the true and lawful landholder of the property. In Hilario vs. IAC,148 SCRA 573 (1987), the Supreme Court held that tenancy relation does not exist where a usurper cultivates theland.

Hilario vs. Intermediate Appellate Court 148 SCRA 573 (1987)

Facts:

Salvador Baltazar was working on the land pursuant to a contract executed between him and SocorroBalagtas involving a two (2)-ha property. According to Baltazar, in 1965, he relinquished 1.5 ha to certainindividuals and what remained under his cultivation was -ha owned by Corazon Pengzon. After Socorro'sdeath, no new contract was executed. Sometime in 1980, the Hilarios started cultivating a 4,000-sq m portionof the property and enjoined Baltazar from entering the same. The Hilarios claimed that they acquired thelandholding from the Philippine National Bank after a foreclosure proceeding. On the other hand, CorazonPengzon explained that she did not get any share from the produce of the land since 1964 and she would nothave accepted it knowing that she did not own the property anymore.

Held:

Baltazar is not a tenant because no consent was given by Pengzon. As held in Tiongson v. Court of Appeals,130 SCRA 482, tenancy relationship can only be created with the consent of the true and lawful landholderthrough lawful means and not by imposition or usurpation. "So the mere cultivation of the land by usurpercannot confer upon him any legal right to work the land as tenant and enjoy the protection of security oftenure of the law (Spouses Tiongson vs. Court of Appeals, 130 SCRA 482)."

Successors-in-interest of the true and lawful landholder/owner who gave the consent are bound to recognize thetenancy established before they acquired the agricultural land.

Endaya vs. Court of Appeals 215 SCRA 109 (1992)

Facts:

Spouses San Diego owned a 2.0200-ha rice and corn land. The property has been cultivated by Pedro Fidelias a tenant of the couple under a 50-50 sharing agreement. In 1974, a lease contract was executed betweenspouses San Diego and a certain Regino Cassanova for a period of four (4) years at P400.00 per ha perannum rental and gave him the authority to oversee the planting of crops. The contract was subsequentlyrenewed to last until 1980. In both cases, Fideli signed as witness. While the contract was subsisting, Fidelicontinuously worked on the property, sharing equally with Cassanova the net produce of the harvests. In1980, the land was sold to spouses Endaya. Fideli continued tilling the land despite the Endaya's demand tovacate the property. Fideli refused to leave and deposited with Luzon Development Bank the landowner'sshare in the harvests. Fideli filed a complaint praying that he be declared the agricultural tenant of theEndayas. The trial court ruled in favor of the Endayas but the same was subsequently reversed by the CAholding that Fideli is an agricultural lessee entitled to security of tenure.

Held:

It is true that the Court has ruled that agricultural tenancy is not created where the consent of the true andlawful owners is absent. But this doctrine contemplates a si