Agrarian Reform Law

AGRARIAN REFORM LAW
ATTY. JOSEPH ANDREW L. CALUBAQUIB

1ST SEMESTER, SY 2015-2016
I.
FIRST RECITATION
a. Land Reform is the full range of measures that may or should be
taken to improve or remedy those defects in the relations among
men with respect to their rights in the land. It is also defined as
an integrated set of measures designed to eliminate obstacles to
economic and social development arising out of defects in the
agrarian structure.
b. Agrarian reform is the redistribution of lands, regardless of crops
or fruits produced, to farmers and regular farmworkers who are
landless, irrespective of tenurial arrangement, to include the
totality of factors and support services designed to lift the
economic status of the beneficiaries and all other arrangements
alternative to the physical redistribution of lands, such as
production or profit-sharing, labor administration, and the
distribution of shares of stock, which will allow beneficiaries to
receive a just share of the fruits of the lands they work.
c. The Agrarian problem is that the farmer is poor thus he cannot
afford to pay more taxes and thus the government cannot raise
sufficient revenue with which to support its operation.
d. There is a need for agrarian reform in the Philippines because the
Philippine soil is one of the most fertile in the world, that an
agricultural country can actually attain industrialization, but to do
so a large amount of capital is required, and by utilizing the
frozen capital reserved for the agrarian sector, and to abolish
tenancy in the system of agrarian reform.
e. The objections to agrarian reform include the fragmentation of
landholding, wherein there will reduction of lands to some
landowners because the agrarian reform program would entail
the equalization on the area of land they till. Another is that
small farms are uneconomic, because the cost of materials would
not
be
bought
in
bulk,
which
incurs
lesser
cost.
Small
landholdings are also covered in the agrarian reform program

and that agrarian reform has failed in the past.
f. The components agrarian reform is land distribution and
companion measures. Land distribution will allow the tillers of
the land the owners of the land they are tilling and to insure their
right to just share in the fruits of their labor. Companion
AGRARIAN REFORM LAW

measures include the creation of financial institutions to carry
out the goals of agrarian reform.
g. The role of the landlord is to provide the land that will be

redistributed, while the farmers till the land, and the government
regulates the relation among the landlord and the farmers.
II.
SECOND RECITATION
a. Before, there used to be three shifts in order for a share tenant to
a full owner. The shifts are: share tenant to leaseholder,
leaseholder to amortizing owner, and amortizing owner to full
owner.
b. In PD 27, there is only one shift, from amortizing owner to full
owner only.
c. The law applies only to private agricultural lands primarily
devoted to rice and corn under share tenancy or lease-tenancy.
d. The two aspects of the land distribution policy: First is the
determination of what lands are to be transferred and the second
is the problem of financing the compensation to be paid to the
former landowners.
e. The lands to be awarded may be 3 hectares if irrigated and 5
hectares if not irrigated.
f. The requisites for the exercise by the landowner of his right of
retention are:
i. The land must be devoted to rice and corn crops;
ii. There must be a system of share-crop or lease tenancy
obtaining therein;
iii. The size of the landholding must not exceed 24 hectares,
or it could be more than 24 hectares provided that at least
7 hectares thereof are covered lands and more than 7
hectares of it consist of other agricultural lands.
g. The right of retention may be exercised by the heirs of the
decedents provided that he must have manifested during his
lifetime his intention to exercise his right of retention prior
August
30,
1990.
They
may
also
exercise
the
original
landowners right of retention if they can prove that the

decedent had no knowledge of OLT coverage over the subject
property.
h. Requisites for the waiver of right of retention:
AGRARIAN REFORM LAW

i. Signing of the Landowner-Tenant Production Agreement
and Farmers Undertaking (LTPA-FU) covering the subject
property;
ii. Entering into a direct-payment scheme agreement as
evidenced by a Deed of Transfer over the subject property;
and
iii. Signing/Submission of other documents indicating consent

to have the subject property covered, such as the form
letter of the LBP on the disposition of cash and bond
portions of land transfer claim for payment, and the Deed
of Assignment, Warranties and Undertaking executed in
favor of the LBP.
i. The Selection of area is exercised by the landowner.
III.
THIRD RECITATION
a. The issuance of the title shall be done only until the tenantfarmer has become a full-fledged member of a duly recognized
farmers cooperative. In case of default, the amortizations due
shall be paid by the farmers cooperative in which the defaulting
tenant-farmer is a member, with the cooperative having a right
of recourse against him.
b. The modes of compensation are:
i. Bond payment over 10 years, with 10% of the value of the
land payable immediately in cash, and the balance in the
form of LBP bonds bearing market areas of interest that are
aligned with 90-day treasury bill rates, net of applicable
final withholding tax;
ii. Direct payment in cash or kind by the farmer-beneficiaries
with the terms to be mutually agreed upon by the
beneficiaries and landowners and subject to the approval
of the DAR; and
iii. Other modes of payment as may be prescribed or
approved by the Presidential Agrarian Reform Council.
c. Lien by way of mortgage shall exist in favor of the LBP on all
lands it has financed and acquired by the farmer-beneficiary by
virtue of PD 27 for all amortizations, both principal and interest,
AGRARIAN REFORM LAW

due from the farmer-beneficiary or a valid transferee until the
amortizations are paid in full.
d. Ground for foreclosure is the failure on the part of the farmerbeneficiary to pay three annual amortizations shall be sufficient
cause for the LBP to foreclose on the mortgage.
e. To lift the foreclosure, the tenant-farmer, or any of his
compulsory heirs may lift the foreclosure within a period of two
years from its registration by paying the LBP all unpaid
amortizations on the land with interest thereon of 6% per annum.
f. In case of failure to lift the foreclosure within the said period,

ownership of the land shall be deemed transferred to the LBP.
g. The LBP may sell the foreclosed land, not later than 3 months
after its acquisition of the land, to any interested landless farmer
duly certified to as a bona fide landless farmer by the DAR of the
barangays or the two closest barangays where the land is
situated.
h. The land granted to the beneficiaries may be transferred only by
hereditary succession and to the government. The transfer by
sale is not allowed because there is the idea that the lands are to
be held under trust for the succeeding generations of farmers.
i. The landowner is exempt from paying capital gains tax on the
proceeds of the amortization paid him by the tenant-purchaser
and likewise from income tax due on the accruing interest paid
as an addition to the total cost of the land.
j. Operation Land Transfer is the main objective of PD 27. The
objective of OLT is to distribute land transfer certificates to the
tenant-farmers.
k. The DAR Secretary is authorized and empowered to sign, issue
and transfer certificates in the name and on behalf of the
President of the PH.
l. The scope of the OLT exempts lands devoted to rice and corn and
is not tenanted or when it is not devoted to rice and corn but
already tenanted.
m. Stages of OLT:
i. Issuance of a Certificate of Land Transfer (CLT) to a tenantfarmer as soon as the landholding is transferred by the
DAR to recognize him as deemed owner.
AGRARIAN REFORM LAW

ii. Issuance of an Emancipation Patent (EP) as proof of full
ownership of the landholding upon complete payment of
the annual amortization.
n. Priority Areas:
i. First: Landed estates or landholdings larger than 24
hectares.
ii. Second: Landholdings of 24 hectares and less, but not
below 12 hectares.
iii. Third: Landholdings less than 12 hectares.
o. CLTs are certificates issued to tenant-farmers in agricultural lands
primarily devoted to the production of rice and corn found
qualified to acquire the lands tilled by them.
i. CLTs may be used as collateral for loans. The amount of
loan shall not be less than 60% of the value of the farm
holding as determined by PD 27.
ii. The conditions of the loan:

1. The loan obtained shall be guaranteed by the
Guarantee Fund established by the Samahang Nayon
in which the tenant-farmer is a member.
2. Such loans shall be used in the improvement or
development of the farm holding of the tenantfarmer or the establishment of facilities that will
enhance production or marketing of agricultural
productions or increase farm income therefrom.
p. Emancipation Patent is issued only when the tenant-farmer shall
have fully complied with the requirements for the grant of title
under PD 27 and issued by the DAR
IV.
FOURTH RECITATION
a. Proclamation No. 131 and EO 229 provides the mechanisms
needed initially to implement the program.
b. RA 6657 enacts the Comprehensive Agrarian Reform Program.
c. Key Objectives of the Program:
i. Equity: It establishes equity by democratizing control over
the countrys lands to a large section of the population and
enabling them to directly participate in nation-building.
ii. Capability: it builds the capability of farmer-beneficiaries to
manage reformed lands productively by giving them the
support services they need.
AGRARIAN REFORM LAW

iii. Sustainability: it promotes sustainability by incorporating
the ecosystem and stakeholder approaches to land use and
management.
d. CARL of 1988 covers all public and private agricultural lands
(regardless of tenurial arrangement and commodity produced)
including other lands of the public domain suitable to agriculture.
e. Retention Limits:
i. General Rule: The size of any public of private agricultural
land which a person may own or retain directly or indirectly
shall vary according to factors governing a viable familysized farm.
1. FACTORS:
a. commodity produced
b. terrain
c. infrastructure, and
d. Soil fertility. (Determined by PARC).
ii. The retained land shall not exceed 5 hectares.
iii. Three hectares may be awarded to each child of the
landowner subject to the following qualifications:
1. That he is at least 15 years of age; and
2. That he is actually tilling the land or directly
managing the farm.
iv. Exceptions:
1. Landowners whose lands have been covered by PD
27.
2. Original homestead grantees.
3. Expropriated agricultural lands.
f. Landholdings five hectares and below are exempt from coverage
under the CARP, except those submitted for VOS before July 1,
2009 wherein the retention right has been waived.
g. Right to choose the area to be retained:
i. General Rule: the right to choose the area to be retained
shall pertain to the landowner.
ii. Exception: if the area selected is tenanted, then the tenant
shall have the option to choose whether to remain therein
or be a beneficiary in the same or another agricultural land
with similar or comparable features.
1. If the tenant chooses to remain in the retained area ,
he shall be considered a leaseholder and shall lose
right to be a beneficiary; or
AGRARIAN REFORM LAW

2. If he chooses to be a beneficiary in another
agricultural land, he loses his right as a leaseholder
to the land retained by the landowner.
a. The tenant must exercise this option within a
period of one year from the time the landowner
manifests his choice of the area of retention.
h. Exemptions and Exclusions:
i. Lands actually, directly and exclusively used and found to
be necessary for:
1. Parks, wildlife, forest reserves, and reforestation;
2. Fish sanctuaries and breeding grounds; and
3. Watersheds and mangroves.

ii. Private lands actually, directly, and exclusively used for
prawn farms and fishponds;
iii. Lands actually, directly and exclusively used and found to
be necessary for:
1. National defense;
2. School sites and campuses, including experimental
farm stations operated by public or private schools,
for educational purposes, and seeds and seedlings,
research and pilot production centers;
3. Church sites and convents appurtenant thereto,
mosque
sites
and
Islamic
centers
appurtenant
thereto;
4. Communal burial grounds and cemeteries;
5. Penal colonies and penal farms actually worked by
the inmates;
6. Government and private research and quarantine
centers
iv. All lands with 18% slope and over, unless already
developed.
v. Ancestral lands or domains.
V.
FIFTH RECITATION
a. Qualifications of Beneficiaries:
i. General Qualifications:
1. Landless.
2. Filipino Citizen.
3. Permanent resident
of
the
barangay
municipality where the landholding is located.
and/or
AGRARIAN REFORM LAW

4. At least 15 years of age at the time of identification,
screening and selection of farmer-beneficiaries.
5. Willing, able and equipped with the aptitude to
cultivate and make the land productive.
ii. Specific Qualification is required only in commercial farms
and plantations wherein the applicant must have been
employed as of June 15, 1988 in the landholding covered
under CARP.
b. Grounds for Disqualifications:
i. Failure to meet the qualifications provided for.
ii. Execution of waiver of right to become an ARB in exchange

for due compensation and such waiver has not been
questioned in the proper government entity.
iii. Non-payment of an aggregate of three
amortizations
and
failure
to
exercise
the
annual
right
of
redemption/repurchase within two years resulting in the

foreclosure of mortgage by the LBP of a previously
awarded land.
iv. Deliberate non-payment of 3 annual amortizations to the
landowner resulting in the repossession by the landowner
(in the case of VLT/DPS) of the awarded land.
c. Tenants/Lessees Right of Redemption or Pre-Emption:
i. In case the landowner/lessor decides to
sell
his
tenanted/leased land, he must first offer to sell it to the

tenant or lessee therefor who has the preferential right to
buy the same under reasonable terms and conditions.
ii. If the land is sold to a third person without the knowledge
of the tenant/lessee thereof, the latter shall have the right
to redeem the same at reasonable price and consideration.
iii. Sale or transfer to the government, LBP, or DAR of lands
acquired by the beneficiary under the CARL shall be
subject to the right of the children or spouse of the
beneficiary to repurchase the land from the government,
DAR or LBP, within a period of 2 years.
d. Compulsory Acquisition is the mandatory
agricultural
lands
including
facilities
and
acquisition
of
improvements
necessary for agricultural production, as may be appropriate, for

distribution to qualified beneficiaries upon payment of just
compensation.
AGRARIAN REFORM LAW

e. Rules on Land Acquisition:
i. The landholdings of the Landowners owning a total of 5
hectares or less shall not be subject to acquisition and
distribution under CARP.
ii. Landholdings above 5 hectares which were offered under
the VLT and not approved by the DAR shall be covered
under compulsory acquisition.
iii. Landowners may voluntarily offer their private agricultural
lands.
iv. Landowners
who
have
voluntarily
offered
their
landholdings for coverage under the CARP and those who

have
previously
waived
their
rights
to
retain
are
disqualified from being ARBs.
v. The maximum landholding awarded to ARBs shall not

exceed 3 hectares.
f. Qualified Beneficiaries are:
i. Agricultural lessees and share tenants, regular, seasonal
and other farmworkers, actual tillers or occupants of public
lands,
collectives
or
cooperatives
of
the
above
beneficiaries, and others directly working on the land.

(Order of the Priority)
ii. Children of the landowners.
g. The responsibility of the beneficiary shall commence at the time
of the receipt of the emancipation patent or the CLOA (certificate
of land ownership award).
h. Payment of the Beneficiaries:
i. The lands awarded shall be paid for by the beneficiaries to
the LBP in 30 annual amortizations at 6% interest per
annum subject to the following rules:
1. The annual amortizations shall start 1 year from the
date of the CLOA registration. However, if the
occupancy took place a year after the issuance of the
CLOA registration, the amortization shall start 1 year
from actual occupancy.
2. The payments for the first 3 years after the award
may be reduced at amounts as established by PARC.
3. The first 5 annual payments may not be more than
5% of the value of the annual gross production as
established by DAR.
AGRARIAN REFORM LAW

4. Should the scheduled annual payments after the 5th
years exceed 10% of the annual gross production
and the failure to produce accordingly is not due to
the beneficiarys fault, the LBP may reduce the
interest rate or the principal obligation to make the
repayment affordable.
i. Lien of the LBP by way of mortgage:
i. The LBP has a lien by way of mortgage on the land
awarded to the beneficiary, and this may be foreclosed by
the LBP for non-payment of an aggregate of 3 annual
amortizations.
j. Rules on Land Distribution:
i. Equitable distribution of the land shall be observed:
1. Landholdings
covered
by
the
CARP
shall
be
distributed first to agricultural lessees and share

tenants, then regular farmworkers. (The maximum
area of landholding shall not exceed 3 hectares).
2. The excess areas shall be awarded to other qualified
beneficiaries without prejudice to the consideration
of immediate family members.
k. Certificate of Land Ownership Award (CLOA) is the title awarded
to the ARBs on a contiguous tract or several parcels of land.
l. The qualified transferees may not sell, transfer or convey the
lands they have acquired except by hereditary succession or to
the government, the LBP or the DAR or to other qualified
beneficiaries for a period of 10 years.
VI.
SIXTH RECITATION
a. Determination of Just Compensation shall be subject to the:
i. Cost of the acquisition of land
ii. Current value of like properties
iii. Its nature
iv. Its actual use and income
v. Sworn valuation by the owner
vi. Tax declarations
vii. Assessment made by government assessors
viii. 70% of the zonal valuation of the BIR.
b. Modes of Just Compensation:
i. Cash payment, under the following terms and conditions:
AGRARIAN REFORM LAW

1. For lands above 50 hectares, insofar as the excess
hectarage is concerned 25% cash, the balance to
be
paid
in
government
financial
instruments
negotiable at any time;

2. For lands above 24 hectares and up to 50 hectares
30%
cash, the balance to be paid in government
financial instruments negotiable at any time;

3. For lands 24 hectares and below 35% cash, the
balance
to
be
paid
in
government
financial
instruments negotiable at any time.

ii. Shares of stock in GOCCs, LBP Preferred Shares, physical
assets or other qualified investments in accordance with
guidelines set by PARC;
iii. Tax credits which can be used against any tax liability;
iv. LBP Bonds.
c. Voluntary Land Transfer
i. Guidelines:
1. All notices for VLT must be submitted to the DAR
within the 1st year of the implementation of CARP.
Negotiations between the landowners and qualified
beneficiaries
covering
any
VLT
which
remain
unresolved after 1 year shall not be recognized and

such
land
shall
instead
be
acquired
by
the
government and transferred in pursuant to RA 6657;

2. The terms and conditions of such transfer shall not
be less favorable to the transferee than those of the
governments standing offer to purchase from the
landowner and to resell to the beneficiaries, if such
offers have been made and are fully known to both
parties; and
3. The voluntary agreement shall include sanctions for
non-compliance by either party and shall be duly
recorded and its implementation monitored by the
DAR.
4. Payment of compensation by the beneficiaries:
a. Direct payment in cash or in kind may be made
by the farmer-beneficiary to the landowner
under terms to be mutually agreed upon by
both parties, which shall be binding upon them,
upon registration with and approval by the
DAR. Said approval shall be considered given,
AGRARIAN REFORM LAW

unless notice of disapproval is received by the
farmer-beneficiary within 30 days from the
date of registration.
d. Voluntary Offer to Sell
i. It involves the transaction between the government and
the landowners where the latter voluntarily offers his
landholding for sale in favor of the former. The transaction
is between the landowner and the beneficiary. There is also
the matter of incentives.
1. The incentive includes the exemption from paying

taxes and other fees.
e. Corporate landowners
i. Voluntary transfer of ownership: corporate landowners may
voluntarily
transfer
landholdings
to
ownership
the
over
government
their
or
agricultural
to
qualified
beneficiaries under such terms and conditions, consistent

with the Act, as may be agreed upon, subject to the DARs
confirmation.
ii. The grant of right to qualified beneficiaries to purchase
shares of stocks is upon the certification by the DAR.
f. Stock Distribution Option Plan:
i. Corporations that voluntarily divest themselves a portion of
their capital stock, equity or participation in favor of their
workers and other qualified beneficiaries.
ii. Policies and principles governing SDO Plans:
1. Viability and profitability of the
corporations
operations.
a. Such that the distribution of shares of stocks
would result to increased income and greater
benefits for the beneficiaries that if the lands
were
distributed
to
them
individually
or
collectively.
2. Features and transferability of shares of stocks
a. Any shares acquired by the workers and
beneficiaries shall have the same rights and
features as all other shares;
b. Any transfer of shares of stocks by the original
beneficiaries shall be void ab initio, UNLESS
AGRARIAN REFORM LAW

said transaction is in favor of a qualified and
registered
beneficiary
within
the
same
corporation.
c. The beneficiaries do not lose their rights and
privileges as stockholders of the corporation
even if they have retired, are incapacitated, or
are separated from the service unless they
opted to sell their shares of stocks.
3. Right of First Refusal
a. The beneficiaries shall have the right of first
refusal over the unsubscribed capital stock in
the same proportion of the par value of their
shares to the total par value of the outstanding
shares of stock.
b. The beneficiaries may opt to immediately
exercise
their
right
of
first
refusal
by
subscribing for the proportionate number of

shares, thus, affording them the preemptive
right over such shares.
c. In the event that the BOD decides to call the
subscriptions and/or issue additional shares in
order to raise funds, the beneficiaries shall
have 60 days or within a period specified in the
MOA to make payment for their subscribed
shares.
4. Representation in the BOD
a. Irrespective of the value of their equity in the
corporation or association, the beneficiaries
shall be assured of at least one representative
in the Board, or in a management executive
committee, of the corporation or association.
b. The representative/s to the BOD shall be
elected by the majority of the beneficiaries
through secret balloting.
c. The representative/s to the BOD shall have
tenure of 1 year in pursuance with the Corp.
Code. S/he can be re-nominated to the BOD as
long as the beneficiaries elect him/her.
d. As part of his/their duties and responsibilities,
the
representative/s
to
the
BOD
shall
render/submit reports to the officers of the
AGRARIAN REFORM LAW

association/cooperative
or
to
the
General
Assembly of the beneficiaries to apprise them

on
the
salient
points
of
discussion
resolutions passed in the Boards Meetings.
and

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AGRARIAN REFORM LAW

ATTY. JOSEPH ANDREW L. CALUBAQUIB

landholdings are also covered in the agrarian reform program