AGRARIAN REFORM LAW (MTE REVIEWER)

GENERAL CONCEPTS OF AGRARIAN REFORM

Agrarian law – the term “agrarian” is derived from the Latin word “ager” which means a field. The word agrarian means “relating to
land or to the ownership or division of land.”

Agrarian law embraces ALL LAWS that govern and regulate the rights and relationship over agricultural lands between landowners,
tenants, lessees or agricultural workers.

Agrarian law refers to the DISTRIBUTION of public agricultural lands, large estates, and REGULATION of the relationship between the
landowner and the farmer who works on the land. It embraces all laws that govern and regulate the rights and relationship over
agricultural lands BETWEEN landowners, tenants, lessees or agricultural workers.

The focus of agrarian laws is on agrarian reform, or the redistribution of agricultural lands. Our basic law on Agrarian Reform is the
COMPREHENSIVE AGRARIAN REFORM LAW (CARL) supplemented by
 Tenant Emancipation Law and;
 the Code of Agrarian Reforms

primary objective: to breakup agricultural lands and transform them into ECONOMIC-SIZE FARMS to be owned by the farmers
themselves, in view of uplifting their socio-economic status

The agrarian reform program is founded on the right of farmers and regular farm workers who are landless, to OWN DIRECTLY or
COLLECTIVELY the lands they till or, in the case of other farm workers, to RECEIVE a just share in the fruits

Social legislation – it covers labor laws, agrarian laws and welfare laws. The emphasis is more on the aspect of general public good
and social welfare. These are laws or statutes which are enacted to pursuant to the social justice clause of the constitution

I and II – found on other reading material

II – LAND ACQUISITION

Corporate Landowners: Stock Distribution Option – Sec. 31 of RA 6657

SECTION 31. Corporate Landowners. – Corporate landowners may voluntarily transfer ownership over their agricultural
landholdings to the Republic of the Philippines pursuant to Section 20 hereof or to qualified beneficiaries, under such terms and
conditions, consistent with this Act, as they may agree upon, subject to confirmation by the DAR.

Upon certification by the DAR, corporations owning agricultural lands may give their qualified beneficiaries the right to purchase
such proportion of the capital stock of the corporation that the agricultural land, actually devoted to agricultural activities, bears in
relation to the company’s total assets, under such terms and conditions as may be agreed upon by them. In no case shall the
compensation received by the workers at the time the shares of stocks are distributed be reduced. The same principle shall be
applied to associations, with respect to their equity or participation.

Corporations or associations which voluntarily divest a proportion of their capital stock, equity or participation in favor of their
workers or other qualified beneficiaries under this section shall be deemed to have complied with the provisions of this Act:
Provided, That the following conditions are complied with:

a) In order to safeguard the right of beneficiaries who own shares of stocks to dividends and other financial benefits, the books of
the corporation or association shall be subject to periodic audit by certified public accountants chosen by the beneficiaries;

b) Irrespective of the value of their equity in the corporation or association, the beneficiaries shall be assured of at least one (1)
representative in the board of directors, or in a management or executive committee, if one exists, of the corporation or association;
and

c) Any shares acquired by such workers and beneficiaries shall have the same rights and features as all other shares.
d) Any transfer of shares of stocks by the original beneficiaries shall be void ab initio unless said transaction is in favor of a qualified
and registered beneficiary within the same corporation.

If within two (2) years from the approval of this Act, the land or stock transfer envisioned above is not made or realized or the plan
for such stock distribution approved by the PARC within the same period, the agricultural land of the corporate owners or
corporation shall be subject to the compulsory coverage of this Act.

Awards of Lands to Children of Landowners

SECTION 6. Retention Limits. – no person may own or retain, directly or indirectly, any public or private agricultural land, the size of
which shall vary according to factors governing a viable family-size farm, such as commodity produced, terrain, infrastructure, and
soil fertility as determined by the Presidential Agrarian Reform Council (PARC) created, but in no case shall retention by the
landowner exceed five (5) hectares. Three (3) hectares may be awarded to each child of the landowner, subject to the following
qualifications: (1) that he is at least fifteen (15) years of age; and (2) that he is actually tilling the land or directly managing the farm:
Provided, That landowners whose lands have been covered by Presidential Decree No. 27 shall be allowed to keep the areas
originally retained by them: Provided, that original homestead grantees or their direct compulsory heirs who still own the original
homestead at the time of the approval of this Act shall retain the same areas as long as they continue to cultivate said homestead.

The right to choose the area to be retained, which shall be compact or contiguous, shall pertain to the landowner: Provided,
however, That in case the area selected for retention by the landowner is tenanted, 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. In case
the tenant chooses to remain in the retained area, he shall be considered a leaseholder and shall lose his right to be a beneficiary
under this Act. In case the tenant chooses to be a beneficiary in another agricultural land, he loses his right as a leaseholder to the
land retained by the landowner. The tenant must exercise this option within a period of one (1) year from the time the landowner
manifests his choice of the area for retention.

In all cases, the security of tenure of the farmers or farmworkers on the land prior to the approval of this Act shall be respected.

Upon the effectivity of this Act, any sale, disposition, lease, management, contract or transfer of possession of private lands
executed by the original landowner in violation of this Act shall be null and void: Provided, however, That those executed prior to
this Act shall be valid only when registered with the Register of Deeds within a period of three (3) months after the effectivity of this
Act. Thereafter, all Registers of Deeds shall inform the Department of Agrarian Reform (DAR) within thirty (30) days of any
transaction involving agricultural lands in excess of five (5) hectares.

DAR AO 2, S. 2009

 Pursuant to section 3 of RA 9700, the landholdings of LOs owning a total of five (5) hectares or less shall not be subject of
acquisition and distribution under CARP

 Landholdings ABOVE five (5) hectares offered under VOLUNTARY LAND TRANSFER (VLT) and not approved by the DAR shall
be covered under COMPULSORY ACQUISITION (CA).

 Landowners may voluntarily offer their private agricultural lands for coverage under R.A. 6657; upon acceptance by the
DAR, the letter-offer for coverage under Voluntary Offer to Sell (VOS) can no longer be withdrawn. The DAR can
immediately subject such landholding to coverage under COMPULSORY ACQUISITION and DISTRIBUTION under CARP
notwithstanding the schedule of prioritized phasing under RA 9700.

III – RETENTION, EXEMPTION AND EXCLUSIONS

RETENTION RIGHTS

SECTION 6. Retention Limits. – no person may own or retain, directly or indirectly, any public or private agricultural land, the size of
which shall vary according to factors governing a viable family-size farm, such as commodity produced, terrain, infrastructure, and
soil fertility as determined by the Presidential Agrarian Reform Council (PARC) created, but in no case shall retention by the
landowner exceed five (5) hectares. Three (3) hectares may be awarded to each child of the landowner, subject to the following
qualifications: (1) that he is at least fifteen (15) years of age; and (2) that he is actually tilling the land or directly managing the farm:
Provided, That landowners whose lands have been covered by Presidential Decree No. 27 shall be allowed to keep the areas
originally retained by them: Provided, that original homestead grantees or their direct compulsory heirs who still own the original
homestead at the time of the approval of this Act shall retain the same areas as long as they continue to cultivate said homestead.

The right to choose the area to be retained, which shall be compact or contiguous, shall pertain to the landowner: Provided,
however, That in case the area selected for retention by the landowner is tenanted, 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. In case
the tenant chooses to remain in the retained area, he shall be considered a leaseholder and shall lose his right to be a beneficiary
under this Act. In case the tenant chooses to be a beneficiary in another agricultural land, he loses his right as a leaseholder to the
land retained by the landowner. The tenant must exercise this option within a period of one (1) year from the time the landowner
manifests his choice of the area for retention.

In all cases, the security of tenure of the farmers or farm workers on the land prior to the approval of this Act shall be respected.

Upon the effectivity of this Act, any sale, disposition, lease, management, contract or transfer of possession of private lands
executed by the original landowner in violation of this Act shall be null and void: Provided, however, That those executed prior to
this Act shall be valid only when registered with the Register of Deeds within a period of three (3) months after the effectivity of this
Act. Thereafter, all Registers of Deeds shall inform the Department of Agrarian Reform (DAR) within thirty (30) days of any
transaction involving agricultural lands in excess of five (5) hectares.

DAR AO 2, s. 2003

These are rules and procedures governing landowner retention rights

SECTION 2 – Statement of policies

 The LO has the right to choose the area to be retained by him which shall be compact and contiguous, and which shall be
least prejudicial to the entire landholding and the majority of the farmers therein

 The LO shall exercise the right to retain by signifying his intention to retain within 60 DAYS from receipt of notice of
coverage. Failure to do so within the period shall constitute a waiver of the right to retain any area.

EXEMPTIONS AND EXCLUSIONS

SECTION 10. Exemptions and Exclusions. – Lands actually, directly and exclusively used and found to be necessary for parks, wildlife,
forest reserves, reforestation, fish sanctuaries and breeding grounds, watersheds, and mangroves, national defense, school sites and
campuses including experimental farm stations operated by public or private schools for educational purposes, seeds and seedlings
research and pilot production centers, church sites and convents appurtenant thereto, mosque sites and Islamic centers
appurtenant thereto, communal burial grounds and cemeteries, penal colonies and penal farms actually worked by the inmates,
government and private research and quarantine centers and all lands with eighteen percent (18%) slope and over, except those
already developed shall be exempt from the coverage of this Act.

SECTION 3. (C) - Agricultural Land refers to land devoted to agricultural activity as defined in this Act and not classified as mineral,
forest, residential, commercial or industrial land.

SEC. 3(C) OF RA 6657, IN RELATION TO DOJ OPINION NO. 44 s. 1990

The meaning of agricultural lands covered by the CARL was explained further by the DAR in its Administrative Order No. 1, Series of
1990,[12] entitled “Revised Rules and Regulations Governing Conversion of Private Agricultural Land to Non-Agricultural Uses,”
issued pursuant to Section 49 of CARL, which we quote:

“x x x.  Agricultural land refers to those devoted to agricultural activity as defined in R.A. 6657 and not classified as mineral 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.”  (Emphasis supplied)
Prior to this Order, Department of Justice Opinion No. 44 dated March 16, 1990, which was addressed to then DAR Secretary
Florencio Abad, recognized the fact that before the date of the law’s effectivity on June 15, 1988, the reclassification or conversion
of lands was not exclusively done by the DAR.[13] Rather, it was a “coordinated effort” of all concerned agencies; namely, the
Department of Local Governments and Community Development, the Human Settlements Commission and the DAR.[14] Then
Justice Secretary Franklin M. Drilon explained the coordination in this wise:
“x x x.  Under R.A. No. 3844,[15] as amended by R.A. No. 6389,[16] an agricultural lessee may, by order of the court, be dispossessed
of his landholding if after due hearing, it is shown that the ‘landholding is declared by the [DAR]upon the recommendation of the
National Planning Commission to be suited for residential, commercial, industrial or some other urban purposes.’[17]

“Likewise, under various Presidential Decrees (P.D. Nos. 583, 815 and 946) which were issued to give teeth to the implementation of
the agrarian reform program decreed in P.D. No. 27, the DAR was empowered to authorize conversions of tenanted agricultural
lands, specifically those planted to rice and/or corn, to other agricultural or to non-agricultural uses, ‘subject to studies on zoning of
the Human Settlements Commissions’ (HSC).  This non-exclusiveauthority of the DAR under the aforesaid laws was, x x x recognized
and reaffirmed by other concerned agencies, such as the Department of Local Government and Community Development (DLGCD)
and the then Human Settlements Commission (HSC) in a Memorandum of Agreement executed by the DAR and these two agencies
on May 13, 1977, which is an admission that with respect to land use planning and conversions, the authority is not exclusive to any
particular agency but is a coordinated effort of all concerned agencies.

“It is significant to mention that in 1978, the then Ministry of Human Settlements was granted authority to review and ratify land use
plans and zoning ordinance of local governments and to approve development proposals which include land use conversions
(see LOI No. 729 [1978]). This was followed by [E.O.] No. 648 (1981) which conferred upon the Human Settlements Regulatory
Commission (the predecessors of the Housing and Land Use Regulatory Board [HLURB] the authority to promulgate zoning and other
land use control standards and guidelines which shall govern land use plans and zoning ordinances of local governments, subdivision
or estate development projects of both the public and private sector and urban renewal plans, programs and projects; as well as to
review, evaluate and approve or disapprove comprehensive land use development plans and zoning components of civil works and
infrastructure projects, of national, regional and local governments, subdivisions, condominiums or estate development projects
including industrial estates.”
Hence, the justice secretary opined that the authority of the DAR to approve conversions of agricultural lands to non-agricultural
uses could be exercised only from the date of the law’s effectivity on June 15, 1988. [Junio v. Garilao, G.R. No. 147146.  July 29,
2005]

DAR AO 13, S. 1990 – RULES AND PROCEDURES GOVERNING EXEMPTIONS OF LAND UNDER SECTION 10 OF RA 6657

DAR AO 4, S. 2003 – RULES ON EXEMPTION OF LANDS

DAR AO 3, S. 1995 – EXEMPTION OF FISHPONDS FROM THE COVERAGE OF CARL PURSUANT TO RA 7881

IV – LAND VALUATION

P.D. 27 – LAND VALUATION UNDER OPERATIONAL LAND TRANSFER

This shall apply to tenant farmers of private agricultural lands primarily devoted to rice and corn under a system of sharecrop or
lease-tenancy, whether classified as landed estate or not;

The tenant farmer, whether in land classified as landed estate or not, shall be deemed owner of a portion constituting a family-size
farm of five (5) hectares if not irrigated and three (3) hectares if irrigated;

In all cases, the landowner may retain an area of not more than seven (7) hectares if such landowner is cultivating such area or will
now cultivate it;

For the purpose of determining the cost of the land to be transferred to the tenant-farmer pursuant to this Decree, the value of the
land shall be equivalent to two and one-half (2 1/2) times the average harvest of three normal crop years immediately preceding the
promulgation of this Decree;

The total cost of the land, including interest at the rate of six (6) per centum per annum, shall be paid by the tenant in fifteen (15)
years of fifteen (15) equal annual amortizations;
In case of default, the amortization 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;

The government shall guaranty such amortizations with shares of stock in government-owned and government-controlled
corporations;

No title to the land owned by the tenant-farmers under this Decree shall be actually issued to a tenant-farmer unless and until the
tenant-farmer has become a full-fledged member of a duly recognized farmer's cooperative;

Title to land acquired pursuant to this Decree or the Land Reform Program of the Government shall not be transferable except by
hereditary succession or to the Government in accordance with the provisions of this Decree, the Code of Agrarian Reforms and
other existing laws and regulations;

The Department of Agrarian Reform through its Secretary is hereby empowered to promulgate rules and regulations for the
implementation of this Decree.

All laws, executive orders, decrees and rules and regulations, or parts thereof, inconsistent with this Decree are hereby repealed and
or modified accordingly.

Done in the City of Manila, this 21st day of October, in the year of Our Lord, nineteen hundred and seventy-two.

PAR. 4 of PD 27 AND SEC. 2 of EO 228: VALUATION FORMULA

Sec. 2 of EO 228. Henceforth, the valuation of rice and corn lands covered by P.D. No. 27 shall be based on the average gross
production determined by the Barangay Committee on Land Production in accordance with Department Memorandum Circular No.
26, Series of 1973, and related issuances and regulations of the Department of Agrarian Reform. The average gross production per
hectare shall be multiplied by two and a half (2.5), the product of which shall be multiplied by Thirty Five Pesos (P35.00), the
government support price for one cavan of 50 kilos of palay on October 21, 1972, or Thirty One Pesos (P31.00), the government
support price for one cavan of 50 kilos of corn on October 21, 1972, and the amount arrived at shall be the value of the rice and corn
land, as the case may be, for the purpose of determining its cost to the farmer and compensation to the landowner.

DETERMINATION OF JUST COMPENSATION

SECTION 17. Determination of Just Compensation. – In determining just compensation, the cost of acquisition of the land, the
current value of like properties, its nature, actual use and income, the sworn valuation by the owner, the tax declarations, and the
assessment made by government assessors shall be considered. The social and economic benefits contributed by the farmers and
the farmworkers and by the Government to the property as well as the non-payment of taxes or loans secured from any government
financing institution on the said land shall be considered as additional factors to determine its valuation.

VALUATION AND MODE OF COMPENSATION

SECTION 18. Valuation and Mode of Compensation. – The LBP shall compensate the landowner in such amounts as may be agreed
upon by the landowner and the DAR and the LBP, in accordance with the criteria provided for in Sections 16 and 17 and other
pertinent provisions hereof, or as may be finally determined by the court, as the just compensation for the land.

The compensation shall be paid in one of the following modes, at the option of the landowner:

(1) Cash payment, under the following terms and conditions;

(a) For lands above – Twenty-five percent

fifty (50) hectares, insofar (25%) cash, the balance to
as the excess hectarage is be paid in government
concerned. financial instruments
negotiable at any time.
(b) For lands above – Thirty percent (30%) cash,
twenty-four (24) hectares the balance to be paid in
and up to fifty (50) hectares. government financial
instruments negotiable
at any time.

(c) For lands twenty-four – Thirty-five percent (35%)

(24) hectares and below. cash, the balance to be paid

in government financial

instruments negotiable at

any time.

(2) Shares of stock in government-owned or controlled corporations, LBP preferred shares, physical assets or other qualified
investments in accordance with guidelines set by the PARC;

(3) Tax credits which can be used against any tax liability;

(4) LBP bonds, which shall have the following features:

(a) Market interest rates aligned with 91-day treasury bill rates. Ten percent (10%) of the face value of the bonds shall mature every
year from the date of issuance until the tenth (10th) year: Provided, That should the landowner choose to forego the cash portion,
whether in full or in part, he shall be paid correspondingly in LBP bonds;

(b) Transferability and negotiability. Such LBP bonds may be used by the landowner, his successors in interest or his assigns, up to
the amount of their face value, for any of the following:

(i) Acquisition of land or other real properties of the government, including assets under the Asset Privatization Program and other
assets foreclosed by government financial institutions in the same province or region where the lands for which the bonds were paid
are situated;

(ii) Acquisition of shares of stock of government-owned or controlled corporations or shares of stocks owned by the government in
private corporations;

(iii) Substitution for surety or bail bonds for the provisional release of accused persons, or performance bonds;

(iv) Security for loans with any government financial institution, provided the proceeds of the loans shall be invested in an economic
enterprise, preferably in a small- and medium-scale industry, in the same province or region as the land for which the bonds are
paid;

(v) Payment for various taxes and fees to government; Provided, That the use of these bonds for these purposes will be limited to a
certain percentage of the outstanding balance of the financial instruments: Provided, further, That the PARC shall determine the
percentage mentioned above;

(vi) Payment for tuition fees of the immediate family of the original bondholder in government universities, colleges, trade schools,
and other institutions;

(vii) Payment for fees of the immediate family of the original bondholder in government hospitals; and
(viii) Such other uses as the PARC may from time to time allow.

In case of extraordinary inflation, the PARC shall take appropriate measures to protect the economy.

PROCEDURE FOR ACQUISITION OF PRIVATE LANDS IN CASE OF LANDOWNER’S REJECTION OR FAILURE TO REPLY

SECTION 16 (d) - In case of rejection or failure to reply, the DAR shall conduct summary administrative proceedings to determine the
compensation for the land by requiring the landowner, the LBP and other interested parties to submit evidence as to the just
compensation for the land, within fifteen (15) days from the receipt of the notice. After the expiration of the above period, the
matter is deemed submitted for decision. The DAR shall decide the case within thirty (30) days after it is submitted for decision.

LAND VALUATION AND LANDOWNER COMPENSATION

SEC. IV-D OF DAR AO 2, S. 2009.     Land Valuation and Landowner Compensation

1.         The compensation for lands covered under R.A. No. 9700 shall be: a) the amount determined in accordance with the criteria
provided for in Section 7 of the said law and existing guidelines on land valuation; or b) the value based on the order of the DAR
Adjudication Board (DARAB) or the regular court, which has become final and executory.

            The basic formula for the valuation of lands covered by VOS or CA shall be:

            LV = (CNI x 0.60) + (CS x 0.30) + (MV x 0.10)

Where:  LV =         Land Value

                  CNI =         Capitalized Net Income (based on land use and productivity)

                    CS =         Comparable Sales (based on fair market value equivalent to 70% of BIR Zonal Value)

                    MV =         Market Value per Tax Declaration (based on Government assessment)

1.1       If three factors are present    ATcEDS

            When the CNI, CS and MV are present, the formula shall be:

            LV = (CNI x 0.60) + (CS x 0.30) + (MV x 0.10)

1.2       If two factors are present

1.2.1   When the CS factor is not present and CNI and MV are applicable, the formula shall be:

            LV = (CNI x 0.90) + (MV x 0.10)

1.2.2   When the CNI factor is not present, and CS and MV are applicable, the formula shall be:

            LV = (CS x 0.90) + (MV x 0.10)

1.3       If only one factor is present

            When both the CS and CNI are not present and only MV is applicable, the formula shall be:

            LV = MV x 2
            In no case shall the value of idle land using the formula (MV x 2) exceed the lowest value of land within the same estate under
consideration or within the same barangay, municipality or province (in that order) approved by LBP within one (1) year from receipt
of Claim Folder (CF.) 

            The specific guidelines governing the valuation of lands under voluntary offer to sell (VOS) or compulsory acquisition (CA)
pursuant to R.A. No. 6657, as amended by R.A. No. 9700 are provided in CARP-LAD Annex A of this Order.

2.         All previously acquired lands wherein valuation is subject to challenge by landowners shall be completed and finally resolved
pursuant to Section 17 of R.A. No. 6657, as amended.

            In like manner, claims over tenanted rice and corn lands under P.D. No. 27 and Executive Order (E.O.) No. 228 whether
submitted or not to the Land Bank of the Philippines (LBP) and not yet approved for payment shall be valued under R.A. No. 6657, as
amended.

            Landholdings covered by P.D. No. 27 and falling under Phase I of R.A. No. 9700 shall be valued under R.A. No. 9700.

3.         In cases of rejection, landowners may withdraw the original value of the landholding as determined by the Department of
Agrarian Reform (DAR) and Land Bank of the Philippines (LBP) per Memorandum of Valuation (MOV) and subsequently deposited in
their names, subject to their submission of the requirements for payment.    ATESCc

            When the LO later accepts the original value or as recomputed by the LBP based on existing valuation guidelines, mere filing
of a manifestation by the LO as regards the acceptance of the original value or a joint manifestation by the LO and the LBP on the
recomputed value with the DAR Adjudication Board (DARAB) shall automatically terminate the just compensation case pending
thereat.

4.         Landowners, other than banks and financial institutions, who voluntarily offer their lands for sale, shall be entitled to an
additional five percent (5%) cash payment.

5.         For landholdings which were conveyed after the effectivity of R.A. No. 6657, the LBP shall consider the transferor as the
payee.

            However, payment must be released to the LO-transferee if the LO-transferor issues a Special Power of Attorney (SPA) or
Deed of Assignment in favor of the former.

6.         In the determination of the Annual Gross Production (AGP), Selling Price (SP) and Cost of Operation (CO) to be used in the
land valuation, the audited financial statement filed with the Bureau of Internal Revenue (BIR) shall be obtained by the DARMO from
the LO fifteen (15) days prior to the date of field investigation. If the landowner fails to submit the same, the DAR and LBP may adopt
applicable industry data or, in the absence thereof, conduct an industry study on the specific crop. 

7.         Small portions or patches within the covered landholdings which are determined to be less productive than the bigger portion
during the conduct of joint field investigation shall be valued based on the current use of the adjacent portions, provided that said
small portions or patches shall not exceed 10% of the productive area. 

            Likewise, small portions or patches of landholdings above 18 percent slope, undeveloped and of no use to the landowner shall
be valued as idle provided it shall not exceed 10% of the covered landholding.

PRELIMINARY DETERMINATION OF JUST COMPENSATION PER RULE XIX OF THE 2009 DARAB RULES OF PROCEDURE

RULE XIX
Preliminary Determination of Just Compensation

SECTION 1. Principal Role of Board/Adjudicator. — The principal role of the Board/Adjudicator in the summary
administrative proceedings for the preliminary determination of just compensation is to determine whether the Land Bank of the
Philippines (LBP) and the Department of Agrarian Reform (DAR) in their land valuation computations have complied with the
administrative orders and other issuances of the Secretary of the DAR and the LBP.

SECTION 2. By whom Conducted. — The preliminary proceedings of land valuation for the purpose of the
determination of just compensation for its acquisition shall be conducted:

a. by the PARAD when the initial land valuation of the Land Bank of the Philippines (LBP) is less than Ten
Million Pesos (PhP10,000,000.00);

b. by the RARAD when the said valuation is Ten Million Pesos and above but not exceeding Fifty Million
Pesos (PhP50,000,000.00); and

c. by the Board when the said valuation is Fifty Million Pesos (PhP50,000,000.00) and above.

In the event of non-availability, inhibition or disqualification of a designated PARAD in the locality, the RARAD concerned
may conduct preliminary proceedings of land valuation notwithstanding that the jurisdictional amount is less than Ten (10) Million
Pesos.

On account of non-availability, inhibition or disqualification of the RARAD concerned, the Board may conduct the
preliminary proceedings of land valuation or designate the same to an Adjudicator from among the PARADs in the region.

SECTION 3. Order for Submission of Evidence, Position Papers, and Notice of Hearing. — Upon receipt of the Claim
Folder (CF) containing all the pertinent documents, the Board/Adjudicator shall issue an order:

a. to the landowner, the LBP, the DAR officials concerned, the farmer-beneficiaries and other interested parties, that
they may examine the claim folder in the Adjudicator’s possession and to submit evidence, pertinent documents, and
their respective position papers and affidavits within thirty (30) days from receipt of the order; and

b. notifying said parties of the date set for hearing on the matter.

Thereafter, the Board/Adjudicator shall proceed to make an administrative determination of just compensation following
the procedure in ordinary cases.

The Order shall be served in the same manner as the service of summons as provided for in Rule VII hereof.

SECTION 4. Failure to Comply with Above Order. — If the parties fail to submit the required documents and their
position papers, and/or to appear on the date set for hearing, despite proper notice, the matter shall be deemed submitted for
resolution.

SECTION 5. When Resolution Deemed Final. — Failure on the part of the aggrieved party to contest the resolution of
the Board/Adjudicator within the afore-cited reglementary period provided shall be deemed a concurrence by such party with the
land valuation, hence said valuation shall become final and executory.
 SECTION 6. Filing of Original Action with the Special Agrarian Court for Final Determination. — The party who
disagrees with the decision of the Board/Adjudicator may contest the same by filing an original action with the Special Agrarian
Court (SAC) having jurisdiction over the subject property within fifteen (15) days from his receipt of the Board/Adjudicator’s
decision.

Immediately upon filing with the SAC, the party shall file a Notice of Filing of Original Action with the Board/Adjudicator,
together with a certified true copy of the petition filed with the SAC.

Failure to file a Notice of Filing of Original Action or to submit a certified true copy of the petition shall render the decision
of the Board/Adjudicator final and executory. Upon receipt of the Notice of Filing of Original Action or certified true copy of the
petition filed with the SAC, no writ of execution shall be issued by the Board/Adjudicator.

SECTION 7. Notice of Resolution. — A copy of the resolution of the Board/Adjudicator shall be sent to the landowner,
the Land Bank of the Philippines, the potential farmer beneficiaries, other interested parties, and their counsels.

SECTION 8. Return of Claim Folder. — The Board/Adjudicator shall, within three (3) days from return of the notice of
the resolution pursuant to the preceding section, transmit the Claim Folder (CF), together with the complete records thereof to the
office of origin or the Provincial Agrarian Reform Officer (PARO) concerned, copy furnished the LBP.

SECTION 9. Execution of Judgments for Just Compensation which have become Final and Executory. — The Sheriff shall
enforce a writ of execution of a final judgment for compensation by demanding for the payment of the amount stated in the writ of
execution in cash and bonds against the Agrarian Reform Fund in the custody of the LBP in accordance with RA 6657, as amended,
and the LBP shall pay the same in accordance with the final judgment and the writ of execution within five (5) days from the time the
landowner accordingly executes and submits to the LBP the corresponding deed/s of transfer in favor of the government and
surrenders the muniments of title to the property in accordance with Section 16(c) of RA 6657, as amended.

V – LAND DISTRIBUTION

LAND REDISTRIBUTION PER SECS. 22 TO 27 OF RA 6657, AS AMENDED

SECTION 22. Qualified Beneficiaries. – The lands covered by the CARP shall be distributed as much as possible to landless residents of
the same barangay, or in the absence thereof, landless residents of the same municipality in the following order of priority:

(a) agricultural lessees and share tenants;

(b) regular farmworkers;

(c) seasonal farmworkers;

(d) other farmworkers;

(e) actual tillers or occupants of public lands;

(f) collectives or cooperatives of the above beneficiaries; and

(g) others directly working on the land.

Provided, however, That the children of landowners who are qualified under Section 6 of this Act shall be given preference in the
distribution of the land of their parents: and Provided, That actual tenant-tillers in the landholdings shall not be ejected or removed

Beneficiaries under Presidential Decree No. 27 who have culpably sold, disposed of, or abandoned their land are disqualified to
become beneficiaries under this Program.

A basic qualification of a beneficiary shall be his willingness, aptitude, and ability to cultivate and make the land as productive as
possible. The DAR shall adopt a system of monitoring the record or performance of each beneficiary, so that any beneficiary guilty of
negligence or misuse of the land or any support extended to him shall forfeit his right to continue as such beneficiary. The DAR shall
submit periodic reports on the performance of the beneficiaries to the PARC.

If, due to the landowner’s retention rights or to the number of tenants, lessees, or workers on the land, there is not enough land to
accommodate any or some of them, they may be granted ownership of other lands available for distribution under this Act, at the
option of the beneficiaries.

Farmers already in place and those not accommodated in the distribution of privately-owned lands will be given preferential rights in
the distribution of lands from the public domain.

SECTION 23. Distribution Limit. – No qualified beneficiary may own more than three (3) hectares of agricultural land.

SECTION 24. Award to Beneficiaries. – The rights and responsibilities of the beneficiary shall commence from the time the DAR
makes an award of the land to him, which award shall be completed within one hundred eighty (180) days from the time the DAR
takes actual possession of the land. Ownership of the beneficiary shall be evidenced by a Certificate of Land Ownership Award,
which shall contain the restrictions and conditions provided for in this Act, and shall be recorded in the Register of Deeds concerned
and annotated on the Certificate of Title.

SECTION 25. Award Ceilings for Beneficiaries. – Beneficiaries shall be awarded an area not exceeding three (3) hectares which may
cover a contiguous tract of land or several parcels of land cumulated up to the prescribed award limits.

For purposes of this Act, a landless beneficiary is one who owns less than three (3) hectares of agricultural land.

The beneficiaries may opt for collective ownership, such as co-ownership or farmers cooperative or some other form of collective
organization: Provided, That the total area that may be awarded shall not exceed the total number of co-owners or member of the
cooperative or collective organization multiplied by the award limit above prescribed, except in meritorious cases as determined by
the PARC. Title to the property shall be issued in the name of the co-owners or the cooperative or collective organization as the case
may be.

SECTION 26. Payment by Beneficiaries. – Lands awarded pursuant to this Act shall be paid for by the beneficiaries to the LBP in thirty
(30) annual amortizations at six percent (6%) interest per annum. The payments for the first three (3) years after the award may be
at reduced amounts as established by the PARC: Provided, That the first five (5) annual payments may not be more than five percent
(5%) of the value of the annual gross production as established by the DAR. Should the scheduled annual payments after the fifth
year exceed ten percent (10%) of the annual gross production and the failure to produce accordingly is not due to the beneficiary’s
fault, the LBP may reduce the interest rate or reduce the principal obligation to make the repayment affordable.

The LBP shall have a lien by way of mortgage on the land awarded to the beneficiary; and this mortgage may be foreclosed by the
LBP for non-payment of an aggregate of three (3) annual amortizations. The LBP shall advise the DAR of such proceedings and the
latter shall subsequently award the forfeited landholdings to other qualified beneficiaries. A beneficiary whose land, as provided
herein, has been foreclosed shall thereafter be permanently disqualified from becoming a beneficiary under this Act.

SECTION 27. Transferability of Awarded Lands. – Lands acquired by beneficiaries under this Act may not be sold, transferred or
conveyed except through hereditary succession, or to the government, or to the LBP, or to other qualified beneficiaries for a period
of ten (10) years: Provided, however, That the children or the spouse of the transferor shall have a right to repurchase the land from
the government or LBP within a period of two (2) years. Due notice of the availability of the land shall be given by the LBP to the
Barangay Agrarian Reform Committee (BARC) of the barangay where the land is situated. The Provincial Agrarian Reform
Coordinating Committee (PARCCOM) as herein provided, shall, in turn, be given due notice thereof by the BARC.
If the land has not yet been fully paid by the beneficiary, the rights to the land may be transferred or conveyed, with prior approval
of the DAR, to any heir of the beneficiary or to any other beneficiary who, as a condition for such transfer or conveyance, shall
cultivate the land himself. Failing compliance herewith, the land shall be transferred to the LBP which shall give due notice of the
availability of the land in the manner specified in the immediately preceding paragraph.

In the event of such transfer to the LBP, the latter shall compensate the beneficiary in one lump sum for the amounts the latter has
already paid, together with the value of improvements he has made on the land.

SECTION 28. Standing Crops at the Time of Acquisition. – The landowner shall retain his share of any standing crops unharvested at
the time the DAR shall take possession of the land under Section 16 of this Act, and shall be given a reasonable time to harvest the
same.

VI – LAND TENURE IMPROVEMENT

SECTION 12. Determination of Lease Rentals. – In order to protect and improve the tenurial and economic status of the farmers in
tenanted lands under the retention limit and lands not yet acquired under this Act, the DAR is mandated to determine and fix
immediately the lease rentals  thereof in accordance with Section 34 of Republic Act No. 3844, as amended: Provided, That the
DAR shall immediately and periodically review and adjust the rental structure for different crops, including rice and corn, or different
regions in order to improve progressively the conditions of the farmer, tenant or lessee.

PRODUCTION SHARING

SECTION 32. Production-Sharing. – Pending final land transfer, individuals or entities owning, or operating under lease or
management contract, agricultural lands are hereby mandated to execute a production-sharing plan with their farmworkers or
farmworkers’ organization, if any, whereby three percent (3%) of the gross sales from the production of such lands are distributed
within sixty (60) days of the end of the fiscal year as compensation to regular and other farmworkers in such lands over and above
the compensation they currently receive: Provided, That these individuals or entities realize gross sales in excess of five million pesos
per annum unless the DAR, upon proper application, determines a lower ceiling.

In the event that the individual or entity realizes a profit, an additional ten percent (10%) of the net profit after tax shall be
distributed to said regular and other farmworkers within ninety (90) days of the end of the fiscal year.

To forestall any disruption in the normal operation of lands to be turned over to the farmworker-beneficiaries mentioned above, a
transitory period, the length of which shall be determined by the DAR, shall be established.

During this transitory period, at least one percent (1%) of the gross sales of the entity shall be distributed to the managerial,
supervisory and technical group in place at the time of the effectivity of this Act, as compensation for such transitory managerial and
technical functions as it will perform, pursuant to an agreement that the farmworker-beneficiaries and the managerial, supervisory
and technical group may conclude, subject to the approval of the DAR.

AGRIBUSINESS VENTURE ARRANGEMENTS (AVAs) in Agrarian Reform Areas per DAR AO 09-06

SECTION 1.   Framework and Objectives. — To augment the support services extended by the government to the agrarian reform
beneficiaries (ARBs), the formation of agribusiness venture arrangements is encouraged as a means by which investment of financial
and other resources by the private sector can be channeled to agrarian reform areas through productive and collaborative ventures
between the private sector and the ARBs. These collaborative ventures seek to:
1.1       Mobilize private sector investments in developing agrarian reform areas;

1.2       Provide adequate support services and facilities to ARBs;

1.3       Optimize the operating size of distributed lands for agricultural production;

1.4       Ensure security of ownership, tenure and income of participating ARBs;

1.5       Enhance and sustain the productivity and profitability of commercial farms;

1.6       Hasten the transformation of ARBs into farmer-entrepreneurs; and

1.7       Contribute to the realization of a globally competitive local agriculture sector and the attainment of food security.

SECTION 2.   Coverage. — These rules and regulations shall apply to all awarded lands distributed under the Comprehensive Agrarian
Reform Program (CARP).   IcDHaT
Individual ARBs and ARB cooperatives or associations, who are bonafide holders of Emancipation Patent (EP), Certificate of Land
Ownership Award (CLOA) or similar tenurial instruments issued by the Department of Agrarian Reform (DAR) or its predecessor may
apply for AVA provided herein.

Retained areas of small landowners (LOs) and lands of ARBs that are fully paid or where the ten-year prohibitory period under Sec.
27 of R.A. No. 6657 has already lapsed may also be covered by these rules and regulations provided the said LOs and ARBs opt to
include the said landholdings in the AVAs under this Order.
SECTION 3.   Definition of Terms. — For purposes of this Order, the following terms are hereunder defined:
3.1       Agrarian Reform Beneficiaries (ARBs) refer to qualified individual beneficiaries under Presidential Decree (P.D.) No. 27 or R.A.
No. 6657, or their cooperative or association duly registered with the Cooperative Development Authority (CDA), the Securities and
Exchange Commission (SEC) or the Bureau of Rural Workers (BRW) of the Department of Labor and Employment (DOLE).
3.2       Agribusiness Venture Arrangement (AVA) refers to entrepreneurial collaboration between ARBs and investors to implement
an agribusiness venture involving lands distributed under CARP.
3.3       Arbitration is a method of voluntary conciliation whereby the contending parties submit their dispute to an arbitral
committee who, in turn, shall conduct hearings and make final decisions binding upon both parties.
3.4       Association refers to ARBs who voluntarily form a group duly recognized by the SEC or BRW and organized for the purpose of
entering into an AVA with a common investor, among others.
3.5       Build-Operate-Transfer (BOT) is an AVA scheme wherein the investor builds, rehabilitates or upgrades, at his own cost, capital
assets, infrastructure and facilities applied to the production, processing and marketing of agricultural products and operates the
same at his expense for an agreed period after which the ownership thereof is conveyed to the ARBs who own the land where such
improvements and facilities are located.   AHcDEI
3.6       Cooperative refers to a group of ARBs duly organized under R.A. No. 6938, otherwise known as the “Cooperative Code of the
Philippines”, for the purpose of pooling land, human, technological, financial and/or other economic resources to achieve social and
economic ends, and to make equitable contributions and accept fair risks and benefits of the cooperative’s undertakings.
3.7       Equity is the value of the shares subscribed and paid for by each party in relation to the authorized capital stock of a joint
venture corporation.
3.8       Investors refer to either former landowners, private individuals, corporations, non-government organizations, ARB
cooperatives/associations, government owned and/or controlled corporations or any entity duly authorized by law, who are willing
and able to contribute their capital, equipment and facilities, technology, and/or management services in an AVA and whose
application has been approved pursuant to Art. III of this Order.
3.9       Joint Venture Agreement (JVA) is an AVA scheme wherein the ARBs and investors form a joint venture corporation (JVC) to
manage farm operations. The beneficiaries contribute the use of the land held individually or in common and the facilities and
improvements, if any. On the other hand, the investor furnishes capital and technology for production, processing and marketing of
agricultural goods, or construction, rehabilitation, upgrading and operation of agricultural capital assets, infrastructure and facilities.
3.10    Joint Venture Corporation (JVC) is a corporation formed by the investor and the ARB cooperative/association and is governed
by the joint venture agreement. It has all the powers and attributes of a duly organized and registered corporation pursuant to Batas
Pambansa (B.P.) Blg. 68, otherwise known as the “Corporation Code of the Philippines”, provided that, agricultural lands contributed
by the ARBs to the JVC are subject to the restriction on transferability of awarded lands under Section 27 of R.A. No. 6657.
3.11    Lease Agreement is an AVA scheme wherein the beneficiaries bind themselves to give the former landowner or any other
investor general control over the use and management of the land for a certain amount and for a definite period.
3.12    Management Contract is an AVA scheme wherein the ARBs hire the services of a contractor who may be an individual,
partnership or corporation to assist in the management and operation of the farm for the purpose of producing high value crops or
other agricultural crops in exchange for a fixed wage and/or commission.   EITcaH
3.13    Marketing Agreement is an AVA scheme wherein the investor explores possible markets/buyers for the ARB’s produce and in
turn receives commission for actual sales.
It is distinct from the direct marketing arrangement/contracts of ARBs or their cooperative/association wherein the
regional/provincial marketing assistance officer of DAR helps or assists in the sale and marketing of ARBs produce to a regular
market, e.g., institutional buyers such as Cargill Philippines or San Miguel Corporation (SMC) for yellow/hybrid corn. This
arrangement is under the DAR marketing assistance program (MAP) and not considered as an AVA scheme.
3.14    Production/Contract Growing/Growership is an AVA scheme wherein the ARBs commit to produce certain crops which the
investor buys at pre-arranged terms (e.g., volume, quality standard, selling price). This may come in the form of production and
processing agreements.
3.15    Service Contract is an AVA scheme wherein the ARBs engage the services of a contractor for mechanized land preparation,
cultivation, harvesting, processing, post-harvest operations and/or other farm activities for a fee.
3.16    Mediation is a method of voluntary conciliation whereby the DAR Provincial Agrarian Reform Officer (PARO), acting as a
neutral facilitator, assists the parties in reaching their own settlement through conference and discussion resulting to compromise.
3.17    Voluntary Conciliation is a mode of resolving disputes arising from the execution of AVA contracts, whereby, the contending
parties engage in voluntary and mutually acceptable means of arriving at resolutions, particularly mediation and arbitration.
3.18    Party-in-Interest is the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the
avails of the suit.
3.19    Transfer is the conveyance of the use and possession of CARP awarded lands from one person or entity to another.
ARTICLE II
Statement of Policies
SECTION 4.   General Policies. — The agribusiness venture arrangement shall be governed by the following policies:
4.1       ARBs (whether individual or organized as cooperative/association) who are already awarded with EP, CLOA or similar tenurial
instruments issued by the DAR or its predecessor and are in possession of their land, may enter into an AVA with qualified investors
of their own choice. In no case shall potential ARBs be allowed to enter into AVA or any interim agreement prior to the award of EP,
CLOA or similar tenurial instruments issued by the DAR or its predecessor, and the possession of the land.

4.2       ARBs organized as cooperatives or associations may enter into an AVA provided that the Board of Directors, with the
technical support of their executive officers, shall secure the vote of approval by the general membership in accordance with its
articles of cooperation/association and by laws. In the absence thereof, a vote of approval of at least 2/3 of the general membership
shall be secured.

4.3       Former landowners may qualify as investors under AVAs provided that they have no outstanding obligations with the ARBs,
such as, among others, separation pay and unpaid benefits under the Labor Code.

4.4       Prospective investors under AVA must provide sufficient evidence, as specified under Sec. 11 of this A.O., to reasonably
demonstrate or prove that they have organizational, technical and financial capabilities to meet the obligations they commit in the
proposed AVA contract.

4.5       All AVAs which will require transfer of or allow the use and possession of the land in favor of the investor or former
landowner, such as lease agreement, joint venture agreement, build-operate-transfer and combination or phased implementation of
these schemes, or other schemes/arrangements analogous to the above shall be reviewed/evaluated by the National AVA
Evaluation Committee (NAEC) upon endorsement by the Provincial Agrarian Reform Coordinating Committee (PARCCOM) and shall
be approved by the Presidential Agrarian Reform Council (PARC) or PARC Executive Committee (ExCom).   aSCHcA

All other AVAs such as production/contract growing/growership, marketing contract, management contract, service contract and
other emerging schemes where there is no transfer in the use and possession of the land in favor of the investor or former LO shall
be reviewed by the Provincial Agrarian Reform Officer (PARO). These shall not be required to go through the NAEC and PARC or
PARC ExCom review and approval process under this Order.

4.6       In order to ensure that the rights and welfare of the ARBs and their cooperative/association are protected, the DAR shall be a
signatory to the AVA contract, subject to the review and favorable endorsement by the NAEC or the AVA-Task Force (TF) at the DAR
Provincial Office (DARPO), as the case may be.

For lands that are not yet fully paid or are within the ten-year prohibition period pursuant to Sec. 27 of R.A. No. 6657, the DAR
Undersecretary of Policy Planning and Legal Affairs Office (PPLAO) or the PARO shall affix his/her signature as a nominal party to the
contract, in accordance with the following category:
A.        DAR PPLAO Undersecretary      All AVAs which will require
                                                           the transfer of or allow the
                                                           use and possession of the
                                                           subject land in favor of the
                                                           investor or former LO; or
B.        PARO                                      All other AVAs where there is 
                                                          no transfer in the use and
                                                          possession of the land in favor
                                                          of the investor or former LO.

For lands that are fully paid or the ten-year prohibition period pursuant to Sec. 27 of R.A. No. 6657 has lapsed, the DAR PPLAO
Undersecretary or the PARO shall affix his/her signature as a witness to the AVA contract in accordance with the abovementioned
category. The PARCCOM shall be furnished with a copy of the AVA contract duly witnessed by the DAR PPLAO Undersecretary and
the PARO.
4.7       The terms and conditions of the AVA contract shall be mutually agreed upon by the ARBs and the investor. The approval of
AVA contracts by the PARC or PARC ExCom shall be strictly guided by the conditions stipulated in Art. III of this Order.

The terms and conditions of the AVA contract shall be fully known to all parties. If warranted, the parties may translate the contract
into the local dialect known to the ARBs. It shall be the responsibility of the concerned DAR field officials to ensure that the ARBs are
made fully aware of and understand the options available to them, including their rights and obligations under the AVA contract.

4.8       The PARCCOM, NAEC and PARC or PARC ExCom shall act on the AVA within thirty (30) days each reckoned from the
completion of all the required documents. Pending the approval of the AVA, the transitory provision under Sec. 33, Item (a) of DAR
A.O. No. 9, Series of 1998 shall apply.   aDIHTE
4.9       The AVA contract shall take effect only upon receipt by the contracting parties of the PARC or PARC ExCom resolution
approving such contract, or upon the affixing of the PARO’s signature as a witness or nominal party to the contract. The absence of
PARC or PARC ExCom approval or signature of the PARO shall render the said AVA contract null and void.

4.10    The AVA shall be approved only if it guarantees the security of ownership and tenure of ARBs, and ensure an increase of their
income. Further, there must be sufficient and reliable basis to reasonably conclude that the economic viability and productivity of
the farms are ensured. The AVA contract shall not be approved if it will result in the transfer of ownership, exemption/exclusion
from CARP coverage and/or conversion of the subject landholding to non-agricultural use except those necessary for the operation
of the AVA.

4.11    A member can only transfer his/her share to a qualified ARB through the cooperative/association. Any transfer of shares by
the original beneficiaries shall be void ab initio unless said transaction is in favor of a qualified and registered beneficiary within the
same cooperative/association. Such transfer of shares shall be in accordance with the provisions under Item VI.2, paragraph 2
of Joint DAR-CDA A.O. No. 2, Series of 1997 for cooperative and pertinent provisions of the Civil Code of the Philippines for
associations.
4.12    The landholding subject of AVA shall be used solely for agricultural purposes and the investor shall not use or allow the use of
the subject landholding for illegal or prohibited purposes or for other purposes not covered under the AVA contract.

4.13    The duration or period of the AVA contract shall be mutually agreed by all parties taking into consideration the following
parameters: (1) crop or production cycle; (2) gestation period of the crop; (3) economic lifespan of existing major and essential
facilities/infrastructure (if any); (4) payback or recoup period of investments; and (5) term of office of cooperative/association
officers and Board of Directors (if applicable).

4.14    To allow for some changes in the economic assumptions and/or the prevailing economic conditions at the time of AVA
application and processing as well as changes on the physical attributes of the land, the critical terms of the contracts (i.e., duration
and amounts involved) shall be periodically reviewed and/or renegotiated by the contracting parties. The review and/or
renegotiation shall be undertaken upon request or petition of any of the parties on the following grounds: (1) extraordinary increase
of inflation rate; (2) drastic change in price fluctuation on both input and output; (3) declaration of the areas as calamity or disaster
areas due to force majeure; and (4) other meritorious grounds.
All renegotiated/renewed/extended contracts and their effectivity shall be subject to the same process of review and approval by
the PARC or PARC ExCom and PARO as provided in this Order.

4.15    The AVA shall balance and address the farmers’/farmworkers’ distinctive roles and rights as cooperative member,
employee/farmworker and ARB. The ARB’s membership in the cooperative or association shall be in accordance with the
Cooperative Code (R.A. No. 6938) orCivil Code/Corporation Code (B.P. No. 68), as may be applicable, as well as the appurtenant
implementing guidelines thereof. His/her beneficiary status shall be determined by the CARL (R.A. No. 6657) and its relevant policy
issuances, while his/her employment relation shall be governed by the Labor Code and related legislations.   cSaADC
4.16    For the duration of the contract, whenever applicable, the investor shall provide funds necessary to ensure ecological
protection of both the farm and its workers, particularly for the conservation and maintenance of land quality, proper handling,
storage and disposal of hazardous residues and waste products, and proper protective and acceptable safe methods of application
of fertilizers and other chemicals.

4.17    For the duration of the AVA contract, the DAR must ensure the viability and stability of the cooperative/association as a
business partner and entity through effective periodic monitoring and intervention measures/strategies.

4.18    As a general rule, the AVA shall provide for the participation of ARBs in farm management operations and shall include a
human resource development plan/program aimed at providing management capability building and transfer of technology to ARBs
and hastening their transformation into rural entrepreneurs.

4.19    The DAR shall ensure that the AVA contract shall include provisions to help promote the development and transformation of
ARBs from mere laborers and labor union members to farm owners, cooperative members and business entrepreneurs and
managers.

 4.20   The AVA shall include provisions for worker’s productivity and quality incentives for the employed ARBs over and above the
compensation they shall receive as employees of the AVA.

4.21    The AVA contract shall provide sanctions for non-compliance by either parties and shall be periodically monitored by the DAR.
All AVAs entered into by and between the ARBs and the investors shall be governed by the provisions under Sec. 73 (e) and (f), and
Sec. 74 of R.A. No. 6657, respectively.
4.22    Voluntary conciliation methods shall be preferred in resolving disputes arising from the execution of AVA contracts. The AVA
contract shall stipulate mediation by the PARO as the first recourse for the resolution of disputes and if it fails, the parties shall
resort to arbitration in accordance with Art. VI, Sec. 15 of this Order and R.A. No. 9285 known as the Alternative Dispute Resolution
Act of 2004 or other arbitration laws. The stipulation of voluntary conciliation methods as preferred means of resolving disputes in
the AVA contract shall be observed without prejudice to the parties’ right to submit the decision of the arbitrators to the proper
court, tribunal or quasi-judicial agency.   cSICHD
4.23    The DAR, through its regional and provincial offices, shall monitor, together with the PARCCOM, the progress and
implementation of AVAs in accordance with Art. VII of this Order. With prior notice to the parties, the DAR shall be given access to
the records and premises subject of AVA and conduct inspection on the property to determine the extent of its development and
use, and the parties’ compliance with the terms and conditions of the AVA contract. It shall recommend remedial measures when
warranted.

This shall include the monitoring of all AVAs previously approved under A.O. No. 2, Series of 1999 where said contracts may be
revoked or amended pursuant to Secs. 12 (last par.) and 15 of the said A.O.
4.24    Any party-in-interest may file the petition for the revocation of the AVA contract to the PARO. Upon the recommendation of
the AVA-TF through the NAEC, the PARC or PARC ExCom, or the DAR Adjudication Board (DARAB), as the case may be, may revoke
and/or terminate the AVA contract if and when it has reasonably/justifiably proven after determination on the merits that the
welfare of the ARBs and their cooperative/association have not improved after a period of five (5) years from the implementation of
the AVA, or the concerned party/ies has/have committed any violation on the AVA contract, or any of the grounds provided under
Art. VIII, Sec. 19 of this Order.

For those contracts which where not approved by the PARC or those executed prior to this Order, any party may file for the
revocation of the AVA contract with the DARAB pursuant to Secs. 50 and 3 (d) of R.A. No. 6657.
4.25    Subject to the provisions of this Order, the contracting parties may combine the features of any or all of the AVA schemes, or
provide for a phased implementation thereof. For instance, production and processing of agricultural crops may be covered by a
contract growing arrangement, while marketing may be under a joint venture, or, a small grower may engage in production, while a
corporation may undertake processing and marketing. Likewise, lease agreement may initially be undertaken and then shift to
contract growing.

SECTION 5.   Specific Policies. — The different types of agribusiness partnership or arrangement shall be governed by the following
specific policies:
5.1       Joint Venture Agreement. — The ARBs and investors shall form a joint venture corporation (JVC) to manage farm operations.
The beneficiaries shall contribute use of the land held individually or in common and the facilities and improvements, if any, while
the investor shall furnish capital and technology for production, processing and marketing of agricultural goods, or construction,
rehabilitation, upgrading and operation of agricultural capital assets, infrastructure and facilities. It shall be governed by the
following policies:
5.1.1   The JVC, which had been duly organized and registered with the Securities and Exchange Commission (SEC), shall have
juridical personality separate and distinct from that of the contracting parties in accordance with Batas Pambansa (B.P.) Blg. 68,
otherwise known as the “Corporation Code of the Philippines.”
5.1.2   The JVC shall acquire merely usufructuary, but not ownership, rights over the land for an agreed period, subject to the
limitations provided for under Art. 605 of the Civil Code, and subject, further to the condition that it shall preserve the form and
substance thereof. Ownership of the land remains with the ARBs and the property cannot be used to settle obligations of the JVC in
the event of insolvency or bankruptcy.   SaDICE

5.1.3   The JVC shall be liable for taxes due on the improvements, while the ARBs are accountable for taxes due on the land pursuant
to Arts. 596 and 597 of the Civil Code.
5.1.4   The equity participation of the ARBs may be determined by both parties based on prevailing market rates or as appraised by a
registered and accredited independent appraiser chosen by the parties.

5.1.5   The equity shall serve as basis for determining the voting shares in the JVC. Through an equity review mechanism, increases in
the fair market value of the use of the land, facilities and improvements may result in a corresponding increase in equity. For this
purpose, the ARBs and the investors may engage the services of independent appraisers or valuators.

5.1.6   The equity of the ARBs shall not be, in any manner, subject to dilution in case of additional issuance by the JVC of shares of
the capital stock. For this purpose, additional issuance shall consist of non-voting shares.

5.1.7   The JVC shall be managed jointly by the investors and the ARBs. The ARBs shall be given a fixed number of seats in its Board of
Directors corresponding to their equity. They may be given additional seats in the board, as agreed by the parties, as special privilege
as incorporators or founders pursuant to Sec. 7 of B.P. Blg. 68.
5.1.8   ARBs and/or their dependents shall be given preference for employment in the joint venture. Employed ARBs shall receive
salaries/wages for their labor in accordance with existing labor laws, in addition to dividends on their equity interest, to be given
every crop year, and other income that may be due the registered owner for the land used under the joint venture, as the case may
be.

5.1.9   The joint venture agreement shall provide for the creation of a social fund which shall be managed by the Board of Directors.
The Board of Directors of the JVC shall formulate and implement the relevant policies and guidelines for the creation, establishment
and management of a social fund which shall be made available to the members of the cooperative. The social fund shall be
established through any or all of the following sources: (1) proceeds of the joint venture as determined by the Board of Directors; (2)
income generated out of business opportunities made available by the investor to the cooperative; or (3) such other available funds
the Board of Directors or the administrators of the social fund may identify/determine. The social fund shall be used to support
social welfare, livelihood and other income-generating projects for the ARBs and their dependents.

5.1.10 The agreement shall provide for the establishment of a fund which will guarantee the payment of land amortization and real
property taxes of the ARBs in case of contingency.

5.1.11 The JVC articles and by-laws and the joint venture agreement shall incorporate the applicable specific policies and basic
features provided herein.

5.1.12 Upon dissolution and winding up of the joint venture corporation after due process, the ARBs or their cooperative/association
shall assume full control of the land.

5.1.13 In cases of permanent total incapacity of a member, he/she has the option to sell his/her share capital to the cooperative or
nominate his/her successor to the cooperative. In case of death, his/her heirs have the option either to monetize his/her share
capital or nominate his/her successor to the cooperative. In both cases, the nominated successor should be qualified as an ARB and
approved by the cooperative and the DAR.

5.2       Production/Contract Growing/Growership/Marketing Contract. — In production/contract growing/growership, the ARBs shall

commit to produce certain crops which the investor buys at pre-agreed terms (e.g., volume, quality standard, selling price) and
maintain ownership of the land.
In marketing contracts, the ARB shall engage the services of an investor who will explore possible markets/buyers for his/her
produce.

The contracts shall be governed by the following policies:

5.2.1   The production/growing/growership/marketing contract shall stipulate the terms of sale which shall include the quality,
quantity and price of agricultural produce to be bought by the investor.

5.2.2   In production/contract growing/growership, the investor may provide at reasonable cost, the technology and other farm
inputs prescribed for the production of agricultural goods according to the quality standards set by the growership contract. Any loss
resulting from arbitrary adjustments in the quality standards shall be borne by the investor unless the ARBs are informed, at the
earliest opportunity, of the adjustments and are provided with reasonable means to cope therewith.

5.2.3   If the application of the prescribed production technology results in the degradation of the substance and form of the land,
the ARBs shall be justified in applying alternative and equally effective production technology upon proper notice to the investor.

5.2.4   The schedule of deduction and amounts representing the cost or value of the use of the technology, equipment, facilities,
service and other farm inputs provided by the investor to the beneficiaries shall be agreed upon by both parties and shall be clearly
stipulated in the contract.

5.2.5   Agricultural produce of ARBs which fail to meet the pre-agreed quality standards may be rejected by the investor, the
liabilities for which shall be borne by the ARBs, provided, that such sub-standard produce are not due to the technology, equipment
or inputs specifically prescribed by the investor.   CDISAc

            The parties shall avail of a crop insurance from which the costs shall be recovered in case sub-quality standard produce is due
to force majeure. In case the agreement is one of production/contract growing/growership, the premium shall be charged to both
parties as deductible expenses. If it is a marketing contract, the premium shall be charged to the ARBs.
5.2.6   The period for acceptance by the investor of the products delivered shall be stated in the growership contract. Acceptance is
implied by the investor’s failure to notify the ARBs of its rejection of the products after the lapse of the agreed period.

5.2.7   If production exceeds the volume of crops agreed upon in the contract, the ARBs may dispose of the excess to other
interested buyers, subject to the investor’s right of first refusal. The proceeds of the sale of the excess shall accrue exclusively to the
ARBs.

5.2.8   The agreement shall incorporate a price review mechanism, including the disclosure of prices and post harvest and marketing
cost, taking into consideration industry practice, prevailing market prices, and other appropriate factors.

5.2.9   The investor/buyer is solely responsible for generating financial resources to pay for the ARBs’ produce and advance
payments.

5.2.10 In case the investor assigns/delegates his/her marketing rights in the marketing contract to other investors, he/she shall
inform the ARBs, in writing, on the matter, with the assurance that the terms and conditions of the existing marketing contract shall
be honored and respected by the assignee. He/She shall furnish the AVA-TF a copy of the written assurance.

5.3       Lease Agreement. — The beneficiaries shall bind themselves to give the former landowner or any other investor general
control over the use and management of the land for a certain amount and for a definite period. It shall be governed by the
following policies:
5.3.1   The ARBs lease the land to the investor, who may be the former landowner or other investors. However, leaseback
arrangements should be the last resort/option pursuant to Sec. 3 of R.A. No. 7905.
            The ARBs and the investor shall first consider other types of agribusiness arrangements before deciding to enter into a lease
agreement. They shall submit document/s (e.g., economic and social justification of lease arrangement, matrix of comparative
analysis of all applicable AVAs) as proof that other types of AVAs were considered in the negotiation.
5.3.2   The lessors or ARBs shall allow or authorize the lessee to exclusively use and cultivate their land for the purpose of agricultural
production.

5.3.3   The lessee or investor shall provide the capital to develop, cultivate, plant, harvest or process the agricultural crops, extend all
technical and management services for the efficient operation of the farm, and assume the risk of loss of agricultural operations.
Notwithstanding crop failure due to natural calamities or force majeure, the lessee shall ensure payment of lease rental as stipulated
in the contract.   CADSHI
5.3.4   The annual lease rental to be paid by the lessee to the lessor shall be more than the annual land amortization value per
hectare and the annual real property tax per hectare.

5.3.5   The lessee/investor shall have the right to construct buildings and introduce other physical improvements or facilities on the
property subject of lease, necessary for agricultural operations. In no case, however, shall any improvement on the property
decrease the aggregate agricultural area to the extent of lowering the land rental and other privileges accruing to the ARBs.

5.3.6   Property taxes due on buildings or any other improvements on the land shall be for the account of the lessee/investor.
Property taxes on the lands shall be the liability of the lessors/ARBs.

5.3.7   All buildings, roads, bridges and other immovable permanent structures/improvements and facilities on the land constructed
or developed by the investor during the term of the lease contract, including fruits thereon, shall accrue or belong to the ARBs upon
termination of the lease. Notwithstanding, all infrastructure, facilities and improvements, including buildings, roads, machinery,
receptacles, irrigation and drainage system, packing plants, cables, instruments or implements, and the like, permanently attached
to the land, and are necessary and beneficial to the operations of the farm as determined by the DAR, may be acquired at the option
of the ARBs, subject to the amount agreed upon by both parties. In case of disagreement, the valuation procedures of the LBP shall
apply.

            For non-permanent improvements on the land, the ARB shall have the option to buy said improvements which are beneficial
to the land at the amount agreed upon by both parties. Otherwise, the lessee/investor shall have the option to remove or transfer
any non-permanent improvement, prior to or upon termination/expiration of the agreement at the investor’s own expense, and in
any manner not to cause damage to the land.

5.3.8   The lessee/investor shall give priority to qualified and willing ARBs and their dependents for employment in the enterprise. In
such case, they shall be treated as employees of the lessee/investor and shall be entitled to the mandated minimum wage and other
economic benefits granted under the Labor Code and other existing laws.

5.3.9   The lease agreement shall only be intended to enable the ARBs or their organization to develop the skills necessary to assume
general control and management of the farm. As such, the lease agreement, after the expiration of the lease contract, may shift to
other options/arrangements or the lessor may opt to immediately assume full control and management of the land.

5.3.10 In case of insolvency or bankruptcy of the lessee-investor, the lease agreement shall be deemed terminated and the subject
landholdings shall be returned/turned over to the ARBs. The ARBs should not be precluded from filing claims against the lessee-
investor (e.g., salaries, wages, lease rentals, and other benefits).

5.4       Management Contract. — The ARBs shall hire the services of a contractor who may be an individual, partnership, or
corporation to assist in the management and operation of the farm for the purpose of producing high value crops or other
agricultural crops in exchange for a fixed wage and/or commission. It shall be governed by the following policies:
5.4.1   The farms shall remain under the control and possession of the ARBs and the management contractor shall receive a fixed
compensation, commission or other forms of remuneration for his services, to be stipulated in the contract.

5.4.2   The management contractor shall prepare the development plan, cost estimates, annual budget, and manpower
requirements of the agribusiness enterprise, subject to approval of the ARBs, and assist in sourcing funds to finance its operations.

5.4.3   Employees of the management contractor shall essentially be limited to managerial positions and those engaged in the
introduction and transfer of appropriate technology. The ARBs shall provide the labor necessary for farm operations.
5.4.4   A human resource development program for members of the cooperative, association or federation shall be implemented in
coordination with DAR’s Beneficiaries Development and Coordination Division (BDCD) and Regional Support Services Division (RSSD),
to facilitate transfer of technology and management techniques to enable them to eventually directly manage and operate the
farm.   DTIcSH

5.4.5   All income from the operation of the farm shall accrue exclusively to the ARBs. Disbursements shall be made jointly by the
management contractor and the ARBs through their duly authorized representatives.

5.5       Service Contract. — The ARBs shall engage the services of a contractor for mechanized land preparation, cultivation,
harvesting, processing, post-harvest operations and/or other farm activities for a fee. It shall be governed by the following policies:
5.5.1   The farms shall remain under the control and possession of the ARBs while the service contractors provide the necessary
equipment, facilities or other services for a period of time and at specifications stipulated in the service contract.

5.5.2   The service contractors shall receive a fixed compensation, commission or other forms of remuneration to be stipulated in the
contract.

5.6       Build-Operate-Transfer. (BOT). The investor may build, rehabilitate or upgrade, at his own cost, capital assets, infrastructure
and facilities applied to the production, processing and marketing of agricultural products. He/She shall operate the same at his/her
expense for an agreed period after which the ownership thereof is conveyed to the ARBs who own the land where such
improvements and facilities are located. It shall be governed by the following policies:
5.6.1   The investor shall build infrastructure or rehabilitate facilities and improvements necessary to make the lands productive and
shall directly operate the same for a specified period and under the terms stipulated in the BOT contract.

5.6.2   The facilities and improvements shall be constructed at the investor’s own expense. The use of government funds that would
otherwise be available for financing or capital for ARBs shall not be used for this purpose.

5.6.3   The ARBs shall receive a reasonable amount (i.e., rent or profit sharing arrangement) or any other equitable arrangement
advantageous to the ARBs for the use of the land while the investor operates the infrastructure/facilities. The determination of the
rent shall take into consideration relevant factors such as, among others, the area utilized and amount of amortization pursuant to
the implementing rules and regulations regarding lease rental under lease agreement. In no case shall the rent be less than the
yearly amortization and taxes to be paid by the ARBs on the land.

5.6.4   The ARBs shall continue to engage in production activities on portions of the land not affected by the facilities being
constructed/rehabilitated

5.6.5   The investor shall be liable for taxes due on the improvements while the ARBs shall be responsible for taxes due on the land
pursuant to Articles 596 and 597 of the Civil Code.