QuestionsQuestions (DAR ADMINISTRATIVE ORDER NO. 02)
It is anchored mainly on Section 8 of R.A. No. 6657 (CARP), Section 3 of R.A. No. 7905 amending Section 44 of R.A. No. 6657 (PARCOM’s coordination and monitoring, including continuous processing of lease-back/joint venture schemes), and Section 11 of E.O. No. 229 (continuation of existing leases/manage tracts up to five years and renegotiation of unacceptable rentals with DAR determination if parties fail to agree).
No. It applies to (1) lands covered by CARP under AVA; and (2) retained areas of small landowners and lands of ARBs that are fully paid and where the 10-year prohibitory period under Section 27 of R.A. No. 6657 has lapsed, but where ARBs opted to include such landholdings under lease agreement.
An AVA lease agreement is one where ARBs bind themselves to give the former landowner (lessor) or any other investor general control over the use and management of the land for a certain amount and for a definite period.
LAV is the regular annual amortization per hectare paid by ARBs for CARP lands. It is based on LBP land valuation and amortization schedule, subject to land value as determined by final arbitration of DARAB, SAC, or CA if contested or appealed by the landowner.
If fully paid or donated: LAV refers to the equivalent value or annual amortization of comparable lands within the municipality/province/region. Under VLT: LAV is the fixed land value specified in the signed voluntary land transfer agreement between ARBs and the landowner.
The terms and conditions, including determination/computation of lease rental, must be mutually agreed by parties subject to approval of the PARC/PARC Executive Committee, upon recommendation of PARCCOM and review/evaluation by the NAEC pursuant to DAR A.O. No. 09, series of 2006. Without PARC or PARC ExCom approval, the lease agreement is null and void.
The formula is: LR = PT + LAV + RPT. PT is the annual poverty threshold computed by multiplying annual per capita poverty threshold of the province by national average household size of five (5). LAV is land amortization value per hectare per year, and RPT is annual real property tax per hectare.
Renegotiation occurs every five (5) years (or earlier if grounds arise such as extraordinary inflation, drastic input/output price changes, calamity/disaster due to force majeure, or other meritorious grounds). The renegotiated lease rental may not be lower than the preceding lease rental.
Examples: (1) Receive lease rentals and other agreed benefits; (2) Keep the lessee-investor in full and peaceful possession/enjoyment during the lease term and not appropriate/partition the leased land among members; (3) Have the right to ownership of permanent improvements introduced upon termination unless lease provides otherwise; (4) Option to buy beneficial non-permanent improvements; (5) Permit annotation of the lease in the Registry of Deeds and memorandum on CLOA.
Examples: (1) Manage/operate the land and adhere to lease stipulations premised on payment; (2) Provide required capital and assume risk of loss in agricultural operations; (3) Pay property taxes on buildings/improvements; (4) Remit segregated payments for real estate/property tax and land amortizations to LGUs/LBP (or landowner in VLT) and provide receipts; (5) Pay lease rental in good faith and pay interest (12% or prevailing legal rate, whichever is higher) for late payment.
The lessee-investor must use/manage the land according to what the lease agreement specifies for agricultural production. Prohibited is cultivating/growing/producing other crops or using the land for purposes other than agreed in the lease; sub-leasing or assigning lease rights; and causing substantial and unreasonable damage/depletion of soil fertility/improvements.
It is unlawful for the lessee-investor to plant/grow/raise or permit planting/growing/raising of plants, fruits, produce, and products as defined by R.A. No. 9165 (Comprehensive Dangerous Drugs Act), on the leased land.
If there is a pending petition for nullification of the lease agreement, it is unlawful for the lessor-ARB to dispossess the lessee-investor during the period subject of the petition. Unlawful dispossession without due process makes the lessor-ARB liable for damages.
The lessee-investor must implement, in collaboration with DAR, a transfer of technology and management program focused on production technologies, entrepreneurship, marketing, resource mobilization, and monitoring/evaluation within one (1) year from effectivity of the lease agreement to ensure successful management by the ARBs at expiration.
The Order governs lease applications filed and renegotiated for revised terms/conditions upon its effectivity, including pending applications in DAR Provincial Offices. For existing lease agreements approved under DAR A.O. No. 02 (1999), they may be renegotiated upon petition of parties pursuant to specified sections of A.O. No. 02 (1999).
It takes effect ten (10) days after its publication in two (2) national newspapers of general circulation.