Question & AnswerQ&A (DAR ADMINISTRATIVE ORDER NO. 02)
The legal basis includes Section 8 of Republic Act No. 6657, Section 3 of Republic Act No. 7905, and Section 11 of Executive Order No. 229.
They apply to all lands covered by the Comprehensive Agrarian Reform Program (CARP) under agribusiness venture arrangement, including retained areas of small landowners and fully paid lands of agrarian reform beneficiaries (ARBs) whose ten-year prohibitory period has lapsed but have opted for lease agreements.
Land Amortization Value (LAV) refers to the regular annual amortization per hectare paid by ARBs for agricultural lands awarded under CARP, based on Land Bank of the Philippines valuation and amortization schedule, or equivalent value for fully paid or donated lands.
The lease rental formula is LR = PT + LAV + RPT, where PT is the annual poverty threshold, LAV is the land amortization value per hectare, and RPT is the annual real property tax per hectare, divided by 3, the maximum hectares awarded per ARB family.
The lessor-ARB has the right to receive rentals and agreed benefits, pay land amortization and taxes, allow peaceful possession to the lessee-investor, own permanent improvements upon lease termination, and allow annotation of the lease agreement at the Registry of Deeds.
Obligations include managing and operating the land per the agreement, providing capital and technical services, paying property taxes on improvements, remitting land amortization and real estate taxes to the lessor-ARB, constructing improvements with consent, and paying lease rentals timely with interest for delays.
The lessee-investor is prohibited from using the land for unauthorized crops or purposes, planting dangerous drugs as defined by law, causing substantial damage to the land, and subleasing or assigning the lease rights without consent.
Lease rentals must be renegotiated every five years or earlier if there is extraordinary inflation, drastic price changes, calamity declarations, or other meritorious grounds. Renegotiated rentals cannot be lower than the previous rates.
Any lease agreement without PARC or PARC ExCom approval is considered null and void according to Section 4.9 of DAR Administrative Order No. 09, series of 2006.
Conflicts are governed by sections 14 to 16 of DAR A.O. No. 09, series of 2006, including arbitration. During arbitration, the lessee-investor must continue paying lease rentals based on the previous year's rate until resolution.