Question & AnswerQ&A (DAR ADMINISTRATIVE ORDER NO. 8)
Republic Act No. 6657 took effect on June 15, 1988.
A Production Sharing Plan is a scheme mandated to be executed within 90 days from the effectivity of RA 6657 by enterprises operating agricultural lands under lease, management, or similar arrangements, providing for a share of production-based compensation to farmworker-beneficiaries.
Covered employers include any enterprise owning or operating agricultural lands under lease, management contract, or similar arrangements; multinational corporations engaged in agricultural activities; and commercial farms with gross annual agricultural sales exceeding five million pesos, among others.
Managerial and supervisory employees are excluded from receiving Production and Profit Shares but may be compensated separately during a transitory period.
Production Share is three percent (3%) of the gross sales; Profit Share is ten percent (10%) of the net profit after tax, both payable to regular and other farmworkers above their current compensation.
Production Shares must be distributed within 60 days after the end of the fiscal year and Profit Shares within 90 days after the fiscal year end, with balances payable after auditing not more than 60 days later.
The DAR prescribes guidelines for the Production Sharing Plan; approves agreements; determines ceilings for gross sales where applicable; enforces compliance; and adjudicates disputes regarding Production/Profit Sharing.
Violations are subject to penalties as provided under Sections 73 and 74 of RA 6657 which cover prohibited acts and omissions and their sanctions.
Undistributed or unclaimed shares must be deposited with the Land Bank of the Philippines under the name of the DAR Secretary, and after two years if unclaimed, are forfeited and turned over to the Agrarian Reform Fund.
'Regular annual compensation' includes all cash remuneration regularly paid to employees such as salaries, wages, 13th month pay, bonuses, allowances, commissions, and paid leaves but excludes payments arising from Production/Profit Sharing.