Guidelines for non-negotiable land conversion

Constitutional and policy foundations

The Order rests on the State’s mandate to promote comprehensive rural development and agrarian reform under Article II of the 1987 Constitution (Section 1).
The Order applies the constitutional direction to promote industrialization and full employment based on sound agricultural development and agrarian reform through industries using human and natural resources (Section 1).
The Order aligns with the constitutional commitment to a continuing urban land reform and housing program for underprivileged and homeless citizens (Section 1).
The Order declares a need to rationalize government policy: protecting prime agricultural lands while providing areas for industry, housing, and commerce (WHEREAS clauses; Section 1).
The Order recognizes the President’s authority to issue guidelines to Executive agencies defining their roles in pursuing agency mandates (WHEREAS clauses).

Governing principles for land allocation

The State must prioritize a rational and sustainable allocation, utilization, management, and development of the country’s land resources (Section 1.A(1)).
The State must protect prime agricultural lands for food production and give highest priority to completing the Comprehensive Agrarian Reform Program (CARP) (Section 1.A(2)).
The State must ensure food self-sufficiency and food security through efficient and sustainable land use consistent with sound agricultural development, natural resources development, and agrarian reform (Section 1.A(3)).
The State must promote dispersal of industries nationwide to catalyze countryside development through Regional Growth Centers (RGCs), economic zones, and growth networks/corridors (Section 1.A(4)).
The State must promote and encourage economic and socialized housing projects to provide adequate housing units for average and low-income earners in urban and rural areas (Section 1.A(5)).
The State must institutionalize participation of people’s organizations, non-government organizations, and local communities in formulating a national land use plan (Section 1.A(6)).

Non-negotiable areas and conversion limits

The Order establishes “non-negotiable for conversion” areas that must not be subject to conversion, including:
- Protected areas designated under the National Integrated Protected Areas (NIPAS), including watershed and recharge areas of aquifers, as determined by DENR pursuant to RA 7586 (1992) (Section 1.B(1)(a)).
- All irrigated lands, as delineated by DA and/or NIA and approved by the President where water supports rice and other crop production (Section 1.B(1)(b)), and irrigated lands where water is not available for rice and other crop production but are within areas programmed for irrigation facility rehabilitation by DA and NIA under Presidential Administrative Order 20 (1992) (Section 1.B(1)(b)).
- All irrigable lands already covered by irrigation projects with firm funding commitments, as delineated by DA and/or NIA and approved by the President (Section 1.B(1)(c)).
The Network of Protected Areas for Agriculture (as of 1991) serves as a guide to determine non-negotiable areas, and it may be revised only upon President approval upon favorable recommendation of the Cabinet Cluster on Agro-Industrial Development (Section 1.B(1)).
Applications for conversion involving lands protected from and non-negotiable for conversion must not be given due course by DAR (Section 1.B(1)).
The Order also establishes “highly restricted from conversion” areas, requiring additional limitations:
- Lands classified as “Highly Restricted from Conversion” in the Network of Protected Areas for Agriculture, including:
  - Irrigable lands not covered by irrigation projects with firm funding commitments (Section 1.B(2)(a.1)),
  - Agro-industrial croplands or lands planted to industrial crops supporting the economic viability of existing agricultural infrastructure and agro-based enterprises (Section 1.B(2)(a.2)),
  - Highlands—areas located at elevations of 500 meters or above with potential for semi-temperate and usually high value crops (Section 1.B(2)(a.3)).
- Lands with Notice of Acquisition/Valuation under agrarian reform or subject of a perfected agreement between landowner and beneficiaries under Voluntary Land Transfer (VLT) or Direct Payment Scheme (DPS) under CARP, as determined by DAR (Section 1.B(2)(b)).
- Areas identified as environmentally critical by DENR pursuant to PD 1586 (1978) and its implementing rules and regulations (Section 1.B(2)(c)).
Lands classified as highly restricted from conversion may be converted only upon compliance with existing laws, rules, and regulations, and an additional requirement of social benefit cost analysis approved by DA (Section 1.B(2)).
Conversion applications involving highly restricted lands under environmentally critical areas must be subject to Environmental Impact Assessment (EIA) and/or Environmental Compliance Certificate (ECC) of DENR (Section 1.B(2)).

Priority-area conversions and irrigated replacements

Conversion of priority areas under Executive Order 124 (1993)—when these areas fall within highly restricted from conversion—may be allowed and the social benefit cost analysis may be waived, subject to strict conditions (Section 1.B(3)).
Even when social benefit cost analysis is waived, the requirement of an EIC or ECC must always be complied with (Section 1.B(3)).
Conversion is prohibited in any case if the sites fall under non-negotiable areas (Section 1.B(3)).
The identified priority sites for this limited allowance are:
- Specific sites in regional agri-industrial centers/regional industrial centers (RAICs/RICs) identified by DTI and DA, attached as Annex A (Section 1.B(3)(a)),
- Tourism development areas (TDAs) identified by DOT, attached as Annex B (Section 1.B(3)(b)),
- Sites identified by local government units (LGUs) for socialized housing (Section 1.B(3)(c)).

Farmer protection, certifications, and approvals

The Order requires disturbance compensation: farmers or prospective CARP beneficiaries affected by conversion must be paid sufficient disturbance compensation (Section 1.B(4)).
Owners and/or developers must be encouraged to provide capital enabling affected farmers and other legitimate stakeholders to shift to another livelihood, undergo skills training, relocate, and receive priority in employment for them and their children (Section 1.B(4)).
The Order encourages investment arrangements giving affected farmers and legitimate stakeholders a stake in land development, including joint ventures and partnerships (Section 1.B(4)).
LGU reclassification: No application for reclassification by LGUs shall be given due course by HLURB without an approved comprehensive land use plan and specified accompanying approvals post-January 1, 1989 (Section 1.B(5)).
HLURB/HLURB-related requirements for LGU reclassification include the following certifications:
- HLURB certification specifying the total area of zoned agricultural lands based on the approved comprehensive land use plan or zoning ordinance prior to the conversion application (Section 1.B(5)(a)).
- NIA certification that the area to be reclassified is not covered under Presidential A.O. 20, s. 1992 (Section 1.B(5)(b)).
- DAR certification that such lands are not distributed or covered by a Notice of Valuation under CARP (Section 1.B(5)(c)).
- DENR certification that the area for reclassification is classified as alienable and disposable and not needed for forestry purposes for applications within public lands (Section 1.B(5)(d)).
DAR conversion due course conditions: No application for conversion shall be given due course by DAR without specified agency certifications (Section 1.B(6)).
Required certifications for DAR conversion due course include:
- DA certification of viability or non-viability of agricultural land and that the land is not part of non-negotiable areas, or a certification on whether the land is classified as highly restricted (Section 1.B(6)(a)).
- DENR certification that the land does not fall under NIPAS or is not classified as environmentally critical; for environmentally critical areas, DAR may issue an Order of Conversion subject to issuance of an ECC by DENR (Section 1.B(6)(b)).
- Establishment requirement: DENR, in coordination with DAR, must institute an Environmental Guarantee Fund to ensure environment protection and provide government financial capability to handle negative conversion impacts (Section 1.B(6)(b)).
- NIA certification that the area is not covered under Presidential A.O. 20, S. 1992 (Section 1.B(6)(c)).
- HLURB certification that the land has been reclassified and that reclassification is within or outside the maximum allowable limits set by law (Section 1.B(6)(d)).
Appeals and presidential authority:
- The decision of the DAR Secretary must be appealable to the Office of the President (Section 1.B(7)).
- The President may allow conversion of areas considered non-negotiable only upon favorable recommendation of the Cabinet Cluster on Agro-Industrial Development (Section 1.B(7)).
- For irrigated affected lands, the owner/developer must replace affected areas with an equal area of irrigated lands, whether within or outside the locality applied for, and such conversion must not adversely affect the irrigation system (Section 1.B(7)).

Monitoring CARP land conversion compliance

The implementation of Section 20 of RA No. 7160 on reclassification of agricultural lands into non-agricultural uses must observe the guidelines of the Joint HLURB, DAR, DA and DILG Memorandum Circular, s. 1995, pursuant to M.C. 54, s. 1993 from the Office of the President (Section 3).

Defined terms and key concepts

Agricultural Lands mean lands devoted to agricultural activity and not classified as mineral, forest, residential, commercial, or industrial land (Section 2(a), citing Sec. 3(c), RA 6657).
Aquifer Recharge Areas are sources of water replenishment where rainwater or seepage actually enters aquifers; aquifers are sources of water from the ground (Section 2(b)).
Environmentally Critical Areas include areas declared by law for natural parks, watershed reserves, wildlife preserves, sanctuaries, aesthetic potential tourist spots, habitats of endangered or threatened indigenous wildlife, unique historic/archeological/scientific interests, cultural communities and tribes, critical slopes, areas frequently visited and/or hard hit by natural calamities (geologic hazards, floods, typhoons, volcanic activities), prime agricultural lands, recharge areas of aquifers, water bodies, mangrove areas, coral reefs, mossy and virgin forests, river banks, and swamp forests and marshlands (Section 2(c)).
Highly Restricted Areas Within Network of Protected Areas for Agricultural Development refer to the most efficient agricultural land that can be grown to a wide range of crops with minimum to moderate farm management requirement (Section 2(d)).
Land Use means manner of utilization of land, including allocation, development, and management (Section 2(e)).
Land Use Conversion means changing current use of agricultural land into another use (Section 2(f)).
Land Use Plan embodies policies with maps and similar illustrations reflecting community-desired population distribution pattern and proposal for future land allocation to land-using activities, identifying allocation, character, and extent of land resources and the process/criteria for determination (Section 2(g)).
Network of Protected Areas for Agriculture (NPAA) means land reserved for agricultural activities, including all irrigated and potentially irrigable lands; all alluvial/plain highly suitable for agriculture or food production; all sustainable land that are traditional food sources; all crop land that supports existing economic-scale production sustaining agricultural infrastructure and agro-based enterprises; all productive land in low-calamity risk areas suitable for economic trees and other cash crops; and all ecologically fragile agricultural land whose conversion will cause serious environmental problems (Section 2(h)).
National Integrated Protected Areas System is the system for classification and administration of designated protected areas to maintain essential ecological processes and life-support systems, preserve genetic diversity, ensure sustainable resource use, and maintain natural conditions as far as possible (Section 2(i)).
Premature Conversion of Agricultural Land means development activities modifying or altering agricultural lands’ physical characteristics to make them sustainable for non-agricultural purposes without an approved DAR order of conversion (Section 2(j)).
Prime Agricultural Lands are lands that can be used for agricultural activities providing optimum and sustainable yield with minimum inputs and development cost as determined by DA (Section 2(k)).
Protected Areas are identified portions of land and water set aside for unique physical and biological significance, managed to enhance biological diversity and protected from destructive human exploitation (Section 2(l)).
Reclassification of Agricultural Lands means specifying non-agricultural uses (residential, industrial, commercial) as embodied in the land use plan, subject to conversion requirements and procedure; it also includes reversion of non-agricultural lands to agricultural use (Joint HLURB, DAR, DA, DILG Memorandum Circular, s. 1995) (Section 2(m)).
Regional Agri-Industrial Growth Centers (RGCs) are specific locations outside NCR identified for development by providing infrastructure/utilities needed for industries to operate in the countryside, intended to strengthen linkages between agriculture and industry, between urban and rural areas, and integration into national production/distribution/exchange systems and international competitiveness (Section 2(n)).
Regional Growth Networks/Corridors are neighboring provinces/regions linked through LGU collaboration to share strengths and ensure optimum resource utilization and development of networks/corridors and radiation areas (Section 2(o)).
Socialized Housing covers housing programs/projects for underprivileged and homeless citizens undertaken by government or private sector for houses and lots/homelots, including sites and services development, long-term financing, liberalized interest terms, and other benefits under RA 7279 (Section 2(p)).
Special Economic Zones are selected areas highly developed or with potential for agro-industrial, industrial, tourist/recreational, commercial, banking, investment, and financial centers; an ecozone may include industrial estates, export processing zones, free trade zones, and tourist/recreational centers (Section 2(q)).
Tourism Development Areas are specific tourism development sites located in priorities in national and regional tourism master plans and designated through legislative and executive issuances as tourist spots and tourist zones for tourism estates or integrated resort/leisure/recreation complexes and other tourism facilities (Section 2(r)).
Watershed is a catchment area/drainage basin from which waters of a stream/stream system are drawn (Section 2(s)).
Zoning is delineation of functional zones allowing only specific land uses, directing and regulating land use in accordance with an approved/adopted land use plan, and prescribing setback provisions, minimum lot sizes, building heights, and bulk (Section 2(t)).
Zoning Ordinance is local legislation approving development control/zoning plan and providing regulations and other conditions on land uses and limitations on infrastructures within city/municipal territorial jurisdiction (Section 2(u)).

Prohibited acts and sanctions framework

Section 4 applies prohibited acts and penalties defined and penalized in related laws and administrative issuances, including RA 6657, RA 7586, Executive Order 184, Executive Order 648, DAR Administrative Order 12 (1994), DAR-DOJ Administrative Order 4 (1993) and 5 (1994), DA Administrative Order 2 (1992), and DENR Administrative Order 96-37 (1996) (Section 4).
The Order treats the following as prohibited acts under the referenced penalty regimes:
- Converting agricultural land to non-agricultural use with intent to avoid RA 6657 and dispossess tenant farmers (Section 4(a)(1)).
- Selling, transferring, conveying, or changing the nature of lands outside urban centers and city limits after RA 6657 effectivity (Section 4(a)(2)).
- Squatting, mineral exploration, or illegally occupying any land inside protected areas (Section 4(a)(3)).
- Constructing or maintaining structures, fences, enclosures, or conducting business enterprises without permit inside protected areas (Section 4(a)(4)).
- Failing of the developer/proponent to comply with undertaking or socialized housing project requirements (Section 4(a)(5)).
- Making misrepresentations or concealing material facts in applications for land use conversion and any other material rule violations for grant of conversion (Section 4(a)(6)).
- Failing to implement and complete land development of the converted area within the specified time (Section 4(a)(7)).
- Knowingly or willfully converting agricultural land without DAR approval (Section 4(a)(8)).
- Misrepresentation or concealment of material facts for issuance of the Certificate of Eligibility for Conversion (CEC) by DA, or attempts to misrepresent/conceal material facts for CEC issuance (Section 4(a)(9)).
- Operating projects or activities classified as environmentally critical and/or located in environmentally critical areas without a valid ECC from DENR (Section 4(a)(10)).
- Projects violating ECC conditions, environmental management plans (EMP), or environmental impact statement rules under the EIS system (Section 4(a)(11)).
- Misrepresentations in EIS/IEE (Initial Environment Examination) or other proponent documents submitted pursuant to DENR A.O. 96-37 (Section 4(a)(12)).

Transitory implementation duties and timelines

Agencies must harmonize and amend their procedures and guidelines on land use and land use conversion based on the Order’s principles within sixty (60) days from effectivity (Section 5(a)).
Agencies must implement full implementation within six (6) months from effectivity through the following actions (Section 5):
- Department of Agriculture must:
  - Update and revise the Network of Protected Areas for Agriculture, including maps, accounting for the Order’s provisions (Section 5(1)(a)),
  - Identify criteria certifying that land has ceased to be economically sound and suitable for agriculture (Section 5(1)(b)),
  - Design, in consultation with DAR, DENR, NEDA, HLURB, DTI and DOT, the social benefit cost analysis used in evaluating lands before CEC issuance (Section 5(1)(c)),
  - Have the National Irrigation Administration prepare and update maps of irrigated and irrigable lands protected from and non-negotiable for conversion (Section 5(1)(d)).
- Department of Environment and Natural Resources must:
  - Prepare and/or validate maps of initial components of NIPAS, including watershed and aquifer areas, in consultation with and active support from LGUs (Section 5(2)(a)),
  - Identify and map environmentally critical areas subject of EIA or ECC, in consultation with and active support from LGUs (Section 5(2)(b)).
- Department of Agrarian Reform must identify lands already issued any of: (1) Notice of Valuation under Compulsory Acquisition (CA), (2) Voluntary Offer to Sell (VOS) process, or (3) lands subject of a perfected agreement between landowner and beneficiaries under VLT or DPS under CARP (Section 5(3)).
- Housing and Land Use Regulatory Board must, pursuant to M.C. 54 (1993) and in coordination with DA, DAR, DILG, NEDA, League of Provinces, League of Cities, League of Municipalities, in consultation with people’s organizations and NGOs, design and install a monitoring and evaluation system for reclassification of agricultural lands into non-agricultural uses (Section 5(4)).
- Department of Interior and Local Government must, in coordination with HLURB, cause LGUs’ immediate compliance with formulation and updating of their respective comprehensive land use plans, reviewed and approved by HLURB or the Sangguniang Panlalawigan, pursuant to EO 72 (1993) (Section 5(5)).
In the absence of presidential approval of delineation of irrigated and irrigable lands non-negotiable for conversion, the DA’s Network of Protected Areas for Agriculture governs (Section 5).

Repeal, modification, and effectivity rule

Inconsistency repeal: all issuances inconsistent with Administrative Order No. 363 are repealed or modified accordingly (Section 6).
Effectivity: the Order becomes effective ten (10) days after publication in two (2) national newspapers of general circulation (Section 7).