Mechanisms for Implementing Agrarian Reform

Coverage and basic implementation rules

Section 1 makes CARP cover all public and private agricultural lands provided in Proclamation No. 131 dated July 22, 1987, regardless of tenurial arrangement and commodity produced.
Section 1 includes, whenever applicable in accordance with law, other lands of the public domain suitable to agriculture.
Section 2 requires that land acquisition and distribution under Executive Order No. 229 applies to all kinds of lands under CARP coverage, subject to priorities and reasonable retention limits that Congress may prescribe under the Constitution.
Section 2 requires acquisition and distribution to consider ecological, developmental, or equity considerations, and to remain subject to the payment of just compensation.
Section 3 exempts from CARP coverage lands actually used and found necessary for:
- national defense;
- school sites and campuses;
- religious purposes;
- penal colonies; and
- government research and quarantine centers.

Compulsory registration and valuation controls

Section 4 requires that within one hundred eighty (180) days from the effectivity of Executive Order No. 229, all natural and juridical persons, including government entities, owning, leasing, or managing agricultural lands must file a sworn statement in the proper Assessor’s Office.
Section 4 requires the sworn statement to include:
- (a) description and area of the property;
- (b) estimated average gross income from the property;
- (c) names of all tenants and regular farmworkers in the property;
- (d) crop(s) planted and the area covered by each crop as of June 1, 1987;
- (e) terms of mortgages, leases, and management contracts subsisting as of June 1, 1987;
- (f) the latest declared market value determined by the City/Provincial Assessor; and
- (g) a sworn declaration of the current fair market value the owner wishes to receive if acquired for agrarian reform purposes.
Section 4 provides that if a landowner fails to register within the prescribed period, the government bases the valuation for landowner compensation purposes on the City/Provincial Assessor’s value.
Section 4 further provides that starting with the quarter immediately following registration, the real property tax is based on the owner’s declared current fair market value.

Private land acquisition procedure and possession

Section 5 provides that after land, landowners, and beneficiaries are identified, the DAR must publish its decision to acquire the land and notify landowners, including an offer to pay under Section 6.
Section 5 requires that within fifteen (15) days from publication and notice, the landowner must signify acceptance or rejection of the DAR offer.
Section 5 mandates that if the landowner accepts, the Land Bank of the Philippines (LBP) must pay the landowner the purchase price within fifteen (15) days after surrender of the Certificate of Title and other relevant documents required by DAR and LBP.
Section 5 provides that in case of rejection or no reply, the DAR conducts administrative summary proceedings to determine compensation, requiring the landowner, the LBP, and other interested parties to submit evidence on compensation within fifteen (15) days from receipt of notice.
Section 5 states that after the submission period expires, the matter is deemed submitted for decision.
Section 5 requires that within fifteen (15) days from receipt of the decision, the LBP establishes a trust fund in the amount decided and notifies the landowner and the DAR.
Section 5 grants that any party who disagrees with the decision may bring the matter to the proper court for determination of just compensation.
Section 5 provides that after the establishment of the trust fund or receipt by DAR of the landowner’s acceptance, the DAR takes immediate possession.
Section 5 requires that upon formal notification by DAR, the Register of Deeds issues a Transfer Certificate of Title (TCT) in the name of the Republic of the Philippines as Trustee for and in behalf of qualified beneficiaries, after which DAR proceeds with redistribution.
Section 5 provides that beneficiary ownership rights and responsibilities commence when the beneficiaries are designated as awardees-owners by DAR, evidenced by a Certificate of Landownership Award.

Landowner compensation and payment modes

Section 6 requires the LBP to compensate the landowner with an amount established by the government based on the owner’s declaration of current fair market value under Section 4, subject to controls defined and promulgated by the Presidential Agrarian Reform Council (PARC) under Section 18.
Section 6 allows the landowner to receive compensation in any of these modes, at the landowner’s option:
- (a) Bond payment over ten (10) years with:
  - ten (10) percent of the value of the land payable immediately in cash; and
  - the balance in the form of LBP bonds bearing market rates of interest aligned with 91-day treasury bills rates, net of applicable final withholding tax.
  - One-tenth of the face value of the bonds matures every year from issuance until the tenth year.
  - LBP bonds issued under this mode are eligible at face value for purchase of government assets to be privatized.
- (b) Direct payment in cash or kind by farmer-beneficiaries, with terms mutually agreed and subject to approval of DAR.
- (c) Other modes of payment prescribed or approved by PARC.
Section 7 requires assistance to landowners through LBP services including:
- investment information and counseling assistance;
- conversion and/or exchange of LBP bonds to/from government stocks and/or government assets; and
- marketing of LBP bonds.

Voluntary transfer, corporate arrangements, and leases

Section 8 allows landowners whose lands are subject to redistribution to enter a voluntary agreement for direct transfer to appropriate beneficiaries, subject to approval of DAR and to terms acceptable to both parties.
Section 8 requires voluntary transfer guidelines, including that:
- (a) beneficiaries are determined by DAR to be the same individuals who would be eligible to purchase the land if government acquired it for resale;
- (b) the transferred area is no less than the area the government would otherwise acquire for resale;
- (c) both parties fully know and understand the terms and conditions of the government’s standing offer to purchase and standing offer to resell; and
- (d) the agreement includes sanctions for non-compliance, is binding and irrevocable for both parties, and is recorded at and monitored by DAR.
Section 9 authorizes the government to purchase all agricultural lands it deems productive and suitable for farmer cultivation voluntarily offered for sale to it at valuation determined under Section 6.
Section 9 provides that voluntary offers for sale are exempt from payment of capital gains tax and other taxes and fees.
Section 10 allows corporate landowners to give workers and other qualified beneficiaries the right to purchase a proportion of the corporation’s capital stock based on the ratio of the land assets to the corporation’s total assets, and to grant additional compensation for that purpose.
Section 10 provides that PARC approval of a plan for such stock distribution and its initial implementation constitutes compliance with CARP land distribution requirements.
Section 11 provides continuity and rules for:
- Leases and management contracts registered with the Register of Deeds prior to approval of Executive Order No. 229 may continue under original terms but not beyond five (5) years from effectivity.
- Renewal of such leases and management contracts is allowed only if qualified beneficiaries agree; and if existing lease rentals are not acceptable after distribution/award, rentals are renegotiated with assistance of the Barangay Agrarian Reform Council (BARC), with DAR determining rentals if parties fail to agree.
- Mortgages and other claims registered with the Register of Deeds are assumed by the government up to the landowner’s compensation value under Section 6.

Beneficiary payment, credit, ownership, and public land

Section 12 requires that land acquired and redistributed by government is paid for by beneficiaries in thirty (30) equal annual payments at six (6) percent per annum interest.
Section 12 makes the first payment due one (1) year after resale and provides a two (2) percent interest rebate for amortizations paid on time.
Section 12 limits annual amortizations so that they shall not exceed ten (10) percent of the land’s annual value of gross production.
Section 12 provides that if amortization exceeds ten (10) percent, LBP shall reduce the interest rate and/or principal obligation to make repayments affordable.
Section 12 provides that incentives apply for prepayments.
Section 12 gives LBP a lien by way of mortgage on land acquired by the beneficiary and allows foreclosure by LBP when the outstanding principal balance unpaid and past due reaches the equivalent of three (3) annual amortizations.
Section 13 requires that upon land transfer, each beneficiary who actually farms the land is eligible for a production loan to finance one crop cycle, under terms set by LBP case-by-case and renewable upon repayment.
Section 14 allows ownership transfer for lands with multiple beneficiaries to be collective or individual, at beneficiaries’ option.
Section 14 limits collective ownership by requiring each beneficiary’s undivided share held in common to be equivalent to not more than the applicable retention limit.
Section 14 authorizes beneficiaries to collectively decide either to continue operation of the parcel/estate as a whole or subdivide into individual lots, including determining the manner of subdivision implementation.
Section 15 directs that all alienable and disposable public lands suitable for agriculture outside proclaimed settlements are distributed by DENR to qualified beneficiaries as certified jointly by DAR and DENR.

Production sharing requirement

Section 16 mandates that individuals or entities owing and/or operating under lease agricultural lands with gross sales in excess of Five Million Pesos (P 5 million) per annum must execute a production sharing salary plan.
Section 16 requires that at least two and one-half (2.5) percent of gross sales from production/cultivation be distributed as compensation to farmworkers over and above compensation they already receive.
Section 16 imposes a cap: such individuals or entities must not be obligated to pay more than 100 percent of the regular and annual compensation of the farmworkers.

DAR powers, PARC creation, and barangay mediation

Section 17 vests the DAR with quasi-judicial powers to determine and adjudicate agrarian reform matters.
Section 17 grants exclusive original jurisdiction to the DAR over all matters involving implementation of agrarian reform, except matters under the exclusive original jurisdiction of DENR and the Department of Agriculture (DA).
Section 17 authorizes DAR to punish for contempt and to issue subpoena, subpoena duces tecum, and writs to enforce orders or decisions.
Section 17 provides that DAR decisions may be appealed to the Regional Trial Courts in proper cases, while decisions are immediately executory notwithstanding appeal.
Section 18 creates the Presidential Agrarian Reform Council (PARC) to coordinate CARP implementation and ensure timely, effective delivery of support services.
Section 18 establishes PARC composition including the President as Chairman, the following agency heads/secretaries as Vice Chairmen or Members, and the Executive Secretary as Member:
- Department of Agrarian Reform;
- Department of Agriculture;
- Department of Environment and Natural Resources;
- Department of Budget and Management;
- Department of Finance;
- Department of Justice;
- Department of Labor and Employment;
- Department of Local Government;
- Department of Public Works and Highways;
- Department of Trade & Industry;
- Department of Transportation and Communications;
- National Economic and Development Authority;
- Land Bank of the Philippines; and
- Presidential Commission on Good Government.
Section 18 requires the President to appoint representatives of agrarian reform beneficiaries and affected landowners as PARC members.
Section 18 provides that DAR supplies the Secretariat for PARC and that the Secretary of Agrarian Reform is the Director-General of the Secretariat.
Section 18 directs PARC to formulate and/or implement policies, rules, and regulations including:
- recommending small farm economy areas by crop based on technical study and evaluation;
- scheduling acquisition and redistribution of agrarian reform areas, with acquisition not implemented until all requirements are completed including the first payment to landowners concerned;
- controlling mechanisms for evaluating the owner’s declaration of current fair market value to establish government’s compensation offer under Section 6, considering current local land transactions, the landowner’s annual income, and other factors.
Section 18 establishes an Executive Committee of PARC with the Secretary of Agrarian Reform as Chairman and members from:
- Executive Secretary;
- Department of Agriculture;
- Department of Environment and Natural Resources;
- Department of Finance;
- Department of Public Works and Highways; and
- Land Bank of the Philippines.
Section 18 requires that within ninety (90) days from effectivity, the Executive Committee complete a Program of implementation incorporating physical targets, implementation schedule, and support requirements, for PARC approval.
Section 18 requires the implementation program to take into account constitutional policies and guidelines, including:
- farmer and regular farmworker rights to own directly or collectively the lands they till, and for other farmworkers to receive a just share of fruits;
- respect for the right of small landowners;
- encouragement of voluntary land-sharing;
- participation rights of farmers, farmworkers, landowners, cooperatives, and/or independent farmer’s organizations in planning, organization, and management of CARP;
- respect in public domain lands for prior rights, homestead rights of small settlers, and rights of indigenous communities to ancestral lands;
- support to agriculture through appropriate technology and research and adequate financial, production, marketing, and other support services;
- encouragement for landowners to invest agrarian reform proceeds to promote industrialization, employment creation, and privatization of public sector enterprises; and
- expropriation at the earliest possible time of idle or abandoned agricultural lands defined by law for distribution to beneficiaries.
Section 19 requires DAR to convene at barangay level a Barangay Agrarian Reform Council (BARC) operated on a self-help basis.
Section 19 requires BARC to include representatives of:
- farmer and farmworker beneficiaries;
- farmer and farmworker non-beneficiaries;
- agriculture cooperatives;
- other farmer organizations;
- the Barangay Council;
- NGOs;
- landowners;
- a DA official assigned to the barangay;
- a DENR official assigned to the area;
- a DAR Agrarian Reform Technologist assigned to the area, acting as Secretary; and
- an LBP representative.
Section 19 provides BARC functions including participation and support for agrarian reform programs, mediation/conciliation/arbitration of agrarian conflicts and issues brought for resolution, and other delegated functions from PARC, its Executive Committee, or the DAR Secretary.

Financing and budget appropriation sources

Section 20 creates a special fund called the Agrarian Reform Fund with an initial amount of FIFTY BILLION PESOS (P 50 billion) to cover estimated CARP cost from 1987 to 1992.
Section 20 provides that the Agrarian Reform Fund is sourced from:
- receipts from sale of assets of the Asset Privatization Trust (APT); and
- receipts of sale of ill-gotten wealth recovered through the Presidential Commission on Good Government; and
- other sources government may deem appropriate.
Section 20 states that the amount collected and accruing to the Agrarian Reform Fund is considered automatically appropriated for the authorized purposes.
Section 21 appropriates TWO BILLION SEVEN HUNDRED MILLION PESOS (P 2.7 billion) for supplemental CARP requirements for 1987.
Section 21 provides that the P 2.7 billion is sourced from:
- receipts of sale of ill-gotten wealth recovered through the Presidential Commission on Good Government; and
- proceeds from sale of assets by the APT.
Section 21 mandates that amounts accrued from these sources are automatically appropriated for the authorized purposes.

Sanctions for interference and premature entry

Section 22 permanently disqualifies persons, associations, or entities that prematurely enter land to avail themselves of rights and benefits, from receiving benefits and mandates forfeiture of their rights.
Section 23 makes persons, associations, or entities that willfully prevent or obstruct CARP implementation liable for contempt.

General provisions on land rights, court restraints, and governance

Section 24 protects the rights of indigenous cultural communities to their ancestral lands within the framework of national unity and development.
Section 25 prohibits lower courts from issuing injunctions, restraining orders, prohibitions, or mandamus against the DAR, DA, DENR, and the Department of Justice in implementing the CARP.
Section 26 authorizes PARC, in exercising its functions, to call upon assistance and support of other government agencies, bureaus, offices, and government-owned or controlled corporations.
Section 27 provides that Presidential Decree No. 27, as amended, continues to operate for rice and corn lands covered thereunder.
Section 27 provides that Republic Act No. 3844 and other agrarian laws not inconsistent with Executive Order No. 229 have suppletory effect.
Section 28 directs all Registers of Deeds to register free of payment of all fees for patents, titles, and documents required in implementing the CARP.
Section 29 establishes a separability clause: if any section or provision is held unconstitutional or invalid, other sections remain unaffected.
Section 30 provides a repealing clause: inconsistent laws, issuances, decrees, and parts thereof are repealed or amended accordingly.