Fishpond and Mangrove Aquaculture Lease Rules

Policy basis and governing statutes

Section 16, Article II of the 1987 Constitution is cited as the constitutional basis for promoting national development and public welfare in land-use arrangements.
The order implements lease rules under Republic Act No. 8550, including its cited sections: Sections 3, 6, 12, 13, 45, 46, 50, 55, 57, 65, 103(b), and 107.
The order is also anchored on Republic Act No. 8289, as amended by Republic Act No. 9501, and Executive Order No. 26 (series of 2011).

Key definitions used in the rules

“Abandoned fishpond” refers to released public land where there is no occupation, possession, or operational activity by the lessee (or lawful representative), shown by conditions including failure to submit the required initial report under oath within ten (10) days after six (6) months from lease approval; subleasing; or absence of clear indication of fish production operations.
“Aquasilviculture Stewardship Contract (ASC)” is a contract between the Secretary and qualified fisherfolk cooperatives/associations and MSMEs for use of public land for mangrove-friendly aquaculture.
“Areas released for fishpond development” are portions of public land transferred by DENR to BFAR for fishpond development through specified certifications/orders/releases, including releases made prior to Presidential Decree No. 705 and releases made prior to the effectivity of Republic Act No. 8550.
“Commercial-scale production” is aquaculture production of fish in the required volume (or equivalent) per hectare per year.
“Environmental Compliance Certificate (ECC)” is a permit issued by the President or duly authorized representative certifying that new fishpond development will not bring unacceptable environmental impact and that compliance exists with Presidential Decree No. 1586.
“Fish” covers finfish and also mollusks, crustaceans, echinoderms, marine mammals, and all other species of aquatic flora and fauna/aquatic resources.
“Fishpond Lease Agreement (FLA)” is an agreement between the Secretary and a qualified applicant for use of developed public fishpond areas.
“Undeveloped fishpond area” is fishpond land released for fishpond development that is not enclosed by dikes; or enclosed but lacks functional water control structures; or water level required for commercial-scale production cannot be maintained; or a larger area enclosed only with a simple perimeter dike and may or may not have mangrove species.
“Underutilized fishpond” is released fishpond land not producing in commercial scale within three (3) years from ASC/FLA approval, or not fully developed and producing in commercial scale within five (5) years, as reflected in annual reports or inspection/verification reports endorsed and verified by the concerned office.
“Vegetated with mangrove species” means an intertidal area of one (1) hectare or more with at least ten percent (10%) mangrove crown cover in each hectare, measured using canopy shadow criteria at high noon.

Permits, contracts, and leases required

No person shall occupy or use any portion of areas released for fishpond development without first securing a permit, contract, or lease under this order (Section 2).
A Gratuitous Permit (GP) may be granted by the Secretary upon the recommendation of the Director for scientific, research, educational, or experimental breeding purposes to qualified branches of government, academic, scientific or research institutions (Section 3(a)).
An Aquaculture Stewardship Contract (ASC) may be granted by the Secretary upon the recommendation of the Director for mangrove-friendly aquaculture to qualified fisherfolk cooperatives/associations and MSMEs (Section 3(b)).
A Fishpond Lease Agreement (FLA) may be granted by the Secretary upon the recommendation of the Director to qualified applicants for fishpond operations over areas released for fishpond development that are already developed (Section 3(c)).

Who may apply and how much land

An ASC may be granted for an area not exceeding fifty (50) hectares to fisherfolk cooperatives/associations or MSMEs (Section 4(a)).
An FLA may be granted for an area not exceeding twenty-five (25) hectares to an individual or husband and wife living together (Section 4(b)).
A person who is already an FLA holder over an area as allowed shall be precluded from acquiring any right or interest in another permit, contract or lease issued to any corporation, association, or partnership, even if the person’s interest is as a stockholder or member (Section 4(b)).
A gratuitous permit may be granted for an area not exceeding twenty-five (25) hectares, subject to availability, for scientific/research/educational/experimental breeding aquaculture (Section 4(c)).
An FLA may be granted for an area not exceeding fifty (50) hectares to a corporation duly registered with the SEC (Section 4(d)).
The Secretary may increase the allowable area for public interest, considering the applicant’s financial capacity/qualification and the importance of the project/industry (Section 4(e)).

Application rules and required documents

Applicants must apply using a prescribed form; corporations, cooperatives, MSMEs, associations, or partnerships must attach documents such as articles/by-laws/certificate of registration and other proof of qualification (Section 8).
Applications must be filed with the Regional or Provincial Office where the area is located (Section 9).
A non-refundable application fee of PHP 2,000.00 must be paid upon filing for an ASC or FLA (Section 10).
An application is considered filed only on the date and time the original application and the complete set of initial requirements are actually received by the correct Regional or Provincial Office (Section 11).
Applications with incomplete initial requirements are rejected outright and are not treated as filed (Section 11).
No transfer of the applied area (all or part) is allowed during the application process; violating this causes automatic rejection and forfeiture of all improvements introduced (Section 11).
Accepted ASC or FLA applications receive serial numbers and are recorded in a registry book (Section 12).
Priority for applications is given to the earliest filed for the same area; Filipino applicants have priority over areas whose leases expired/cancelled/terminated for cause (Section 13).
If multiple qualified fisherfolk cooperatives/associations or MSMEs apply for the same area on the same date, the FLA or ASC is raffled among them (Section 13(b)).

Initial requirements for ASC/FLA

Initial requirements for ASC or FLA include four (4) copies of the sketch plan; specified corporate/by-law documents if the applicant is juridical; a bank deposit certificate with at least PHP 5,000.00 per hectare (or fraction) and bank statements for the preceding six (6) months; and an affidavit that the initial capital will be used exclusively for development (Section 14).
Applicants must submit a notarized affidavit of adherence to Good Aquaculture Practices in the form in Annex A and proof of compliance with the relevant Section 5(A)(a) or 5(A)(b) requirement set, when applicable (Section 14(e)-(f)).

Requirements for GP applications

GP applications require a project profile stating general/specific objectives, project description, methodology (including personnel, time allocation, schedule, funding sources local and foreign, target beneficiaries, and monitoring/evaluation), and a sketch plan (Section 15).

Final requirements for ASC/FLA approval

Final requirements include twelve (12) copies of a survey plan approved/certified by the Director/Regional Director of Lands or the Bureau of Lands (as applicable), the duly accomplished ASC/FLA form acknowledged before a notary, and certifications from the Regional Director and Regional Trial Court that the area is not involved in pending administrative and judicial cases (Section 16).
The applicant must pay cash bond deposit and initial rental, and obtain certification from the Regional Director that the area is not subleased to any other persons (Section 16(d)-(e)).
An ECC or Certificate of Non-Coverage from the DENR is required, plus proof of updated remittances to the Social Security System for permanent workers employed, when applicable (Section 16(f)-(g)).

Renewal, transfer, and assignment requirements

A GP is valid for five (5) years, renewable for another five (5) years, and renewable as long as the area is needed, subject to submission of an annual report on approved use (Section 6).
An ASC is for ten (10) years, renewable for another ten (10) years (Section 6).
An FLA is for twenty-five (25) years, renewable for another twenty-five (25) years but not to exceed fifty (50) years, with transfers allowed only within the fifty-year period (Section 6).
There is no right of renewal after fifty (50) years for the lessee/transferee or their legal heirs (Section 6).

Renewal of ASC/FLA

Renewal requires payment of an application fee of PHP 2,000, payment of cash bond and initial rental, and court certification that the area is not involved in pending judicial cases (Section 17).
Renewal also requires either a copy of the approved survey plan if the area remains unchanged, or submission of a new survey plan if there are changes (Section 17(d)-(e)).
BFAR Regional Director must validate development, adherence to Good Aquaculture Practices, no pending administrative cases, no unpaid rentals/surcharges, and that the area remains unchanged per the approved survey plan (Section 17(e)).

Assignment/transfer conditions

Assignment/transfer of ASC/FLA rights may be allowed only if the assignor/transferor held the contract/lease for at least five (5) years, the area is developed, there is no violation of fisheries laws/rules and lease terms, the assignee is qualified, and the area is not involved in any administrative or judicial case (Section 18(a)-(e)).
The assignee/transferee assumes the transferor’s obligations for the unexpired period (Section 18(f)).
The transferee of an FLA may apply for a 25-year lease renewal if the transferor never exercised such renewal option, but the combined FLA period for both transferor and transferee must not exceed fifty (50) years, and no renewal lies after that period for the transferee or legal heirs (Section 18(f)).

Assignment/transfer procedural requirements

Prior written approval of the LESSOR is required for assignment/transfer (Section 19(a)).
Requirements also include an accomplished application form; original deed of assignment/transfer with assumption of obligations; certified true copies of receipts showing updated rental payments; payment of assignment/transfer fee of PHP 100 per hectare or fraction; payment of PHP 2,000.00 application fee; posting required cash bond; latest improvements report; and twelve (12) copies of survey plan approved by the Director of Lands (Section 19(b)-(i)).
Further requirements include duly accomplished ASC/FLA contract/lease form acknowledged by a notary; certifications that the area is not involved in pending administrative and judicial cases; affidavits/certifications that the area is not subleased; and notarized affidavit of adherence to Good Aquaculture Practices (Section 19(k)-(m)).

Grounds for rejection and cancellation

An ASC/FLA application, or renewal of an ASC/FLA, is rejected on grounds including: lack or loss of interest; applicant not qualified; incomplete initial requirements; death of individual applicant; dissolution of juridical person; fraudulent/false/misleading statements or information; occupying or introducing improvements without an ASC/FLA; failure to comply with requirements within six (6) months from receipt of Notice of Compliance; and when public interest so requires (Section 20).
Non-compliance due to inaction or delay of concerned government agencies is not a basis for rejection under the rules’ six-month compliance framework (Section 20(h)).

Cancellation grounds for ASC/FLA

The ASC or FLA is cancelled for grounds including violation of fisheries laws/rules and applicable laws; death of the lessee subject to legal heir preemptive rights; dissolution of juridical person; fraudulent/false/misleading statements before or after issuance; failure to submit a yearly report; failure to pay rentals and surcharges for two (2) consecutive years; subleasing; transfer/assignment without prior Secretary approval; non-adherence to Good Aquaculture Practices; failure to provide environmental pollution-minimizing facilities (settling ponds or reservoirs); failure to comply with other contract/lease terms or rules; and abandonment, non-development, or underutilization of the area (Section 28(a)-(l)).

Rentals, surcharges, cash bonds

Annual rentals become due and payable upon effectivity, with an annual rate schedule for fishpond areas for 2013 through the sixth year and every year thereafter:
- First year (January 1, 2013 to December 31, 2013): PHP 1,000.00 per hectare (or fraction)
- Second year: PHP 1,100.00
- Third year: PHP 1,200.00
- Fourth year: PHP 1,300.00
- Fifth year: PHP 1,400.00
- Sixth year and every year thereafter unless increased: PHP 1,500.00 per hectare (or fraction) (Section 21).
The annual rental for areas allocated for mangroves or silviculture is PHP 500.00 per hectare (or fraction) (Section 21).
Resource rent studies for FLA/ASC areas are conducted on the 6th year after approval and every five (5) years thereafter, and the results become the basis for new rental rates (Section 21).
Rental must be paid to BFAR Central Office or the Regional Office where the area is located no later than the last working day of February of each year (Section 21).
Rentals may be paid in cash or by postal money order; check payments are accepted subject to Government Accounting and Audit Manual rules, and post-dated checks are accepted only if drawn from the lessee/contracting party’s current account, dated on or before the due date, and only acknowledgment receipts are issued until clearing on due date (Section 21).
Rentals from FLAs and ASCs accrue to a fund other than the General Fund and must be remitted to the National Fisheries Research and Development Institute and other qualified research institutions for aquaculture research development (Section 22).

Surcharges for late payment

Late payment surcharges apply based on payment timing:
- March 1–31: 5%
- April 1–June 30: 10%
- July 1–December 31: 15%
- After one (1) year: 20% (Section 23).
If the ASC or FLA holder fully pays the annual rental for the following year within December of the current year, the holder receives an incentive discount of 10% on the annual rental (Section 23).

Cash bond deposit and forfeiture

Before issuance of any contract or lease, applicants must deposit a cash bond with BFAR or its Regional Offices at PHP 500 per hectare (or fraction) as guaranty of good faith and compliance (Section 24).
After three (3) years from approval of the FLA or ASC and after the lessee has fully developed the area and made it commercially producing, or after the contracting party has utilized the area for mangrove-friendly aquaculture and complied with all requirements and terms, the Director may credit the cash bond for payment of annual rentals (Section 24).
If the contract/lease is cancelled for cause, the cash bond is forfeited to the government for BFAR bio-physical rehabilitation/restoration (Section 24).
The Secretary or Director may confiscate or forfeit the cash bond (or part) for violation of terms/conditions/requirements, violation of fisheries laws/rules, or rescission/cancellation for cause (Section 25).
Refund of any bond deposit or part may be allowed upon request of the contracting party/lessee and submission of original receipt; if the receipt is lost, an affidavit of loss may be submitted; transfer of cash bond requires prior approval (Section 25).

ASC/FLA operational terms and performance standards

The ASC/FLA area is limited strictly to boundaries in the contract and may be used only for silviculture and mangrove-friendly aquaculture (ASC) or aquaculture purposes only (FLA) by the contracting party/lessee (Section 26(a)).
The contracting party or lessee must immediately put up two all-weather signboards 3 feet by 2.5 feet, visible from 30 meters, identifying that the area is under an ASC/FLA, the name of the holder, and the approval and expiration dates, placed at the entrance and one at the main residential structure (Section 26(a)).
The contracting party or lessee shoulders expenses for removal of any construction made in violation of Section 7(j) when ordered by the Secretary through the Director in coordination with other government agencies (Section 26(b)).
Failure to pay annual rentals on the due date triggers surcharges under the order; failure to pay rentals and surcharges for two (2) consecutive years without justifiable cause results in cancellation/termination and bond forfeiture, without prejudice to actions to recover rentals due including surcharges (Section 26(c)).
Within 180 days from issuance, the contracting party (ASC) must have started mangrove-friendly aquaculture utilization; the lessee (FLA) must have introduced improvements; otherwise the ASC/FLA is cancelled (Section 26(d)).
Within five (5) years from FLA approval, the lessee must fully develop the area and make it capable of producing in commercial scale, with specified commercial-scale production benchmarks by year starting 2013 at 1,000 kilograms fish per hectare per year and rising annually to 1,500 kilograms per hectare per year in 2018 (Section 26(e)).
On the sixth year from approval of the order, evaluation determines the appropriate commercial-scale production level by Administrative Order; failure to attain the required level becomes underutilization and is a ground for FLA cancellation (Section 26(e)).
Within five (5) years from ASC approval, the contracting party must fully utilize the area for mangrove-friendly aquaculture and make it capable of producing 1,000 kilograms of fish per hectare per year, based on actual fish production area excluding mangrove areas; the sixth-year benchmark is set by Administrative Order; failure becomes underutilization and grounds for ASC cancellation (Section 26(f)).
The contracting party or lessee must have financial capability to develop and manage the area (Section 26(g)).
ASC/FLA rights cannot be used as collateral to secure a loan for area development (Section 26(h)).
The contracting party or lessee is prohibited from subleasing all or any portion of the area through any arrangement that operates as a sub-lease (Section 26(i)).
Any transfer/assignment of leasehold right to another person/entity requires prior approval of the Secretary (Section 26(j)).
The contracting party or lessee must undertake reforestation in river banks, bays, streams, and seashore fronts fronting the ASC/FLA area to a 50-meter strip when applicable (Section 26(k)).
Upon cancellation for cause or expiration, the contracting party/lessee must vacate; otherwise ejectment is ordered by the Secretary or authorized representative; failure to vacate triggers application of existing laws/rules and all improvements are forfeited to the government (Section 26(l)).
The contracting party/lessee must keep operational/transaction records audited by an independent auditor commissioned by the holder, and must allow authorized LESSOR representatives to inspect and validate records (Section 26(m)-(n)).
The ASC/FLA does not confer rights to cut down or harvest mangrove timber or other forest products; a cutting permit must be secured from the appropriate government agency when necessary for optimum fishpond operations; gleaning/harvesting of mangrove-associated aquatic fauna not threatened is permitted (Section 26(o)).
ASC/FLA holders must execute within six (6) months an incentive plan with regular fishpond or prawn farm workers (or workers’ organization, if any) distributing 7.5% of net profit before tax within 60 days after the fiscal year as compensation to regular and other pond workers over and above current compensation; worker safeguards include periodic audit/inspection by certified public accountants chosen by workers (Section 26(p)).
Within 10 days after six (6) months from ASC/FLA approval, the holder must submit an initial report to the Director through the Regional Director; annually thereafter, the holder must submit sworn annual reports under oath on development, operation, and production, in a prescribed form, duly verified/certified by the Regional Director or representative; failure to submit yearly reports leads to immediate cancellation under Section 103(b) of Republic Act 8550 (Section 26(q)).
The contracting party/lessee must provide facilities to minimize environmental pollution (e.g., settling ponds and reservoirs); failure is a ground for cancellation (Section 26(r)).
The ASC/FLA is subject to existing laws and rules governing the matter (Section 26(s)).

Death effects and preemptive renewal for FLA

The FLA terminates upon the death of an individual lessee (Section 27).
The legal spouse and/or children as legal heirs, if qualified, have preemptive rights to the unexpired term of the FLA if they file an application within 90 days from the lessee’s death, subject to original terms and without renewal if the deceased lessee had already exercised the right of renewal (Section 27).
If preemptive rights are not timely exercised, legal heirs may apply for 25-year renewal, with the combined FLA period of the original lessee and legal heirs not exceeding fifty (50) years (Section 27).

Cancellation procedure before BFAR

Cancellation cases are handled by a Hearing Officer chosen from a pool of trained Hearing Officers determined by raffle; BFAR must create the trained pool within 120 days from effectivity (Section 29).
Cancellation cases are numbered and docketed consecutively in accordance with BFAR’s docketing system (Section 30).
Captioning follows whether the complaint is initiated by a person other than BFAR personnel or by BFAR; the case names include cancellation of FLA or ASC and the involved ASC/FLA parties (Section 30).

Procedure for violations or non-compliance

For cancellation due to violation/non-compliance with ASC/FLA terms or rules, the Director/Regional Director issues a Notice of Violation based on inspection/monitoring reports and conducts raffle to a Hearing Officer (Section 31(A)(1)).
The Notice of Violation states the ground and requires the holder to show cause why the ASC/FLA should not be cancelled; the holder has ten (10) days from receipt to submit a verified answer with supporting documents and affidavits; affidavits must be based on direct personal knowledge and competence to testify, and serve as the place of direct testimony (Section 31(A)(2)).
Failure to submit a verified answer within the reglementary period results in default and resolution based on the evidence on record (Section 31(A)(3)).
The Hearing Officer may conduct an ocular inspection with the holder and the Provincial Fisheries Officer and must furnish a report on the ocular inspection as part of due process (Section 31(A)(4)).
After gathering facts and finding no need for further hearing, the Hearing Officer submits a certified report to the Regional Director within 15 days from receipt of the verified answer or issuance of a default order, including findings/recommendations and appending original records (Section 31(A)(5)).
If the Hearing Officer recommends dismissal, the Regional Director dismisses within 15 days from receipt of the Hearing Officer report (Section 31(A)(6)).
A complainant may move for reconsideration of the Regional Director’s dismissal within 15 days from receipt of the decision, serving the respondent and the Director; the respondent and other parties file comments within 10 days from receipt (Section 31(A)(7)).
Only one motion for reconsideration is allowed; later submissions are supplements; the Regional Director resolves the motion within 15 days from submission, and filing suspends the period to appeal (Section 31(A)(8)).
A dismissal decision becomes final and executory after 15 days from receipt unless a motion for reconsideration is filed or an appeal to the Secretary through the Director is perfected within the same period (Section 31(A)(9)).
If the Hearing Officer recommends cancellation, the Regional Director endorses findings to the Director within 10 days from receipt of the Hearing Officer report (Section 31(A)(10)).
The Director must recommend cancellation to the Secretary within 30 days from receipt of the Regional Director endorsement whenever the Director agrees there is prima facie evidence of violation (Section 31(A)(11)).
The Secretary issues the Order of Cancellation if he/she agrees; the Order states facts and law, includes forfeiture of the cash bond and forfeiture of improvements to government, and is sent to the holder within 10 days from issuance of the signed Order (Section 31(A)(12)).

Procedure for abandoned or undeveloped areas

For abandonment or undeveloped grounds, the Director/Regional Director issues a Notice of Violation upon inspection findings or upon written petition of DENR, LGU, MFARMC, or a resident/community organization or NGO; raffle assigns the case to a Hearing Officer (Section 31(B)(1)).
The Notice of Violation requires show cause and gives