RULES AND REGULATIONS FOR IMPLEMENTING SECTION 11 OF R.A. 6657 ON COMMERCIAL FARMING

The following Rules and Regulations are hereby promulgated to
implement Section 11 of R.A. 6657 for the guidance of all concerned:

SECTION 1.  Coverage . — These Rules and Regulations cover the following:

Crops — Commercial farms which are private
agricultural lands devoted to livestock, poultry and swine raising,
aquaculture including saltbeds, fishponds and prawnponds, fruit farms
and orchards; vegetables and cutflower farms, cacao, coffee and rubber
plantations (as enumerated in Annex A)

Area — Farm areas in excess of the retention
limit prescribed in Section 6 of R.A. 6657 and owned/operated by
corporations, single individuals/proprietorships or partnerships.

SECTION 2.           Definition of Terms . — The terms used in these Rules and Regulations are defined as follows:

Farm — any parcel or parcels of land used
wholly or partly or agricultural operation and operated as one technical
unit by one person alone or with others under one management. and where
the financial resources needed for the operation of said farms come
from the same management.

Intercrop — The method of growing crops on the
same parcel of land in between another crop in a more or less
systematic method, i.e., in between rows of the other crop.

Gestation period — the period beginning from
the time the crop/commodity is first planted or raised until the time
the crops bear fruit or produce are harvested.

Start of commercial production — the time immediately after the end of the gestation period or once the crops bear fruit or produce are harvested.

Deferment period — the ten-year period counted from the start of commercial production.

SECTION 3.           Criteria/Qualifications For Deferment From CARP Coverage Under Section 11 of R.A. 6657.
— To qualify for deferment from acquisition and distribution by DAR in
accordance with the phasing prescribed in Section 7 of R.A. 6657, and
consequently to qualify deferment from CARP coverage under Section 11 of
R.A. 6657 commercial farms shall meet the following conditions:

A.    the farm should already be planted to commercial crops or devoted to commercial farming operations before June 15, 1988;

B.    the farm should meet the criteria set in Annex A of these Rules and Regulations; and

C.    the farm shall be applied for deferment with DAR and the same is approved by DAR.

SECTION 4. Application and Time of Filing . — A
landowner shall file with DAR a Sworn Declaration that his farm is
commercial shall apply for deferment not later than sixty (60) days
after the effectivity of these Rules and Regulations.

DAR may approve the application and grant the deferment upon the
proper validation verification of the Sworn Declaration of the landowner
and after due hearing with the potential beneficiaries.

SECTION 5. Determination of Deferment Period . — Deferment period for qualified commercial farms shall be as follows:

A.           For commercial farms already in commercial
production and operation as of June 15, 1988, the deferment period
immediately begins as of that date and ends on June 15, 1988. The farm
shall then be subject to compulsory land acquisition and distribution by
DAR after June 15, 1998.

B.           For commercial farms established before June 15,
1988, but which are not yet in commercial production and operation, the
ten year deferment period shall begin from the first year of commercial
production and operation or at the end of the gestation period for that
crop or commodity. The allowable gestation period for specific
commercial crops/commodities are listed Annex A.

C.           In case of multi-crop farms (i.e., one large farm
divided into several areas, each planted or devoted to different crops),
the areas which are already in commercial production and operation
shall follow the deferment period prescribed in Section 5.A above while
areas which are not yet in commercial production and operation shall
follow Section 5.B above.

D.           Where a commercial crop is intercropped with another
commercial crop, the ten (10) year period shall be based on the main
crop or the crop most prevalent in that farm area.

E.           In case of areas with varying crop ages, the ten
(10) year period shall be based on the most prevalent age group in that
area.

SECTION 6.           Production and Profit Sharing Scheme . — The provisions of Section 32 (Production and Profit Sharing) of R.A. 6657 and PARC shall apply to commercial farms.

For commercial farms existing as of June 15, 1988, and qualified
for ten (10) year deferment period, the effectivity date of the Rules
and Regulations on Section 32 of R.A. 6657 shall apply. For farms not
yet in commercial production or operation, the effectivity of said Rules
and Regulations shall start once their deferment period begins.

SECTION 7.           DAR Activities During the Deferment Period.
— During the ten (10) year deferment period, the government shall
initiate the steps necessary to acquire the lands covered by these Rules
and Regulations upon payment of just compensation for the land and
improvements thereon, preferably in favor of organized cooperatives or
associations, which shall thereafter manage the said lands for the
workers/beneficiaries.  Final land transfer to the beneficiaries shall
be effected at the end of the deferment period.

SECTION 8.           Implementation and Monitoring
. — Upon the effectivity of these Rules and Regulations, DAR shall
conduct an information campaign at the municipal level informing the
public on the provisions of the Rules and Regulations and the prescribed
application period.

Landowner-applicants shall file their application for deferment
with the Municipal Agrarian Reform Officer (MARO) of the municipality
where the farm is located. Validation or verification of the
applications and hearings with the potential beneficiaries shall
thereafter be conducted by the MARO.

DAR shall issue to the landowner-applicant, upon approval of his
application, an Order of Deferment signed by the Regional Director.  The
DAR Regional Office shall maintain records of the landowner-applicants’
operations to monitor compliance with these Rules and Regulations.

For landowners affected by Section 32 of R.A. 6657, the reporting
requirements stipulated in the approved Guidelines for Production and
Income Sharing shall also apply.

For these purposes, the landowner shall make available to DAR his
premises for ocular inspection, his personnel for interview and his
records for examination during normal business hours.

SECTION 9.           Redistribution of Commercial Farms Cancelled from Deferment from CARP Coverage
— If DAR determines that the purpose for which the deferment from CARP
coverage no longer exists, e.g., the particular farm area ceases to be
commercially productive, the ten (10) year period is automatically
terminated and the land shall be subject to immediate acquisition and
distribution to the beneficiaries.

In cases where the crop/commodity raised or planted in the area is
destroyed by force majeure and the farm owner wishes to replenish said
crop/commodity, DAR may continue to grant the deferment provided that
the following conditions are present:

A.     The landowner can immediately resume commercial operations:

B.     The employment status of the workers/beneficiaries is not affected; and

C.    The ten (10) year deferment period is not extended.

SECTION 10.        Valuation of Commercial Farms Already Subject to Distribution to Qualified Beneficiaries
. — Just compensation for the land and improvements thereon, and other
factors provided for in Section 17 of R.A. 6657, will be considered in
valuating commercial farms already subject to land distribution.

SECTION 11.        Penalties . — Should it be
proven that the landowner filed fraudulent declarations and/or that
there was clear intent to circumvent the law, all agricultural
landholdings of the landowner shall be subject to immediate acquisition
and distribution by DAR without prejudice to the application of Section
74 of R.A. 6657 on Penalties.

SECTION 12.        Reservation Clause . — Nothing
herein shall be construed as precluding the Presidential Agrarian
Reform Council (PARC) and/or the DAR from prescribing other
requirements.

SECTION 13.        Separability Clause . — If,
for any reason, any section or provision of these Rules and Regulations
is declared null and void, no other section, provision or part thereof
shall be affected and the same shall remain in full force and effect.

SECTION 14.        Effectivity Clause . — This
Order shall take effect ten (10) days after publication in two (2)
national newspapers of general circulation pursuant to Section 49 of
R.A. 6657.

Adopted: 3 Jan. 1989

(SGD.) PHILIP ELLA JUICO
Secretary

Effective: 21 January 1990