GUIDELINES AND PROCEDURES IMPLEMENTING PRODUCTION SHARING UNDER EXECUTIVE ORDER NO. 229

WHEREAS, Executive Order No. 229, Providing the Mechanism for the
Implementation of the Comprehensive Agrarian Reform Program, which took
effect on August 29, 1987, provides this section on Production Sharing:

“Section 16.  PRODUCTION SHARING — Individuals or entities owning
and/or operating under lease agricultural lands with gross sales in
excess of Five Million Pesos (P5M) per annum are hereby mandated to
execute a production sharing plan whereby at least two and one-half
(2.5) percent of the gross sales from the production/cultivation of such
lands are distributed as compensation to the farm-workers over and
above the compensation they currently receive; provided, that such
individuals or entities are not obligated to pay more than 100 percent
of the regular annual compensation of the farmworkers.”

NOW, THEREFORE, to ensure an orderly and effective implementation of
the above provision, the following Guidelines and Procedures are hereby
promulgated for the guidance of all concerned.

SECTION 1.       Definition of Terms . — As used in these Guidelines and Procedures, the following terms shall have the following respective meanings:

A.      Agricultural Land means land devoted to any growth, including but not limited to crop lands, saltbeds, fish ponds, idle land and abandoned land.

B.      Farmworker includes any agricultural wage,
salary or piece worker, but is not limited to a farm worker of a
particular farm employer unless R.A. 3844 explicitly states otherwise,
and any individual whose work has ceased as a consequence of, or in
connection with, a current agrarian dispute or an unfair labor practice
and who has not obtained a substantially equivalent and regular
employment.

C.      Gross Sales means the total annual revenue
arising from the sale of all agricultural products, in their raw or
original state, derived from the land or farm owned; operated under
lease, management, production venture, grower or service contract; or
other similar arrangement by an agricultural enterprise. Simple
post-harvest operations ordinarily done within the farm to preserve or
prepare agricultural products for the market, such as drying, salting,
smoking or stripping, are considered agricultural activities. In cases
where retention right is allowed, the amount of gross sales may be
reduced by an amount equivalent to such proportion that the retained
area bears in relation to total land area.

D.      Regular Annual Compensation includes all
cash renumeration or earnings regularly paid to an employee by an
employer for services rendered within a year, such as salaries, wages,
13th month pay, bonus, allowances, commissions and paid leaves, and
other income of similar nature, whether mandated by law or provided by
collective bargaining agreement or established company practices, but
excludes payment arising from the Production Sharing provided herein.

SECTION 2.       Employers Covered. — Pending final
land or corporate stock transfer, individuals or entitles owning and/or
operating agricultural lands under lease are covered by this Production
Sharing.

Provided, that these individuals or entities realize gross sales in excess of FIVE MILLION PESOS (P5M) per annum.

In the case of individuals or entities with business operations other
than agricultural, only the divisions groups or units involved in
agricultural production are included in the mandated Production Sharing.

SECTION 3.       Employees Covered — All
farmworkers, as defined herein, of covered employers are included in the
mandated Production Sharing. Provided, that any farmworker who renders
service, regardless of duration within a covered period shall be
entitled to this benefit.

SECTION 4.       Main Features of the Mandated Production Sharing Plan . — Covered employers shall prepare and execute a Production Sharing Plan which shall conform to the following requirements:

A.      The Plan shall apply only for the covered period stating August 29, 1987 up to June 14, 1988.

B.      The implementation of the Plan shall start on the
accounting year (i.e., fiscal crop or calendar year followed by a
covered employer) ending after August 29, 1987. During the accounting
period covered, the employer’s gross sales for a full year period shall
be considered to determine whether the employer has realized annual
gross sales of over FIVE MILLION PESOS (P5M) for purposes of coverage
under the Production Sharing Plan.  However, the gross sales to be
considered in computing covered workers’ Production Shares shall be the
amount equivalent to such proportion that the fraction of the accounting
period falling within August 29, 1987, and June 14, 1988, bears in
relation to the entire accounting period.

C.      Covered employers are obligated to pay the following
Production Shares to be given over and above the compensation their
farmworkers currently receive and which shall be distributed based on:

Amount of production share: 2.5% of-Annual Gross
Sales from August 29, 1987 to June 14, 1988, provided that the employer
is not obligated to pay more than 100% of the regular annual
compensation of the farmworker-beneficiaries.

Schedule of distribution: 50% of Production Share shall be paid not later than February 12, 1989, and the balance on or before April 2, 1989.

D.      The formula to be used in computing the Production Shares of individual workers is:

Production share per covered worker = 2.5% of Annual Gross Sales multiplied by Factor Y but not to exceed 100% of the worker’s regular annual compensation

where factor Y = No. of paid days of covered
worker for the period August 29, 1987, to June 14, 1988, divided by
total number of paid days of all covered workers for the same period
covered.

SECTION 5.       Manner of Payment . — The
Production Shares of the workers shall be paid in cash. Such additional
compensation shall be in separate payrolls which shall contain
information on:

1.       the employer’s gross sales;

2.       the total amount for distribution as workers production shares;

3.       each worker s number of paid days for the year and

4.       each worker s production share.

SECTION 6.       Undistributed/Unclaimed Production Share
. — Unless otherwise provided by existing law, agreement or plan, all
undistributed or unclaimed Production Shares shall be deposited by the
employer with the nearest Land Bank of the Philippines branch in the
name of the Secretary of Agrarian Reform for payment to the workers to
whom they are due.  The employer shall immediately report such deposits
to the nearest DAR office and send notices to the worker-beneficiaries
concerned. If the money remains undistributed or unclaimed after two
years from date of deposit the same shall be considered forfeited and
shall be turned over to the Agrarian Reform Fund.

SECTION 7.       Effect on Existing Production Sharing Plans
. — Any existing Production Sharing Plan granted by the employer before
the effectivity of E.O. 229 shall be credited, unless otherwise
provided by agreement, as compliance with the mandated Production
Sharing Plan prescribed herein, subject to prior approval by the DAR. 
Provided that where the benefit under the existing Production Sharing
Plan is less than the applicable amount required in these Guidelines,
the employer shall pay the difference.

Nothing herein shall be construed to sanction the diminution of any
benefits such as salaries, bonuses, leaves and working conditions
granted to the worker-beneficiaries under existing laws, decrees,
issuances, executive orders, and/or under any contract or agreement
between workers and employers nor shall any individual or entity and
their worker-beneficiaries be prevented from entering into any agreement
with terms more favorable to the latter.

SECTION 8.       Enforcement . — The Secretary of
Agrarian Reform or his authorized representatives shall have the power
to order and administer compliance with the Production Sharing
provisions of these Guidelines, and to require submission of reports
compel the production of books and documents compel answers to
interrogatories, issue subpoena and subpoena duces tecum, and enforce
its writs through sheriffs or other duly deputized officers.

SECTION 9.       Settlement of Disputes . — Issues
involving production sharing shall be considered as Agrarian Reform
issues. Disputes arising from production sharing shall first be settled
voluntarily between the parties. In the event of a deadlock, such
dispute shall be submitted for conciliation to the appropriate DAR
Regional Office. In case the dispute is not resolved at the regional
level, it shall be forwarded for adjudication to the DAR Adjudication
Board.

SECTION 10.    Reporting Requirements . — All
covered employers shall submit a report on the Production Shares
distributed, including the special payrolls, under oath signed by the
employer or his duly authorized representatives not later than 30 days
after completion of distribution of the workers shares.  Two copies of
the report shall be submitted to the appropriate DAR Regional Office.

The report shall conform substantially to the following form:

Report on Compliance with Production Sharing:

1.       Name of Establishment/Employer

2.       Address

3.       Principal Commodity Produced

4.       Total Employment

5.       Total Gross Sales After Tax

6.       Amount of Production Shares Distributed

7.       No. of Workers Benefitted

8.       Average Amount Received per Worker

9.       Dates of Distribution of Production Shares

10.     Total Undistributed/Unclaimed Production Shares.

SECTION 11.    Separability Clause . — If, for any
reason, any section or provision of these Guidelines 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 12.    Effectivity Clause . — These
Guidelines and Procedures shall take effect ten (10) days after
publication in two (2) national newspapers of general circulation.

Adopted: 30 Sept. 1988

(SGD.) PHILIP ELLA JUICO
Secretary

Effective: 12 January 1989