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Introduced by Representative Rufus B. Rodriguez.<, BY: Ss

House Bill No, 4201

EXPLANATORY NOTE

Land is an important factor of production in agriculture and land fragmentation has significantly
reduced agricultural productivity. The 2019 study by economists Tasso Adamopoulos and
Diego Restuccia found that the government's agrarian reform program has resulted in land
fragmentation and reducing average farm size by 34 percent, agricultural productivity by 17%,
and the share of landless individuals by 20%.*

The current restriction on farm lands under the Comprehensive Agrarian Reform Law such as
the five hectare limit and non-transferability of the land within 10 years of issuance and 30
years of amortization has effectively discouraged efficient rural land market operations, eroded
the value and collateral value of awarded lands, reducing the farmers’ incentive to invest in
land improvements, and limiting choice of more efficient contractual arrangements.” Thus,
decades into the government's land reform program it has only created a new class of people
the “landed poor’

Economies of scale dictate that there is a great advantage in the operation of larger farmlands
as the cost per unit of output decreases with the increase in farmland area. Larger farms will
allow farmers to introduce new and alternative technologies and farming systems. It will also
encourage younger Filipinos to go into farming thereby introducing new blood in our already
aging farmer population.

‘According to a 2021 study by agricultural economist Keijiro Otsuka, “the decrease in farm size
is particularly pronounced in the Philippines partly because of rapid population growth and
partly because of the failure of growth of non-farm sectors, which can absorb rural labor. If this
trend in farm size reduction continues and the economy sustains a fairly high growth rate, the
agricultural sector's inefficiency can be a major constraint to further economic growth.”>

Also at present, there are still 680,000 agrarian reform beneficiaries (ARBs) in 1.2 million
hectares of agrarian land with amortization debts. These ARBs, though emancipated from
their landlords, are now saddled with debts with the land that the government awarded to
them. Unpaid agrarian lands are covered by restrictions, reducing the land value and farmers’
options to increase their productivity to pay off the debt. It has undermined their ownership of
the awarded land.

"Tasso Adamopoulos& Diego Restuccia, 2019. "Land Reform and Productivity: A Quantitative Analysis with
Micro Data," NBER Working Papers 25780, National Bureau of Economic Research, Inc.
Ieeps://www.nber.org/system/files/working_papers/w25780/w25780.pdf

2Cristina David, et al., 2003. “Land Reform and Land Market Transactions in the Philippines: Terminal
Report,” Philippine Institute for Development Studies

2? Keijiro Otsuka, 2021. “Changing Relationship Between Farm Size and Productivity and Its Implications for
Philippine Agriculture.” Graduate School in Economics, Kobe University


To effectively address land fragmentation and resulting decline in agricultural productivity, and
persistent poverty in the sector, there is a need to ease restrictions on farm size, remove
restrictions on agricultural land transactions, condone amortization debts, and promote a
vigorous rural land leasing market.

Section 70 of Republic Act No. 6657 or the Comprehensive Agrarian Reform Law and its
implementing rules and regulations have created a stumbling block in the transfers of
agricultural land. It is also proposed to remove bureaucratic delays created from the need for
DAR clearances in land transfers, as the electronic database of the Land Registration
Authority is sufficient to verify the landholding ceiling.

In view of the foregoing, the passage of this bill is earnestly sought.

RUFYS B. RODRIGUEZ


NINETEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES

Introduced by Representative Rufus B. Rodriguez

sin 4201

House Bill No.

AN ACT
TO PROMOTE INVESTMENTS IN AGRICULTURE BY EASING FARMLAND
RESTRICTIONS, CONDONING AMORTIZATION DEBTS AND RATIONALIZING LAND
RELATED PROCESSES

Be it enacted by the Senate and the House of Representatives of the Philippines in Congress
assembled:

SECTION 1. Declaration of Policy. - It is hereby declared the policy of the State to
promote investments in agriculture and to encourage the establishment of economically viable
enterprises in the countryside by easing farmland restrictions, condoning amortization debts,
and rationalizing land related processes and procedures.

SECTION 2. Fee Simple Title. - Lands acquired by farmer-beneficiaries under any of
the agrarian reform laws shall be considered as lands with fee simple title and thus may be
sold, transferred, conveyed, mortgaged, leased, or entered into a partnership or usufruct
agreements, at any time, with any person, natural or juridical, qualified to own or possess
lands in the Philippines in accordance with existing laws.

SECTION 3. Landholdings’ Ceiling Requirement. - Any sale, transfer or conveyance
of agricultural lands shall be valid as long as the resulting total agricultural landholdings by the
transferee do not exceed twenty-four (24) hectares. Exemption to the land ownership ceiling
of twenty-four hectares may be granted by the Department of Agrarian Reform for idle and
non-irrigated lands.

SECTION 4. Condonation of Unpaid Amortizations and Other Charges. - The State
hereby condones all unpaid amortizations, interests thereon, penalties and surcharges owing
‘or due to the government, obtained from the acquisition of lands awarded under the
Comprehensive Agrarian Reform Law and other land reform legislations. All liens and
encumbrances associated with agrarian reform land acquisition that are annotated in the
Certificates of Title issued to farmer beneficiaries and its derivative titles are automatically
cancelled by operation of law. It shall not be necessary for titles to be presented to the Registry
of Deeds. No further action shall be required from farmer beneficiaries for the cancellation of
such annotations.

SECTION 5. Lease of CARP Awarded Lands. - CARP Awarded lands may be
conveyed through lease, at any time, to any person or entity qualified to hold lands in
accordance with existing laws, The land area and number of lease agreements that may be
entered into by any natural or juridical entity shall not be limited. Such leases shall not require
the approval of the DAR or any other government agency for its validity and implementation.

SECTION 6. Removal of DAR Clearances on Transfers of Ownership of Agricultural
Lands. — Transferees of ownership of agricultural lands shall furnish the appropriate Registry
of Deeds an affidavit attesting to the fact that his/her total agricultural landholdings, as a result
of the said transfer, do not exceed twenty-four (24) hectares. Such transfers shall not require

3


any clearance from the Department of Agrarian Reform (DAR) as a prerequisite for registration
of transaction with the Register of Deeds. The transfer of ownership shall be immediately
registered by the Registrar of Deeds if the resulting agricultural landholdings of the transferee,
based on the electronic database of the Land Registration Authority (LRA), do not exceed 24
hectares. If from the electronic records of the LRA it appears that the transferee's landholdings
exceed 24 hectares, his/her registration shall be denied and the transferee shall be notified of
said fact and shall be provided with the list of the properties that is registered in his/her name.
If the transferee claims that the person who has a landholding in excess of 24 hectares is only
a namesake, the transferee shall be required to submit additional evidence with the Register
of Deeds for verification of the transferee's identify within a reasonable time as may be
provided in the implementing rules under Section 11 of this Act.

SECTION 7. Bank Mortgages. — Banks and non-bank financial institutions duly
registered with the Bangko Sentral ng Pilipinas (BSP) and allowed by law to hold mortgage
rights or security interests in agricultural lands to secure loans and other obligations of
borrowers, may acquire title to these mortgaged properties upon foreclosure, subject to
existing banking laws. These financial institutions shall not be subject to the agricultural
landholding ceiling requirement under this act subject to the provision of Section 52 of
Republic Act No. 8791 or the General Banking Law on disposition of acquired asset within a
period of five (5) years.

SECTION 8. Redemption. - In case of foreclosure of CARP awarded lands, the period
of redemption provided under Section 47 of Republic Act No. 8791 or the General Banking
Law shall apply.

SECTION 9. Penalty for Violation of this Act. - Any person who knowingly or willfully
violates the provisions of this Act shall be punished by imprisonment of not less than one (1)
month to not more than three (3) years. If the offender is a corporation or association, the
officer responsible therefore shall be criminally liable.

SECTION 10. Existing Notice of Coverage. ~ All existing Notice of Coverage upon the
effectivity of this act shall be effective for a period of one year. If no acquisition is made within
this period, these agricultural lands will be automatically released from this burden, lien, or
encumbrance and may be freely transacted by the owner subject only to the limitations
provided under this law.

SECTION 11. Implementing Rules and Regulations. - The Department of Justice,
through the Land Registration Authority (LRA), and the Department of Agrarian Reform (DAR),
in coordination with Bangko Sentral Ng Pilipinas (BSP) and the Land Bank of the Philippines
(LBP) shall promulgate the necessary implementing rules and regulations within one hundred
twenty (120) days upon the effectivity of this Act.

SECTION 12. Repealing Clause. — Sections 6, 27, and 70 of RA No. 6657, all laws,
decrees, orders, rules and regulations or parts thereof inconsistent with any provision of this
Act are hereby repealed, amended or modified accordingly.

SECTION 13. Separability Clause. - If, for any reason, any provision of this Act or any
part thereof be declared unconstitutional and invalid, the other parts or provisions of this Act
not affected thereby shall remain in full force and effect.

SECTION 14. Effectivity Clause. - This Act shall take effect fifteen (15) days after its
complete publication in the Official Gazette or in at least two (2) newspapers of general
circulation.

Approved,