EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
S. No.
)))
SENATE
786
S enate
of tljr g>frret«rf
'19 
JUL 25 P4’-48
R C C b . 'u 1 ->1
INTRODUCED BY SENATOR RISA HONTIVEROS
AN ACT REGULATING THE ESTABLISHMENT AND IMPLEMENTATION OF 
AGRIBUSINESS VENTURES ARRANGEMENTS (AVAS) IN AGRARIAN REFORM 
LANDS
EXPLANATORY NOTE
The advent of increasing interest on land investments in the Philippines fueled by 
the rising global demand for food and raw materials for agro-fuel production, tourism 
and mining calls for a strong regulatory mechanism to govern land investments. The 
influx of both local and foreign investments in our country has exposed the basic 
sectors, particularly the farmers, fisher folk and indigenous peoples, not only to the 
threat of displacement and loss of control, ownership and possession over their lands, 
but also to adverse incorporation -  whereby they are incorporated into the capitalist 
economy but under terms grossly unfavorable to them.
In the Southern part of the Philippines, rich in natural resources and blessed with 
fertile lands, large tracts of lands are being developed into pineapple and banana 
plantations for the export markets. The narrative is that the investments are beneficial 
to the country and uplift the lives of otherwise impoverished agrarian reform 
beneficiaries. However, a closer look at the agrarian rural economy in these areas 
shows stark asymmetrical 
relations between the smallholder farmers and the 
transnational investor. And study of the contracts signed between these farmers and 
the investor demonstrates how these asymmetries in economic power are translated in 
legally-binding documents that are barely understood by the farmer.
It is in this regard that this bill is being proposed. While the economic benefits of 
these agreements cannot be discounted, regulation is necessary in order to protect the 
weaker party to the contract and to ensure that welfare-enhancing outcomes are 
obtained, that will have meaningful impacts on rural poverty reduction. This bill seeks to 
promote productive, collaborative and just relations between the private sector and the


ARBs, transform the latter into farmer-entrepreneurs, and maximize distributed agrarian 
lands without compromising the famers' tenure rights.
The provisions in this bill emphasize the principle of agrarian reform of providing 
"farmers and farm workers with the opportunity to enhance their dignity and improve 
the quality of their lives through greater productivity of agricultural lands." AVAs should 
not be a threat to the ARBs' land rights but should give incentive to develop their lands 
and improve their productivity.
Moreover, the bill likewise ensures that there are social preparation, capacity 
building, and assistance provided to ARBs to better equip them in the negotiation for 
and evaluation of the agreement they are entering into.
In view of the foregoing, the immediate passage of the bill is earnestly sought.
RISA HONTIVEROS 
^ 
Senator


EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
S. No.
)))
SENATE
786
S enate
of tl)c iifc rria rf
'19 
JUL 25 P4 '•48
—
1^
-
-R£a
INTRODUCED BY SENATOR RISA HONTIVEROS
AN ACT REGULATING THE ESTABLISHMENT AND IMPLEMENTATION OF 
AGRIBUSINESS VENTURES ARRANGEMENTS (AVAS) IN AGRARIAN REFORM 
LANDS
Be it enacted by the Senate and the House o f Representatives o f the Philippines in 
Congress Assembled:
1 
Section 1. This Act shall be entitled as Agribusiness Ventures Arrangements in
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Agrarian Reform Lands Act.
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Sec. 2. Governing Principles and Policies. The 1987 Constitution mandates that
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the State shall promote social justice in all phases of national development and
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guarantee full respect for human rights.
6 
Predicated on these overarching principles, the agrarian reform program is founded on
7 
the right of farmers and regular farmworkers, who are landless, to own directly or
8 
collectively the lands they till or, in the case of other farm workers, to receive a just
9 
share of the fruits thereof. The State shall ensure that control over the lands awarded
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under the agrarian reform program shall remain always with the agrarian reform
11 
beneficiaries so that they can plan, organize and manage their farmlands independently
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and productively with adequate support services from the State and investors.
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To provide support services to the ARBs, the State shall encourage the participation of
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the private sector in order to enhance the development and productivity of the awarded
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lands under the agrarian reform program. In providing such support services, the State
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shall take utmost consideration of the following, to wit:
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a) Ensure the security of ownership, tenure and income of all agrarian
18 
reform beneficiaries;
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b) Optimize the use of distributed lands for agricultural production;
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c) Facilitate the development of ARBs or Cooperatives/Associations into
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viable agricultural entrepreneurs or enterprises;


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d) Encourage responsible private sector investments in developing agrarian
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reform areas;
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e) Address the concerns on food security of the Philippines;
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f) Enhance and sustain the productivity and profitability of agrarian reform
5 
lands; and
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g) Transform the local agriculture sector into a globally competitive
7 
industry.
8 
Sec. 3. Definition o f Terms. For purposes of this Act, the following terms are
9 
hereunder defined:
10 
a) Agrarian Reform Beneficiaries (ARBs) refer to qualified individual
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beneficiaries under Presidential Decree (P.D.) No. 27 or R.A. No. 6657,
12 
as amended, or their cooperative or association duly registered with the
13 
Cooperative Development Authority (CDA), the Securities and Exchange
14 
Commission (SEC) or the Bureau of Rural Workers (BRW) of the
15 
Department of Labor and Employment (DOLE).
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b) Agrarian Reform Lands refer to lands awarded under P.D. No. U  and
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R.A. No. 6657, and their amendments.
18 
c) Agribusiness Venture Arrangement (AVA) refers to the entrepreneurial
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collaboration between ARBs and private investors in the implementation
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of an agriculturally-related business venture involving lands distributed
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under CARP.
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d) fKrbitration is a voluntary dispute resolution process where the parties
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submit their dispute to an arbitral committee who, in turn, conducts
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hearings and makes final decisions binding upon the parties.
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e) Association refers to ARBs who voluntarily form a group duly recognized
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by the SEC or DOLE, and organized for the purpose of, but not limited
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to, entering into an AVA with a common investor.
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f) Buiid-Operate-Transfer (BOT) is an AVA scheme where the investor
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builds, rehabilitates or upgrades, at his own cost, capital assets,
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infrastructure and facilities applied to the production, processing and
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marketing of agricultural products and operates the same for a fixed
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period after which ownership thereof is conveyed to the ARBs.
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g) Contract Growing is an AVA scheme where the investor provides farm
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inputs and technology at reasonable cost in exchange for the ARBs'
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commitment to produce certain crops at pre-arranged agreement


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involving volume, quality standards, selling price, delivery and other 
terms and conditions.
h) Control refers to the power of ARBs to direct the whole operation of the 
farm.
i) 
Cooperative refers to a group of ARBs, duly registered under R.A. No. 
9520, otherwise known as the "Philippine Cooperative Code of 2008", 
who have voluntarily (i) pooled their land, human, technological, 
financial and/or economic resources to achieve social and economic 
ends, (ii) made equitable contributions to the capital required and (iii) 
accepted a fair share of the risks and benefits of the group's 
undertakings.
j) Equity is the value of the shares subscribed to and paid for by each 
party in relation to the authorized capital stock of a joint venture 
corporation.
k) Growership is an AVA scheme where the investor supplies all the inputs 
and required technology for the production of certain crops, with no cost 
to the ARBs, in exchange for the latter's commitment to produce 
particular crops at pre-arranged agreement 
involving volume, quality 
standards, growership fee, delivery and other terms and conditions.
l) Investors refer 
to 
the 
former 
landowners, 
private 
individuals,
corporations, 
non-government 
organizations, 
ARB
cooperatives/associations, 
government 
owned 
and/or 
controlled 
corporations or any entity duly authorized by law, who are willing and 
able to contribute their capital, equipment and facilities, technology, 
and/or management services in an AVA.
m) Joint Venture Agreement (JVA) is an AVA scheme where the ARBs and 
investors form a joint venture corporation (JVC) for the purpose of 
managing the farm operations.
n) Lease Agreement \s an AVA scheme where the ARBs bind themselves to 
give the investor general control over the use and management of the 
land for a certain amount and for a definite period.
o) Management Contract is an AVA scheme where the ARBs contract the 
services of an individual, partnership or corporation in order to assist in 
the management and operation of the farm in exchange for a fixed 
wage or commission.


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p) Marketing Agreement is an AVA scheme where the ARBs engage the
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investor to promote their produce in exchange for commission on actual
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sales.
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q) Mediation is a voluntary dispute resolution process where a neutral
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facilitator assists the parties 
in reaching 
a settlement 
regarding 
a
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dispute.
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r) Service Contract is an AVA scheme where the ARBs engage the services
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of a contractor for mechanized land preparation, cultivation, harvesting,
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processing, post-harvest operations 
and/or other farm activities 
for a
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fee.
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s) Voiuntary Dispute Resoiution is a mode of resolving disputes other than
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by adjudication of a presiding 
judge of a court 
or an officer of 
a
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government agency, in 
which a neutral third party assists 
in the
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resolution of issues.
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t) 
Take-over -  is an act of the investor in controlling the operation of the
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farm and/or assuming any of the responsibilities of the ARBs in an AVA.
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u) Transfer is the conveyance of the use and possession of CARP awarded
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lands from one person or entity to another.
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Sec. 4. 
Coverage. This Act shall apply to all awarded lands distributed under
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Republic Act No. 6657, as amended, or the Comprehensive Agrarian Reform Program
21 
(CARP), and other agrarian reform laws.
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Former landowners (LO) with respect to their untenanted retained areas, and ARBs,
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who have completely paid their land amortizations and tenants in certain cases, shall be
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covered should they opt to place the said landholdings under this Act.
25 
Sec. 
5. 
Agribusiness 
Venture Arrangements. 
Individual 
ARBs 
and 
ARB
26 
cooperatives or associations, who are bonafide holders of Emancipation Patent (EP),
27 
Certificate of Land Ownership Award (CLOA) or similar tenurial instruments issued by
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the Department of Agrarian Reform (DAR) or its predecessor may enter into any of the
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following Agribusiness Venture Arrangements, namely:
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a) Growership
31 
b) Contract Growing
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c) Marketing Contract
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d) Management Contract
34 
e) Service Contracts
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f) Build-Operate-Transfer
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g) Joint Venture Agreements


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h) Lease Agreements; and
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i) Any combination of the foregoing AVAs without violating any provisions
3 
of this Act.
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Sec. 6. 
Contracting Parties and their Quaiifications. The parties to an
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agribusiness venture agreement shall have the following qualifications, namely:
6 
a) ARBs (whether individual or organized) should be holders of an
7 
Emancipation Patent (EP), a Certificate of Land Ownership Award
8 
(CLOA) or similar tenurial instruments and are in possession of their
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land. In no case shall potential ARBs be allowed to enter into an AVA
10 
or any interim agreement prior to the award of such tenurial
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instrument and prior to the actual possession of the land.
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b) ARB cooperatives or associations shall have the legal personality to
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transact or enter into any contract. 
For ARB cooperatives or
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associations with CLOAs in the name of the organization, 
the Board
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of Directors/Trustees of such cooperative or association shall secure
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the vote of approval by the general membership in accordance with
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their articles of cooperation/association and by laws. In the absence
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thereof, a vote of approval of at least 2/3 of the general membership
19 
shall be secured.
20 
c) Prospective investors must have the following qualifications, namely:
21 
a. Must be registered with the appropriate regulatory agencies,
22 
such as Securities and Exchange Commission, Department of
23 
Trade and Industry.
24 
b. Good financial standing for the past three (3) years;
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c. Good track record in food and agribusiness;
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d. Stable business relations;
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e. Capable of managing and operating the AVA undertaking;
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f. Shall not have violated any laws, rules and regulations, and
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contracts as the case may be.
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Sec. 7. Mandatory provisions o f the AVAs. Agribusiness Venture Arrangements
31 
entered into under this Act, being imbued with public interest, shall have the following
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mandatory provisions, to wit:
33 
a) The landholding subject of the AVA shall be used exclusively for
34 
agricultural purposes. Only two thirds of the entire area shall be
35 
subjected to the AVA, the remaining one third portion shall be


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exclusively controlled and used by the ARBs with full support from the 
government;
b) The contract shall guarantee the participation of the ARB/s in the farm 
management operations and shall include, among others, capacity 
building programs aimed to facilitate transfer of technology and 
management techniques to the ARBs;
c) The AVA shall include provisions for workers' productivity and quality 
incentives for the employed ARBs over and above the compensation 
from the AVA.
For the duration of the contract, the investor shall provide funds 
necessary to ensure ecological protection of the farm and safety of its 
workers, particularly for the conservation and maintenance of land 
quality, proper handling, storage and disposal of hazardous residues and 
waste products, and proper protective and acceptable safe methods of 
application of fertilizers, pesticides and other chemicals; provided that 
decisions as to the ecological protection of the farm and safety of 
workers, and the methods employed in the application of fertilizers, 
pesticides and other chemicals, shall be mutually agreed upon by the 
investor and the ARBs;
d) There shall be a periodic review and/or renegotiation of the terms of 
the contract by the contracting parties to allow for some changes in 
the economic assumptions and/or the prevailing economic conditions 
at the time of AVA application and processing as well as changes on 
the physical attributes of the land.
e) The review and/or renegotiation shall also be undertaken upon request 
or petition of any of the parties on any of the following grounds: (1) 
extraordinary increase of inflation rate as declared by the Bangko 
Sentral ng Pilipinas (BSP); (2) drastic change in price fluctuation on 
both input and output by at least 20% from the previous price; (3) 
declaration by the executive department of government or the
f) local government unit of the area where the land is located as calamity 
or disaster area; and (4) other meritorious grounds to be determined 
by the DAR Secretary.
g) The AVAs shall be subject to the approval of the PARC Executive 
Committee 
(EXECOM). 
Otherwise, 
it 
shall 
become 
void 
and 
unenforceable.


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All renegotiated/renewed/extended contracts and their effectivity shall 
be subject to the same process of review and approval by the PARC 
EXECOM in accordance with the rules and regulations issued therefor.
h) The duration of the AVA shall be mutually agreed upon by all parties, 
but not more than 10 years subject to renewal. It shall take into 
consideration the following parameters: (i) crop or production cycle; 
(ii) gestation period of the crop; (iii) economic lifespan of existing 
major and essential facilities or infrastructure; and (iv) payback or 
recoup period of investments. 
All AVA contracts must contain a 
provision allowing the ARB to rescind the AVA, upon due notice to the 
investor.
i) In addressing the food security concerns of the country, the parties 
should agree that, in case of food shortage in the country, at least fifty 
percent (50%) of the produce in investment involving staple crops will 
automatically be set aside for the domestic market. For purposes of its 
enforcement, the DAR may invoke said provision, if and when 
necessary.
j) The roles and responsibilities of DAR, the ARBs (individual or 
cooperatives/associations) and the investor shall be clearly identified in 
the contract as well as the expected output from each party. It must 
be clear that successors-in-interest of both the investors and the ARBs 
are bound by the terms of the contract.
k) Consent of the other party in cases of transfer of rights and 
responsibilities shall be secured.
l) An alternative dispute resolution mechanism in resolving disputes 
between the parties shall be established.
m) Terms and conditions of the AVA contract shall be made known to all 
parties. The contract shall be translated to the language known to the 
ARBs.
n) Terms and conditions for pre-termination of contracts shall be clearly 
stipulated in the AVA contract.
o) In case of lease agreements, the rental shall be at least ten per cent 
(10%) of the gross sales per han/est;
p) Where the AVA requires the employment of workers, the parties shall 
comply with 
labor laws, 
rules and 
regulations particularly the 
prohibition on employment of children fifteen years and below.


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Sec. 8. Control over agrarian reform lands. In any AVA, control over the agrarian
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reform land shall always remain with the agrarian reform beneficiaries. For this
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purpose, joint venture agreements between agrarian reform beneficiaries and investors
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which result to a minority equity of the agrarian reform beneficiaries shall not be
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allowed or approved by PARC EXECOM. Also, any provision of permanent take-over in
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the AVAs that takes away the management of the agricultural production in growership
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contract or contract growing agreement shall be void.
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Temporary takeover may be allowed provided that all of the following conditions are
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present:
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a) Upon mutual agreement of the parties;
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b) The takeover shall only be for one (1) cropping cycle;
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c) When both parties mutually determine that the agreed quantity and/or
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quality of production cannot be delivered by the ARBs.
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Temporary takeover shall not take place during the transition to a new production
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technology.
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Sec. 9. Approval o f Agribusiness Ventures Agreements. All AVAs entered into
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between ARBs and any other person under this Act shall be approved by the 
PARC
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EXECOM as established under Proclamation No. 129-A. For this purpose, the PARC
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EXECOM, through the DAR, shall issue policies, rules and regulations relative to such
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approval taking into consideration of the following, namely: a) economic viability; b)
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legal enforceability; c) ARB control over the land/or business operation; d) ARB skill
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development; (e) ecological soundness; f) non-transferability of ownership over the
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land to investor; and other considerations which PARC EXECOM may deem proper
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under the circumstances.
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Sec. 10. Revocation o f A VA Contracts by the PARC EXECOM. — Without prejudice
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to the right of rescission by the investor and the ARBs, AVA contracts may be revoked
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by the PARC EXECOM based on the following grounds:
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a) Gross violation or non-compliance of the terms and conditions of the
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contract such as, but not limited to:
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a. Non-implementation of the human resources development plan
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provisions;
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b. Non-employment of the ARBs;
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c. Concealment of the true financial status of the enterprise; and
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d. Commission of fraud in the application or implementation of the
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AVA;
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e. Other analogous cases.


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b) When, without justifiable reasons, the AVA fails to provide benefits and
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incentives stipulated in the approved AVA contracts, such as, but not
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limited to, dividends accruing to ARB's equity shares, production and
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quality incentives. For this purpose, situations beyond the control of the
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investor such as force majeure are considered justifiable reasons;
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c) When the AVA is no longer financially and economically viable;
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d) When a portion of the commercial farm subject of the AVA is converted
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or fragmented into non-agricultural use without prior written consent of
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the ARBs and the DAR;
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e) Any action resulting to the transfer of ownership of the landholding
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subject of AVA to the investors;
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f) In cases of permanent 
take-over or temporary take over when the
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conditions set forth under Article 8 are not present;
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g) Acquisition or approval of AVA through fraud, intimidation, coercion,
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deceit, etc
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h) Other analogous or meritorious grounds.
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Sec. 11. Support Services for ARBs entering an AVA. The State shall establish an
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AVA Capacity Building Program with sufficient funding from the General Appropriations
20 
Act. The purpose of the capacity building program is to strengthen the farmer's ability
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to negotiate fairer terms for agribusiness contracts, deal with markets, harness local
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and international opportunities, and identify and act on onerous agreements to protect
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their rights.
24 
The program shall be formulated jointly by the DAR, DA, DTI, LBP and CDA, upon
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consultations with civil society organizations and people's organizations, within 60
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days from the enactment of this law. It shall include, but will not be limited to, the
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following components: acquisition and design of technology for production and
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packaging, access and management of production credit, organizing of business units
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like clustering and sugar blocks, registration of juridical entities (cooperative,
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corporation 
or association), 
business ideation, 
organizational 
development and
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strengthening, market linkages, product development and value addition, certification of
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products and processes of DAR, enterprise lawyering, the review and renegotiation of
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onerous agreements, and compliance with sanitary and phytosanitary requirements.
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Sec. 12. Disaster and calamity relief and rehabilitation assistance. In the event of
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a disaster or calamity affecting production, or where a State of Calamity has been
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declared in the province, the contract may be temporarily suspended upon the request


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or petition of any of the parties and the investor shall assist the ARBs in disaster relief 
and rehabilitation efforts. The existence of a valid AVA shall not be used a precondition 
by government agencies in granting or denying calamity loans or disaster relief funds.
Sec. 13. Jurisdiction. — The PARC Executive Committee shall have primary and 
exclusive jurisdiction over the approval and revocation of AVAs :
The DAR Adjudication Board (DARAB) shall have jurisdiction over disputes involving the 
interpretation and enforcement of agribusiness agreements or agrarian disputes as 
defined in Sec. 3 (d) of R.A. No. 6657:
The DAR Secretary, in his/her capacity as Chairperson of the PARC Executive 
Committee, may issue orders, as may be appropriate, to maintain the status quo and 
preserve peace and order in the farm subject of AVAs, particularly in the following cases 
pursuant to Sec. 5 (b) in relation to Sec. 7 of E.O. No. 129-A:
a) Where there is clear and imminent threat to life or property;
b) Where the dispute will cause serious and irreparable damage to either 
party or to the AVA; or
c) Where, in the Secretary's judgment, there is an urgent need to protect 
the national interest
Sec. 14. Pena! Provisions. -  Any act that wrests control over the agricultural land 
from agrarian reform beneficiaries not constituting a temporary take-over as defined in 
this Act shall be punishable by imprisonment of not less than three (3) years and one 
day but not more than six (6) years.
Any act to impose undue pressure to the ARBs to enter into an AVA, or renew an 
existing AVA, or rescind and existing AVA, or agree to new terms of an existing AVA, 
including but not limited to threats, harassment, economic coercion, denial of 
government support, and the like, shall be punishable by imprisonment of not less than 
three (3) years and one day but not more than six (6) years.
Additional administrative sanctions will apply if the offender is a government employee.
Sec. 15. 
Repealing Clause. -  All other laws, decrees, executive orders, 
issuances, rules and regulations, or part thereof inconsistent with this Act are hereby 
likewise repealed or amended accordingly.
Sec. 16. Separability Clause. -  If, for any reason, any section or provisions of 
this Act is declared unconstitutional or invalid, the other sections or provisions not 
affected thereby shall remain in full force and effect.
Sec. 17. Transitory Provision. -  All existing AVAs without PARC approval shall be 
subject for review and approval of the PARC. Parties to existing AVAs shall submit their
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contracts to PARC within 60 days from the effectivity of this Act. Failure to comply with 
this requirement within the given period shall render the AVAs void.
Sec. 18. Effectivity Cause. -  This Act shall take effect after fifteen (15) days 
upon publication in at least two (2) newspapers of general circulation.
Approved,
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