Agricultural Land Conversion in the Philippines: Rules Under RA 6657

Agricultural land conversion in the Philippines begins with a legal definition. Under Republic Act No. 6657, the Comprehensive Agrarian Reform Law of 1988, agricultural land refers to land devoted to agricultural activity and not classified as mineral, forest, residential, commercial or industrial land. Land is agricultural because of how it is actually used, not merely because of what a tax declaration says. Conversion therefore means taking land out of that category — and because the Comprehensive Agrarian Reform Program (CARP) covers all public and private agricultural lands, the law treats conversion with caution.

What counts as agricultural land under RA 6657

Section 3 of RA 6657 defines agriculture, agricultural enterprise or agricultural activity broadly. It covers the cultivation of the soil, planting of crops, growing of fruit trees, raising of livestock, poultry or fish, including the harvesting of farm products, and other farm activities performed by a farmer in conjunction with such operations, whether by natural or juridical persons.

The same section defines agricultural land as land devoted to agricultural activity and not classified as mineral, forest, residential, commercial or industrial land. Two consequences follow. First, idle farm land can still be agricultural land. Second, land that has become permanently or regularly devoted to non-agricultural purposes is treated differently — the definition of idle or abandoned land expressly excludes land that has become permanently or regularly devoted to non-agricultural purposes.

Why conversion is restricted

Section 2 of RA 6657 declares that land has a social function and that land ownership carries a special responsibility. Owners of agricultural land have the obligation to cultivate the land directly or through labor administration and thereby make it productive.

Section 4 states that CARP covers, regardless of tenurial arrangement and commodity produced, all public and private agricultural lands, including all private lands devoted to or suitable for agriculture regardless of the agricultural products raised or that can be raised thereon. This broad coverage is the reason conversion is not a simple private decision: land within CARP coverage carries the rights of farmers and farmworkers, including security of tenure.

Conversion by reclassification of forest or mineral land

Section 4 also addresses reclassification in the opposite direction. It provides that no reclassification of forest or mineral lands to agricultural lands shall be undertaken after the approval of the Act until Congress, taking into account ecological, developmental and equity considerations, shall have determined by law the specific limits of the public domain. The provision shows that land classification in the Philippines is treated as a matter of national policy, not merely of local or private initiative.

Exempt lands and lands excluded from coverage

Section 10 of RA 6657 lists lands exempt from CARP coverage. These include lands actually, directly and exclusively used and found necessary for parks, wildlife, forest reserves, reforestation, fish sanctuaries and breeding grounds, watersheds and mangroves, national defense, school sites and campuses including experimental farm stations operated by public or private schools for educational purposes, seeds and seedlings research and pilot production centers, church sites and convents appurtenant thereto, mosque sites and Islamic centers appurtenant thereto, communal burial grounds and cemeteries, penal colonies and penal farms actually worked by inmates, and government and private research and quarantine centers.

The same section exempts all lands with eighteen percent (18%) slope and over, except those already developed. Land falling under these categories sits outside the coverage of the agrarian reform program.

Commercial farms and agribusiness operations

Section 11 of RA 6657 treats commercial farms separately. These are private agricultural lands devoted to commercial livestock, poultry and swine raising, and aquaculture including saltbeds, fishponds and prawn ponds, fruit farms, orchards, vegetable and cut-flower farms, and cacao, coffee and rubber plantations. They are subject to immediate compulsory acquisition and distribution after ten (10) years from the effectivity of the Act. For new farms, the ten-year period begins from the first year of commercial production and operation, as determined by the Department of Agrarian Reform (DAR).

During that ten-year period, the government initiates the steps necessary to acquire these lands upon payment of just compensation for the land and the improvements thereon, preferably in favor of organized cooperatives or associations, which shall thereafter manage the lands for the worker-beneficiaries. If the DAR determines that the purposes for which the deferment was granted no longer exist, the areas become automatically subject to redistribution.

How land is acquired and compensated

Where land is covered, acquisition follows the procedure in Section 16. After identifying the land, the landowners and the beneficiaries, the DAR sends a notice to acquire the land to the owners by personal delivery or registered mail and posts it in a conspicuous place in the municipal building and barangay hall where the property is located. The notice contains the DAR's offer of payment.

Within thirty (30) days from receipt of the written notice, the landowner, administrator or representative informs the DAR of acceptance or rejection. If the offer is accepted, the Land Bank of the Philippines pays the purchase price within thirty (30) days after the landowner executes and delivers a deed of transfer and surrenders the certificate of title and other muniments of title. If the offer is rejected or no reply is made, the DAR conducts summary administrative proceedings to determine compensation.

Just compensation under Section 17 considers the cost of acquisition, the current value of like properties, the nature, actual use and income of the land, the sworn valuation by the owner, the tax declarations, and the assessment made by government assessors, among other factors.

Frequently asked questions

Can agricultural land be converted to commercial or residential use? Land classified as agricultural under RA 6657 is covered by the agrarian reform program, and land devoted to agricultural activity is treated as agricultural land regardless of what the owner intends. Conversion is not a purely private act, and covered land carries the rights of farmers and farmworkers.

What is the retention limit for landowners? Under Section 6 of RA 6657, retention by a landowner shall in no case exceed five (5) hectares, subject to factors governing a viable family-size farm as determined by the Presidential Agrarian Reform Council. Three (3) hectares may be awarded to each qualified child of the landowner.

When can commercial farms be acquired? Commercial farms are subject to immediate compulsory acquisition and distribution after ten (10) years from the effectivity of RA 6657. For new farms, the ten-year period begins from the first year of commercial production and operation, as determined by the DAR.

Practical takeaways

• Land is agricultural under RA 6657 based on actual use — cultivation of the soil, planting of crops, growing of fruit trees, raising livestock, poultry or fish, and related farm activities.
• CARP covers all public and private agricultural lands, so conversion affects the rights of farmers and farmworkers, including security of tenure.
• Section 10 lists specific exemptions, including lands with eighteen percent (18%) slope and over, except those already developed.
• Commercial farms face compulsory acquisition after ten (10) years, or from the first year of commercial production for new farms.
• Acquisition follows the notice-and-offer procedure in Section 16, with just compensation determined under Section 17.

Primary sources

The rules discussed above are drawn from the following primary sources. Where the firm's library holds the document as a PDF it is embedded here in full; the rest are cited by title.

Issuance of the new Financial Reporting Package (FRP) for banks in line with the adoption of the Philippine Financial Reporting Standards (PFRS) and Philippine Accounting Standards (PAS)Open in Law LibraryDownload PDF

• REPUBLIC ACT NO. 6657 - AN ACT INSTITUTING A COMPREHENSIVE AGRARIAN REFORM PROGRAM TO PROMOTE SOCIAL JUSTICE AND INDUSTRIALIZATION, PROVIDING THE MECHANISM FOR ITS IMPLEMENTATION, AND FOR OTHER PURPOSES

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.