The latest trend in the market today is investing in real property. This has become more apparent when San Miguel Corporation expanded its operation to include real property development. Probably taking hint on this active market, even small companies are now fighting for a piece of the market action by acquiring properties and developing it into resorts, buildings, and residential homes.
Most of the properties being developed by these companies are agricultural lands. In the Philippines, conversion of agricultural lands to some other use such as commercial, residential, or industrial is regulated under the law. The primary purpose of which is maintain food security. Most companies are unaware of this. Such ignorance comes with a price if the government agency concerned enters its appearance to enforce the law.
Failure to comply with the law on land use conversion may result to criminal and administrative cases, forfeiture and fines may be imposed, and/or cease and desist of operations will be issued against the erring company, the developer and landowner included.
In buying a land and in view of using it for other than an agricultural enterprise, investor must bear in mind the following:
1. Do not buy irrigated agricultural land. It is non-negotiable for conversion;
2. If agricultural land is tenanted, make sure to provide for the tenant a disturbance compensation which must not be less than 5 years average gross annual harvest (in cavans) multiplied by 5. That is the computation provided under the law;
3. Determine if the project or the land itself is among those listed as exempt or excluded under the law;
4. Make sure that the area being converted has been reclassified as such. This information is available in the MPDC or PPDC. The favorable resolution as to the reclassification will play an important role in the approval for land use conversion;
5. Probably the hardest part in the list of requirements would be preparation of the feasibility study;
6. Bond will be required.
Here are the documentary requirements pursuant to DAR Memorandum Circular 02-02:
"DOCUMENTARY REQUIREMENTS FOR LAND USE CONVERSION
A. Standard
Requirements: Six (6) sets of land use conversion folder (LUCF) consisting
of the following: (One [1] original set and five [5] photocopy sets) with table
of contents and page numbers of all documents including photographs,
sequentially numbered, except for maps and development plans which shall
likewise be in sextuplicate but shall be submitted in six separate envelopes
with contents properly labeled on each envelope. Of the six (6) folders, two
(2) will be transmitted to the Municipal Agrarian Reform Officer (MARO),
containing therein only the filled-up application form and the documents specified
in Nos. 4, 5, 14 and 26 hereunder. The remaining four (4) folders shall contain
all the documents enumerated hereunder that are applicable. The arrangement
thereof shall follow the sequence of the enumeration below, with the
requirement referred to in No. 1 hereof being the first document after the
table of contents:
1. Official receipt
showing proof of payment of filing fee and inspection cost.
2. Official receipt
showing proof of posting of bond or an original copy of the GSIS surety bond in
accordance with the terms and conditions set forth in Section 24 of DAR AO No. 1, Series of 2002.
3. Sworn
Application for Land Use Conversion. (Form No. 1)
4. True copy of the
Original Certificate of Title (OCT) or Transfer Certificate of Title (TCT) of
the subject land, certified by the Register of Deeds not earlier than thirty
(30) days prior to application filing date.
In case of untitled land, the following shall be required in lieu of a
title:
4.1. Certification from the
Department of Environment and Natural Resources-Community Environment and
Natural Resources Officer (DENR-CENRO) that the landholding has been classified
as alienable and disposable; and
4.2. Certification from the
DENR-CENRO (for administrative confirmation of imperfect title) or the Clerk of
Court (for judicial confirmation of imperfect title) that the titling
process/proceedings has commenced and there are no adverse claimants.
5. True copy of the
Certificate of Title of the subject land as of 15 June 1988, and all successor
Titles until the present Title referred to in No. 4 hereof, if applicable.
6. True copy of the
current Tax Declaration covering the subject property.
7. Project
feasibility study.
8. Joint venture
agreement or any other business arrangement on the use of the land between the
landowner and the developer (if the developer is other than the landowner) or
between the Emancipation Patent/Certificate of Land Ownership Award (EP/CLOA)
holders and the developer (if the land was awarded under the agrarian reform
program).
9. Narrative
description of the development plan describing in detail the activities,
program components, phasing, schedule, work and financial plan, all duly
certified by a licensed engineer, architect, or land use planner.
10. Proof of financial and
organizational capability of the developer to develop land, including the
following information:
10.1. Statement of project cost and availability
of potential funding source(s) for the development of the proposed project;
10.2. Profile of the developer;
10.3. Most recent financial statement, not later
than the year before application, duly authenticated by a certified public
accountant; and
10.4. If the developer is a corporation or
partnership, a copy of its Certificate of Registration and recent General
Information Sheet (GIS) for the immediately preceding year, certified by the
Securities and Exchange Commission (SEC), or in lieu of the latter, a duly
accomplished GIS sworn to before a notary public, provided, that if the land is
to be used for socialized housing by the LGU under EO 124-1993, a Sanggunian Resolution appropriating funds for the project and
authorizing the LGU to undertake the same shall be required: Provided, further,
that if the socialized housing shall be undertaken by other government agencies
such as the National Housing Authority and the like, a board resolution
approving the project and appropriating funds therefor shall likewise be
submitted. HCaEAT
11. Socio-Economic Benefit-Cost
Study of the proposed project.
12. Photographs, size 5R (five
[5] inches by seven [7] inches), using color film, and taken on the landholding
under sunlight. The applicant shall attach the pictures to a paper background
and the photographer who took said pictures shall sign on said paper background
to certify the authenticity of the pictures. On each background paper shall be
written a short description of each picture. The pictures shall consist of:
12.1. At least four (4) photographs taken from
the center of the landholding: one (1) facing north, one (1) facing east, one
(1) facing south, and one (1) facing west;
12.2. At least one (1) photograph per corner,
taken from each corner of the landholding's borders.
12.3. At least two (2) photographs each for all
distinct man-made structures existing on the land, taken from opposite angles;
12.4. At least two (2) photographs each of the
front view of the billboard(s) required in Section 11 of DAR A.O. No. 1 Series
of 2002. The applicant shall set aside the second copy of said billboard
photograph(s) for submission to the Municipal Agrarian Reform Officer (MARO);
and
12.5. Sufficient number of photographs of the
most conspicuous landmarks from the nearest barangay center and leading to and
from the ingress and egress routes at the subject landholding, for the purpose
of assisting the ocular inspection team in locating the site.
13. Affidavit/Undertaking in a
single document of the applicant. (LUC Form No. 2)
14. MARO Certification (LUC
Form No. 3) and Notice of Land Use Conversion in English language (LUC Form No.
4) and in local dialect (LUC Form No. 4A).
15. Certification from the
Housing and Land Use Regulatory Board (HLURB) Regional Officer on the actual
zoning or classification of the land subject of the application based on the
approved comprehensive land use plan citing: (a) the municipal or city zoning
ordinance number; and (b) resolution number and date of approval by the HLURB
or the Sangguniang Panlalawigan concerned, as the case may be. (LUC Form No. 5)
16. Certification from the
authorized Department of Agriculture (DA) official stating, among others, the
classification of the property under the NPAAAD and SAFDZ, whether or not the
subject property is within the five percent (5%) limit of the SAFDZ allowed for
conversion, the status of irrigation coverage of the subject property, and
whether the land has ceased to be economically feasible and sound for
agricultural purposes.
17. Certification from the
authorized DENR official stating, among others, whether or not the subject land
is within the National Integrated Protected Area System (NIPAS), mossy and
virgin forests, riverbanks, or swamp forests and marshlands; within an
Environmentally Critical Area (ECA), or will involve the establishment of an
Environmentally Critical Project (ECP). (LUC Form No. 6).
18. Environmental Compliance
Certificate (ECC) when the subject land is within an ECA or will involve the
establishment of an ECP.
19. If applicable, Special
Power of Attorney (SPA), when the applicant is not the registered owner.
20. If applicable, notarized
secretary's certificate of a corporate/cooperative board resolution authorizing
the representative, when the applicant is a corporation or cooperative.
21. If applicable, concurrence
letter of the mortgagee or of the individual or entity in whose favor the
encumbrance was constituted, when the property is encumbered.
22. If applicable, endorsement
from the concerned government agency, when the application involves a priority
development area or project, such as:
b) HLURB
endorsement if socialized housing (LUC Form No. 7); or
c) PEZA Board
Resolution approving the project for ecozone project
23. If applicable, Land Bank of
the Philippines (LBP) Certification attesting that the applicant-landowner has
fully paid his obligations to the LBP, when the applicant-landowner is a beneficiary
of the agrarian reform program. (LUC Form No. 8)
24. If applicable, Provincial
Agrarian Reform Officer (PARO) Certification attesting that the
applicant-landowner acquired the subject land from a landed-estate or under the
Voluntary Land Transfer / Direct Payment Scheme (VLT/DPS) and he has already
fully paid his obligation thereunder, when the applicant-landowner is a
beneficiary of the agrarian reform program. (LUC Form No. 9)
25. Vicinity map and a lot plan
prepared by a duly-licensed geodetic engineer indicating the lots being applied
for and their technical descriptions, name of owner/s, lot number and area. The
map shall highlight the specific area applied for conversion if the application
covers less than the total lot area.
26. Directional sketch map
showing the orientation of the subject property in relation to adjoining lands
and nearest provincial and/or national and/or feeder roads, to facilitate and
determine the location of the property for the purpose of ocular inspection.
The map shall: indicate the existing infrastructure and/or improvements thereon
including any house or tillage thereupon of any occupant therein; landmarks
within a one (1) kilometer radius; and owners of adjacent properties. The map
need not be drawn to scale.
27. Map of the development
plan. For socialized housing projects, the applicant shall submit map of the
development plan with marked "reviewed by the HLURB."
28. Topographic Map if the
subject property is within an upland, hilly or mountainous area. SaCDTA
Note: The applicant shall submit all the foregoing
applicable requirements from Nos. 1 to 28 hereof at the time of filing of the
application to the CLUPPI/RCLUPPI. However, for applications involving housing
projects under EO-45-2001, requirements mentioned in Nos. 15 to 18 maybe
submitted at a later time."
The most intimidating part which most applicants dreaded is the requirement for the project feasibility study. The only way that one can get around this is to hire professional help. Anyway, having a feasibility study would not only comply with the aforementioned requirements but it will also help in giving direction to the project itself.