Javier vs CA

Javier vs CA, GR No L-78953, January 22, 1990

Victoria Javier, wife of the private respondent received from Prudential bank and Trust Company the amount of USD 999,973.70 remitted by her sister, Mrs. Dolores Vertosa, through some banks in the US, among which is Mellon Bank,NA.

Mellon Bank filed a complaint against private respondent, his wife and other defendants, claiming that its remittance of US$1M was a clerical error and should have been US$1,000. On the ground that the defendants are trustees of an implied trust for the benefit of Mellon Bank with the clear, immediate and continuing duty to return the said amount from the moment it was received.

Private respondent filed his income tax return for the taxable year 1977 showing a gross income of PhP 53,053.38 and a net income of PhP 48.053.88 and stating in the footnote of the return that “Taxpayer was a recipient of some money received from abroad which he presumed to be a gift but turned out to be an error and is now subject to litigation.”

Private respondent wrote the BIR that he was paying the deficiency income assessment for the year 1976 but denying that he had any undeclared income for the year 1977 and requested that the assessment for 1977 be made to wait final court decision on the case filed against him for filing an allegedly fraudulent return.

CIR reply stating that the amount of Mellon Bank erroneous remittance which were depose is definitely taxable.  The Commission also imposed a 50% fraud penalty against Javier.

ISSUE: WON private respondent is liable for the 50% fraud?

HELD:

Under Sec 72 of the Tax Code, a taxpayer who files a false return is liable to pay a fraud penalty of 50% of the tax due from him of the deficiency tax in case payment has been made on the basis of the return filed before the discovery of the falsity or fraud. The fraud contemplated by law is actual and not constructive.

In the case at bar, there was no actual and intentional fraud through willful and deliberate misleading of the government agency concerned, the BIR.  The government was not induced to give up some legal right and place itself at a disadvantage so as to prevent its lawful agents from proper assessment of tax liabilities because Javier did not conceal anything.  Error or mistake of law is not fraud.

The imposition of the fraud penalty in this case is not justifies by the extant facts because he did not conceal the facts that he received an amount of money although it was a subject of litigation.

As ruled by respondent CTA, the 50% surcharge imposed as fraud penalty by the petitioner against the private respondent in the deficiency assessment should be deleted.

Fair Shipping vs. Medel

FAIR SHIPPING CORP., and/or KOHYU MARINE CO., LTD., Petitioners, 
vs.
JOSELITO T. MEDEL, Respondent.

 G.R. No. 177907               August 29, 2012

On OCT. 23, 1998, respondent Joselito T. Medel was hired by petitioner Fair Shipping Corp. for and in behalf of its foreign principal Kohyu Marine Co., LTD. as an able seaman of the vessel M/V Optima for 12 months. On Nov. 27, 1998, he began the performance of his duties. On March 1, 1999, the M/V Optima was docked at the Port of Vungtao in Ho Chi Minh City, Vietnam. During emergency drills aboard the vessel, one of Medel’s co-workers lost control of the manual handle of a lifeboat, causing the same to turn uncontrollably and strike Medel in the forehead.

After a series of medical examinations, treatments and procedure, Medel claimed from petitioners the payment of permanent total disability benefits. Petitioners refused to grant his claim. Consequently, Medel filed a complaint against petitioners, for among others, disability benefits.

            The Labor Arbiter issued a decision in favor of Medel, holding that Medel is entitled to a disability benefits. It emphasized that Medel suffered injury that was sustained by him during the effectivity of his shipboard employment contract and while engaged in the performance of his contracted duties.

            The Court of Appeals cited the Court’s ruling in Crystal Shipping, Inc. v. Natividad, the Court of Appeals stated that an award of permanent total disability benefits is proper when an employee is unable to perform his customary work for more than 120 days. Since Medel’s accident rendered him incapable of performing his usual or customary work for more than 120 days, the Court of Appeals concluded that he was entitled to permanent total disability benefits.

HELD:

            Following the guidelines laid down in Vergara, it is evident that the maximum 240-day medical treatment period expired in this case without a declaration of Medel’s fitness to work or the existence of his permanent disability determined.

            Accordingly, Medel’s temporary total disability should be deemed permanent and thus, he is entitled to permanent total disability benefits.

            The Supreme Court correlates the provision of the POEA SEC with the pertinent labor laws and rules, and cited the case of Vergara v. Hammonia Maritime Services, Inc. It teaches that “For the duration of the treatment but in no case to exceed 120 days, the seaman is on temporary total disability as he is totally unable to work. He receives his basic wage during this period until he is declared fit to work or his temporary disability is acknowledged by the company to be permanent, either partially or totally, as his condition is defined under the POEA Standard Employment Contract and by applicable Philippine laws. If the 120 days initial period is exceeded and no such declaration is made because the seafarer requires further medical attention, then the temporary total disability period may be extended up to a maximum of 240 days, subject to the right of the employer to declare within this period that a permanent partial or total disability already exists. The seaman may of course also be declared fit to work at any time such declaration is justified by his medical condition.”

            A temporary total disability only becomes permanent when so declared by the company physician within the periods he is allowed to do so, or upon the expiration of the maximum 240-day medical treatment period without a declaration of either fitness to work or the existence of a permanent disability.

Plaridel Surety Co vs. Collector

Plaridel Surety Co vs. Collector, GR No L-21520, Dec. 11, 1967

Petitioner Plaridel Surety is a domestic corporation engaged in the bonding business.

Petitioner surety and Constancio San Jose (principal), solidarily executed a performance bond in favor of the PL Galang Machinery to secure the performance of San Jose contractual obligation to produce and supply logs. To afford itself adequate protection against loss or damages on the performance, petitioner required San Jose and Ramon Cuervo to execute an indemnity agreement obligating themselves, solidarity to indemnify petitioner for whatever liability it may incur by reason of said performance bond. San Jose constituted a chattel mortgage on logging machineries and other movables in petitioners favor while Ramon Cuervo executed a real estate mortgage.

San Jose failed to deliver the logs to Galang Machinery and sued on the performance bond.  The lower court directed San Jose and Cuervo to reimburse petitioner for whatever amount it would pay Galang Machinery.

Petitioner in his income tax claimed that the amount P44,490 as deductible loss from its gross income.

CIR disallowed the claimed deductions and assessed against petitioner the sum P8,898, plus interest, as deficiency income tax for the year 1957.

ISSUE: WON petitioner can claim P44,490 as a deductible loss from its gross income.

Held:

NO

Petitioner was duly compensated for otherwise than by insurance- thru the mortgage in its favor executed by San Jose and Cuervo and it had not yet exhausted all its available remedies, especially as against Cuervo to minimize its loss.

LOSS is deductible only in the taxable year it actually happens or is sustained.  However, if it is compensable by insurance or otherwise deductions for the loss suffered is postponed to a subsequent year, with, to be precise, is that year in which it appears that no compensation at all can be had, on that there is a remaining or net loss.

City Lumber vs. Domingo and CTA

City Lumber vs. Domingo and CTA, GR. No. L-18611, January 30,1964

Petitioner seek the review of CTA decision, upholding an assessment by respondent on an additional income of P16, 678 representing minor deductions from the alleged expenses, on undisclosed sales of plywood, nails and GI sheets and on a cash credit balance.

Petitioner claim the plywood and GI sheet were lost in a fire and the credit cash balance as a loan secured by petitioner.

Issue: WON petitioner can claim deductions on his expenses/loss?

Held:

NO

The lower court rejected the alleged loss of plywood because said loss was never reported in the books of petitioner, and neither was such loss reported in the ITR of petitioner for that year. Neither were any receipt or other evidence reduced to show that said amount was a loan secured by petitioner or that loan was never secured.

CIR vs Mitsubishi

CIR vs Mitsubishi, GR No L-54908, January 22, 1990

Atlas Consolidated Mining and Dev Corp (Atlas) entered into a loan and sales contract with Mitsubishi, a Japanese corp licenses to engage in business in the Phils., for purposes of the projected expansion of the productive capacity of Atlas.

Mitsubishi agreed to extend a loan to Atlas for the installation of a new concentrator for copper production and Atlas to sell to Mitsubishi all the copper concentrates produced for 15 years.

Mitsubishi applied for a loan with Export-Import Bank of Japan (Eximbank) for purpose of its obligation under said contract. Pursuant to the contract between Atlas and Mitsubishi, interest payments were made by Atlas to Mitsubishi for the years 1974-75.  The corresponding 15% tax thereon in the amount of P1,971,595.01 was withheld pursuant to sec. 24(b)(1) and sec. 53 (b)(2) of NIRC, as amended by PD 131, and duly remitted to the government.

Private respondent filed a claim for the tax credit requesting the sum of P1,971,595.01 be applied against their existing and future tax liabilities. It was later noted by respondent CTA that Mitsubishi executed a waiver and disclaimer of its interest in the claim for tax credit in favor of Atlas.

Mitsubishi filed a petition for review with respondent court on the ground that Mitsubishi was a mere agent of Eximbank, which is a financing institution owned, controlled and financed by the Japanese Government.  Such government status of Eximbank, if it may be so called, is the basis for private respondents claim for exemption from paying the tax on the interest payment on the loan. It was further claimed that the interest payments on the loan from the consortium of Japanese banks were likewise exempt because loan supposedly came from or were fniancé by Eximbank.  Relying on the provision of sec. 29(b)(7)(A) NIRC.

CTA promulgated its decision ordering petitioner to grant a tax credit in favor of Atlas and the court declared that all papers and documents pertaining to the loan obtained by Mitsubishi from Eximbank shows that this was the same amount given to Atlas. It also observed that the money for the loan from the consortium of private Japanese banks originated from Eximbank.  From these, respondent court concluded that the ultimate creditor of Atlas was Eximbank.  Mitsubishi was acting as a mere “arranger or conduit through which the loan flowed from the creditor Eximbank to the debtor Atlas.

ISSUE: 1) WON the interest income from the loan extended to Atlas by Mitsubishi is excludible from gross income taxation pursuant to sec. 29(b)(7)(A), NIRC and therefore, exempt from withholding tax.

       

            2) WON Mitsubishi is a mere conduit of Eximbank which will then be considered as the creditor whose investment in the Phils. On loans are exempt from taxes.

HELD:

1)    NO

The signatories on the loans and sales contract were Mitsubishi and Atlas, nowhere in the contract can it be inferred that Mitsubishi acted for and behalf of Eximbank of Japan nor of any entity, private or public, for that matter.  When Mitsubishi obtained the loan of USD 20M from Eximbank of Japan said amount ceased to be the property of the bank and become property of Mitsubishi. 

Mitsubishi and not Eximbank is the sole creditor of Atlas, the former being the owner of the USD 20M upon completion of its loan contract with Eximbank of Japan.  The interest income of the loan paid by Atlas to Mitsubishi is therefore entirely different from the interest income paid by Mitsubishi to Eximbank of Japan.  What was the subject of the 15% withholding tax is not the interest income paid by Mitsubishi to Eximbank, but the interest income earned by Mitsubishi from the loan to Atlas.

2)    NO

When Mitsubishi secured the loan, it was in its own independent capacity as a private entity and not as a conduit of the consortium of Japanese banks or the Eximbank of Japan.  While loans were secured by Mitsubishi primarily “as a loan to and in consideration for importing copper concentrates from Atlas, the fact remains that it was a loan by Eximbank of Japan to Mitsubishi and not to Atlas.

China Banking Corporation vs. CA

[G.R. No. 125508. July 19, 2000]

CHINA BANKING CORPORATION, petitioner, vs. COURT OF APPEALS, COMMISSIONER OF INTERNAL REVENUE and COURT OF TAX APPEALS, respondents.

Petitioner China Banking Corp made an equity investment in the First CBC Capital, a HongKong subsidiary engaged in financing and investment with “deposit-taking” function.

A regular examination by Bangko Sentral on petitioner financial book and investment portfolio shows that First CBC Capital has become insolvent. With approval of Bangko Sentral, petitioner wrote off as being worthless in its investment in First CBC in its 1987 Income Tax Return and treated it as a bad debt or as an ordinary loss deductible from its gross income.  Respondent CIR disallowed the deduction and assessed petitioner for income deficiency, inclusive of surcharge, interest and compromise penalty.

Issue: WON petitioner is allowed to claim for the deductions?

Held:

NO.

The disallowance of the deduction was made on the ground that the investment should not be classified as being “worthless” and that, although the HongKong Banking Commissioner had revoked the license of First CBC Capital as a “deposit-taking company” it can still exercise its financing investments.  Also, it should be classifies as capital loss and not as a bad debts expense there being no indebtedness to speak petitioner and its subsidiary.

Madrigal vs. Rafferty

G.R. No. L-12287            August 7, 1918

VICENTE MADRIGAL and his wife, SUSANA PATERNO, plaintiffs-appellants, 
vs.
JAMES J. RAFFERTY, Collector of Internal Revenue, and VENANCIO CONCEPCION, Deputy Collector of Internal Revenue, defendants-appellees.

Vicente Madrigal and Susana Paterno were legally married and have conjugal partnership.

Madrigal filed his total net income for the year is P296,302.73.

Subsequently, Madrigal submitted the claim that the said total net income of year 1914 did not represent his income for the year 1914, but was in fact the income of the conjugal partnership existing between himself and his wife, and the computing and assessing the additional income tax provided by the Act of Congress of Oct. 3, 1913, the income declared by Madrigal and the other half of Paterno.

Madrigal and Paterno brought action against Collector of Internal Revenue and the Deputy Collector of Internal Revenue for the recovery of the sum P3,786.08.

The burden of the complaint was that if the income tax for the year 1914 had been correctly and lawfully computed there would have been due payable by each of the plaintiff the sum of P2,921.09, which taken together amount of P5842.18 instead of P9,668.21.

Issue: WON the additional income tax should be divided into equal parts because of the conjugal partnership existing between them?

Held:

NO.

Paterno has an inchoate right in the property of her husband Madrigal during the lifetime of the conjugal property.  She has an interest in the ultimate ownership of property acquired as income of the conjugal partnership. Not being seized of the separate estate, Paterno cannot make a separate return in order to receive the benefit of the exemption which would arise by reason of the additional tax.  As she has no estate or income, actually and legally vested in her and entirely distinct from her husband property, the income cannot properly be considered the separate income of the wife for the purpose of the additional tax.  The income tax law does not look on the spouses as individual partners in an ordinary partnership.

The higher schedules of the additional tax directed at the incomes of the wealthy may not be partially defeated by reliance on provisions in our Civil Code dealing with the conjugal partnership and having no application to the Income Tax Law.

Agrarian Reform RULES ON LAND USE CONVERSION

RULES ON LAND USE CONVERSION

DAR Administrative Order No. 1, Series of 2002

Basis:

RA 6657 — Comprehensive Agrarian Reform Law

RA 8435 — Agriculture and Fisheries Modernization Act

EO 45 — Prescribing Time Periods for Issuance of Housing-Related Certifications, Clearances and Permits, and Imposing Sanctions for Failure to Observe the Same, October 24, 2001

Terms:

Illegal Conversion is the conversion by any landowner of his agricultural land into any non-agricultural use with intent to avoid the application of RA 6657 to his landholding and to dispossess his tenant farmers of the land tilled by them; or the change of nature of lands outside urban centers and city limits either in whole or in part after the effectivity of RA 6657,

Land Use Conversion refers to the act or process of changing the current physical use of a piece of agricultural land into some other use or for another agricultural use other than the cultivation of the soil, planting of crops, growing of trees, including harvesting of produce therefrom, as approved by DAR.

National Integrated Protected Areas System (NIPAS) refers to the classification and administration of all designated protected areas to maintain essential ecological processes and life support systems, to preserve genetic diversity, to ensure sustainable use of resources found therein, and to maintain their natural conditions to the greatest extent possible.

Network of Protected Areas for Agricultural and Agro-Industrial Development(NPAAAD) refers to agricultural areas identified by the Department of Agriculture (DA) through the Bureau of Soils and Water Management

Premature Conversion of Agricultural Land refers to the undertaking of any development activity, the result of which may modify or alter the physical characteristics of the agricultural land as would render it suitable for non-agricultural purposes without an approved Conversion Order from the DAR.

Strategic Agriculture and Fisheries Development Zone (SAFDZ) refer to the areas within the NPAAAD identified for production, agro-processing and marketing activities to help develop and modernize, with the support of the government, the agriculture and fisheries sectors in an environmentally and socio-culturally sound manner.

Unauthorized Conversion is the act of changing the current use of the land from agricultural (e.g. riceland) to another agricultural use, the effect of which is to exclude the land from CARP coverage (e.g. livestock) without a Conversion Order from the DAR, or changing the use of the land other than that allowed under the Conversion Order issued by the DAR.

v  Areas Covered:

        1.     Agricultural lands to be converted to non-agricultural uses

        2.     Agricultural lands to be devoted to other types of agricultural activities such as livestock, poultry & fishpond

        3.     Agricultural lands to be converted to non-agricultural uses other than that previously authorized

        4.      Agricultural lands reclassified to non-agricultural uses by the LGU after June 15, 1988

v  What are the Areas Non-negotiable for Conversion?

         1.       Agricultural lands under NIPAS

         2.       Mossy and virgin forests

         3.       Riverbanks

         4.       Swamp forests or marshlands

         5.       All irrigated lands

         6.       All irrigable lands covered by firm funding project commitments

         7.       All agricultural lands with irrigation facilities

v  Priority Development Areas and Projects

         1.     Specific sites in RAIC/RIC identified by DTI and DA

         2.     Tourism development areas

         3.     Areas intended for eco-zone projects, endorsed by PEZA

         4.     Government-owned lands to be converted for projects of national interest

v  Effect of the Approval of Conversion

The approval of conversion shall have, but shall not be limited to, the following effect:

         a.     It shall be limited to the specific use of the land authorized in the Conversion Order

         b.    It shall be subject to the schedule indicated in the detailed site development, work and financial plans and shall not extend beyond 5 years from issuance of the Conversion Order.

         c.     The condition thereof shall be binding upon successors-in-interest of the property

         d.    The applicant shall allow duly authorized representative of DAR free and unhampered access to the property subject of the Conversion Order to monitor compliance with the terms and conditions thereof.

         e.     The use authorized in the conversion order shall be annotated on the title of the subject property

         f.     It shall be without prejudice to the ancestral domain claims of indigenous people

v  Criteria for Conversion. — The following criteria shall guide the resolution of application for conversion:

1.      Conversion may be allowed if the land subject of application is not among those considered non-negotiable for conversion

2.      Conversion may be allowed, in accordance with Section 65 of RA 6657, when the land has ceased to be economically feasible and sound for agricultural purposes or the locality has become urbanized and the land will have a greater economic value for residential, commercial, industrial, or other non-agricultural purposes.

           3.      Conversion of lands within SAFDZ,

                                  3.1.      All irrigated lands, irrigable lands already covered by irrigation projects with firm funding commitments, and lands with existing or having the potential for growing high-value crops included within the SAFDZ shall be subject to a conversion moratorium for a period of five (5) years from 10 February 1998 to 9 February 2003.

                                  3.2.      During the effectivity of the moratorium, conversion may be allowed with respect to only five percent (5%) of said lands within SAFDZ upon compliance with existing laws, rules and regulations.

                                  3.3.      The maximum of five percent (5%) of land(s) eligible for conversion to non-agricultural use from the total SAFDZ area shall be jointly determined by the DA and the DAR, upon the recommendation of the Regional and National SAFDZ Committees pursuant to Rule 9.5.2 of DA-AO-6-1998, or the implementing rules and regulations of RA 8435.

                                  3.4.      After the expiration of the conversion moratorium, conversion may be allowed on a case-to-case basis, subject to existing laws, rules and regulations on land use conversion.

v  Where to Secure Application Forms

•           CLUPPI (Center for Land Use Policy, Planning and Implementation)

•           RCLUPPI (Regional Center for Land Use Policy Planning and Implementation)

•           PARO (Provincial Agrarian Reform Officer)

v  Where to File Application for Land Use Conversion

CLUPPI	RCLUPPI
Above 5 hectares	5 hectares and below

v  Filing Fee/Inspection Cost

5 hectares & below	Filling Fee	Inspection Fee
Within same Island or that of the Office of the DAR Regional Director	1,000.00	10,000.00
Not within same island or that of the Office of the DAR Regional Director		15,000.00

Above 5 hectares
Major island of Luzon (except Bicol peninsula)	P2,000.00	P10,000.00
Region I - IV                                                                  (outside the main island of Luzon)		P15,000.00
Visayas Group of Island (including Bicol peninsula)		P15,000.00
Mindanao Group of Island		P20,000.00

                                                                                       

v  Approving Authority

Secretary	Areas above 5 hectares	Total land applied. Land is adjacent to area previously granted conversion.  Single project with different owners within same barangay or within 2 or more adjacent barangays.
Regional Director	Areas involving 5 hectares and below.

v  Standard Documentary Requirements

•           Proof of payment of necessary fees & posting of bonds

•           Notarized Application

•           Copy of OCT or TCT

•           If untitled, DENR Certification on Alienable & Disposable status of land

                                 1. Certification from the DENR Community Environment and Natural Resources Officer (CENRO) that the landholding has been classified as alienable and disposable; and

                                 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;

•           DENR/Court Certification that titling has begun; and absence of adverse claimants

•           True Copy of TCTs/OCTs of all subject land as of 15 June 1998, and all successor titles until present

•           True Copy of current Tax Declaration

•           Project Feasibility Study

•           Joint Venture Agreement or Business arrangement on the use of land between the landowner (or EP/CLOA holders) and developer

•           Narrative description of development plan with detailed activities, program components, phasing, work schedule and financial plan duly certified by a licensed engineer, architect or land use planner

•           Proof of financial & organizational capability of the developer to develop land

•           Socio-economic benefit-cost study of the proposed project

•           Recent 5R photos of the property

•           SPA or Board Resolution

•           Concurrence letter of the mortgagee; if land is encumbered

•           Certification from the MARO

                         1)        Status of CARP coverage on & around the subject land

                         2)        Condition of the posting of billboards

                         3)        Presence of  farmers, agricultural lessee, etc.

                         4)        Posting of notices of application in conspicuous places

•           Affidavit/Undertaking of the applicant stating:

                             1)        list of tenants, farmworkers, bonafide occupants to be affected by conversion

                             2)        payment of or shall pay disturbance compensation

                             3)        required billboard has been erected

                             4)        not to undertake premature development

                             5)        authorizing DAR to forfeit bond in case of premature development

                             6)        has not commenced any action or filed any claim involving the same land in any court

v  Certifications from:

•           Housing and Land Use Regulatory Board (HLURB)

•           Department of Agriculture (DA)

•           Department of Environment and Natural Resources (DENR)

v  Public Notice

          1.         4 Feet by 8 feet billboard made of strong weather-resistant material.

          2.           One billboard for every 20 hectares

          3.           Located on visible points within the landholding applied, preferably along the road

          4.           Written in local dialect

•           Information includes:

-        Statement that the applicant is proposing to convert the subject landholding from agricultural to non-agricultural use

-        Name of the landowner representative and developer

-        Area and location

-        Filing date

-        Date of posting of billboard

-        Schedule of ocular inspection

-        Deadline for filing protest

-        Address of the CLUPPI and RCUPPI and PARO where oppositors may formally file their protest

-        Address of the approving authority

-        Date of approval or denial of the application

v  Bond to Guarantee Against Premature Conversion

-        Cash or Manager's/Cashier's Check (2.5% of zonal value)

-        Surety Bond issued by the GSIS (15% of zonal value)

Conditions at the minimum:

1.         The bond is callable on demand;

                                                2.         The DAR shall forfeit the bond in favor of the Agrarian Reform Fund when it finds the applicant carrying out any premature conversion activity; and

                                                3.         The validity of the bond shall be for a period of one (1) year, renewable by not more than one (1) year when necessary.

-        Posted upon filing of application

-        Guarantee against premature conversion

-        Refundable or convertible into performance bond

-        Forfeited in favor of ARF

When the applicant, or any person acting in his behalf, carries out any actual conversion activity on the land prior to the application's approval. Forfeiture shall be without prejudice to the filing of criminal charges against those responsible for premature conversion.

-        Applicant carry out

After faithful compliance with the terms and conditions of the bond, the applicant may opt to refund or convert the same into a performance bond after issuance of the Conversion Order.

-        Premature development

v  Exemption from Bond to Guarantee against Premature Conversion

•           Socialized housing projects (HLURB)

•           Resettlement projects for families displaced by development of government projects (NHA)

•           Community Mortgage Program projects (NHMFC)

When the application involves a mixed use of socialized and non-socialized housing projects, the application shall not enjoy any bond exemption for socialized housing unless at least eighty (80) percent of the land applied for conversion shall be used directly and exclusively for socialized housing.

v  Performance Bond-  within 5 days from receipt of a copy of the Conversion Order shall post performance bod in the form of either of the following:

•           Cash or manager's/cashier's check (2.5% of total zonal value)

•           GSIS surety bond (15% of total zonal value)

1.         The bond is callable on demand;

                                    2.         A photocopy of the approved Conversion Order is attached and forms part of the bond;

                                    3.         The DAR shall forfeit the bond in favor of the Agrarian Reform Fund when it finds the applicant in default of his obligation to complete development of the land and/or comply with any of the conditions in the Conversion Order; and

                                    4.         The validity of the bond shall be equivalent to the prescribed period of development of the area under the Conversion Order.

•           Posted within 5 days from receipt of copy of conversion order

•           Ensure faithful compliance with the conditions of conversion Order

•           Refundable upon completion of the project

•           Forfeited upon default in development of land and/or non-compliance with conditions in the Order

-when the applicant, or any person acting in his behalf, carries out any actual conversion activity on the land prior to the application's approval. Forfeiture shall be without prejudice to the filing of criminal charges against those responsible for premature conversion.

v  LAND USE CONVERSION PROCEDURES

File application                        Maximum Processing Period:
                                                   Regular                   - 130 days
                                                   Priority areas          - 110 days
Conduct of filed                            Housing                  - 70 days
Investigation (10 days)

Committee deliberation/                             Issue Order of
Recommendation (30 days)                       Conversion (30 days)

v  EFFECT OF PROTEST
Interrupt running for processing

v  DAR may impose any or all of the following sanctions after determining, in an appropriate administrative proceeding, that a violation of the Rules on Land Use Conversion has been committed:

                1.   Revocation or withdrawal of the authorization for land use conversion;

                2.   Blacklisting of the applicant, developer or representative;

                3.   Automatic disapproval of pending and subsequent conversion applications that the offender may file with the DAR;

                4.   Issuance of cease and desist order by the Secretary or Regional Director, as the case may be, upon verified reports that premature, illegal or unauthorized conversion activities are being undertaken; or

                 5.   Forfeiture of cash bond or performance bond.

v  Disturbance Compensation. —

1.   The applicant and/or landowner and/or developer shall pay disturbance compensation in cash or kind or combination of cash and kind to the farmers, agricultural lessees, share tenants, farmworkers, actual tillers, and/or occupants affected by the conversion, in such amounts or under such terms as the parties may mutually agree upon.

2.   The amount of disturbance compensation shall not be less than five (5) times the average of the gross harvests on the target landholding during the last five (5) preceding calendar years, pursuant to Section 36 of RA 3844, as amended by Section 7 of RA 6389.

3.   Compensation in kind may consist of some or all or mixture of housing, homelots, employment, and/or other benefits.

 The DAR shall approve the terms of any agreement for the payment of disturbance compensation and monitor compliance therewith.

 In no case shall compliance with the terms and conditions thereof extend beyond sixty (60) days from the date of approval of the application for conversion.

4.   If the parties fail to agree on the amount of disturbance compensation, or raise an issue questioning the lease or tenancy relationship or any other prejudicial issue that tends to justify non-payment of disturbance compensation, either or both parties may refer the issue to the Provincial Agrarian Reform Adjudicator (PARAD) for resolution.

While the case is pending before the Adjudicating Authority, the landowner(s)/applicant(s) may not evict said farmers, agricultural lessees, share tenants, farmworkers, actual tillers, or occupants, until such time when the Adjudicating Authority resolves the prejudicial issue(s) with finality.

5.   The applicant shall furnish the RCLUPPI/CLUPPI with proof of payment of disturbance compensation within five (5) days from receipt of payment.

v  Conditions of Conversion Order. — The approval of the application for conversion shall be subject to the following conditions:

1.   The applicant shall not undertake any development until all the applicable permits and clearances from the other concerned government agencies have been granted.

2.   Within fifteen (15) days from receipt of the Conversion Order, the landowner shall post a performance bond

3.   Within thirty (30) days from receipt of the Conversion Order, the landowner shall request the Register of Deeds to annotate on the property's title the land use allowed under the Conversion Order.

4.   Within sixty (60) days from receipt of the Conversion Order, the landowner shall return to the CLUPPI or RCLUPPI a certified true copy of the title that already contains the annotation indicating the land use allowed under the Conversion Order.

5.   Within sixty (60) days from receipt of the Conversion Order, the landowner, solidarity with his co-owner(s) and developer(s), shall pay disturbance compensation to the affected farmers, agricultural lessees, share tenants, farmworkers, actual tillers, or occupants, in such amounts or kinds as the parties may mutually agree upon, subject to the approval of the DAR.

6.   Within one (1) year from issuance of the Conversion Order, the landowner and/or developer shall commence development on the property approved for conversion, and shall complete development not later than the deadline(s) set forth in its site development plan schedule, but in no case shall development extend beyond five (5) years from issuance of the Conversion Order.

7.   For housing projects, the landowner shall secure an ECC, if applicable, prior to undertaking any development therein.

8.   The landowner and his representatives shall allow DAR officials free and unhampered access into the property approved for conversion for the purpose of monitoring compliance with the terms and conditions thereof.

9.   The landowner and future landowner(s) of the property approved for conversion shall not change its use to another use not authorized under the Conversion Order without prior consent from the DAR. This prohibition extends to changes in housing standards, changes in selling schemes, changes from social housing to open market housing or vice-versa, and all other similar changes.

10. The landowner and/or developer shall submit quarterly reports on the status of development to the MARO, PARO, and DAR Regional Office covering the subject property.

11. The grant of a Conversion Order alone shall not be a ground for eviction. Any person who desires to evict occupants on the basis of the Conversion Order shall invoke other meritorious grounds and file the proper action.

12. The DAR reserves the right to revoke the Conversion Order upon valid grounds and after proper investigation.

Source: www.DAR.gov.ph

Note: I have used this as my reference during my Agrarian Reform subject and it was very helpful.  So i thought might as well share it. Credit to the owner.