After the Memorandum of Understanding with the Fu Hua Corporation – unprecedented in terms of the size of agricultural lands to be leased to a foreign corporation – it is imperative to discuss two more agreements dealing with the next sizeable areas of land in the bundle of RP-China agreements entered into by the Philippines through the Convergence Group (Department of Agriculture, Department of Agrarian Reform, Department of Trade and Industry) with  corporations and local governments of the People’s Republic of China.

These Agreements are the following[1]:

  • The MOA entered into by and between the Philippine Agriculture, Agrarian Reform, and Environment and Natural Resources departments (the “Convergence Group”), as the First Party, and the BEIDAHUANG Seed Group of the General Bureau of Heilongjian, as the Second Party (hereinafter BEIDAHUANG MOA) involves a collaboration for developing agricultural production in two hundred thousand (200,000) hectares of land, ostensibly for grains production.
  • The MOA executed by and between the ADGZAR, as the First Party, and the Philippine “Convergence Group,” as the Second Party (hereinafter, ADGZAR MOA) is an accord on a Project on cassava and sugarcane production over an (initial) area of “at least 40,000 hectares” of land.

In a context wherein the President has been quoted in her State of the Nation Address that she will turn our country’s farmers into agribusinessmen and agribusinesswomen, and given this present juncture wherein there is still much uncertainty and debate over the possible extension of the Comprehensive Agrarian Reform Program after its expiration in 2008, there is a need to scrutinize deals and contracts entered into by the government involving agricultural lands that could jeopardize the interests of farmers and farmworkers.

The bundle of RP-China Agreements is, as a whole, characterized by a confusing and perhaps deliberate lack of clarity. In the agreements involving agricultural lands, however, this ambiguity may prove to altogether dangerous. Terms such as “new lands” and “lands owned by the Philippine government” and “new lands for planting” are tossed around in complete disregard of their legal definitions and concrete consequences. The provisions appear to be written in a manner that ignores, if not defies, constitutional proscriptions. But most of all, they are prejudicial to the interests of thePhilippinesand Filipinos.

Release us from this lease!

Both agreements contain a provision that reads: “…Facilitate through lease or any other agreed agribusiness venture options in the identified land for a term of twenty five years including the renewal of the agreement if necessary, pursuant to existing Philippine Laws and Regulations.”

Insofar as the lease of identified lands to the Chinese parties be are contemplated, the terms of the agreements lend basis for objections.

(1)      Distortion of the nature and concept of lease. What distinguishes the concept of lease from other arrangements, as for instance a joint venture arrangement, is that in a lease agreement, the lessor cedes management and control of the leased property to the lessee in exchange for a sum certain in money. It is the lessee that is responsible for building the necessary infrastructure to conduct its business, as the profits will redound to its benefit.

Strangely enough, in the so-called lease agreements entered into by the Philippines with the Chinese corporations, there are provisions that impose on the Philippines obligations to partake in the costs of investments. These include the following:

a)        Make available the necessary counterpart resources that may be required to facilitate production and post production activities;

b)        Facilitate the availability of the required volume of cassava and sugarcane production at the agreed quantity and quality

c)         Provide basic farm to market roads and basic irrigation infrastructure for the project.

(2)      Absence of stipulations ensuring “return of investment” for the Philippines.  This distortion of the concept of lease is made even more disconcerting by the fact that there is no counterpart provision granting to the Philippine government a share in the profits generated by the investment arrangement. Machineries and equipment provided for by the Chinese corporation will not automatically be transferred to the Philippines.

Concededly, both of these MOAs contain the clause “or any other agreed agri-business venture options in the identified land”. This, of course, begs the question: what are these other agri-business options, and how can we be certain that these do not flout established principles of law and jurisprudence?

One step back for agrarian reform

As it stands, there is much to be desired with the current agrarian reform program being implemented via Republic Act 6657. Huge tracts of lands have yet to be transferred to the farmers and the Department of Agrarian Reform is facing a tremendous backlog. The “whereas clauses” of the Agreements are littered with exhortations to improve the lives of farmers and to abate rural poverty. However, the operational provisions of the Agreements suffer from vague terminology and poor construction.

These defects, at the most basic, imperil the constitutional mandate to redistribute land. For one thing, there is no provision that is clear as to what lands may be subjected to the lease agreement. This clearly puts in jeopardy the tenurial interests of the farmers. In a ruling of the Supreme Court that has yet to be overturned, it was stated that the rights of the farmers to the lands supersedes the terms of the lease, if such rights were in place upon the perfection of the contract.

“… in case of transfer or in case of lease, as in the instant case, the tenancy relationship between the landowner and his tenant should be preserved in order to insure the well-being of the tenant or protect him from being unjustly dispossessed by the transferee or purchaser of the land; in other words, the purpose of the law in question is to maintain the tenants in the peaceful possession and cultivation of the land or afford them protection against unjustified dismissal from their holdings. (Primero v. CAR, 101 Phil. 675);” (Coconut Cooperatives Marketing Association v. CA. G.R. Nos. L-46281-83 August 19, 1988)

May this apply by analogy to a scenario wherein the landowner is not a private individual who contracts a lease with another private individual, but a State who contracts with a foreign corporation in an investment worth millions of dollars and involving literally more than a hundred thousand hectares? Given that virtually any excuse is taken to circumvent the provision of the CARL and given that we have a President who appears bent to draw in foreign investment in pursuit of the agri-business agenda, no less than a guarantee in the Agreements stating both parties’ commitment to honor the farmers’ tenurial interests should be in place – notwithstanding the basic rule that the laws of the land should be read into each and every contract entered into and coming into force in this jurisdiction.

Moreover, the Agreements undermine the true intent of the agrarian reform program which is not merely to physically distribute land, but also to empower our farmers. Hence, RA 6657 is explicit in the mechanisms available to farmers and people’s organizations to participate and be consulted. Sadly, in the Beidahuang MOA, or the MOA involving 200,000 hectares of land, the provision reads: “(The First Party, the Philippines, agrees to) coordinate and collaborate with government institutions, civil society groups, non-government organizations and private sector groups as may be necessary in the course of the implementation of the project.” This means it is discretionary and mandatory to consult and collaborate with key stakeholders. The ADGZAR MOA, or the MOA for 40,000 hectares, is even worse, in that it makes no mention at all of collaboration or coordination.

The absence of any provision specifying mandatory consultation is compounded by the absence of any sort of grievance mechanism or forum to seek redress. The Agreements merely say that disagreements shall be resolved “through diplomatic channels.” Obviously, these diplomatic channels are not readily available, if at all, to simple farmers and farmworkers who as it is, are hard put to access conventional legal mechanisms.

Changing the Constitution, Shortchanging the Farmers

As in the one million hectare contract with Fu Hua Corporation, the essence of the Agreements themselves is its infirmity. It reformulates the agrarian reform program of the state, which seeks the physical redistribution of the agricultural lands to the farmers and which therefore views agri-business deals as interim measures to stem rural poverty.

The bundle of RP-China agribusiness agreements changes the Constitution by introducing flagrant violations both to its letter and to its spirit, but its greater sin is that it shortchanges the farmers – putting in jeopardy their right to the land that they till, compromising their already precarious future.//


[1] This analysis is based on documents IDEALS, Inc. obtained from contacts in the Department of Agriculture. To date, the Department of Agriculture failed to give a copy of the final version of the MOAs  despite requests from different organizations and has not even clarified the status of the various RP-China Agreements.

AR Dialogues No. 4-07 / 17 August 2007

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