Legal Aspects about fishpond, ownership, rights and limitations on Fishpond lease Agreement or Aquaculture Stewardship Contract in the Philippines

My knowledge about the technical and legal aspect of fishpond acquisition, ownership, possession and the likes were very limited until I was given the opportunity to handle a fishpond account involving several issues to be resolved. It's a very challenging task! Intensive research was done in every detail on legal and technical side and even up to business registration. I attended seminars and further consulted private counsel, legal counsels of government agencies in direct control of fishpond concerns at regional level. To them, I am so grateful for imparting their knowledge to me and answer my queries passionately. One of the most relevant seminar I have attended was the orientation sponsored by Bureau of Fisheries and Aquatic Resources Region 7 (BFAR 7) regarding Fisheries Administrative Order (FAO 197-1) held at JJ's Restaurant, Tagbilaran City, Philippines last March 14, 2013.  This administrative order took effect in January 2013 superseding FAO 197. The main objective of the seminar was for public awareness. It was well attended by fishpond operators in the province of Bohol. May I share with you the basic information on fishpond legalities in the Philippines that the public must know. There are two classification of fishpond areas: 1. Privately owned fishpond which means that the property has a certificate of land title of that particular area. An owner can exercise his right to use, dispose or sell, lease to third parties, mortgage or assign his property. In the Philippines, only very few has a title over their fishpond. Like any other real estate property, titled fishponds are subject to annual property tax payable to local government unit. Take note, tax declaration of fishpond does not constitute absolute ownership. 2. Public or government owned fishpond areas which are occupied by fishpond operators or cooperatives/fisherfolk under Fishpond Lease Agreement (FLA) or Aquaculture Stewardship Contract (ASC) respectively. FLA or ASC is both lease contract between an Individual/partnership/corporation or fisherfolk respectively and the Philippine Government. Maximum lease term for FLA is 25 years and renewable for another 25 years not exceeding 50 years. While ASC is up to 10 years renewable for another 10 years. An individual is entitled to lease an area at a maximum of 25 hectares and 50 hectares for partnership/corporation and fisherfolk/association. Subleasing of the area is prohibited as one of the provision of the lease contract. If this is the nature of possession of the fishpond operator, fishpond areas can not be sold but may transfer their right if their FLA is in force or has not expired. Annual rental rate is at P1,000.00 /hectare for year 2013, P1,100.00/hectare for the year 2014, P1,200.00/hectare for year 2015, P1,300.00/hectare for year 2016, P1,400.00/hectare for year 2017, and P1,500.00 /hectare for year 2018 and succeeding years unless increased based on research studies. Rent is payable to BFAR. Local government may charge also an assessment on the area leased areas especially when Fishpond owners has acquired tax declaration. Tax Declaration issued to fishpond lessees or occupants does not constitute ownership.  Tax declaration is not mandatory to have it issued to FLA holder's  name. In cases where tax declaration is  issued, the Local Government Unit  unit concerned, city or municipal assessor will be collecting the annual property tax. To know more about requirements, qualifications, limitations and everything you want to know regarding fishpond lease application, please copy paste to your browser the link below: http://www.bfar.da.gov.ph/pages/legislation/FAO/FAO%20197-1%20(1).pdf  or http://www.bfar.da.gov.ph/LAW?fi=342 A mere occupation of fishpond does not constitute ownership. If fishpond operator occupying an area who  is holding a piece of contract particularly known as Fishpond Lease Agreement (FLA) or ASC, his right is limited only  to what is specified in the contract. Upon expiry of the lease contract, rights are also terminated unless renewed. It's a fact that majority of attendees of the above-mentioned seminar are operating with expired FLA's (Fishpond Lease Agreement) for so many reasons. Some said they they cannot proceed with their application because they have difficulty In documentary compliance associated with the financial problems of operators. Whatever stories behind, reasonable or unreasonable, pay your annual rentals, renew FLA's prior to its expiry date to avoid penalties, because the law excuses no one.  To operate fishpond under lease, getting a valid FLA/ASC does not end there. All types of business must register to government agencies to operate legally. You have to register your business name with DTI for individual, Cooperative Development Authority for fisherfolk / cooperative and SEC for partnership and corporation. You must also register with SSS, Phil-HEALTH and PAG-IBIG. Secure business permit from city or municipal hall where your business is located. Within 30 days from the approval of your business name registration, you have to register your business with BIR, secure your TIN and Certificate of Registration and register your books of accounts. You must familiarize your BIR tax obligations, tax exemption including local government taxes. Know also your reportorial requirements to Government Agencies. Fishpond Annual Production Report must be submitted to provincial or regional's office where fishpond is located. For corporation & partnership, submit annual reports to Securities and Exchange Commission (SEC).  For cooperatives, submit reports to Cooperative Development Authority.  As law abiding citizens, we should not forget to pay our taxes.   Unprocessed agricultural products are exempted from sales tax but income derived from agriculture is subject to income tax except for cooperatives because they have distinct tax privilege.   Since manpower is vital in your operation, take good care of the people who work for you by paying them at least a minimum wage, deduct from their payroll their SSS PHILHEALTH and Pag-ibig contributions and remit them including the employer's counterpart. Because we  are not experts on everything, consult the people with authority which I always do especially on legal matters. Fishpond operators with expired FLA'S or ASC's  should renew it ASAP before any other qualified parties would. Those who apply first, are given the preferential right.  Fishpond areas with expired FLA's are open to any qualified applicants.  Don't just ignore your expired FLA or ASC, you might just wake up one morning and get evicted in a  fishpond you are claiming  because another legal lessee is taking over your fishpond. APPLICATION FEES & OTHER CASH REQUIREMENT RENTAL FEES: annual rental rate is P1,500.00 per hectare payable one year in advance  upon acceptance of application APPLICATION FEE:  P2,000.00 Cash Bond: P500.00 per hectare Bank Certificate for Fishpond development:  P5,000.00 per hectare  Updates: One of the final requirements is ENVIRONMENTAL CERTIFICATE OF COMPLIANCE (ECC)  for fishponds developed from 1982 onwards or CERTIFICATE ON NON-COVERAGE (CNC) for fishpond developed prior to 1982. Based on actual experience, no one can apply on any fishpond area even if it has been expired for long time until there is CANCELLATION ORDER and ORDER OF FINALITY. Other Issues: If  a lessee (FLA holder) dies, leased fishpond area does not form part of the estate therefore this not subject to estate tax.   Buying & Selling Fishpond: To fishpond sellers:  If you possess the fishpond with title, you can dispose your property anytime by way of DEED OF ABSOLUTE SALE. To sellers holding a piece of contract as in FLA, you cannot sell the fishpond but you may transfer your right if you still have a valid right by way of DEED OF ASSIGNMENT or WAIVER OF RIGHTS. A valid right means your lease contract is in active status, rental is updated, the lease term is not terminated by any cause. Please note that death of an individual lessee terminates the contract. But the legal heirs, spouse and children, have the preemptive right to apply for lease on the unexpired portion of the FLA within 90 days from the death of the lessee. To the buyers:  Buying fishpond with title, go through the normal way of buying real estate properties by paying the capital gains tax (CGT), documentary stamp tax (DST) and transfer fee. Normally, CGT & DST are for seller's account but this could be passed on to the buyer depending on the agreed terms by both the buyer and seller. Transfer of rights does not involve taxes similar to titled fishponds but there are transfer charges to be settled with BFAR. Transferees/Assignees must make sure you follow the BFAR documentation requirement to effect the transfer. Above all, you must consider the unexpired portion of lease must be long enough for you to enjoy the fishpond use and the price you pay must be fair enough in relation to its expiry period and renewability. To brokers or sales person,  always apply due diligence.  If land title is verified from Register of deeds, FLA or ASC is verified from BFAR.  It is more appropriate to check FLA or ASC at the BFAR PROVINCIAL FISHERIES OFFICE where fishpond is located. Should you need assistance regarding application/business registration or other real estate requirement like selling or buying all types of real estate properties, please feel free to communicate with me.

CONTACT INFORMATION
JOSEPHINE L. ENGLIS, CPA, REB

Sun    +639225989140

Smart +639299711720

Globe  +639052968334

Landline +63 32 511 0020

Email: jlenglis@gmail.com, jlenglis@yahoo.com

Skype: Jo_englis

Photographs taken in a fishpond in Bohol,. Philippines during my visits there  in May 2013 and in April 2014.

Mangrooves (Bohol)

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The following are photos of Fishpond in Masbate and vistis made to some BFAR OFFICES in December 2018.

BFAR Regional Office  5,  Fabrica, Bula, Camarines Sur, Philippines

BFAR CENTRAL OFFICE, Diliman Quezon City, Philippines.

BFAR PROVINCIAL FISHERIES OFFICE, Mobo, Masbate, Philippines.

BFAR 7, REFRESHER SEMINAR ON BFAR FAO 197-1, Tagbilaran City on March 5, 2019