However, the manner on how these sales are undertaken can give insights into the reasons for land sale (or purchase) and the possible distortions that can arise from these transactions. There are direct and indirect ways of sale of agricultural lands. Indirect sales are done through waiver of rights, land conversion or land pawning. Waiving of rights is common on sale of CARP awarded lands. In this scheme, farmer beneficiaries make written waivers in favor of other persons. The act involves a voluntary release of rights and possession of the land. One reason for the use of waiver is that the awarded land has not been fully paid and thus not eligible for sale. It is common knowledge in agrarian villages and in the municipal DAR offices that waiver of rights is used by contracting parties to undertake sale transactions or ownership transfers (DAR 1996, p. 7). Transfer via waiver has been significant but no systematic record of these waivers is available at the DAR municipal or provincial offices. Another indirect method of sale is through conversion of agriculture land to non-agriculture uses. The sale transaction is undertaken upon approval of conversion. The conversion to nonagriculture use allows the land to be sold without the restrictions imposed by the land reform law. Land pawning or sanglaan is an informal credit facility that involves a transfer of usufruct rights that can be redeemed upon payment of the loan. Sale can occur after a pawning transaction. Usually, a permanent transfer of ownership rights occurs when the debt accumulates and remains unpaid after a long period of time (Nagarajan, David and Meyer 1992). It has been observed that sales of agriculture lands are mainly done through indirect methods. Land purchases through the land conversion method might also have been used to circumvent the land reform law. The process of sale of agriculture lands requires informal channels of approvals that could imply significant transaction costs. The different modes of sale is shown in Box 5-2.
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