F U N D A M E N TA L DISTINCTIONS
LEASEHOLD TENANCY
I - LEGAL BASIS:
1. Republic Act No. 3844-
Agricultural Land Reform Code
(August 8, 1963)
2. Republic Act No. 6389- Code
of Agrarian Reform (September 10,
1971)
3. Presidential Decree No. 1425-
Amending Presidential Decree No.
1040 by Strengthening the Prohibition
against Agricultural Share, Tenancy and
Providing Penalties for Violation
thereof. (June 10, 1978)
4. Section 12, Republic Act No.
6657- Comprehensive Agrarian
Reform Law of 1988.
TENANT EMANCIPATION DECREE COMPREHENSIVE AGRARIAN REFORM
PROGRAM
Presidential Proclamation No. 131-
1. Presidential Decree No. 27 – Instituting a Comprehensive Agrarian
Tenant’s Emancipation Decree Reform Program (July 22, 1987)
(October 21, 1972)
2. Republic Act No. 6657 – An Act
2. Letter Instruction No. 474-PLACING instituting a Comprehensive Agrarian
UNDER OLT TENANTED Reform Program to Promote Social
RICE/CORN LANDS SEVEN Justice and Industrialization, providing
HECTARES OR LESS IN AREA the Mechanism for its Implementation
UNDER CERTAIN CONDITION and other purposes. (June 15, 1988)
(OCTOBER 21, 1976)
1. The power of
1. Presidential Decree No. 27 was President Aquino to promulgate Proc.
assumed to be constitutional and No. 131 and E.O. Nos. 228 and 229
upheld as part and parcel of the law was authorized under Section 6 of the
of the land in De Chavez vs. Zobel, Transitory Provision of the 1987
155 SCRA 26; Gonzales vs. Estrella, Constitution.
91 SCRA 294 (1979) and Association All assault on the validity of RA
of Small Landowners in the Philippines 6657 was set aside. (Association of
Inc. vs. Secretary of Agrarian Reform, Small Landowners in the Philippines
175 SCRA 342 (1989) Inc. vs. Secretary of Agrarian Reform,
 ASEC AUGUSTO P. QUIJANO
2004 U.P. PRE-WEEK REVIEW
Lecture Outline
Page -2-

II – JURISPRUDENCE ON 2. Letter of Instruction No. 474 175 SCRA 342 (1989)

CONSTITUTIONALITY
1. Security of Tenure- Primero vs.
CIR, 10 Phil. 675 (1957); Pineda vs. de
Guzman, 21 SCRA 1450 (1967).
III – COVERAGE OR SCOPE
Agricultural Leasehold shall apply
to all tenanted agricultural lands,
including but not limited to the following
– 2. There must be a system of
A. Retained areas under R.A. 6657
and P.D. 27;
B. Tenanted Agricultural Lands
not yet acquired for distribution under
CARP pursuant to RA 6657;
C. All tenanted areas under
Section 10 of RA 6657 which may be
covered by this Order. (Administrative
Order No. 4, Series of 1989)
Constitutionality was upheld in
Zurbano vs. Estrella, 137 SCRA 333 COVERAGE OF CARL 1988
(1989)
The REQUISITES FOR COVERAGE
under OPERATION LAND
TRANSFER (OLT) program are the
following:
1. The land must be DEVOTED to
RICE or CORN crops; and
SHARE CROP or LEASE
TENANCY obtaining therein.
If either of these requisites is
ABSENT, the land is NOT
COVERED under OLT. Hence, a
landowner NEED NOT APPLY FOR
RETENTION, where his ownership
over the entire landholding is
INTACT and UNDISTURBED.
(Euclosia Daez and/or Her Heirs
represented by Edriano D. Daez vs.
the Hon. CA, et al., 325 SCRA
Scope – All PUBLIC and PRIVATE
Agricultural Lands regardless of tenurial
arrangement and commodity produced,
including lands of the public domain
suitable for agriculture. (1st par. Sec. 4,
RA 6657)
Specific lands covered by CARP.
a. All alienable and disposable lands
of the public domain devoted to
or suitable for agriculture
b. All lands of the public domain in
excess of the specific limits as
determined by Congress in the
preceding paragraph;
c. All other lands owned by the
Government devoted to or
suitable for agriculture; and
d. All private lands devoted to or
suitable for agriculture regardless
of the agricultural products
raised or that can be raised
 ASEC AUGUSTO P. QUIJANO
2004 U.P. PRE-WEEK REVIEW
Lecture Outline
Page -3-

IV - AREA OF COVERAGE 857). thereon.

It shall be unlawful for the tenant,
whenever the area of his holding is five
hectares or more, or is of sufficient
size to make him and the members
of his immediate farm household
fully occupied in its cultivation, to
CONTRACT TO WORK at the same
time on TWO OR MORE SEPARATE
HOLDINGS belonging to different
landholders under any system of
tenancy WITHOUT THE KNOWLEDGE
AND CONSENT of the landholder with
whom he first entered into tenancy
relationship. (Par. 1, Sec. 24, republic
Act No. 1199)
V – EXEMPTION OR EXCLUSION FROM
COVERAGE
Absence of any of the six (6)
Essential Elements of Tenancy
Relationship.
RULES ON COVERAGE OF LANDS
UNDER PD 27. PRIORITIES – The DAR, in
Rule 1 coordination with the PARC shall plan and
Landed estates or landholdings larger program the acquisition and
than 24 hectare (LOI 46 (December 7, distribution of all agricultural lands
1972) - covered by OLT and there is no through a period of ten (10) years from the
retention to the landowner. effectively of this Act. Land shall be
acquired and distributed as follows:
Rule 2
Landholding of 24 hectares or less (but Phase One:
above 7 hectares (LOI 46 (ibid) and 1.Rice and corn land under PD
LOI 227 (November 16, 1974) covered 27;
by OLT but landowner is entitled to 2. Idle and abandoned lands
retention except if LOI 474 (October 21, 3. Private lands
1976) applies. voluntarily offered by the
owners for agrarian reform;
Rule 3 4. Foreclosed land by
Landholding of seven (7) hectares or government financial
less is EXEMPTED from OLT except if institutions;
LOI 474 is applicable under the following 5. Land acquired by the
circumstances: Presidential Commission on
Landowner owns other agricultural Good Government; and
land of more than seven hectares in 6. All other lands owned by the
aggregate area, or he owns Government devoted to or
COMMERCIAL, INDUSTRIAL, suitable for agriculture

Essential Elements of Tenancy
Relationship:
1. The parties are the landholder
and the tenant;
2. The subject is agricultural land;
3. There is consent;
4. The purpose is agricultural
production;
5. There is personal cultivation;
6. There is sharing of harvest or
payment of rentals. (Caballes vs.
DAR, 168 SCRA 247; Qua vs.
Court of Appeals, 198 SCRA 247.)
VI - RETENTION
In Leasehold Tenancy, the Landowner
or agricultural lessor RETAIN OWNERSHIP
of the subject landholding.
The landowner EXERCISES the
ATTRIBUTED OF OWNERSHIP. Under Art.
428 of the New Civil Code. The OWNER
has the RIGHT TO DISPOSE OF a thing
without other limitation than those imposed
RESIDENTIAL or URBAN LAND
where he derive an adequate income,
DAR Memo, Circular No. 11, s. 1978
(April 21, 1978) Adequate income is
at least FIVE THOUSAND (P5000.00)
PESOS per annum. (Gross Income).
Lands not covered by Presidential
Decree No. 27.
1. Private agricultural lands which are
NOT PRIMARILY DEVOTED TO
RICE OR CORN, or
2. There is NO SYSTEM OF SHARE
CROP OR LEASE TENANCY
obtaining in the landholding. (Daez,
vs. CA, IBID).
*The REQUISITES for the exercise by
the landowner of his RIGHT OF
RETENTION are the following:
1. The land must be DEVOTED TO RICE
OR CORN CROPS;
ASEC AUGUSTO P. QUIJANO
2004 U.P. PRE-WEEK REVIEW
Lecture Outline
Page -4-
These shall be acquired and
distributed immediately upon
effectivity of the Act, with the
implementation to be completed
within a period of not more than
four (4) years (Sec. 7, par. 2, RA
6657)
Phase Two:
1. All Disposable and alienable
public agricultural lands;
2. All Arable public agricultural
lands under agro-forest,
pasture and agricultural leases
already cultivated and planted
for crops in accordance with
Sec. 6, Art. XIII of the
Constitution;
3. All public agricultural lands
which are opened for new
development and resettlement;
and
4. All private agricultural lands
in excess of fifty (50) hectares
These shall be distributed
immediately upon the effectivity of
 ASEC AUGUSTO P. QUIJANO
2004 U.P. PRE-WEEK REVIEW
Lecture Outline
Page -5-

by law. As an incident of ownership, 2. There must be a system of share- the Act, with the implementation
Therefore, there is nothing to prevent a crop or lease tenancy obtaining to be completed within a period of
landowner from DONATING his NAKED there. not more than four (4) years.
TITLE TO THE LAND. However, the new 3. The size of the landholding MUST
owner MUST RESPECT THE RIGHT OF NOT EXCEED TWENTY FOUR (24) Phase Three: All private
THE TENANT. hectares provided that at least seven AGRICULTURAL LANDS
(7) hectares thereof are covered lands commencing with LARGE
The agricultural leasehold relation and more than seven (7) hectares of it landholdings and proceeding to
under this Code shall not be extinguished consist of “other agricultural lands.” MEDIUM and SMALL
by MERE EXPIRATION OF THE TERM Daez vs. CA, Ibid) landholding under the following
OR PERIOD in a leasehold contract nor schedules:
by the SALE, ALIENATION OR a) Landholdings ABOVE 24
TRANSFER of the legal possession of the hectares up to 50 hectares to
landholding. In case the agricultural lessor Right of Retention by Landowners under begin on the forth year from
SELLS, ALIENATES, OR TRANSFER the Presidential Decree No. 27. Supplemental effectivity of this act and to be
legal possession of the landholding, the Guideline A.O. No. 04, Series of 1991). completed within three years;
PURCHASER OR TRANSFEREE thereof and,
shall be subrogated to the right and The policy statements are as follows: b) Landholdings from the
substituted to the obligations of the a. Landowners covered by PD 27 are RETENTION LIMIT up to 24
agricultural lessor (see. 10, RA 3844) entitled to retain SEVEN hectares, hectares, to begin on the sixth
except those whose entire tenanted year from effectivity of this Act
VII - BENEFICIARIES rice and corn lands are subject to and to be completed within four
acquisition and distribution under OLT. year.
The beneficiaries under Republic Act
No. 1199, Republic Act No. 3844 as
amended by Republic Act No. 6389 are AN OWNER MAY NOT RETAIN

SHARE-TENANT OR AGRICULTURAL
LESSEES (TENANTS). Thus:
“In the INTERPRETATION AND
ENFORCEMENT of this Act and other
laws as well as of the stipulation between
the landholder and the tenant the
COURTS AND ADMINISTRATIVE
OFFICIALS SHALL RESOLVE ALL
GRAVE DOUBTS IN FAVOR OF THE
TENANT. (Sec. 56, Republic act No. 1199)
VIII - AWARD CEILING
The share-tenant/agricultural lessee
who is already cultivating a landholding
with an area of FIVE (5) HECTARES or
more or of sufficient size to make him
and member of his immediate farm
household fully occupied in its cultivation
is prohibited to CONTRACT TO WORK at
the same time two or more separated
holding belonging to different
landholder WITHOUT THE
KNOWLEDGE AND CONSENT OF THE
LANDOWNER/AGRICULTURAL
UNDER THE FOLLOWING CASES:
a) If he as of October 21, 1972 owned
more than 24 hectares of tenanted
rice or corn lands; or
b) By virtue of LOI 474, if he as of 21
October 1972 owns less than 24
hectares of tenanted rice but
additionally owned the follows =
 Other agricultural land of
more than seven hectares,
whether tenanted or not,
whether cultivated or not, and
regardless of the income
derived therefrom; or
 Land use for commercial,
industrial, residential or
other urban purposes, from
which he derives adequate
income to support himself
and his family
b. Landowners who filed their
application for retention BEFORE
27 August 1985, the deadline set
by Administrative Order No. 1,
Series of 1985, may retain not
ASEC AUGUSTO P. QUIJANO
2004 U.P. PRE-WEEK REVIEW
Lecture Outline
Page -6-
LANDS NOT COVERED BY CARP
1. Those which are not suitable for
agriculture or those which are
classified as mineral, forest
residential, commercial or industrial
lands. (Sec. 3. ©, RA 6657);
2. Those which have been classified and
approved as NON-AGRICLTURAL
prior to June 15, 1988. (DOJ
Opinion No. 44, S. 1990)
3. Those which are EXEMPT pursuant
to Sec. 10, RA 6657.
4. Those which are devoted to poultry,
swine or livestock-raising as of
June 15, 1988 pursuant to the
Supreme Court ruling on Luz. Farms
vs. The Hon. Secretary of Agrarian
Reform (192 SCRA 51);
5. Fishponds and prawn farms
exempted pursuant to R.A. No.
7881, and its implementing

LESSOR (Par. I, Sec. 24, Republic Act.
No. 1199)
IX - PAYMENT FOR THE COST OF THE
LAND.
In the exercise of RIGHT OF PRE-
EMPTION by the agricultural lessee-
tenant, he must EITHER TENDER
PAYMENT OF, OR PRESENT A
CERTIFICATE FROM THE LBP that it
shall make payment under Section 80 of
Republic Act No. 3844 (10% CASH and
90% in six percent, tax free, redeemable
bonds issued by the LBP.) If the
landowner refuses to accept TENDER or
PRESENTMENT, the agricultural lessee
may CONSIGN it in COURT, (Sec. 11,
Republic Act No. 3844 as amended by
Republic Act No. 6389.
c. A landowner WHO HAS DIED must Landowners and Award to Children under
The REDEMPTION PRICE shall be,
the REASONABLE PRICE OF THE
LAND at the time of sale. (Sec. 12,
Republic Act No. 3844 as amended by
Republic Act No. 6389)
more than seven hectares of their
landholding covered by PD 27
regardless of whether or not they
complied with LOI Nos. 41, 45, and
52.
Landowners who filed their
application AFTER 27 August 1985
but complied with the requirement
of LOI No. 41, 45 and 52 shall
likewise be entitled to such a
seven hectares retention area.
However landowner who filed
their application for retention
AFTER the 27 August 1985
deadline and DID NOT COMPLY
with the requirements of LOI Nos.
41, 45, and 52 shall only be
entitled to a maximum of five (5)
hectares as retention area.
have manifested during his Sec. 6 of RA 6657 (A.O. No. 11, Series of
lifetime his intention to exercise 1990; and A.O. No. 2, S. 2003)
his right of retention prior to 23
AUGUST 1990 (The finality of the
Supreme Court decision in the
ASEC AUGUSTO P. QUIJANO
2004 U.P. PRE-WEEK REVIEW
Lecture Outline
Page -7-
Administrative Order No. 3, Series of
1995;
6. Those which are retained by the
landowners;
7. Those lands or portions thereof under
the coverage of EO 407 but found to
be no longer suitable for agriculture
and therefore, could not be given
appropriate valuation by the LBP as
determined by DAR/LBP; and
8. Those lands declared by Presidential
Proclamations for certain uses other
than agricultural.
Rules and Procedures Governing the
Exercise of Retention Rights by
A.Landowners whose landholding are
covered by CARP may retain an area
of FIVE (5) hectares.
 ASEC AUGUSTO P. QUIJANO
2004 U.P. PRE-WEEK REVIEW
Lecture Outline
Page -8-

case "Association of Small In addition, each of his children,

X -TRANSFERABILITY OF LANDHOLDING Landowners of the Philippines, Inc. (legitimate, illegitimate or adopted
et al. vs. Honorable Secretary of may be AWARDED three (3) hectares
1. Sale, Alienation or Transfer of the Agrarian Reform) to allow his heirs as PREFERRED BENEFICIARY
legal possession of the to now exercise such right under provided-
landholding. these Guidelines. Said heirs must 1. That the child was at
2. Extinguishment of Agricultural show proof of the original least 15 years of age on the
Leasehold Relations (Sec. 8, RA landowners intention. June 15, 1988 (RA 6657-
3844) The heirs may also exercise effectivity); and
A. ABANDONMENT of the landholding the original landowners' right of 2. The child was
without the knowledge of the retention if they can prove that the actually tilling the land or
agricultural lessor. (Teodoro vs. decedent HAD NO KNOWLEDGE directly managing the farmland
Macaraeg, 27 SCRA 7 (1969) To of OLT coverage over the subject from June 15, 1988 to the filing
constitute abandonment there must be property. of the application for retention
an absolute relinquishment of the and/or at the time of acquisition
premises of the tenant. This "overt act" of the land under CARP.
must be coupled with his intention to do The BENEFICIARIES of Presidential
so "which is carried into effect," Decree No. 27 are TENANT-FARMERS, Retention of husband and wife:
(Philippine Labor and Social thus:
Legislation, Martin, 70 Ed. Pp. 405- 1. For marriages covered by the
406). Abandonment to validly “This shall apply to TENANT- New Civil Code, the spouses
terminate tenancy relationship is FARMERS of PRIVATE who owns only CONJUGAL
characterized by: AGRICULTURAL LANDS PRIMARILY PROPERTIES may retain a total
DEVOTED TO RICE OR CORN under of five (5) hectares unless there
(a)an INTENT to ABANDON, and a SYSTEM OF SHARE-CROP or is an agreement for the
(b)an OVERT ACT to carry out LEASE-TENANCY, whether classified JUDICIAL SEPERATION OF
 ASEC AUGUSTO P. QUIJANO
2004 U.P. PRE-WEEK REVIEW
Lecture Outline
Page -9-

such intention as landed estate or not. (Par. 5, PROPERTIES. However, if

There must be, therefore, NO
ANIMUS REVERTENDI on the part of
the tenant (Labor, Agrarian and Social
Legislation, Montemayor, 2nd Ed.,
1968, pp. 54-55)
B. VOLUNTARY SURRENDER of
the landholding by the agricultural
lessee, written notice of which
shall be served three months in
advance (Nisnisan, et al., vs. CA,
294 SCRA 173 (1998).
As a mode of extinguishing
tenancy relationship it connotes a
decision in the part of the tenant
to return the possession of the
landholding and relinquished his
right as tenant thereon
uninfluenced by any compelling
factor, coming particularly from
the landholder. For surrender to
be valid, there must be (a) an
intention to abandon, and (b) an
external act or an omission to act,
Presidential Decree No. 27).
“The tenant-farmers, whether in
land classified as landed estate or not
shall be DEEMED OWNER of a
portion constituting of family-size farm
of FIVE (5) hectares if not irrigated
and THREE (3) HECTARES IF
IRRIGATED. (Par. 6, Presidential
Decree No. 27)
2. For marriage covered by the
The tenant shall pay for THE COST
OF THE LAND, including interest of
six (6) percent per annum in
FIFTEEN (15) YEARS of fifteen (15)
equal annual amortizations.
NOTE: The period in extended to
twenty (20) years equal annual
amortization under Sec. 6, E.O..
228 of July 17, 1987 by Pres.
Corazon C. Aquino.
The TITLE to the land owned by
the tenant shall not be transferable
except BY HEREDITARY
either or both of them are
landowners in their respective
rights (capital and/or
paraphernal) they may retain
not more than five (5) hectares
each from their respective
landholdings. In no case,
however, shall the total retention
of such a couple exceed 10
hectares, and
New Family Code (August 3,
1988), a husband owning capital
property and/or a wife owning
paraphernal property may
retain not more than five (5)
hectares each provided they
execute a JUDICIAL
SPERATION OF PROPERTIES
prior to entering the marriage. In
the absence of such an
agreement all properties
(capital, paraphernal and
conjugal) shall be considered
held in absolute community.

by which such intention is carried SUCCESSION or TO THE
out into effect. When a tenant GOVERNMENT in accordance with
voluntarily yields the land, he this Decree, the Code of Agrarian
terminates the tenancy Reform and other existing laws and
relationship by his unilateral act. regulation.
(Anacleto Inson vs. Planas de NOTE: Sec. 6, EO 228 provides,
Asis, et.al., CA GR No. Sp-01769, “Ownership of lands acquired by
October 11, 1974.) farmer-beneficiary may be
transferred after full payment of
NOTE: SUBLEASING by the amortization.
agricultural lessee is also a ground for
the extinguishments of Agricultural The EMANCIPATION PATENT.
Leasehold Relations. (Par.(2), Sec. 27, Awarded to the TENANT-BENEFICIARY
Republic Act No. 3844). CREATES a VESTED RIGHT OF
ABSOLUTE OWNERSHIP in the
XI - EVIDENCE OF RIGHT/TITLE OVER landholding – “a right which has become
THE LANDHOLDING. fixed and established and is no longer
open to doubt or controversy. “
AGRICUTLURAL LEASEHOLD (Pagtalunan vs. Tamayo, 183 SCRA 252)
CONTRACT IN GENERAL.-
The Mode of Transfer of lands Tenant-
- The agricultural lessor and the Beneficiaries under Presidential Decree No.
agricultural lessee shall be FREE to 27 are the following:
ENTER into any kind of TERMS,
CONDITIONS or STIPULATIONS in a 1. OPERATION LAND TRANSFER
LEASEHOLD CONTRACT as long as (OLT) under PD 27 and EO 228; and
ASEC AUGUSTO P. QUIJANO
2004 U.P. PRE-WEEK REVIEW
Lecture Outline
Page -10-
QUALIFIED BENEFICIARIES.- The
lands covered by the CARP shall be
distributed as much a possible to
landless residents of the same
barangay, or in the absence thereof,
landless resident of the same
municipality in the following order of
priority:
a) agricultural lessees and share
tenants;
b) regular farmworkers;
c) seasonal farmworkers;
d) other farmworkers;
e) actual tillers or occupants of
public lands;
f) collectives or cooperatives of the
above beneficiaries; and
g) others directly working on the
land.
(Par. 1, Sec. 22, RA 6657)
The children of landowners who are
qualified under Sec. 6 of this Act shall
be given preference in the distribution of
 ASEC AUGUSTO P. QUIJANO
2004 U.P. PRE-WEEK REVIEW
Lecture Outline
Page -11-

they are not contrary to LAW, the land of their parents; And, further,
MORALS OR PUBLIC POLICY. (Sec. Operation Land Transfer is the that actual tenant-tillers in the
15 Republic Act No. 3844). ORDERLY and SYSTEMATIC landholding shall be ejected or removed
TRANSFER of land from the therefrom. (Par. 2, Sec.22, RA 6657).
Except in case of mistake, landowner to the tenant-farmer under
violence, intimidation, undue Presidential Decree No. 27. “Distribution Limit – No qualified
influence, or fraud, an beneficiary may own more than Three (3)
AGRICULTURAL CONTRACT reduced 2. DIRECT PAYMENT SCHEME (DPS). hectares of agricultural land” (Sec. 23, RA
in writing and registered as – The landowner and the tenant- 6657)
hereinafter provided, SHALL BE beneficiary can AGREE on the
CONCLUSIVE BETWEEN THE DIRECT SALE terms and conditions “Award Ceiling for Beneficiaries. –
CONTRACTING PARTIES, if not which is not onerous to the tenant- Beneficiaries shall be awarded an area NOT
DENOUNCED OR IMPUGNED beneficiary. EXCEEDING THREE (3) HECTARES which
WITHIN THIRTY DAYS AFTER may cover a CONTIGUOUS tract of land or
REGISTRATION (Sec. 17, Republic Act The value if the land shall SEVERAL PARCELS of land cumulated up
No. 3844) equivalent to two and one half (2-1/2) to the prescribed award limits.” (Sec. 25, RA
times the AVERAGE HARVEST OF 6657).
THREE NORMAL CROP YEARS
XII - MODES OF TRANSFER OF THE IMMEDIATELY PRECEDING THE Payment by Beneficiaries.- Lands
LAND TO THE TENANT OR PROMULGATION OF THIS awarded pursuant to this Act shall be paid
BENEFICIARY DEGREE. for the beneficiaries to the LBP in thirty (30)
annual amortizations at six percent (6%)
The landowner-agricultural lessor per annum. The payments for the first three
can FREELY AND VOLUNTARILY (3) years after the award may be at reduced
TRANSFER the landholding to the amounts as established by the PARC:
agricultural lessor by way of: Provided, That the first five (5) annual

1. Sale
2. Donation
3. Succession – the agricultural lessee
as DEVISEE to the testator’s free
portion in the will.
However, the limitation imposed by
law on his right to acquired must be
observed, i.e. Legal prohibition on the
acquisition of property
By operation of law, the agricultural-
lessee can acquired ownership of the
subject landholding by the exercise of
the following rights.
1. Right of Pre-Emption; and
2. Right of Redemption
XIII - CONSIDERATION FOR THE USE OF
VALUE OF THE LAND.
Consideration for the Lease of
Agricultural lands:
ASEC AUGUSTO P. QUIJANO
2004 U.P. PRE-WEEK REVIEW
Lecture Outline
Page -12-
payments may not be more than five percent
(5%) of the value of the annual gross
production as established by the DAR.
Should the scheduled annual payments after
the fifth year exceed ten percent (10%) of
the annual gross production and the failure
to produce accordingly is not due to the
beneficiary’s fault, the LBP may reduce the
interest rate or reduce the principal
obligation to make the repayment affordable.
The LBP shall have a lien by way of
mortgage on the land awarded to the
beneficiary; and this mortgage may be
foreclosed by the LBP for non-payment of an
aggregate of three (3) annual amortizations.
The LBP shall advise the DAR of such
proceedings and the latter shall
subsequently award the forfeited
landholding to other qualified beneficiaries.
A beneficiary whose land, as provided
herein, has been foreclosed shall thereafter
be permanently disqualified from becoming
a beneficiary under this Act. (Sec.26, RA
6657).

1. Not more than 25 per centum of the
average normal harvest during the three
agricultural years immediately preceding the
date the leasehold was established.
2. Deductible items
a. Seedlings
b. Cost of Harvesting
c. Cost of Threshing
d. Cost of Loading
e. Cost of Hauling
f. Cost of Processing
3. If the land is cultivated for a period of
less than three years, the initial consideration
is based on the average normal harvest
during the preceeding years when the land
was actually cultivated or on the harvest of
the first year if newly cultivated, and the
harvest is normal.
4. After the lapse of the first three normal
harvest, the final consideration shall be
based on the average normal harvest during
these three preceding agricultural years.
ASEC AUGUSTO P. QUIJANO
2004 U.P. PRE-WEEK REVIEW
Lecture Outline
Page -13-
Transferability of Awarded Lands.- lands
acquired by beneficiaries under this Act may
not be sold, transferred or conveyed except
through hereditary succession, or to the
government, or to the LBP, or to other
qualified beneficiaries for a period of ten (10)
years; Provided, however, That the children
or the spouse of the transferor shall have a
right to repurchase the land from the
government or LBP within the period of two
(2) years. Due notice of the availability of
the land shall be given by the LBP to he
Barangay Agrarian Reform Committee
(BARC) of the barangay where the land is
situated. The Provincial Agrarian Reform
Coordinating Committee (PARCCOM), as
herein provided, shall, in turn, be given due
notice thereof by the BARC.
If the land has not yet been fully paid
by the beneficiary, the rights to the land may
be transferred or conveyed, with prior
approval of the DAR, to any heir of the
beneficiary or to any other beneficiary who,
as a condition for such transfer or

5. In the absence of any agreement as
to the rental, the maximum allowed shall be
applied.
6. If Capital Improvement is introduced
not by the lessee to increase productivity, the
rentals shall be increased proportionally to
the consequent increase in production due to
the improvement.
7. In case of Disagreement the Court
shall determine the reasonably increase in
rental.
8. Capital improvement refers to any
permanent and tangible improvement on the
land that will result in increased productivity.
If done with the consent of the lessee, then
the lease rental shall be increased
proportionately.
ASEC AUGUSTO P. QUIJANO
2004 U.P. PRE-WEEK REVIEW
Lecture Outline
Page -14-
conveyance, shall cultivate the land himself.
Failing compliance herewith, the land shall
be transferred to the LBP which shall give
due notice of the availability of the land in
the manner specified in the immediately
preceding paragraph.
In the event of such transfer to the
LBP, the latter shall compensate the
beneficiary in one lump sum for the
amounts the latter has already paid,
together with the value of improvements he
has made on the land.(Sec. 27, RA 6657).
The TITLES awarded to farmer-
beneficiaries CARP are the following:
1. Free Patent for Public Alienation and
Disposable lands;
2. CERTIFICATE OF LAND
OWNERSHIP AWARD (CLOA) for
Resettlement sites:
3. STEWARDSHIP CONTRACT for
Lands covered by INTERGRATED
 ASEC AUGUSTO P. QUIJANO
2004 U.P. PRE-WEEK REVIEW
Lecture Outline
Page -15-

SOCIAL FORESTRY PROGRAM

(ISFP); and

4. CLOA for Private of Agricultural Lands.

The MODES OF ACQUIRING LANDS for

distribution under CARP:

a. COMPULSORY ACQUISITION
(CA) (Sec. 16, RA 6657)
b. VOLUNTARY OFFER TO SELL
(VOS) (Sec. 19, RA 6657)
c. VOLUNTARY LAND
TRANFER/DIRECT PAYMENT
SCHEME (VLT/DPS) (Sec. 20, RA
6657).

Factors/Criteria considered in
determining just compensation:

1. Cost of Acquisition of the land;

2. Current Value of like properties;
3. Nature of the land;
4. Actual use;
5. Income;
 ASEC AUGUSTO P. QUIJANO
2004 U.P. PRE-WEEK REVIEW
Lecture Outline
Page -16-

6. Sworn valuation by the landowner;

7. Tax Declaration;
8. Assessment made by government
assessors;
9. The social and economic benefits
contributed by the farmers, and
10.Non-payment of taxes or loans
secured from any government
financing institution on the land.

Basic Formula for the valuation of lands

covered by VOS and CA –

LV = (CNI x 0.6) + (CS x 0.3) +

(MV x 0.1)

where:
LV = Land Value
CNI = Capitalized Net Income
CS = Comparable Sales
MV = Market Value per Tax
Declaration

The above formula shall be used if all

 ASEC AUGUSTO P. QUIJANO
2004 U.P. PRE-WEEK REVIEW
Lecture Outline
Page -17-

three
factors are present, relevant and applicable.

A.1. When the CS factor is not present

and
CNI and MV are applicable, the formula shall
be:

LV = (CNI x 0.9) + (MV x 0.1)

A.2. When the CNI factor is not

present and
CS and MV are applicable, the formula shall
be:

LV = (CS x 0.9) + (MV x 0.1)

A.3. When both CS and CNI are not

present and only MV is applicable, the
formula shall be;

LV = (MV x 2)