THE AGRICULTURAL REFORM CODE

Republic Act No. 3844

 Enacted on August 8, 1963 during the incumbency of President Diosdado P.

Macapagal (1961-1965)
 Amended by R.A. 10374 (July 23, 2012) which expanded the life of the Land Bank of
the Philippines
 Amended by R.A. 9700 (July 27, 2009) amending R.A. 6657 on Comprehensive
Agrarian Reform Law of 1988
 Amended R.A. 6389 – Agrarian Reform Special Fund

Objective
To create a system of owner-cultivatorship and economic family-size farm as basis of
Philippine agriculture.
Prominent Features
1. Share Tenancy System to Agricultural Leasehold System
2. BILL OF RIGHTS for agricultural workers
3. Department of Agrarian Reform (DAR) serves as machinery for acquisition and
distribution of agricultural land
4. Land Bank as the financial arm of the agrarian reform program.

Effect on Share Tenancy Contracts

 Existing share tenancy contracts may continue until the end of agricultural year
unless the contract provides for a shorter period.
 Presumption of Leasehold Relationship if a new share tenancy is created (without
prejudice to any lawful contracts the parties may enter into).
 Leasehold contracts perfected prior to the Code will be respected.

Form of Lease Contract

1. Made in quadruplicate in a language or dialect known to the agricultural lessee;
2. Signed or thumb-marked by the Agricultural lessee personally and the agricultural
lessor in the presence of two witnesses chosen by each party;
3. Acknowledge before the municipal court where the land is located;
 4. Registered with the Municipal Treasure (Custodian of leasehold contracts – Registry
of Agricultural Leasehold Contracts).
Note: The witness of the agricultural lessee is there to explain the contents of the contract
if the latter is unable to read.

Leasehold Relation

FORM PARTIES TENURE

Established by operation of
law in accordance with
Section four of this Code
and, in other cases, either
orally or in writing,
expressly or impliedly.
Limited to the person who
furnishes the landholding
either as owner, civil law
lessee, usufructuary, or legal
possessor, and the person
who personally cultivates the
same.
Right to continue working
on the landholding
Security of tenure on his
landholding and cannot
be ejected therefrom
unless authorized by the
Court for cause

Grounds for Extinguishment of the Leasehold

1. Abandonment without the knowledge of the agricultural lessor;
2. Voluntary surrender by the agricultural lessee, with written notice three (3) months
in advance;
3. Absence of successor of the lessee in case of death or permanent incapacity.

Qualified Successors of the Lessee

Personally chosen by the lessee one (1) month prior to his death or permanent incapacity
from the following:
1. Surviving spouse
2. Eldest direct descendant by consanguinity
3. Next eldest descendant/s in order of age
Failure to Choose: Priority will be according to the order enumerated.

Alienation of the Landholding

The purchaser or transferee of the landholding shall be SUBROGATED to the rights and
SUBSTITUTED to the obligations of the agricultural lessor.
Mere expiration of term/period of the leasehold contract does not extinguish the relation.
Terms and Conditions Contrary to Law, Morals, Public Policy
 1. Excessive rental;
2. Payment of consideration in excess of the fair rental value;
3. Contract contains a condition that requires the lessee to:
a. Rent work animals or hire farm implements from the lessor or 3rd
persons;
b. Work or render service other than his duties with or without
compensation;
c. Answer to any fine, deductions, and/or assessments.

Termination of Leasehold by the Lessee

1. Cruel, inhumane or offensive treatment of the lessee by the lessor or his family;
2. Non-compliance of the lessor to the Code or the lease contract;
3. Compulsion to work or render service not considered as farm work or any work or
service without compensation;
4. Commission of a crime by the lessor or his representative against the lessee or any
member of his immediate family;
5. Voluntary surrender due to more advantageous circumstances.

Exemption from Lien and/or Execution

1. 25 % of the entire produce of the land; and
2. Work animals and farm implements belonging to the lessee which must not
exceeding PHP 1000
Exemption to the exemption:
Those mentioned above are not exempt from execution if issued upon judgment for
its price or judgment of foreclosure of a mortgage.

Grounds for Dispossession

1. Land has been declared as residential, commercial, industrial, or other urban
purposes by an authorized government agency;
Disturbance Compensation = 5x the average gross harvest of the
landholding in the last 5 years
2. Failure of the lessee to comply with the terms and conditions of the lease contract;
3. Planted different crops or used the landholding other than what was agreed upon;
 4. Failure to adopt proven farm practices (consideration on the financial capacity and
credit facilities available)
5. Damage or destruction of the land or permanent improvements by the fault or
negligence of the lessee;
6. Failure to pay rental when it falls due;
7. Employment of a sub-lessee
Note:
Dispossession is not automatic. An action/petition must be filed by the lessor with
DARAB and prove the existence of the grounds.

Bill of Rights
1. Right to self-organization
2. Right to engage in concerted activities
3. Right to minimum wage
4. Right to work for not more than eight (8) hours
5. Right to claim for damages for death or injuries sustained while at work
6. Right to compensation for personal injuries, death, illness
7. Right against suspension or lay-off
8. Right of pre-emption
9. Right of redemption
10.Right to a home lot

Mode of Payment of Rental

In MONEY or PRODUCE:
 If in produce – must be paid immediately after threshing/processing

 If in money - within a reasonable time from threshing or processing.

Agricultural Lessee
 Obligations Prohibitions Rights
 To cultivate and take care of  Contracting  To have peaceful
the farm as a good father of a additional possession and
family according to proven landholdings enjoyment of the
farm practices. from a different land.
 Inform the lessor of any lessor.  To manage and
trespass by third persons  Cultivating an work on the land
 Take care of work animals and economic-size with proven farm
farm improvements given by farm without practices.
the lessor (loss of such makes knowledge and  To mechanize all
the lessee liable to their consent of the phase of farm
value) lessor (if the work.
 Keep the farm and crops landholding is  To deal with
attended to ( unjustified sufficient in millers and
abandonment – Court order – size) processors &
forfeited in favor of the lessor)  Employment of attend to issuance
 Three (3) days advance a sub-lessee of quedans or
notification of the date of (Exemption: in warehouse
harvesting or threshing. case of receipts.
 To pay lease rental when it temporary  To have a home
falls due incapacity). lot within the land
he leases.

Enforceability of Loans Obtained By an Agricultural Lessee

To be enforceable, loans obtained by an agricultural lessee should be:
1. Written in language or dialect know to the agricultural lessee; and
2. Signed or thumb-marked by the agricultural lessee or by his agent.

Prescriptive Period
Three (3) years reckoned from the time the cause of action accrued.

Expropriation of Private Agricultural Lands

They shall be expropriated in the following order:
1. Idle or abandoned lands;
2. Those whose area exceeds 1,024 hectares;
3. Those whose area exceeds 500 hectares but not more than 1,024 hectares;
4. Those whose area exceeds 144 hectares but not more than 500 hectares;
5. Those whose area exceeds 75 hectares but not more than 144 hectares.
 Agricultural Lessor

Obligations Prohibitions Rights

 Keep the  Dispossessing the lessee  Inspect and observe
lessee in except when authorized by compliance with the
peaceful Court. terms and conditions
cultivation  Requiring the lessee to of their contract.
and indirectly or directly  Propose change of use
cultivation of assume payment of taxes. or crops planted (Court
the  Requiring the lessee to will settle
landholding indirectly or directly disagreement but
 To keep intact assume payment of rent lessee will not be
all the lessor is under ejected due to
improvements obligation to pay to 3rd conversion for some
existing at the persons. other agricultural
time the  Dealing with millers or purposes)
leasehold was processors without the  To require the lessee
entered into lessee’s authorization. to adopt proven farm
 Discourage or interfere practices (financial
unions of lessees within his capacity and credit
landholding facilities)
 Mortgage expected
rentals

Land Rights Limitation on Expropriation of Private Agricultural Lands

10- Year prohibitory period against encumbrance, sale, mortgage, or transfer from the
date of full payment and acquisition.
After the prohibitory period, disposition or sale may be made only in favor of persons
qualified to acquire economic-sized farms.
Exemption:
Hereditary Succession

Department of Agrarian Reform

1. Implements laws, programs and policies for the acquisition and distribution of all
agricultural lands as provided by laws;
2. Resettle landless farmers and farm workers in government-owned agricultural
estates which shall be distributed to them as provided by laws;
3. Recommend and provide incentives for voluntary sharing of lands by owners of
agricultural lands;
4. Acquire, determine the value, subdivide into family-size farm, develop and distribute
to qualified tillers, actual occupants and displaced urban poor, private agricultural
lands regardless of area and crops planted;
5. Administer and dispose of, under a settlement scheme, all portions of the public
domain declared as alienable and disposable lands for speedy distribution to and
development by deserving and qualified persons who do not own any land and
under such terms and conditions as the Department may prescribe, giving priority
to qualified and deserving farmers in the province where such lands are located;
6. Provide free legal assistance to farmers covered by agrarian reform and expedite
the resolution of agrarian conflicts and land tenure problems either through
conciliatory or adversary proceedings;
7. Provide create, responsive and effective information, education and communication
programs and projects both for the tenant beneficiaries, landowners, the
government and private sectors and the general public, thereby generating a broad
spectrum of support and understanding of the new agrarian reform program;
8. Strengthen agrarian reform beneficiaries organization to a degree of national
viability that would enable them to share in the shaping of government policies and
institutionalize farmers participation In agrarian reform policy formulation, program
implementation and evaluation;
9. Promote the organization and development and cooperatives of agrarian reform
beneficiaries and register the same;
10.Implement all agrarian reform laws and for this purpose issue subpoena, subpoena
duces tecum, and writs of execution of its orders, and decisions and other legal
processes to ensure compliance form all parties concerned for successful and
expeditious program implementation;
11.Undertake land surveys on lands covered by agrarian reform and issue patents to
farmers covered by agrarian reform, both on private and public lands;
12.Develop, implement and undertake alternative and innovative land development
schemes and land tenure systems such as, but not limited to land consolidation,
land forming cooperative farming and agro-industrial estates;
13.Approve or disapprove conversion of agricultural lands to non –agricultural uses
such as residential and industrial conversion in accordance with the existing
provisions of law;
14.Undertake land use management studies;
15.Compensate the landowners covers by agrarian reform;
16.Integrate and synchronize program implementation of the Land Bank of the
Philippines and other relevant civilian and military government and private entities
involve mandated to support the agrarian reform program through inter-agency
committees and Agrarian Reform Coordinating Councils; and
 17.Perform such other functions as may be provided by law.
THE LAND BANK
Established to:
1. Finance Government acquisition of landed estates for division and resale to
small landholders; and
2. To aid in the purchase of the landholding of the agricultural lessee from the
landowner.
Powers and Functions:

1. To prescribe, repeal and alter its own by-laws to determine its operating policies,
and to issue such rules and regulations as may be necessary;
2. To adopt, alter and use a corporate seal;
3. To hold, purchase, acquire and own real and personal property, introduce necessary
improvements thereon to enhance and develop their social and economic values,
and to sell, mortgage or otherwise dispose of the same;
4. To sue and be sued, make contracts, negotiate and secure loans from both local and
foreign sources. Before undertaking any such credit operation, the bank, through
the Secretary of finance, shall request the opinion, in writing, of the Monetary Board
on the monetary implications of the contemplated action. All loans from foreign
sources shall be subject to approval by the President of the Philippines shall be fully
guaranteed by the Philippine Government;
5. To grant short, medium and long term loans advances against security of real estate
and/or other acceptable assets for the establishment, development or expansion of
agricultural, industrial, home building or home financing projects and other
productive enterprises;
6. To finance and/or guarantee the acquisition, under P.D No. 85 dated December
25,1972, of farm lots transferred to tenant-farmers pursuant to P.D No. 27 dated
October 21, 1972.
7. To underwrite, hold, own purchase, acquire, sell, mortgage, dispose or otherwise
invest or reinvest in stocks, bond, debentures, securities and other evidence of
indebtedness of other corporations and of the government or its instrumentalities
which are issued for or in connection with any project or enterprise;
8. The provision of any law to the contrary notwithstanding, to guarantee
acceptance(s), credits, loans, transactions or obligations of any persons, co-
partnership, association or corporation in favor of any financing or banking
institution whether foreign or domestic; Provided, that the proceeds of such
acceptances, credits, loans, transactions or obligations are utilized or earmarked for
the development and/ or expansion of agriculture and industry;
9. To borrow from, or rediscount notes, bills of exchange and other commercial papers
with, the Central Bank. The rate of interest to be charged and the conditions on
such obligations or borrowings shall be subject to the rules and regulations of
Monetary board;
10.To act as trustee, or administer any trust or hold property in trust in accordance with
the provisions of law governing trust corporations; and
11.To act as an official government depository with full authority to maintain deposits
of the government, its branches, subdivisions and instrumentalities, and
government-owned or controlled corporations which deposits shall be subject to the
liquidity flood and/or reserve requirements as may be imposed by the Monetary
Board upon other commercial banks;
12.For the strengthening of the capital base of the bank, to establish a national
marketing umbrella for farmers and fisheries cooperatives to attract massive capital
formation from savings deposits of the cooperative members nationwide;
13.To exercise the general powers mentioned in the Corporation Law and the General
Banking Act, as amended insofar as they are not inconsistent or incompatible with
decree.
Factors for the Creation of Land Reform Districts (Sec.129)
1. Productivity of the area;
2. Suitability for economic-size farms;
3. Tenancy rate in the area;
4. Minimum fixed capital spending to develop the area;
5. Proximity of the area to resettlement projects; and
6. Number of farmers who cultivate uneconomic-sized farms.
a. Ability and readiness to be resettled;
b. Availability of idle or abandoned lands to be acquired or expropriated.
Court of Agrarian Relations
(Chapter IX)
 Judicial function of the Court of Agrarian Relations is vested on an Executive Judge
and the Regional District Judges appointed by the President with consent from the
Commission on Appointments.
 Fifteen (15) Regional Districts across the Philippines
 It shall have all the powers and prerogatives inherent in to the CFI/RTC.