F U N D A M E N TA L DISTINCTIONS
LEASEHOLD TENANCY TENANT EMANCIPATION DECREE
LEGAL BASIS
1. RA 3844 - Agricultural Land Reform
Code (August 8, 1963)
2. RA 6389 - Code of Agrarian Reform
(September 10, 1971)
3. PD 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, RA 6657 -
Comprehensive Agrarian Reform
Law of 1988.
Security of Tenure - Primero vs. CIR,
10 Phil. 675 (1957); Pineda vs. de
Guzman, 21 SCRA 1450 (1967).
COVERAGE OR SCOPE
Agricultural Leasehold shall apply
to all tenanted agricultural lands,
including but not limited to the
following –
1. Retained areas under R.A. 6657
and P.D. 27;
2. Tenanted Agricultural Lands not
yet acquired for distribution under
CARP pursuant to RA 6657;
3. All tenanted areas under Section
10 of RA 6657 which may be
covered by this Order.
(Administrative Order No. 4, Series
of 1989)
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)
1. PD 27 – Tenant’s Emancipation
Decree (October 21, 1972); was
assumed to be constitutional and
upheld as part and parcel of the law
of the land in De Chavez vs. Zobel,
155 SCRA 26; Gonzales vs.
Estrella, 91 SCRA 294 (1979) and
Association of Small Landowners in
the Philippines Inc. vs. Secretary of
Agrarian Reform, 175 SCRA 342
(1989)
2. Letter Instruction No. 474 -
PLACING UNDER OLT
TENANTED RICE/CORN LANDS
SEVEN HECTARES OR LESS IN
AREA UNDER CERTAIN
CONDITION (OCTOBER 21, 1976);
constitutionality was upheld in
Zurbano vs. Estrella, 137 SCRA
333 (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
2. There must be a system of 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 857).
Rule 1
Landed estates or landholdings
larger than 24 hectare (LOI 46
(December 7, 1972) - covered by
OLT and there is no retention to the
landowner.
Rule 2
Landholding of 24 hectares or less
(but above 7 hectares (LOI 46 (ibid) Phase One:
and LOI 227 (November 16, 1974)
covered by OLT but landowner is
entitled to retention except if LOI 474 3. Private lands voluntarily offered by
(October 21, 1976) applies.
Rule 3
Landholding of seven (7) hectares or 5. Land acquired by the Presidential
less is EXEMPTED from OLT except
if LOI 474 is applicable under the
following circumstances:
CARP
1. Presidential Proclamation No. 131 -
Instituting a Comprehensive Agrarian
Reform Program (July 22, 1987)
2. Republic Act No. 6657 – An Act
instituting a Comprehensive Agrarian
Reform Program to Promote Social
Justice and Industrialization, providing
the Mechanism for its Implementation
and other purposes. (June 15, 1988); all
assault on the validity of RA 6657 was
set aside. (Association of Small
Landowners in the Philippines Inc. vs.
Secretary of Agrarian Reform, 175
SCRA 342 (1989)
3. The power of President Aquino to
promulgate Proc. No. 131 and E.O.
Nos. 228 and 229 was authorized under
Section 6 of the Transitory Provision of
the 1987 Constitution.
Scope – All PUBLIC and PRIVATE
Agricultural Lands regardless of tenurial
arrangement and commodity produced,
including lands of the public domain
suitable for agriculture. (Sec. 4 (1), RA
6657)
Specific lands covered by CARP.
1. All alienable and disposable lands of
the public domain devoted to or
suitable for agriculture
2. All lands of the public domain in
excess of the specific limits as
determined by Congress in the
preceding paragraph;
3. All other lands owned by the
Government devoted to or suitable
for agriculture; and
4. All private lands devoted to or
suitable for agriculture regardless of
the agricultural products raised or
that can be raised thereon.
PRIORITIES – The DAR, in coordination
with the PARC shall plan and program
the acquisition and distribution of all
agricultural lands through a period of ten
(10) years from the effectively of this Act.
Land shall be acquired and distributed
as follows:
1. Rice and corn land under PD 27;
2. Idle and abandoned lands
the owners for agrarian reform;
4. Foreclosed land by government
financial institutions;
Commission on Good Government;
and

EXEMPTION OR EXCLUSION FROM COVERAGE
Absence of any of the six (6)
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, Qua vs. Court of Appeals)
• Landowner owns other 6. All other lands owned by the
agricultural land of more
than seven hectares in
aggregate area, or
• he owns COMMERCIAL,
INDUSTRIAL, 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 Phase Two:
FIVE THOUSAND (P5000.00) 1. All Disposable and alienable public
PESOS per annum. (Gross
Income). 2. All Arable public agricultural lands
3. All public agricultural lands which are
4. All private agricultural lands in excess
Lands not covered by PD 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).
Government devoted to or suitable for
agriculture
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)
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;
opened for new development and
resettlement; and
of fifty (50) hectares
These shall be distributed immediately
upon the effectivity of the Act, with the
implementation to be completed within a
period of not more than four (4) years.
Phase Three:
All private AGRICULTURAL LANDS
commencing with LARGE landholdings
and proceeding to MEDIUM and SMALL
landholding under the following schedules:
a) Landholdings ABOVE 24 hectares up
to 50 hectares to begin on the fourth
year from effectivity of this act and to
be completed within three years; and,
b) Landholdings from the RETENTION
LIMIT up to 24 hectares, to begin on
the sixth year from effectivity of this
Act and to be completed within four
year.
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 Administrative Order No.
3, Series of 1995;
6. Those which are retained by the
landowners;

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
by law. As an incident of ownership,
Therefore, there is nothing to prevent
a landowner from DONATING his
NAKED TITLE TO THE LAND.
However, the new owner MUST
RESPECT THE RIGHT OF THE
TENANT.
The agricultural leasehold relation
under this Code shall not be
extinguished by MERE EXPIRATION
OF THE TERM OR PERIOD in a
leasehold contract nor by the SALE,
ALIENATION OR TRANSFER of the
legal possession of the landholding. In
case the agricultural lessor SELLS,
ALIENATES, OR TRANSFER the
legal possession of the landholding,
the PURCHASER OR TRANSFEREE
thereof shall be subrogated to the
right and substituted to the
obligations of the agricultural lessor
(see. 10, RA 3844)
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;
2. There must be a system of share-
crop or lease tenancy obtaining
there.
3. The size of the landholding MUST
NOT EXCEED TWENTY FOUR
(24) hectares provided that at least
seven (7) hectares thereof are
covered lands and more than seven
(7) hectares of it consist of “other
agricultural lands.”
Right of Retention by Landowners
(Supplemental Guideline A.O. No. 04,
Series of 1991).
The policy statements are as follows:
a. Landowners covered by PD 27 are
entitled to retain SEVEN hectares,
except those whose entire
tenanted rice and corn lands are
subject to acquisition and
distribution under OLT.
AN OWNER MAY NOT RETAIN
UNDER THE FOLLOWING
CASES:
i. If he as of October 21, 1972
owned more than 24 hectares
of tenanted rice or corn lands;
or
ii. 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;
• 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
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
Landowners and Award to Children
under Sec. 6 of RA 6657 (A.O. No. 11,
Series of 1990; and A.O. No. 2, S. 2003)
1. Landowners whose landholding are
covered by CARP may retain an area
of FIVE (5) hectares. In addition, each
of his children, (legitimate, illegitimate
or adopted may be AWARDED three
(3) hectares as PREFERRED
BENEFICIARY provided –
a. That the child was at least 15
years of age on the June 15,
1988 (RA 6657-effectivity); and
b. The child was actually tilling
the land or directly managing
the farmland from June 15,
1988 to the filing of the
application for retention and/or
at the time of acquisition of the
land under CARP.
2. Retention of husband and wife:
a. For marriages covered by the New
Civil Code, the spouses who
owns only CONJUGAL
PROPERTIES may retain a total
of five (5) hectares unless there is
an agreement for the JUDICIAL
SEPERATION OF PROPERTIES.
However, if 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
b. 2. For marriage covered by the
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.
 Administrative Order No. 1, Series
of 1985, may retain not 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.

c. 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.

d. A landowner WHO HAS DIED must

have manifested during his
lifetime his intention to exercise
his right of retention prior to 23
AUGUST 1990 (The finality of the
Association of Small Landowners
decision) to allow his heirs to now
exercise such right under these
Guidelines. Said heirs must show
proof of the original landowner’s
intention. The heirs may also
exercise the original landowners'
right of retention if they can prove
that the decedent HAD NO
KNOWLEDGE of OLT coverage
over the subject property.

BENEFICIARIES
The beneficiaries under Republic Act
No. 1199, Republic Act No. 3844 as
amended by Republic Act No. 6389
are 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)
The BENEFICIARIES of Presidential
Decree No. 27 are TENANT-
FARMERS, thus:
“This shall apply to TENANT-
FARMERS of PRIVATE
AGRICULTURAL LANDS
PRIMARILY DEVOTED TO RICE
OR CORN under a SYSTEM OF
SHARE-CROP or LEASE-
TENANCY, whether classified as
landed estate or not. (Par. 5,
Presidential Decree No. 27).
The lands covered by the CARP shall be
distributed as much as 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.

The children of landowners who are

qualified under Sec. 6 of this Act shall be
given preference in the distribution of the
land of their parents; And, further, that
actual tenant-tillers in the landholding
shall be ejected or removed therefrom.
(Par. 2, Sec.22, RA 6657).
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 LESSOR (Par. I,
Sec. 24, Republic Act. No. 1199)
PAYMENT FOR THE COST OF THE LAND
In the exercise of RIGHT OF PRE-
EMPTION by the agricultural lessee- OF THE LAND, including interest
tenant, he must EITHER TENDER
PAYMENT OF, OR PRESENT A
CERTIFICATE FROM THE LBP that
it shall make payment under Section NOTE: The period in extended to
80 of Republic Act No. 3844 (10%
CASH and 90% in six percent, tax
free, redeemable bonds issued by the 228 of July 17, 1987 by Pres.
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.
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)
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)
The tenant shall pay for THE COST
of six (6) percent per annum in
FIFTEEN (15) YEARS of fifteen
(15) equal annual amortizations.
twenty (20) years equal annual
amortization under Sec. 6, E.O..
Corazon C. Aquino.
Distribution Limit – No qualified
beneficiary may own more than Three (3)
hectares of agricultural land” (Sec. 23, RA
6657)
“Award Ceiling for Beneficiaries. –
Beneficiaries shall be awarded an area
NOT EXCEEDING THREE (3)
HECTARES which may cover a
CONTIGUOUS tract of land or SEVERAL
PARCELS of land cumulated up to the
prescribed award limits.” (Sec. 25, RA
6657).
Payment by Beneficiaries.- Lands
awarded pursuant to this Act shall be paid
for the beneficiaries to the LBP in thirty
(30) annual amortizations at six percent
(6%) per annum. The payments for the
first three (3) years after the award may be
at reduced amounts as established by the
PARC: Provided, That the first five (5)
annual 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).
TRANSFERABILITY OF LANDHOLDING
1. Sale, Alienation or Transfer of The TITLE to the land owned by Transferability of Awarded Lands.- lands
the legal possession of the the tenant shall not be acquired by beneficiaries under this Act
landholding. transferable except BY may not be sold, transferred or conveyed
2. Extinguishment of Agricultural HEREDITARY SUCCESSION or except through hereditary succession, or
Leasehold Relations TO THE GOVERNMENT in to the government, or to the LBP, or to
a. ABANDONMENT of the accordance with this Decree, the other qualified beneficiaries for a period of
landholding without the Code of Agrarian Reform and ten (10) years; Provided, however, That
knowledge of the agricultural other existing laws and the children or the spouse of the transferor
lessor. (Teodoro vs. Macaraeg, regulation. shall have a right to repurchase the land
27 SCRA 7 (1969) To NOTE: Sec. 6, EO 228 provides: from the government or LBP within the
constitute abandonment there period of two (2) years. Due notice of the
must be an absolute “Ownership of lands acquired by availability of the land shall be given by
relinquishment of the premises farmer-beneficiary may be the LBP to he Barangay Agrarian Reform
of the tenant. This "overt act" transferred after full payment of Committee (BARC) of the barangay where
must be coupled with his amortization.” the land is situated. The Provincial
intention to do so "which is Agrarian Reform Coordinating Committee
carried into effect," (Philippine (PARCCOM), as herein provided, shall, in
Labor and Social Legislation, turn, be given due notice thereof by the
Martin, 70 Ed. Pp. 405-406). BARC.
Abandonment to validly
terminate tenancy relationship If the land has not yet been fully paid by
is characterized by: the beneficiary, the rights to the land may
i. an INTENT to be transferred or conveyed, with prior
ABANDON, and approval of the DAR, to any heir of the
ii. an OVERT ACT to carry beneficiary or to any other beneficiary
out such intention who, as a condition for such transfer or
conveyance, shall cultivate the land
There must be, therefore, NO himself. Failing compliance herewith, the
ANIMUS REVERTENDI on the land shall be transferred to the LBP which
part of the tenant. shall give due notice of the availability of
the land in the manner specified in the
b. VOLUNTARY SURRENDER immediately preceding paragraph.
of the landholding by the
agricultural lessee, written In the event of such transfer to the LBP,
notice of which shall be served the latter shall compensate the beneficiary
three months in advance in one lump sum for the amounts the latter
(Nisnisan, et al., vs. CA, 294 has already paid, together with the value
SCRA 173 (1998). of improvements he has made on the
land.(Sec. 27, RA 6657).
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, by which such intention
is carried out into effect. When
a tenant voluntarily yields the
land, he terminates the
tenancy relationship by his
unilateral act. (Anacleto Inson
vs. Planas de Asis, et.al., CA
GR No. Sp-01769, October 11,
1974.)

NOTE: SUBLEASING by the

agricultural lessee is also a ground
for the extinguishments of
Agricultural Leasehold Relations.
(Par. (2), Sec. 27, Republic Act No.
3844).
EVIDENCE OF RIGHT/TITLE OVER THE LANDHOLDING
AGRICUTLURAL LEASEHOLD The EMANCIPATION PATENT. The TITLES awarded to farmer-
CONTRACT IN GENERAL - Awarded to the TENANT- beneficiaries CARP are the following:
BENEFICIARY CREATES a
The agricultural lessor and the VESTED RIGHT OF ABSOLUTE 1. Free Patent for Public Alienation and
agricultural lessee shall be FREE OWNERSHIP in the landholding – Disposable lands;
to ENTER into any kind of TERMS, “a right which has become fixed
CONDITIONS or STIPULATIONS in and established and is no longer 2. CERTIFICATE OF LAND
a LEASEHOLD CONTRACT as long open to doubt or controversy. “ OWNERSHIP AWARD (CLOA) for
as they are not contrary to LAW, (Pagtalunan vs. Tamayo, 183 Resettlement sites:
MORALS OR PUBLIC POLICY. SCRA 252)
(Sec. 15 Republic Act No. 3844). 3. STEWARDSHIP CONTRACT for
Lands covered by INTERGRATED
Except in case of mistake, violence, SOCIAL FORESTRY PROGRAM
intimidation, undue influence, or (ISFP); and
fraud, an AGRICULTURAL
CONTRACT reduced in writing and 4. CLOA for Private of Agricultural
registered as hereinafter provided, Lands.
SHALL BE CONCLUSIVE
BETWEEN THE CONTRACTING
PARTIES, if not DENOUNCED OR
IMPUGNED WITHIN THIRTY DAYS
AFTER REGISTRATION (Sec. 17,
Republic Act No. 3844)

MODES OF TRANSFER OF THE LAND TO THE TENANT OR BENEFICIARY

The landowner-agricultural lessor
can FREELY AND VOLUNTARILY
TRANSFER the landholding to the
agricultural lessor by way of:
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
The Mode of Transfer of lands The MODES OF ACQUIRING LANDS for
Tenant-Beneficiaries under distribution under CARP:
Presidential Decree No. 27 are the
following: 1. COMPULSORY ACQUISITION (CA)
(Sec. 16, RA 6657)
1. OPERATION LAND TRANSFER 2. VOLUNTARY OFFER TO SELL
(OLT) under PD 27 and EO 228; (VOS) (Sec. 19, RA 6657)
and 3. VOLUNTARY LAND
TRANFER/DIRECT PAYMENT
Operation Land Transfer is the SCHEME (VLT/DPS) (Sec. 20, RA
ORDERLY and SYSTEMATIC 6657).
TRANSFER of land from the
landowner to the tenant-farmer
under Presidential Decree No. 27.
2. DIRECT PAYMENT SCHEME
(DPS). – The landowner and the
tenant-beneficiary can AGREE on
the DIRECT SALE terms and
conditions which is not onerous to
the tenant-beneficiary.
CONSIDERATION FOR THE USE OF VALUE OF THE LAND
Consideration for the Lease of The value if the land shall equivalent Factors/Criteria considered in
Agricultural lands: to two and one half (2-1/2) times the determining just compensation:
AVERAGE HARVEST OF THREE
1. Not more than 25 per centum of NORMAL CROP YEARS 1. Cost of Acquisition of the land;
the average normal harvest IMMEDIATELY PRECEDING THE 2. Current Value of like properties;
during the three agricultural PROMULGATION OF THIS 3. Nature of the land;
years immediately preceding the DEGREE. 4. Actual use;
date the leasehold was 5. Income;
established. 6. Sworn valuation by the landowner;
7. Tax Declaration;
8. Assessment made by government
2. Deductible items assessors;
a. Seedlings 9. The social and economic benefits
b. Cost of Harvesting contributed by the farmers, and
c. Cost of Threshing 10. Non-payment of taxes or loans
d. Cost of Loading secured from any government
e. Cost of Hauling financing institution on the land.
f. Cost of Processing

3. If the land is cultivated for a period Basic Formula for the valuation of
of less than three years, the lands covered by VOS and CA –
initial consideration is based on
the average normal harvest LV = (CNI x 0.6) + (CS x 0.3) + (MV x
during the preceeding years 0.1)
when the land was actually
cultivated or on the harvest of where:
the first year if newly cultivated, LV = Land Value
and the harvest is normal. CNI = Capitalized Net Income
CS = Comparable Sales
4. After the lapse of the first three MV = Market Value per Tax
normal harvest, the final Declaration
consideration shall be based on
the average normal harvest The above formula shall be used if all
during these three preceding three factors are present, relevant and
agricultural years. applicable.

5. In the absence of any agreement When the CS factor is not present and
as to the rental, the maximum CNI and MV are applicable, the formula shall
allowed shall be applied. be:
LV = (CNI x 0.9) + (MV x 0.1)
6. If Capital Improvement is
introduced not by the lessee to When the CNI factor is not present and
increase productivity, the rentals CS and MV are applicable, the formula
shall be increased proportionally shall be:
to the consequent increase in LV = (CS x 0.9) + (MV x 0.1)
production due to the
improvement. When both CS and CNI are not present
and only MV is applicable, the formula
7. In case of Disagreement the shall be;
Court shall determine the LV = (MV x 2)
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.

NOTE: farmer-beneficiary or tenant owning 3-ha or below shall be deemed landless.