Agricultural Land Reform Code of Philippines

Declaration of policy and code purposes

Section 2 declares the State policy to establish owner-cultivatorship and the economic family-size farm as the basis of Philippine agriculture.
Section 2 declares the State policy to divert landlord capital in agriculture to industrial development.
Section 2 declares the State policy to achieve a dignified existence for small farmers free from pernicious institutional restraints and practices.
Section 2 mandates applying all labor laws equally and without discrimination to both industrial and agricultural wage earners.
Section 2 commits the State to a more vigorous and systematic land resettlement program and public land distribution.
Section 2 commits the State to making small farmers more independent, self-reliant, and responsible citizens.

What the Code establishes

Section 3 establishes an agricultural leasehold system to replace existing share tenancy systems in agriculture.
Section 3 establishes a declaration of rights for agricultural labor.
Section 3 establishes an authority for the acquisition and equitable distribution of agricultural land.
Section 3 establishes an institution to finance acquisition and distribution.
Section 3 establishes a machinery to extend credit and similar assistance to agriculture.
Section 3 establishes a machinery for marketing, management, and other technical services to agriculture.
Section 3 establishes unified administration for land reform project formulation and implementation.
Section 3 establishes an expanded program of land capability survey, classification, and registration.
Section 3 establishes a judicial system to decide issues arising under the Code and related laws and regulations.

Agricultural leasehold system: tenancy abolition

Section 4 abolishes agricultural share tenancy as contrary to public policy.
Section 4 allows existing share tenancy contracts to continue in covered regions or localities under a transitory scheme governed by Republic Act Numbered Eleven hundred and ninety-nine, as amended.
Section 4 provides a separate proclamation mechanism for lands devoted to crops covered by marketing allotments to avoid jeopardizing international commitments and to ensure efficient synchronization with processing phases.
Section 4 creates a presumption mechanism: when a share tenancy contract ceased to be operative or was entered in violation and is null and void, continued possession for cultivation is presumed to create a leasehold relationship under the Code, without prejudice to lawful contracting and without impairing security of tenure under Republic Act Numbered Eleven hundred and ninety-nine, as amended.
Section 4 protects prior lawful leasehold: rights and obligations continue until modified under the Code.

Agricultural leasehold: relationship, tenure, and succession

Section 5 provides that agricultural leasehold relation is established by operation of law under Section four and, in other cases, may be established orally or in writing and expressly or impliedly.
Section 6 limits parties: the leasehold relation is between the person furnishing the landholding (as owner, civil law lessee, usufructuary, or legal possessor) and the person who personally cultivates the same.
Section 7 provides security of tenure: the agricultural lessee has the right to continue working until extinguished and cannot be ejected unless authorized by the Court for causes in the Code.
Section 8 provides extinguishment grounds: (1) abandonment without lessor knowledge; (2) voluntary surrender with written notice three months in advance; or (3) failure of qualified persons to succeed the lessee in case of death or permanent incapacity.
Section 9 provides that death or permanent incapacity of the agricultural lessee does not extinguish the leasehold; it continues between the lessor and a personally cultivating successor chosen by the lessor within one month, from the surviving spouse, the eldest direct descendant, or the next eldest descendant(s) by order of age, with timing rules if death occurs during the agricultural year.
Section 9 provides that failure of the lessor to choose within the periods results in priority following the order established in the Section.
Section 9 provides that if the agricultural lessor dies or becomes permanently incapable, the leasehold binds his legal heirs.
Section 10 provides that expiration of a contractual term, and sale/alienation/transfer of legal possession, does not extinguish the leasehold; the purchaser/transferee is subrogated to lessor rights and substituted to lessor obligations.

Lessee rights on sale: pre-emption and redemption

Section 11 grants the agricultural lessee a preferential right to buy if the agricultural lessor decides to sell, subject to reasonable terms and conditions.
Section 11 provides a Land Authority option: the entire landholding offered for sale must be preempted by the Land Authority if the landowner so desires, unless the majority of lessees object.
Section 11 provides proportionality among multiple lessees: each lessee’s right to pre-emption is only to the extent of the area actually cultivated by him.
Section 11 provides the exercise period: the pre-emption right may be exercised within ninety days from notice in writing served by the owner on all affected lessees.
Section 12 grants the agricultural lessee a right of redemption if the land is sold to a third person without the lessee’s knowledge.
Section 12 provides that the entire landholding sold must be redeemed, with proportional rights where there are multiple lessees based on their actual cultivated areas.
Section 12 provides redemption conditions: it must be at a reasonable price and consideration.
Section 12 sets the exercise period: redemption may be exercised within two years from registration of the sale, and has priority over other legal redemption rights.
Section 13 bars recording: no deed of sale of agricultural land under cultivation by an agricultural lessee (or lessees) may be recorded unless accompanied by an affidavit of the vendor that written notice under Section eleven was given or that the land is not worked by an agricultural lessee.
Section 14 bars pre-emption and redemption for certain conversions: these rights cannot be exercised over land suitably located for residential, commercial, industrial, or other similar non-agricultural purposes, if conversion is made in good faith and substantially carried out within one year from the date of sale.
Section 14 grants a repurchase right if conversion fails: the agricultural lessee may repurchase under reasonable terms and conditions within one year after the conversion period expires.
Section 14 provides that the one-year conversion period ceases to run from the time the agricultural lessee petitions the Land Authority to acquire the land under paragraph 11 of Section fifty-one.

Leasehold contracts: allowed terms, form, registration

Section 15 allows leasehold parties to enter into any terms, conditions, or stipulations not contrary to law, morals, or public policy.
Section 15 declares certain terms contrary to law, morals, or public policy, including:
- rental in excess of that provided in the Code (through the Section’s reference to “hereinafter provided”);
- consideration in excess of fair rental value for use of work animals and/or farm implements of the lessor (or any other person);
- conditions requiring the lessee to rent work animals or hire farm implements from the lessor or a third person, or to make use of stores or services operated by the lessor or a third person;
- conditions requiring the lessee to perform work or render services other than duties and obligations under the Code, with or without compensation; or
- conditions requiring the lessee to answer for fines, deductions, and/or assessments.
Section 15 declares as contrary to law, morals, or public policy any contract requiring the agricultural lessee to accept a loan or make payment therefor in kind.
Section 16 provides that if no period is agreed, leasehold contract terms and conditions continue until modified by the parties.
Section 16 prohibits modifications that prejudice the agricultural lessee’s security of tenure.
Section 16 provides a rental limitation for contracts with a period: the lessor may not increase rental upon expiration except in accordance with Section thirty-four.
Section 17 sets contract form and execution if reduced into writing:
- the contract must be drawn in quadruplicate in a language or dialect known to the agricultural lessee;
- it must be signed or thumb-marked by the agricultural lessee personally and by the agricultural lessor or authorized representative, before two witnesses chosen by each party;
- if the lessee cannot read, his witness must read and explain the contents;
- execution must be acknowledged before the justice of the peace of the municipality where the land is situated;
- no fees or stamps are required for preparation and acknowledgment;
- each party retains a copy of the contract;
- the justice of the peace delivers the third copy to the municipal treasurer and the fourth copy to the Office of the Agrarian Counsel.
Section 17 provides conclusiveness: after writing and registration, the agricultural contract is conclusive between the parties unless denounced or impugned within thirty days after registration, except for mistake, violence, intimidation, undue influence, or fraud.
Section 18 requires the municipal treasurer, upon receipt, to require both parties to present their copies and to annotate the date, time, place of registration, and registration entry/number.
Section 19 requires the municipal treasurer to keep a record called the “Registry of Agricultural Leasehold Contracts,” including copies and annotations of subsequent acts (renewal, novation, cancellation, etc.).
Section 19 provides no registration fees and no documentary stamps for registration of such contracts or subsequent acts.

Loan formality and lien exemptions

Section 20 makes loan obligations unenforceable unless a written memorandum of the obligation (including interest) is in a language or dialect known to the agricultural lessee and is signed or thumb-marked by him (or his agent).
Section 21 exempts from lien and/or execution against the agricultural lessee:
- 25% of the entire produce of the land under cultivation; and
- work animals and farm implements belonging to the agricultural lessee, if their value does not exceed PHP 1,000.
Section 21 provides an exception to the exemption: no property mentioned is exempt from execution issued on a judgment recovered for its price or on a foreclosure judgment of a mortgage on it.

Lessee rights and obligations; prohibitions

Section 23 grants the agricultural lessee rights to:
- possession and peaceful enjoyment;
- manage and work according to proven farm practices;
- mechanize all or any phase; and
- deal with millers/processors and attend to issuance of quedans and warehouse receipts for produce due him.
Section 24 grants the agricultural lessee the right to continue exclusive possession and enjoyment of any home lot occupied upon effectivity of the Code, treated as included in the leasehold.
Section 25 grants indemnification rights for:
- cost and expenses incurred in cultivation, planting, harvesting, and incidental crop improvements if the lessee surrenders/abandons for just cause or is ejected;
- plus indemnity for one-half of necessary and useful improvements made by the lessee, provided they are tangible and have not lost utility at surrender/abandonment, with value determined for indemnity.
Section 26 imposes obligations on the agricultural lessee to:
- cultivate and take care as a good father of a family and perform work per proven farm practices;
- inform the lessor of trespass by third persons within a reasonable time, without prejudice to direct action against trespassers;
- take reasonable care of work animals and farm implements delivered; prevent unauthorized use; be responsible up to value at time of loss/death/destruction if caused by negligence;
- keep the farm and growing crops attended during work season and face forfeiture of expected produce upon Court order to extent of damage if unjustified abandonment/neglect occurs;
- notify the lessor at least three days before harvesting or, where applicable, threshing; and
- pay lease rental when due.
Section 27 makes it unlawful for the agricultural lessee to:
- contract to work additional landholdings belonging to a different lessor or to acquire and personally cultivate an economic family-size farm without the first lessor’s knowledge and consent, if the first landholding is sufficient to fully occupy him and members of the immediate farm household; or
- employ a sub-lessee on his landholding, except that illness or temporary incapacity permits employment of laborers on the lessee’s account.
Section 28 allows termination during the agricultural year by the agricultural lessee for specified causes including cruel, inhuman or offensive treatment; non-compliance by the lessor with obligations; compulsion to do non-farm work without compensation; crime committed by the lessor or representative against the lessee or immediate household; or voluntary surrender due to circumstances more advantageous to the lessee and his family.
Section 29 grants the agricultural lessor rights to inspect compliance; propose changes in use or crops with Court resolution of disagreements; require adoption of proven farm practices for conservation/improvement; and mortgage expected rentals.
Section 30 imposes obligations on the agricultural lessor to keep the lessee in peaceful possession and cultivation, and to keep intact permanent useful improvements existing at the start of the leasehold relation, including irrigation and drainage systems and marketing allotments (with sugar quotas covering both domestic and export quotas), notwithstanding provisions of existing laws to the contrary.
Section 31 prohibits the agricultural lessor from:
- dispossessing the lessee except upon Court authorization under Section thirty-six and creates liability for damages plus the fine or imprisonment for unauthorized dispossession;
- requiring the lessee to assume any part of taxes levied on the land;
- requiring the lessee to assume any part of rent/canon/other consideration payable by the lessor to third persons for use of the land;
- dealing with millers/processors without written authorization of the lessee where crop must be sold in processed form before payment of rental; and
- discouraging or interfering with formation, maintenance, or growth of unions/organizations of agricultural lessees, including initiating, dominating, assisting, or interfering in their formation or administration.
Section 32 governs irrigation system costs:
- the construction cost of a permanent irrigation system (including distributory canals) may be borne exclusively by the lessor, who then is entitled to an increase in rental proportionate to resultant increase in production;
- if the lessor refuses, the lessee may shoulder the expenses, but then the lessor is not entitled to increased rental and, upon termination, must pay the lessee or heir the reasonable value of the improvement at termination;
- if the irrigation system constructed does not work, it is not considered an improvement within the meaning of the Section.
Section 33 requires rental payment in an amount certain in money or in produce, or both, payable at the agreed place immediately after threshing/processing if in kind, or within a reasonable time thereafter if not in kind; it prohibits requiring a bond, deposit, or advance rental payment; it creates a special and preferential lien in favor of the lessor over such portion of the gross harvest necessary for payment of the rental due.
Section 34 sets rental limits for riceland and other-crop lands:
- rental cannot exceed the equivalent of 25% of average normal harvest during the three agricultural years immediately preceding leasehold establishment, deducting seeds and harvesting/threshing/loading/hauling/processing costs as applicable;
- if land has been cultivated for less than three years, the initial consideration is based on average normal harvest during preceding actual cultivation years, or first-year harvest if newly cultivated and that harvest is normal;
- after lapse of the first three normal harvests, final consideration is based on average normal harvest during those three preceding agricultural years;
- absent agreement, the maximum allowed applies;
- if capital improvements introduced to increase productivity not by the lessee increase production, rental increases proportionately to the production increase; if parties disagree, the Court determines the reasonable increase.
Section 35 excludes certain other lands from leasehold rental and tenancy system rules: in cases of fishponds, saltbeds, and lands principally planted to citrus, coconuts, cacao, coffee, durian, and other similar permanent trees at the time of Code approval, consideration and tenancy system are governed by Republic Act No. 1199, as amended.
Section 36 preserves lessee possession except for Court-authorized ejectment after due hearing and a final and executory judgment showing specified causes:
- the lessor-owner or immediate family will personally cultivate or convert suitably located land into specified non-agricultural purposes, subject to disturbance compensation of five years rental plus lessee rights under Sections twenty-five and thirty-four, except if the lessor’s owned and leased land is not more than five hectares, in which case the lessee may receive advanced notice of at least one agricultural year before ejectment proceedings filed;
- if landholder does not personally cultivate for three years or fails to substantially carry out conversion within one year after dispossession, bad faith is presumed and tenant may demand possession and recover damages;
- substantial non-compliance by lessee with contract/Code provisions unless caused by fortuitous event/force majeure;
- planting crops or using the land for purposes other than agreed;
- failure to adopt proven farm practices as determined under Section twenty-nine(3);
- substantial damage/deterioration of land or permanent improvements through lessee fault or negligence;
- non-payment of lease rental when due, except non-payment due to crop failure to the extent of 75% as a result of fortuitous event, where non-payment is not a ground for dispossession though rental for that particular crop remains due;
- sub-lessee employment in violation of Section twenty-seven(2).
Section 37 places the burden of proof for a lawful cause of ejectment on the agricultural lessor.
Section 38 provides a limitation period: actions to enforce any cause of action under the Code are barred if not commenced within three years after the cause accrued.

Agricultural labor bill of rights

Section 39 declares farm workers enjoy rights enabling enjoyment of the same rights and opportunities in life as industrial workers, including:
- right to self-organization;
- right to engage in concerted activities;
- right to minimum wage;
- right to work for not more than eight hours;
- right to claim for damages for death or injuries sustained while at work;
- right to compensation for personal injuries, death, or illness; and
- right against suspension or lay-off.
Section 40 recognizes self-organization and formation/joining/assistance of farm worker organizations for collective bargaining through representatives of their own choosing, subject to non-undue interference with normal farm operations.
Section 40 bars supervisors from membership in farm workers’ organizations under their supervision, while allowing separate organizations for supervisors.
Section 41 grants the right to engage in concerted activities for collective bargaining and mutual aid/protection and imposes a duty on the farm employer/manager to allow freedom for farm workers, labor leaders, organizers, advisers, and helpers to enter and leave the farm where workers live or stay.
Section 42 guarantees minimum wage for farm workers in farm enterprises: at least PHP 3.50 a day for eight hours work, with wage increases by the Minimum Wage Board under Republic Act No. 602.
Section 43 prohibits requiring farm workers to work more than eight hours daily; it excludes non-working time in which the worker can leave the working place and rest completely from counted hours.
Section 43 permits work beyond eight hours only for actual or impending emergencies caused by serious accidents, fire, flood, typhoon, epidemic, or other disaster or calamity, or urgent work on farm machines/equipment/installations to avoid serious loss, or other just cause of similar nature, and grants overtime compensation at the same rate as regular wages plus at least 25% additional, based on daily wages.
Section 43 prohibits compelling farm workers to work Sundays and legal holidays; if the worker agrees, the employer must pay at least 25% additional.
Section 43 prohibits liability for overtime claims not previously authorized by the employer, except when overtime work is rendered to avoid damages to crops, produce, work animals or implements, buildings or the like.
Section 43 declares null and void any agreement contrary to that Section.
Section 44 extends employer responsibility law: Act No. 1874, as amended applies to farm workers insofar as applicable.
Section 45 extends employee compensation law: Act No. 3428, as amended applies to farm workers insofar as applicable.
Section 46 prohibits suspension, lay-off, or dismissal without just cause from the time a farm worker organization/group presents a petition or complaint regarding matters likely to cause a strike or lockout (with a copy furnished to the Department of Labor), or while an agricultural dispute is pending before the Court of Agrarian Relations; if suspension/dismissal without just cause is proved, the Court may direct reinstatement and wage payment during suspension/dismissal, without prejudice to criminal liability under Section twenty-four of Commonwealth Act No. 103, as amended.
Section 47 applies other laws applicable to non-agricultural private enterprise workers that are not inconsistent with the Code to farm workers, farm labor organizations, and agrarian disputes and includes application to relations between farm management and farm labor and the functions of the Department of Labor and other agencies.
Section 48 restricts coverage: the preceding provisions of the Chapter excluding Sections forty, forty-one, forty-two and forty-three do not apply to farm enterprises comprising not more than twelve hectares.

Land Authority: creation, leadership, and powers

Section 49 creates the Land Authority directly under the control and supervision of the President of the Philippines.
Section 49 provides leadership: the Authority is headed by a Governor appointed by the President with consent of the Commission on Appointments, assisted by two Deputy Governors each heading operating departments set up by the Governor.
Section 49 sets term: the Governor and Deputy Governors hold office for five years.
Section 50 requires Governors/Deputy Governors to be natural-born citizens with adequate background and experience in land reform, and at least thirty-five years of age.
Section 50 sets compensation: PHP 24,000 annual compensation for the Governor; PHP 18,000 annual compensation for each Deputy Governor.
Section 51 makes the Authority responsible for initiating and prosecuting expropriation proceedings for acquisition of private agricultural lands for subdivision into economic family-size farm units and resale to qualified tenants/occupants and farmers, within stated limits.
Section 51 limits expropriation to private agricultural lands within specified priority categories, including:
- idle or abandoned lands, subject to the one-year from approval exception for lands held or purchased for resale/subdivision;
- lands suitable for subdivision worked by lessees where the permanent-crops under labor administration exceeds seventy-five hectares (with stated exceptions);
- within land reform districts, priority order among idle/abandoned and size-based categories with thresholds of 1,024 hectares, 500 hectares, 144 hectares, and 75 hectares.
Section 51 empowers the Authority to help bona fide farmers without lands or owner-cultivators of uneconomic-size farms acquire and own economic family-size farm units.
Section 51 empowers administration/disposition of certain public agricultural lands under the custody and administration of the National Resettlement and Rehabilitation Administration prior to the Code approval and other reserved public agricultural lands, subject to forest-reserve permanency and other public forest laws.
Section 51 tasks the Authority to develop plans for opening alienable and disposable lands for distribution, recommend reservation portions after consultation with the Secretary of Agriculture and Natural Resources, give economic family-size farms to landless citizens capable of personal cultivation through organized resettlement with priority to qualified farmers in the province where located, and reclaim swamps/marshes and obtain titles whenever feasible for subdivision and distribution.
Section 51 directs the Authority to ensure early issuance of titles to settlers and cultivators of disposable and alienable public lands; to survey and set aside lands for economic family-size farms, large-scale farm operations, town sites, roads, parks, government centers, and civic improvements; and to submit subdivision survey plans for verification and approval by the Director of Lands or the Land Registration Commission.
Section 51 requires the Authority to inform the Agricultural Productivity Commission and the Office of the Agrarian Counsel about problems of settlers and farmers on lands under its administration and to acquire lands for agricultural lessees exercising pre-emption under Chapter I.
Section 51 assigns the Authority land capability survey/classification and printing of maps; arrangements with the Land Bank regarding titles; expropriation of home lots occupied by agricultural lessees outside their landholdings for resale at cost; and annual reporting within sixty days of the close of the fiscal year.
Section 52 requires the Governor to organize personnel into departments/divisions/sections for maximum efficiency, and to appoint subordinate officials/employees subject to civil service rules; fix compensation subject to WAPCO rules; and determine duties as required.

Authority expropriation: petition, possession, compensation, title

Section 53 authorizes the Authority to institute and prosecute expropriation proceedings for acquisition of private agricultural lands and home lots enumerated under Section fifty-one, upon petition in writing of at least one-third of the lessees, subject to Chapter VII.
Section 53 provides a consensual sale pathway: if a landowner agrees to sell and the National Land Reform Council finds the acquisition suitable and necessary, a joint motion containing the agreement and valuation is submitted to the Court for approval.
Section 53 grants beneficiaries the right to object to excessive valuation, with the Court determining just compensation per Section fifty-six.
Section 54 authorizes immediate possession after the expropriation suit begins upon deposit with the Court of money and bonds of the Land Bank in the proportions under Section eighty, equal to the value determined by the Court under Section fifty-six.
Section 55 requires expeditious subdivision: immediately after possession, the Authority must undertake subdivision survey into economic family-size farms and assign them to beneficiaries selected under Section one hundred and twenty-eight under rules and regulations prescribed by the Authority.
Section 56 sets just compensation for leased land: the Court, in land under leasehold, bases just compensation on annual lease rental income authorized by law capitalized at 6% per annum, without prejudice to considering other factors.
**Section 56