Agricultural Leasehold and Rental Rules

All share-crop tenants covered by the Order convert automatically into agricultural lessees as of June 15, 1988.
Lease rental shall not exceed 25% of the average normal harvest for three years prior to June 15, 1988, after deducting costs for seeds, harvesting, threshing, loading, hauling, and processing.
For lands cultivated less than three years prior to June 15, 1988, rental is based on the average harvest of cultivated years or the first year if normal; post three years, rental is based on average harvest from those years.
The Municipal Agrarian Reform Officer (MARO) is responsible for determining rentals based on local production records.
Rental increases are allowed if permanent capital improvements by the lessor, with lessee’s consent, raise productivity.
Leasehold agreements must be in writing, notarized, and registered with the Municipal Treasurer’s Office.
Existing lease contracts are respected if rental does not exceed legal maximums.

Applies to all tenanted agricultural lands including:
- Retained areas under R.A. 6657 and P.D. 27;
- Tenanted agricultural lands not acquired for distribution under CARP;
- All tenanted areas under Section 10 of R.A. 6657 covered by the Order.

Leaseholds take effect at the start of the agricultural year following:
1. Tenanted rice, corn, and other perennial crops as of Nov 10, 1971;
2. Tenanted sugarlands as of July 4, 1974 (post Laurel-Langley Agreement);
3. Tenanted coconut and permanent crop lands as of June 15, 1988 (R.A. 6657 effectivity);
4. Other tenanted lands upon leasehold establishment by contract or court order.
Leasehold validity for retained areas lasts until DAR acquisition or contract termination legally.

Identification Phase:

MARO identifies share tenancy landholdings as of R.A. 6657 effectivity, including landowners and tenants.

Determination and Fixing of Rental:

MARO and Barangay Agrarian Reform Committee (BARC) mediate between owner and tenant to fix rental.
Both parties present production and deductible cost data for three years before leasehold establishment.
Rental computed using Section 34 of R.A. 3844 formula:
a) Calculate normal harvest for 3 years prior to leasehold date;
b) Deduct costs for seeds and harvesting-related expenses;
c) Obtain average net harvest;
d) Multiply by 25% to fix rental unless both parties agree lower.

Documentation Phase:

Agreement recorded in a written contract in the known language/dialect, signed/thumbmarked by parties with witnesses.
MARO/BARC explains contract terms and parties' rights/obligations before signing.
Contract acknowledged before Municipal Trial Court Judge or DAR Notary Public and registered with Municipal Treasurer.

In Case of Disagreement:

MARO determines rental per prescribed method, prepares documentation folder including evidence, minutes, worksheets, investigation report.
MARO drafts order of lease rental and submits to Provincial Agrarian Reform Officer (PARO) for approval.
PARO considers relevant laws (R.A. 6657, R.A. 3844) and furnishes copies of order to concerned parties.

Parties may appeal the lease rental order to DAR Adjudication Board within 15 days from receipt.
Failure to appeal within the period renders the order final and executory.

Secretary of Agrarian Reform may order periodic rental reviews and adjustments for all leaseholds irrespective of crops and regions.

Becomes effective 10 days after publication in two national newspapers.
All inconsistent prior orders, circulars, rules, and regulations are revoked or amended accordingly.