PRIMER On Agricultural Leasehold System

What are the Laws on Leasehold?

Republic Act No. 1199 – An Act to Govern the Relations Between Landowners and Tenants of Agricultural Lands, August 30, 1954. Under this law, the tenant was given the right to choose a leasehold tenancy arrangement.

Republic Act No. 3844 – An Act known as Agricultural Land Reform Code Instituting Land Reform in the Philippines, including the abolition of Share Tenancy and the Channeling of capital Into Industry, August 8, 1963. Declared agricultural share tenancy to be contrary to public policy and was, thereby, abolished.

Republic Act No. 6389 – an Act amending R.A. No. 3844, known as the Agricultural Landreform Code, and other purposes, September 10, 1971. Provided for the automatic conversion of agricultural share tenancy to agricultural leasehold.

Republic Act No. 6657 – The Comprehensive Agrarian Reform Law, June 15, 1998. Mandated DAR to determine and fix immediately the lease rentals. Made all tenanted lands subject to leasehold.

What are the implications of the above-cited laws? The significant implications are: (1) abolition of share tenancy and conversion to agricultural leasehold now covers all agricultural lands without exception; (2) leasehold is no longer just an option, it exists by operation of law; and (3) leasehold can be a preliminary step to land ownership (areas covered by CARP). All share crop tenants were therefore, automatically converted into agricultural lessees as of June 15, 1988 whether or not a leasehold agreement has been executed. Landowners’ share is 25% of the produce while the lessee’s share is 75% of the produce.

What are the conditions set for tenancy relationship to exist? All the following conditions must be present for tenancy relationship to exist: (1) That the parties are the landholder and the tenant; (2) That the subject is agricultural land; (3) That there is consent by the landowner for the tenant to work on the land; (4) That the purpose is agricultural production; (5) That there is personal cultivation or with the help of the immediate farm household; and (6) That there is compensation in terms of payment of a fixed amount in money and/or produce.

What is personal cultivation? There is personal cultivation if the tenant cultivates the land himself/herself or with the aid of the immediate farm household. Immediate farm household refers to the members of the family of the lessee (tenant) and other persons who are dependent upon him/her for support and who usually help him/her in the activities.

What is cultivation? Cultivation is not limited to the plowing and harrowing of the land, but also husbanding of the ground to forward the products of the earth by general industry, the taking care of the land and fruits growing thereon, fencing of certain areas, and the clearing thereof by gathering dried leaves and cutting grasses. In coconut lands, cultivation includes the clearing of the landholding, gathering of coconuts, their piling, husking and handling, as well as the processing thereof into copra, although at times with the aid of hired laborers (Coconut Cooperative Marketing Association, Inc. vs. Court of Appeals, 164 SCRA 568; Hernandez vs. Court of Intermediate Appellate Court, et. Al., 189 SCRA 758).

Is there tenancy relationship where squatters are allowed by the landowner to cultivate the land for free? No, agricultural tenancy does not exist in this case since there is no expressed or implied agreement to undertake the cultivation of the land belonging to the landholder. No agreement exists in terms of share in harvest or payment in a fixed amount. It is, however, possible for the parties to subsequently enter into a leasehold relationship.

When shall tenancy relationship cease to exist? The agricultural leasehold relation is extinguished by any of the following: (1) abandonment of the landholding without the knowledge of the agricultural lessor/landholder; (2) voluntary surrender of the landholding by the tenant-lessee after giving notice to the lessor three (3) months in advance; or (3) absence of an heir to succeed the lessee in the event of his/her death or permanent incapacity. The leasehold relation is likewise extinguished when the lessee’s dispossession of the land is authorized by the DAR Adjudication Board (DARAB) or by the proper court in a judgement that is final and executory, for violations of the leasehold agreement or pertinent provisions of agrarian laws on leashold.

What are the grounds for dispossession/ejectment? (1) The tenant failed to substantially comply with the terms and conditions of the leasehold contract or with laws governing leasehold relations, unless the failure is caused by a fortuitous event or force majeur; (2) He/she planted crops or used the land for a purpose other than what had been previously agreed upon. DAR A.O. No. 05-93, however, now allows the tenant-lessee to intercrop or plant secondary crops after the rentals has been fixed, provided he/she shoulders the expenses; (3) He/she failed to adopt proven farm practices necessary to conserve the land, improve its fertility, and increase its productivity; (4) His/her fault or negligence resulted in the substantial damage, destruction, or unreasonable deterioration of the land or any permanent improvement thereon; (5) He/she does not pay the lease rentals when it falls due except when such non-payment is due to crop failure to the extent of 75% as a result of fortuitous event; or (6) He/she employed a sub lessee. The dispossession shall be by a final and executory judgment.

When is hired labor allowed? The lessee (tenant) can only employ hired labor if he/she is temporarily incapacitated and has no immediate family household who will do the cultivation.

Is the agricultural leasehold relation extinguished by death or permanent incapacity of any of the parties? No, in case the tenant-lessee dies or is permanently incapacitated, the leasehold relation shall continue between the agricultural lessor (landholder) and the member of the lessee’s immediate farm household who can personally cultivate the land. Such person shall be chosen by the lessor within one month from such death or permanent incapacity from the following: (1) the surviving spouse; (2) the eldest direct descendant by consanguinity; or (3) the next eldest descendant or descendants in the order of their age. If the death or personal incapacity of the lessee occurs during the agricultural year, the choice by the lessor shall be done at the end of that agricultural year. If the lessor fails to exercise his choice within the prescribed period, the above-mentioned order of priority shall be followed. In case of death or permanent incapacity of the lessor (landholder), the leasehold relation shall bind his/her legal heirs.

What is the effect of transfer of legal ownership of the land? Leasehold is not extinguished with the transfer of legal ownership of the land from one landowner to another. The law provides that the purchaser or transferee shall be subrogated to the rights and substituted to the obligations of the agricultural lessor. More info at www.dar.gov.ph 

/cds’06