RA 3844 Agricultural Land Reform Code

7/30/2019 RA 3844 Agricultural Land Reform Code

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R A N o . 3 8 4 4 , A g r i c u l t u r a l L a n d R e f o r m C o d e P a g e | 1

REPUBLIC ACT No. 3844

AN ACT TO ORDAIN THE AGRICULTURALLAND REFORM CODE AND TO INSTITUTE

LAND REFORMS IN THE PHILIPPINES,INCLUDING THE ABOLITION OF TENANCY AND

THE CHANNELING OF CAPITAL INTOINDUSTRY, PROVIDE FOR THE NECESSARYIMPLEMENTING AGENCIES, APPROPRIATE

FUNDS THEREFOR AND FOR OTHERPURPOSES

PRELIMINARY CHAPTER

TITLEDECLARATION OF POLICY AND COMPOSITION

OF CODE

Section 1.Title- This Act shall be known as theAgricultural Land Reform Code.

Section 2.Declaration of Policy- It is the policy ofthe State:

(1) To establish owner-cultivatorship andthe economic family-size farm as the basisof Philippine agriculture and, as aconsequence, divert landlord capital in

agriculture to industrial development;

(2) To achieve a dignified existence for thesmall farmers free from perniciousinstitutional restraints and practices;

(3) To create a truly viable social andeconomic structure in agriculture conduciveto greater productivity and higher farmincomes;

(4) To apply all labor laws equally andwithout discrimination to both industrial andagricultural wage earners;

(5) To provide a more vigorous andsystematic land resettlement program andpublic land distribution; and

(6) To make the small farmers moreindependent, self-reliant and responsiblecitizens, and a source of genuine strength inour democratic society.

Section 3.Composition of Code - In pursuance ofthe policy enunciated in Section two, the followingare established under this Code:

(1) An agricultural leasehold system toreplace all existing share tenancy systems

in agriculture;

(2) A declaration of rights for agriculturallabor;

(3) An authority for the acquisition andequitable distribution of agricultural land;

(4) An institution to finance the acquisitionand distribution of agricultural land;

(5) A machinery to extend credit and similar

assistance to agriculture;

(6) A machinery to provide marketing,management, and other technical servicesto agriculture;

(7) A unified administration for formulatingand implementing projects of land reform;

(8) An expanded program of land capabilitysurvey, classification, and registration; and

(9) A judicial system to decide issues arisingunder this Code and other related laws andregulations.

CHAPTER IAGRICULTURAL LEASEHOLD SYSTEM

Section 4. Aboli t io n of Agricultural ShareTenancy-Agricultural share tenancy, as herein

defined, is hereby declared to be contrary to publicpolicy and shall be abolished: Provided, Thatexisting share tenancy contracts may continue inforce and effect in any region or locality, to begoverned in the meantime by the pertinentprovisions of Republic Act Numbered Elevenhundred and ninety-nine, as amended, until the endof the agricultural year when the National LandReform Council proclaims that all the governmentmachineries and agencies in that region or localityrelating to leasehold envisioned in this Code areoperating, unless such contracts provide for a


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shorter period or the tenant sooner exercise hisoption to elect the leasehold system: Provided,further, That in order not to jeopardize internationalcommitments, lands devoted to crops covered bymarketing allotments shall be made the subject of aseparate proclamation that adequate provisions,

such as the organization of cooperatives, marketingagreements, or other similar workablearrangements, have been made to insure efficientmanagement on all matters requiringsynchronization of the agricultural with theprocessing phases of such crops: Provided,furthermore, That where the agricultural sharetenancy contract has ceased to be operative byvirtue of this Code, or where such a tenancycontract has been entered into in violation of theprovisions of this Code and is, therefore, null andvoid, and the tenant continues in possession of the

land for cultivation, there shall be presumed to exista leasehold relationship under the provisions of thisCode, without prejudice to the right of thelandowner and the former tenant to enter into anyother lawful contract in relation to the land formerlyunder tenancy contract, as long as in the interimthe security of tenure of the former tenant underRepublic Act Numbered Eleven hundred andninety-nine, as amended, and as provided in thisCode, is not impaired: Provided, finally, That if alawful leasehold tenancy contract was entered intoprior to the effectivity of this Code, the rights andobligations arising therefrom shall continue tosubsist until modified by the parties in accordancewith the provisions of this Code.

Section 5.Establishment of Agricultural LeaseholdRelation - The agricultural leasehold relation shallbe established by operation of law in accordancewith Section four of this Code and, in other cases,either orally or in writing, expressly or impliedly.

Section 6.Parties to Agricultural LeaseholdRelation - The agricultural leasehold relation shall

be limited to the person who furnishes thelandholding, either as owner, civil law lessee,usufructuary, or legal possessor, and the personwho personally cultivates the same.

Section 7.Tenure of Agricultural LeaseholdRelation - The agricultural leasehold relation onceestablished shall confer upon the agriculturallessee the right to continue working on thelandholding until such leasehold relation isextinguished. The agricultural lessee shall beentitled to security of tenure on his landholding and

cannot be ejected therefrom unless authorized bythe Court for causes herein provided.

Section 8.Extinguishm ent of AgriculturalLeasehold Relation- The agricultural leaseholdrelation established under this Code shall be

extinguished by:

(1) Abandonment of the landholdingwithout the knowledge of the agriculturallessor;

(2) Voluntary surrender of thelandholding by the agricultural lessee,written notice of which shall be servedthree months in advance; or

(3) Absence of the persons under

Section nine to succeed to the lessee, inthe event of death or permanentincapacity of the lessee.

Section 9.Agricu ltural Leasehold Relat ion NotExtinguish ed by Death or Incapacity of the

Parties-In case of death or permanent incapacityof the agricultural lessee to work his landholding,the leasehold shall continue between theagricultural lessor and the person who can cultivatethe landholding personally, chosen by theagricultural lessor within one month from such

death or permanent incapacity, from among thefollowing:

(a) the surviving spouse;(b) the eldest direct descendant by

consanguinity; or(c) the next eldest descendant or descendants in

the order of their age:

Provided, That in case the death or permanentincapacity of the agricultural lessee occurs duringthe agricultural year, such choice shall be exercised

at the end of that agricultural year: Provided,further, That in the event the agricultural lessor failsto exercise his choice within the periods hereinprovided, the priority shall be in accordance withthe order herein established.

In case of death or permanent incapacity of theagricultural lessor, the leasehold shall bind his legalheirs.


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Section 10.Agric ultural Leasehold Relat ion NotExtinguish ed by Expirat ion of Period, etc. - Theagricultural leasehold relation under this Code shallnot be extinguished by mere expiration of the termor 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 transfers the legal possession of thelandholding, the purchaser or transferee thereofshall be subrogated to the rights and substituted tothe obligations of the agricultural lessor.

Section 11.Lessee's Right of Pre-emption - Incase the agricultural lessor decides to sell thelandholding, the agricultural lessee shall have thepreferential right to buy the same under reasonableterms and conditions: Provided, That the entirelandholding offered for sale must be pre-empted by

the Land Authority if the landowner so desires,unless the majority of the lessees object to suchacquisition: Provided, further, That where there aretwo or more agricultural lessees, each shall beentitled to said preferential right only to the extentof the area actually cultivated by him. The right ofpre-emption under this Section may be exercisedwithin ninety days from notice in writing which shallbe served by the owner on all lessees affected.

Section 12.Lessee's Right of Redemption - Incase the landholding is sold to a third person

without the knowledge of the agricultural lessee,the latter shall have the right to redeem the same ata reasonable price and consideration: Provided,That the entire landholding sold must be redeemed:Provided, further, That where these are two ormore agricultural lessees, each shall be entitled tosaid right of redemption only to the extent of thearea actually cultivated by him. The right ofredemption under this Section may be exercisedwithin two years from the registration of the sale,and shall have priority over any other right of legalredemption.

Section 13.Affidavit Required in Sale of LandSubject to Right of Pre-emption - No deed of sale ofagricultural land under cultivation by an agriculturallessee or lessees shall be recorded in the Registryof Property unless accompanied by an affidavit ofthe vendor that he has given the written noticerequired in Section eleven of this Chapter or thatthe land is not worked by an agricultural lessee.

Section 14.Right of Pre-emption and RedemptionNot Applicable to Land to be Converted into

Residential, Industrial and Similar Purposes - Theright of pre-emption and redemption granted underSections eleven and twelve of this Chapter cannotbe exercised over landholdings suitably locatedwhich the owner bought or holds for conversion intoresidential, commercial, industrial or other similar

non-agricultural purposes: Provided, however, Thatthe conversion be in good faith and is substantiallycarried out within one year from the date of sale.Should the owner fail to comply with the abovecondition, the agricultural lessee shall have theright to repurchase under reasonable terms andconditions said landholding from said owner withinone year after the aforementioned period forconversion has expired: Provided, however, Thatthe tenure of one year shall cease to run from thetime the agricultural lessee petitions the Land

Authority to acquire the land under the provisions of

paragraph 11 of Section fifty-one.

Section 15.Agricultural Leasehold Contract inGeneral- The agricultural lessor and theagricultural lessee shall be free to enter into anykind of terms, conditions or stipulations in aleasehold contract, as long as they are not contraryto law, morals or public policy. A term, condition orstipulation in an agricultural leasehold contract isconsidered contrary to law, morals or public policy:

(1) If the agricultural lessee is required to

pay a rental in excess of that which ishereinafter provided for in this Chapter;

(2) If the agricultural lessee is required topay a consideration in excess of the fairrental value as defined herein, for the use ofwork animals and/or farm implementsbelonging to the agricultural lessor or to anyother person; or

(3) If it is imposed as a condition in theagricultural leasehold contract: (a) that the

agricultural lessee is required to rent workanimals or to hire farm implements from theagricultural lessor or a third person, or tomake use of any store or services operatedby the agricultural lessor or a third person;or (b) that the agricultural lessee is requiredto perform any work or render any serviceother than his duties and obligationsprovided in this Chapter with or withoutcompensation; or (c) that the agriculturallessee is required to answer for any fine,deductions and/or assessments.


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Any contract by which the agricultural lessee isrequired to accept a loan or to make paymenttherefor in kind shall also be contrary to law, moralsor public policy.

Section 16.Nature and Continuity of Conditions of

Leasehold Contract- In the absence of anyagreement as to the period, the terms andconditions of a leasehold contract shall continueuntil modified by the parties: Provided, That in nocase shall any modification of its terms andconditions prejudice the right of the agriculturallessee to the security of his tenure on thelandholding: Provided, further, That in case of acontract with a period an agricultural lessor maynot, upon the expiration of the period increase therental except in accordance with the provisions ofSection thirty-four.

Section 17.Form and Registration of Contract-Should the parties decide to reduce theiragreement into writing, the agricultural leaseholdcontract shall be drawn in quadruplicate in alanguage or dialect known to the agricultural lesseeand signed or thumb-marked both by theagricultural lessee personally and by theagricultural lessor or his authorized representative,before two witnesses, to be chosen by each party.If the agricultural lessee does not know how toread, the contents of the document shall be read

and explained to him by his witness. Thecontracting parties shall acknowledge the executionof the contract before the justice of the peace of themunicipality where the land is situated. No fees orstamps of any kind shall be required in thepreparation and acknowledgment of the instrument.Each of the contracting parties shall retain a copyof the contract. The justice of the peace shall causethe third copy to be delivered to the municipaltreasurer of the municipality where the land islocated and the fourth copy to the Office of the

Agrarian Counsel.

Except in case of mistake, violence, intimidation,undue influence, or fraud, an agricultural contractreduced in writing and registered as hereinafterprovided, shall be conclusive between thecontracting parties, if not denounced or impugnedwithin thirty days after its registration.

Section 18.Registration of Leasehold Contract-The municipal treasurer shall, upon receipt of hiscopy of the contract, require the agricultural lesseeand agricultural lessor to present their respective

copies of the contract, and shall cause to beannotated thereon the date, time and place ofregistration as well as its entry or registrationnumber.

Section 19.Registry of Agricultural Leasehold

Contracts - The Municipal Treasurer of themunicipality wherein the land is situated shall keepa record of all such contracts drawn and executedwithin his jurisdiction, to be known as "Registry of

Agricultural Leasehold Contracts". He shall keepthis registry together with a copy of each contractentered therein, and make annotations on saidregistry of all subsequent acts relative to eachcontract, such as its renewal, novation,cancellation, etc. No registration fees ordocumentary stamps shall be required in theregistration of said contracts or of any subsequent

acts relative thereto.

Section 20.Memorandum of Loans - No obligationto pay money on account of loans including interestthereon obtained by the agricultural lessee from theagricultural lessor or his representative shall beenforceable unless the same or a memorandumthereof be in writing in a language or dialect knownto the agricultural lessee, and signed or thumb-marked by him, or by his agent.

Section 21.Exemption from Lien and/or

Execution - The following shall be exempt from lienand/or execution against the agricultural lessee:

(1) Twenty-five per centum of the entireproduce of the land under cultivation; and

(2) Work animals and farm implementsbelonging to the agricultural lessee:Provided, That their value does not exceedone thousand pesos. But no article orspecies of property mentioned in thisSection shall be exempt from execution

issued upon a judgment recovered for itsprice or upon a judgment of foreclosure of amortgage thereon.

Section 22.Use of Accepted Standards of Weightsand Measures - In all transactions entered intobetween the agricultural lessee and the agriculturallessor concerning agricultural products the officialor, upon agreement of the parties, the acceptedstandards of weights and measures shall be used.


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Section 23.Rights of Agricultural Lessee inGeneral- It shall be the right of the agriculturallessee:

(1) To have possession and peacefulenjoyment of the land;

(2) To manage and work on the land in amanner and method of cultivation andharvest which conform to proven farmpractices;

(3) To mechanize all or any phase of hisfarm work; and

(4) To deal with millers and processors andattend to the issuance of quedans andwarehouse receipts for the produce due

him.

Section 24.Right to a Home Lot- The agriculturallessee shall have the right to continue in theexclusive possession and enjoyment of any homelot he may have occupied upon the effectivity of thisCode, which shall be considered as included in theleasehold.

Section 25.Right to be Indemnified for Labor- Theagricultural lessee shall have the right to beindemnified for the cost and expenses incurred in

the cultivation, planting or harvesting and otherexpenses incidental to the improvement of his cropin case he surrenders or abandons his landholdingfor just cause or is ejected therefrom. In addition,he has the right to be indemnified for one-half of thenecessary and useful improvements made by himon the landholding: Provided, That theseimprovements are tangible and have not yet losttheir utility at the time of surrender and/orabandonment of the landholding, at which time theirvalue shall be determined for the purpose of theindemnity for improvements.

Section 26.Obligations of the Lessee - It shall bethe obligation of the agricultural lessee:

(1) To cultivate and take care of the farm,growing crops, and other improvements onthe landholding as a good father of a familyand perform all the work therein inaccordance with proven farm practices;

(2) To inform the agricultural lessor within areasonable time of any trespass committedby third persons upon the farm, withoutprejudice to his direct action against thetrespasser;

(3) To take reasonable care of the workanimals and farm implements delivered tohim by the agricultural lessor and see thatthey are not used for purposes other thanthose intended or used by another withoutthe knowledge and consent of theagricultural lessor: Provided, however, Thatif said work animals get lost or die, or saidfarm implements get lost or are destroyed,through the negligence of the agriculturallessee, he shall be held responsible andmade answerable therefor to the extent of

the value of the work animals and/or farmimplements at the time of the loss, death ordestruction;

(4) To keep his farm and growing cropsattended to during the work season. In caseof unjustified abandonment or neglect of hisfarm, any or all of his expected producemay, upon order of the Court, be forfeited infavor of the agricultural lessor to the extentof the damage caused thereby;

(5) To notify the agricultural lessor at leastthree days before the date of harvesting or,whenever applicable, of threshing; and

(6) To pay the lease rental to the agriculturalessor when it falls due.

Section 27.Prohibitions to Agricultural Lessee - Itshall be unlawful for the agricultural lessee:

(1) To contract to work additionallandholdings belonging to a different

agricultural lessor or to acquire andpersonally cultivate an economic family-sizefarm, without the knowledge and consent ofthe agricultural lessor with whom he hadentered first into household, if the firstlandholding is of sufficient size to make himand the members of his immediate farmhousehold fully occupied in its cultivation; or

(2) To employ a sub-lessee on hislandholding: Provided, however, That in


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case of illness or temporary incapacity hemay employ laborers whose services on hislandholding shall be on his account.

Section 28.Termination of Leasehold byAgricultural Lessee During Agricultural Year- The

agricultural lessee may terminate the leaseholdduring the agricultural year for any of the followingcauses:

(1) Cruel, inhuman or offensive, treatment ofthe agricultural lessee or any member of hisimmediate farm household by theagricultural lessor or his representative withthe knowledge and consent of the lessor;

(2) Non-compliance on the part of theagricultural lessor with any of the obligations

imposed upon him by the provisions of thisCode or by his contact with the agriculturallessee;

(3) Compulsion of the agricultural lessee orany member of his immediate farmhousehold by the agricultural lessor to doany work or render any service not in anyway connected with farm work or evenwithout compulsion if no compensation ispaid;

(4) Commission of a crime by theagricultural lessor or his representativeagainst the agricultural lessee or anymember of his immediate farm household;or

(5) Voluntary surrender due tocircumstances more advantageous to himand his family.

Section 29.Rights of the Agricultural Lessor- Itshall be the right of the agricultural lessor:

(1) To inspect and observe the extent ofcompliance with the terms and conditions oftheir contract and the provisions of thisChapter;

(2) To propose a change in the use of thelandholding to other agricultural purposes,or in the kind of crops to be planted:Provided, That in case of disagreement asto the proposed change, the same shall be

settled by the Court according to the bestinterest of the parties concerned: Provided,further, That in no case shall an agriculturallessee be ejected as a consequence of theconversion of the land to some otheragricultural purpose or because of a change

in the crop to be planted;

(3) To require the agricultural lessee, takinginto consideration his financial capacity andthe credit facilities available to him, to adoptin his farm proven farm practices necessaryto the conservation of the land,improvement of its fertility and increase ofits productivity: Provided, That in case ofdisagreement as to what proven farmpractice the lessee shall adopt, the sameshall be settled by the Court according to

the best interest of the parties concerned;and

(4) To mortgage expected rentals.

Section 30.Obligations of the Agricultural Lessor-It shall be the obligation of the agricultural lessor:

(1) To keep the agricultural lessee inpeaceful possession and cultivation of hislandholding; and

(2) To keep intact such permanent usefulimprovements existing on the landholding atthe start of the leasehold relation asirrigation and drainage system andmarketing allotments, which in the case ofsugar quotas shall refer both to domesticand export quotas, provisions of existinglaws to the contrary notwithstanding.

Section 31.Prohibitions to the Agricultural Lessor-It shall be unlawful for the agricultural lessor:

(1) To dispossess the agricultural lessee ofhis landholding except upon authorizationby the Court under Section thirty-six. Shouldthe agricultural lessee be dispossessed ofhis landholding without authorization fromthe Court, the agricultural lessor shall beliable for damages suffered by theagricultural lessee in addition to the fine orimprisonment prescribed in this Code forunauthorized dispossession;


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(2) To require the agricultural lessee toassume, directly or indirectly, the paymentof the taxes or part thereof levied by thegovernment on the landholding;

(3) To require the agricultural lessee to

assume, directly or indirectly, any part of therent, "canon" or other consideration whichthe agricultural lessor is under obligation topay to third persons for the use of the land;

(4) To deal with millers or processorswithout written authorization of the lessee incases where the crop has to be sold inprocessed form before payment of therental; or

(5) To discourage, directly or indirectly, the

formation, maintenance or growth of unionsor organizations of agricultural lessees inhis landholding, or to initiate, dominate,assist or interfere in the formation oradministration of any such union ororganization.

Section 32.Cost of Irrigation System - The cost ofconstruction of a permanent irrigation system,including distributory canals, may be borneexclusively by the agricultural lessor who shall beentitled to an increase in rental proportionate to the

resultant increase in production: Provided, That ifthe agricultural lessor refuses to bear the expensesof construction the agricultural lessee or lesseesmay shoulder the same, in which case the formershall not be entitled to an increase in rental andshall, upon the termination of the relationship, paythe lessee or his heir the reasonable value of theimprovement at the time of the termination:Provided, further, That if the irrigation systemconstructed does not work, it shall not beconsidered as an improvement within the meaningof this Section.

Section 33.Manner, Time and Place of RentalPayment- The consideration for the lease of theland shall be paid in an amount certain in money orin produce, or both, payable at the place agreedupon by the parties immediately after threshing orprocessing if the consideration is in kind, or within areasonable time thereafter, if not in kind.

In no case shall the agricultural lessor require theagricultural lessee to file a bond, make a deposit or

pay the rental in advance, in money or in kind or inboth, but a special and preferential lien is herebycreated in favor of the agricultural lessor over suchportion of the gross harvest necessary for thepayment of the rental due in his favor.

Section 34.Consideration for the Lease ofRiceland and Lands Devoted to Other Crops - Theconsideration for the lease of riceland and landsdevoted to other crops shall not be more than theequivalent of twenty-five per centum of the averagenormal harvest during the three agricultural yearsimmediately preceding the date the leasehold wasestablished after deducting the amount used forseeds and the cost of harvesting, threshing,loading, hauling and processing, whichever areapplicable: Provided, That if the land has beencultivated for a period of less than three years, the

initial consideration shall be based on the averagenormal harvest during the preceding years whenthe land was actually cultivated, or on the harvestof the first year in the case of newly-cultivatedlands, if that harvest is normal: Provided, further,That after the lapse of the first three normalharvests, the final consideration shall be based onthe average normal harvest during these threepreceding agricultural years: Provided, furthermore,That in the absence of any agreement between theparties as to the rental, the maximum allowedherein shall apply: Provided, finally, That if capital

improvements are introduced on the farm not bythe lessee to increase its productivity, the rentalshall be increased proportionately to theconsequent increase in production due to saidimprovements. In case of disagreement, the Courtshall determine the reasonable increase in rental.

Section 35.Exemption from Leasehold of OtherKinds of Lands - Notwithstanding the provisions ofthe preceding Sections, in the case of fishponds,saltbeds, and lands principally planted to citrus,coconuts, cacao, coffee, durian, and other similar

permanent trees at the time of the approval of thisCode, the consideration, as well as the tenancysystem prevailing, shall be governed by theprovisions of Republic Act Numbered Elevenhundred and ninety-nine, as amended.

Section 36.Possess ion of Landhold ing;Exceptions- Notwithstanding any agreement as tothe period or future surrender, of the land, anagricultural lessee shall continue in the enjoymentand possession of his landholding except when hisdispossession has been authorized by the Court in


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a judgment that is final and executory if after duehearing it is shown that:

(1) The agricultural lessor-owner or amember of his immediate family willpersonally cultivate the landholding or

will convert the landholding, if suitablylocated, into residential, factory, hospitalor school site or other useful non-agricultural purposes: Provided; That theagricultural lessee shall be entitled todisturbance compensation equivalent tofive years rental on his landholding inaddition to his rights under Sections twenty-five and thirty-four, except when the landowned and leased by the agricultural lessor,is not more than five hectares, in whichcase instead of disturbance compensation

the lessee may be entitled to an advancednotice of at least one agricultural yearbefore ejectment proceedings are filedagainst him: Provided, further, That shouldthe landholder not cultivate the land himselffor three years or fail to substantially carryout such conversion within one year afterthe dispossession of the tenant, it shall bepresumed that he acted in bad faith and thetenant shall have the right to demandpossession of the land and recoverdamages for any loss incurred by him

because of said dispossessions.

(2) The agricultural lessee failed tosubstantially comply with any of theterms and conditions of the contract orany of the provisions of this Code unless hisfailure is caused by fortuitous event or forcemajeure;

(3) The agricultural lessee planted cropsor used the landholding for a purposeother than what had been previously

agreed upon;

(4) The agricultural lessee failed to adoptproven farm practices as determinedunder paragraph 3 of Section twenty-nine;

(5) The land or other substantialpermanent improvement thereon issubstantially damaged or destroyed orhas unreasonably deteriorated throughthe fault or negligence of the agriculturallessee;

(6) The agricultural lessee does not paythe lease rental when it falls due:Provided, That if the non-payment of therental shall be due to crop failure to theextent of seventy-five per centum as a resultof a fortuitous event, the non-payment shall

not be a ground for dispossession, althoughthe obligation to pay the rental due thatparticular crop is not thereby extinguished;or

(7) The lessee employed a sub-lessee onhis landholding in violation of the terms ofparagraph 2 of Section twenty-seven.

Section 37.Burden of Proof- The burden of proofto show the existence of a lawful cause for theejectment of an agricultural lessee shall rest upon

the agricultural lessor.

Section 38.Statute of Limitations - An action toenforce any cause of action under this Code shallbe barred if not commenced within three years aftersuch cause of action accrued.

CHAPTER IIBILL OF RIGHTS FOR AGRICULTURAL LABOR

Section 39.Rights for Agricultural Labor- Toenable the farm workers to enjoy the same rights

and opportunities in life as industrial workers, theyshall enjoy the following:

(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 eighthours;

(5) Right to claim for damages for death orinjuries sustained while at work;

(6) Right to compensation for personalinjuries, death or illness; and

(7) Right against suspension or lay-off.

Section 40.Right to Self-Organization - The farmworkers shall have the right to self-organization andto form, join or assist farm workers' organizations of


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their own choosing for the purpose of collectivebargaining through representatives of their ownchoosing: Provided, That this right shall beexercised in a manner as will not unduly interferewith the normal farm operations. Individualsemployed as supervisors shall not be eligible for

membership in farm workers' organizations undertheir supervision but may form separateorganizations of their own.

Section 41.Right to Engage in ConcertedActivities - The farm workers shall also have theright to engage in concerted activities for thepurpose of collective bargaining and other mutualaid or protection.

For the purpose of this and the preceding Section,it shall be the duty of the farm employer or manager

to allow the farm workers, labor leaders,organizers, advisers and helpers complete freedomto enter and leave the farm, plantation orcompound at the portion of the same where saidfarm workers live or stay permanently ortemporarily.

Section 42.Right to Minimum Wage -Notwithstanding any provision of law or contract tothe contrary, farm workers in farm enterprises shallbe entitled to at least P3.50 a day for eight hours'work: Provided, That this wage may, however, be

increased by the Minimum Wage Board asprovided for in Republic Act Numbered Six hundredand two.

Section 43.Right to Eight Hours' Work-Notwithstanding the provision of existing laws to thecontrary, farm workers shall not be required to workfor more than eight hours daily. When the work isnot continuous, the time during which the farmworker is not working and can leave his workingplace and can rest completely shall not be counted.

Work may be performed beyond eight hours a dayin case of actual or impending emergencies causedby serious accidents, fire, flood, typhoon, epidemic,or other disaster or calamity, or in case of urgentwork to be performed on farm machines, equipmentor installations in order to avoid a serious losswhich the farm employer or manager wouldotherwise suffer, or some other just cause of asimilar nature, but in all such cases the farmworkers shall be entitled to receive compensationfor the overtime work performed at the same rate

as their regular wages, plus at least twenty-five percentum additional, based on their daily wages.

No farm employer or manager shall compel a farmworker to work during Sundays and legal holidays:Provided, however, That should the farm worker

agree to work on said days, he shall be paid anadditional sum of at least twenty-five per centum ofhis regular compensation; Provided, further, Thatthe farm employer or manager shall not be heldliable for any claim for overtime work which he hadnot previously authorized, except if the workrendered was to avoid damages to crops, produce,work animals or implements, buildings or the like.

Any agreement or contract between the farmemployer or manager and the farm worker contraryto the provisions of this Section shall be null and

void.

Section 44.Right of Action for Damages -Notwithstanding the provisions of existing laws tothe contrary, Act Numbered Eighteen hundred andseventy-four, as amended, entitled "An Act toextend and regulate the responsibility of employersfor personal injuries and death suffered by theiremployees while at work", shall apply to farmworkers insofar as it may be applicable.

Section 45.Right to Compensation for Personal

Injuries, Death, or Illness - Notwithstanding theprovisions of existing laws to the contrary, ActNumbered Thirty-four hundred and twenty-eight, asamended, entitled "An Act prescribing thecompensation to be received by employees forpersonal injuries, death or illness contracted in theperformance of their duties", shall apply to farmworkers insofar as it may be applicable.

Section 46.Right Against Suspension of Lay-off-The landowner, farm employer or farm managershall not suspend, lay-off or dismiss any farm

worker without just cause from the time a farmworkers' organization or group of farm workers haspresented to the landowner a petition or complaintregarding any matter likely to cause a strike orlockout and a copy thereof furnished with theDepartment of Labor, or while an agriculturaldispute is pending before the Court of AgrarianRelations. If it is proved during the said period thata worker has been suspended or dismissed without

just cause, the Court may direct the reinstatementand the payment of his wage during the time of hissuspension or dismissal or of any sum he should


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have received had he not been suspended ordismissed, without prejudice to any criminal liabilityof the landowner, farm employer or farm manageras prescribed by Section twenty-four ofCommonwealth Act Numbered One hundred andthree, as amended.

Section 47.Other Applicable Provisions - All otherexisting laws applicable to non-agricultural workersin private enterprises which are not inconsistentwith this Code shall likewise apply to farm workers,farm labor organizations and agrarian disputes asdefined in this Code, as well as to relationsbetween farm management and farm labor and thefunctions of the Department of Labor and otheragencies.

Section 48.Exceptions to Preceding Section - The

preceding Sections of this Chapter, except Sectionsforty, forty-one, forty-two and forty-three shall notapply to farm enterprises comprising not more thantwelve hectares.

CHAPTER IIILAND AUTHORITY

ARTICLE IOrganization and Functions of the Land

Authority

Section 49.Creation of the Land Authority- For thepurpose of carrying out the policy of establishingowner-cultivatorship and the economic family-sizefarm as the basis of Philippine agriculture and otherpolicies enunciated in this Code, there is herebycreated a Land Authority, hereinafter called the

Authority, which shall be directly under the controland supervision of the President of the Philippines.

The Authority shall be headed by a Governor whoshall be appointed by the President with theconsent of the Commission on Appointments.

He shall be assisted by two Deputy Governors whoshall be appointed by the President with theconsent of the Commission on Appointments, eachof whom shall head such operating departments asmay be set up by the Governor. The Governor andthe Deputy Governors shall hold office for fiveyears.

Section 50.Qualifications and Compensation ofGovernors - No person shall be appointedGovernor or Deputy Governor of the Authorityunless he is a natural-born citizen of thePhilippines, with adequate background andexperience in land reform here and/or elsewhere,

and at least thirty-five years of age.

The Governor shall receive an annualcompensation of twenty-four thousand pesos; theDeputy Governors shall each receive an annualcompensation of eighteen thousand pesos.

Section 51.Powers and Functions - It shall be theresponsibility of the Authority:

(1) To initiate and prosecute expropriationproceedings for the acquisition of private

agricultural lands as defined in Section onehundred sixty-six of Chapter XI of this Codefor the purpose of subdivision into economicfamily-size farm units and resale of saidfarm units to bona fide tenants, occupantsand qualified farmers: Provided, That thepowers herein granted shall apply only toprivate agricultural lands subject to theterms and conditions and order of priorityhereinbelow specified:

a. all idle or abandoned private

agricultural lands, except those heldor purchased within one year fromthe approval of this Code by privateindividuals or corporations for thepurpose of resale and subdivisioninto economic family-size farm unitsin accordance with the policiesenunciated in this Code: Provided,That the subdivision and resale shallbe substantially carried out withinone year from the approval of thisCode;

b. all private agricultural landssuitable for subdivision intoeconomic family-size farm units,owned by private individuals orcorporations worked by lessees, nosubstantial portion of whoselandholding in relation to the areasought to be expropriated, is plantedto permanent crops under laboradministration, in excess of seventy-five hectares except all private


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agricultural lands under laboradministration and lands acquiredunder Section seventy-one of thisCode; and

c. in expropriating private agricultural

lands declared by the National LandReform Council or by the LandAuthority within a land reform districtto be necessary for theimplementation of the provisions ofthis Code, the following order ofpriority shall be observed:

1. idle or abandoned lands;

2. those whose area exceeds1,024 hectares;

3. those whose area exceeds500 hectares but is not morethan 1,024 hectares;

4. those whose area exceeds144 hectares but is not morethan 500 hectares; and

5. those whose area exceeds75 hectares but is not morethan 144 hectares.

(2) To help bona fide farmers without landsor agricultural owner-cultivators ofuneconomic-size farms to acquire and owneconomic family-size farm units;

(3) To administer and dispose of agriculturallands of the public domain under thecustody and administration of the NationalResettlement and Rehabilitation

Administration prior to the approval of thisCode and such other public agricultural

lands as may hereafter be reserved by thePresident of the Philippines for resettlementand sale, in accordance with such termsand conditions as are set forth under thisChapter: Provided, That the exercise of theauthority granted herein, as well as in thepreceding sub-paragraph, shall notcontravene public policy on the permanencyof forest reserves or other laws intended forthe preservation and conservation of publicforests;

(4) To develop plans and initiate actions forthe systematic opening of alienable anddisposable lands of the public domain forspeedy, distribution to and development bydeserving and qualified persons orcorporations;

(5) To recommend to the President, fromtime to time after previous consultation withthe Secretary of Agriculture and NaturalResources, what portion of the alienable ordisposable public lands shall be reservedfor settlement or disposition under thischapter;

(6) To give economic family-size farms tolandless citizens of the Philippines whoneed, deserve, and are capable of

cultivating the land personally, throughorganized resettlement, under the termsand conditions the Authority may prescribe,giving priority to qualified and deservingfarmers in the province where such landsare located;

(7) To reclaim swamps and marshes, obtaintitles thereto whenever feasible andsubdivide them into economic family-sizefarms for distribution to deserving andqualified farmers;

(8) To undertake measures which will insurethe early issuance of titles to persons orcorporations who have actually settled andcultivated disposable alienable lands of thepublic domain;

(9) To survey, subdivide and set aside landsor areas of landholdings under itsadministration for economic family-sizefarms, large-scale farm operations, townsites, roads, parks, government centers and

other civic improvements as circumstancesmay warrant and to submit subdivisionsurvey plans conducted either by thegovernment or private surveyors on parcelsof lands under its administration forverification and approval either by theDirector of Lands or by the LandRegistration Commission;

(10) To inform the Agricultural ProductivityCommission and the Office of the Agrarian


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Counsel of the problems of settlers andfarmers on lands under its administration;

(11) To acquire for agricultural lesseesexercising their right of pre-emption underChapter I of this Code, any landholdings

mentioned thereunder;

(12) To conduct land capability survey andclassification of the entire country and printmaps;

(13) To make such arrangements with theLand Bank with respect to titles ofagricultural lands of the public domain underits administration as will be necessary tocarry out the objectives of this Code;

(14) To expropriate home lots occupied byagricultural lessees outside theirlandholdings for resale at cost to saidagricultural lessees; and

(15) To submit to the President of thePhilippines and to both Houses of Congressthrough their presiding officers, to theSecretary of Finance and to the AuditorGeneral within sixty days of the close of thefiscal year, an annual report showing itsaccomplishments during the year; the

expropriation proceedings it hasundertaken; the expenditures it has incurredand other financial transactions undertakenwith respect thereto.

Section 52.Appointment of Subordinate Officialsand Employees - The Governor shall organize thepersonnel in such departments, divisions andsections of the Authority as will insure theirmaximum efficiency. He shall appoint, subject tocivil service rules and regulations, fix thecompensation, subject to WAPCO rules and

regulations, and determine the duties ofsubordinate officials and employees as theexigencies of the service may require.

ARTICLE IIExpropriation of Private Agricultural Lands

Section 53.Compulsory Purchase of AgriculturalLands - The Authority shall, upon petition in writingof at least one-third of the lessees and subject tothe provisions of Chapter VII of this Code, institute

and prosecute expropriation proceedings for theacquisition of private agricultural lands and homelots enumerated under Section fifty-one. In theevent a landowner agrees to sell his property underthe terms specified in this Chapter and the NationalLand Reform Council finds it suitable and

necessary to acquire such property, a joint motionembodying the agreement, including the valuationof the property, shall be submitted by the Land

Authority and the land-owner to the Court forapproval: Provided, That in such case, any personqualified to be a beneficiary of such expropriation orpurchase may object to the valuation as excessive,in which case the Court shall determine the justcompensation in accordance with Section fifty-six ofthis Code.

Section 54.Possession of the Land; Procedure -

The Authority, after commencing the expropriationsuit, may take immediate possession of the landupon deposit with the Court that has acquired

jurisdiction over the expropriation proceedings inaccordance with the Rules of Court, of money, andbonds of the Land Bank, in accordance with theproportions provided for under Section eighty of thisCode, equal to the value as determined by theCourt in accordance with the provisions of Sectionfifty-six hereof.

Section 55.Expeditious Survey and Subdivision -

Immediately after the Authority takes possession oflands to be acquired by it under this Code, it shallundertake a subdivision survey of the land intoeconomic family-size farms which shall beimmediately assigned to beneficiaries selected inaccordance with Section one hundred and twenty-eight subject to such rules and regulations as itmay prescribe.

Section 56.Just Compensation - In determiningthe just compensation of the land to beexpropriated pursuant to this Chapter, the Court, in

land under leasehold, shall consider as a basis,without prejudice to considering other factors also,the annual lease rental income authorized by lawcapitalized at the rate of six per centum per annum.

The owner of the land expropriated shall be paid inaccordance with Section eighty of this Act by theLand Bank and pursuant to an arrangement hereinauthorized.

Section 57.Duty of Court in ExpropriationProceedings - In expropriation proceedings, it shall


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be the duty of the Court to include in its resolutionor order of expropriation a provision that the Land

Authority shall, after taking possession of the landand after the subdivision thereof, allow the LandBank to have the title thereto for the purpose ofpaying the owner the just compensation therefor.

Section 58.Issuance of Certificates of Title forParcel or Lot- After the payment of justcompensation on the land expropriated the LandBank shall cause the issuance of separatecertificates of titles for each parcel or lot inaccordance with the subdivision survey madeunder Section fifty-five.

Section 59.Prohibition Against Alienation andEjectment- Upon the filing of the petition referred toin Section fifty-three the landowner may not

alienate any portion of the land covered by suchpetition except in pursuance of the provisions ofthis Code, or enter into any form of contract todefeat the purposes of this Code, and no ejectmentproceedings against any lessee or occupant of theland covered by the petition shall be instituted orprosecuted until it becomes certain that the landshall not be acquired by the Authority.

Section 60.Disposition of Expropriated Land-After separate certificates of titles have been issuedin accordance with Section fifty-eight, the Land

Authority, on behalf of the Republic of thePhilippines and in representation of the Land Bankas the financing agency, shall allot and sell eachparcel or lot to a qualified beneficiary selectedunder Section fifty-five of this Code, subject touniform terms and conditions imposed by the LandBank: Provided, That the resale shall be at costwhich shall mean the purchase price not more thansix per centum per annum, which shall coveradministrative expenses, and actual expenses forsubdivision, surveying, and registration: Provided,further, That such cost shall be paid on the basis of

an amortization plan not exceeding twenty-fiveyears at the option of the beneficiary.

In case some agricultural lessees working portionsof agricultural lands acquired by the governmentunder this Code prefer to remain as lesseesthereof, which preference shall be expressed inwriting and attested by a representative of theOffice of Agrarian Counsel, the resale andredistribution to them shall be deferred until suchtime that such lessees are ready and willing toassume the obligations and responsibilities of

independent owners, which shall be manifested bya written notice to this effect by the lessees andwhich shall oblige the Land Authority forthwith toallot and sell such portions to such lessees underthe same uniform terms and conditions. Pendingthe sale, such lessees shall continue to work on

their landholdings and receive the produce thereof,subject, however, to the requirement that they paythe Land Bank the allowable rental established inSection thirty-four. The Land Bank shall apply therental to the six percent added to the acquisitionprice and credit the balance to the acquisition costin the name of the lessee as partial payment for theland.

The Land Authority shall administer said parcels ofland during the period they are under lease.Competent management and adequate production

credit shall be provided in accordance with theprogram developed by the Land Reform ProjectTeam for such area.

Section 61.Organization of CooperativeAssociations - For the purpose of more efficientmanagement, adoption of modern farm methodsand techniques, and spreading risk, either throughdiversification of farm projects or mutualassumption of risks the farmer beneficiaries mayorganize themselves into cooperative associationswith the advice or assistance of the Agricultural

Productivity Commission and in accordance withthe guidelines established by said Commission forsuch associations.

Section 62.Limitation on Land Rights - Except incase of hereditary succession by one heir,landholdings acquired under this Code may not beresold, mortgaged, encumbered or transferred untilafter the lapse of ten years from the date of fullpayment and acquisition and after such ten-yearperiod, any transfer, sale or disposition may bemade only in favor of persons qualified to acquire

economic family-size farm units in accordance withthe provisions of this Code: Provided, That apurchaser who acquired his landholding under acontract to sell may secure a loan on the samefrom any private lending institution or individual foran amount not exceeding his equity on saidlandholding upon a guaranty by the Land Bank.

Section 63.Inscription of Specific ProhibitionAgainst Resale and Subdivision of Landholding-Certificates of titles of landholdings acquired by theLand Authority and resold to purchasers shall


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contain therein a specific inscription prohibitingfurther subdivision and the resale, transfer orencumbrance of said landholdings except asprovided in the preceding Section.

Section 64.Exemption from Attachment- Lands

acquired under the provisions of this Chapter shallbe exempt from execution and attachment, exceptwhen the land itself is the property mortgaged, inaccordance with Section sixty-two of this Code.

Section 65.Precedence of Expropriation Cases -Expropriation cases filed by the Authority underprovisions of this Chapter shall take precedenceover all other civil cases pending before the Courtand shall be terminated within a period notexceeding six months from the date of filing.

ARTICLE IIIDistribution of Agricultural Lands of the Public

Domain

Section 66.Title to Public Agricultural Land- Uponreservation by the President of the Philippines ofpublic agricultural land available for disposition bythe Land Authority, such land shall be surveyed,titled and transferred to the Land Bank, which shallreduce said title into individual titles for specific

parcels or lots in accordance with the subdivisionsurvey conducted by the Land Authority underparagraph 9 of Section fifty-one: Provided,however, That existing laws governing theacquisition of public lands shall have beencomplied with.

The Land Authority shall thereupon distribute inaccordance with the provisions of this Code, eachparcel or lot, subject to the terms and conditions ofthe Land Bank, to a beneficiary selected pursuantto Section seventy-one or in accordance with

paragraph 3 of Section fifty-one, to a beneficiaryselected pursuant to paragraph 3 of Section onehundred twenty-eight.

Section 67.Census of Settlements - The Authorityshall take a census of all settlements already madeor started by farmers on their own initiative onpublic agricultural lands, forest lands, and onprivate titled lands which had been cleared,occupied and cultivated wholly or partially by them,with or without legal sanction. The census shall

include, among other things, the bona fidecharacter of the settlements, the character of thesettlers or farmers, the exact status of the landssettled, the feasibility of enlarging the settlements,particularly in connection with the resources of theland occupied and the neighboring areas, actual

and potential accessibility to markets, as well asstrategic location of the settlement with respect tonational security.

Section 68.Assistance to Settlers in TransportingThemselves and Their Belongings - The Authoritymay, in certain projects, assist settlers intransporting themselves, their belongings, workanimals and farm equipment, if any, from thecommunities from which they are migrating to thesettlement areas reserved for the purpose and forsubsistence necessary until credit can be provided

by government financing agencies, or by any othercredit institution by loaning to them the full amountrequired for such purposes. These loans from theLand Authority shall be non-interest bearing, shallconstitute a lien upon the land, and shall beamortized over a period of ten years, payableannually beginning with the end of the third year,after the date of arrival in the settlement areas,subject to the right of the borrower to pay in the fullat any time prior to the maturity of the loan.

Section 69.Assistance to Settlers in Securing

Equipment- The Authority may assist the settlers insecuring equipment, supplies and materialsneeded; or assist the cooperative associations ofthe new settlers in securing the most advantageousprices or terms on farm implements and suppliesneeded.

Section 70.Providing Housing andAccommodations to Settlers - The Authority mayhelp provide housing and other accommodationsfor the new settlers upon their arrival in thesettlement areas by the stationing them in properly

surveyed and subdivided lots reserved for thepurpose: help them organize community activities;and cooperate with the Bureau of Health, theBureau of Public Schools and other pertinentagencies of the Government, in providing servicesnecessary for the proper establishment ofcommunity facilities.

Section 71.Power of the Land Authority to Sell toHolders of Bonds Issued to Former LandownersWhose Lands Have Been Purchased forRedistribution - The Land Authority shall sell, for a


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price not less than the appraised value, any portionnot exceeding one hundred forty-four hectares inthe case of individuals or one thousand twenty-fourhectares in the case of corporations of the publicagricultural lands transferred to the Land Bankwhich is suitable for large-scale farm operations to

any holder, who is qualified to acquire agriculturallands through purchase, of bonds issued to formerlandowners whose lands have been purchased forredistribution under this Code, subject to thecondition that the purchaser shall, within two yearsafter acquisition, place under cultivation at leastthirty per centum of the entire area under plantationadministration and the remaining seventy percentum within five years from the date ofacquisition. The Governor of the Land Authorityshall issue the title of said land upon showing thatthe purchaser has begun the development and

cultivation of his land under plantationadministration: Provided, That public agriculturalland sold as hereinabove specified shall not be theobject of any expropriation as long as the sameshall be developed and cultivated for large-scaleproduction under farm labor management, exceptas allowed by the Constitution.

The selling price of the portion of the publicagricultural land sold under this Section shall becredited to the Government's subscription to theLand Bank. As payment for the land sold under this

Section, the Land Bank shall accept as soleinstruments of payment the bonds issued pursuantto Section seventy-six. Issued bonds accepted aspayment for the land sold shall be cancelled to theextent of the amount paid.

All sales under this Code shall be subject to theprovision of Chapter V of the Public Land Actcovering sales of public agricultural lands insofar asthey are not inconsistent with the provisions of thisCode.

Section 72.Duplicate Records to be Furnished theBureau of Lands - The Land Authority shall furnishthe Bureau of Lands with the duplicate records ofproceedings on applications for the sale or otherdisposition of public agricultural lands under itsadministration.

Section 73.Transfer of Appropriations, Powers,Functions, etc- The National Resettlement andRehabilitation Administration and the Land Tenureadministration are hereby abolished and theirpowers and functions not inconsistent with this

Code, balances of all appropriations, funds,equipment, records and supplies, as well asagricultural lands, public and private, under theiradministration, are hereby transferred to the

Authority: Provided, That the function of the LandTenure Administration with respect to the

expropriation of urban lands as provided by existinglaws is hereby transferred to and all hereafter beundertaken by the People's Homesite and housingCorporation.

In addition to the appropriations herein transferredthere is hereby appropriated from the general fundsin the National Treasury not otherwise appropriatedthe sum of five million pesos, or so much thereof asmay be necessary, to carry out the purposes of thisCode.

To carry out the land capability survey andclassification mentioned in paragraph 12 of Sectionfifty-one and Section one hundred thirty-two of thisCode, there is hereby appropriated out of theunappropriated funds of the National Treasury theamount of ten million pesos.

CHAPTER IVLAND BANK

Section 74.Creation - To finance the acquisition bythe Government of landed estates for division andresale to small landholders, as well as the purchaseof the landholding by the agricultural lessee fromthe landowner, there is hereby established a bodycorporate to be known as the "Land Bank of thePhilippines", hereinafter called the "Bank", whichshall have its principal place of business in Manila.The legal existence of the Bank shall be for aperiod of fifty years counting from the date of theapproval hereof. The Bank shall be subject to suchrules and regulations as the Central Bank may from

time to time promulgate.

Section 75.Powers in General- To carry out thismain purpose, the Bank shall have the power:

(1) To prescribe, repeal, and alter its own bylaws, to determine its operating policies,and to issue such rules and regulations asmay be necessary to achieve the mainpurpose for the creation of the Bank;


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(2) To adopt, alter and use a corporate seal;

(3) To acquire and own real and personalproperty and to sell, mortgage or otherwisedispose of the same;

(4) To sue and be sued, make contracts,and borrow money from both local andforeign sources. Such loans shall be subjectto approval by the President of thePhilippines and shall be fully guaranteed bythe Government of the Philippines;

(5) Upon recommendation of the Committeeon Investments, to hold, own, purchase,acquire, sell or otherwise invest, or reinvestin stocks, bonds or other securities capableof giving the Bank a reasonably assured

income sufficient to support its financingactivities and give its private stockholders afair return on their holdings: Provided,however, That pending the organization ofthe Committee on Investments, the Bankmay exercise the powers herein providedwithout the recommendation of saidCommittee on Investments: Provided,further, That in case of the dissolution of theLand Bank all unsold public landstransferred to it which may be allocated tothe Government of the Philippines in the

course of liquidation of the business of theBank shall revert to the Department of

Agriculture and Natural Resources; and

(6) To provide, free of charge, investmentcounselling and technical services tolandowners whose lands have beenacquired by the Land Bank. For thispurpose, the Land Bank may contract theservices of private consultants.

Section 76.Issuance of Bonds - The Land Bank

shall, upon recommendation by the Board ofTrustees and approval of the Monetary Board of theCentral Bank, issue bonds, debentures and otherevidences of indebtedness at such terms, rates andconditions as the Bank may determine up to anaggregate amount not exceeding, at any one time,five times its unimpaired capital and surplus. Suchbonds and other obligations shall be secured by theassets of the Bank and shall be fully tax exemptboth as to principal and income. Said income shallbe paid to the bondholder every six (6) months fromthe date of issue. These bonds and other

obligations shall be fully negotiable andunconditionally guaranteed by the Government ofthe Republic of the Philippines and shall beredeemable at the option of the Bank at or prior tomaturity, which in no case shall exceed twenty-fiveyears. These negotiable instruments of

indebtedness shall be mortgageable in accordancewith established banking procedures and practicesto government institutions not to exceed sixty percentum of their face value to enable the holders ofsuch bonds to make use of them in investments inproductive enterprises. They shall also be acceptedas payments for reparation equipment andmaterials.

The Board of Trustees shall have the power toprescribe rules and regulations for the registrationof the bonds issued by the Bank at the request of

the holders thereof.

Section 77.Issuance of Preferred Shares of Stockto Finance Acquisition of Landed Estates - TheLand Bank shall issue, from time to time, preferredshares of stock in such quantities not exceeding sixhundred million pesos worth of preferred shares asmay be necessary to pay the owners of landedestates in accordance with Sections eighty andeighty-one of this Code. The amount of shares thatthe Bank may issue shall not exceed the aggregateamount need to pay for acquired estates in the

proportions prescribed in said Section eighty of thisCode. The Board of Trustees shall include as anecessary part of the by-laws that it shall issueunder Section seventy-five of this Code, suchformula as it deems adequate for determining thenet asset value of its holdings as a guide and basisfor the issuance of preferred shares. The shares ofstock issued under the authority of this provisionshall be guaranteed a rate of return of six percentum per annum. In the event that the earningsof the Bank for any single fiscal year are notsufficient to enable the Bank, after making

reasonable allowance for administration,contingencies and growth, to declare dividends atthe guaranteed rate, the amount equivalent to thedifference between the Bank's earnings availablefor dividends and that necessary to pay theguaranteed rate shall be paid by the Bank out of itsown assets but the Government shall, on the sameday that the Bank makes such payment, reimbursethe latter in full, for which purpose such amounts asmay be necessary to enable the Government tomake such reimbursements are herebyappropriated out of any moneys in the National


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Treasury not otherwise appropriated. The Bankshall give sufficient notice to the BudgetCommissioner and the President of the Philippinesin the event that it is not able to pay the guaranteedrate of return on any fiscal period. The guaranteedrate of return on these shares shall not preclude the

holders thereof from participating at a percentagehigher than six per centum should the earnings ofthe Bank for the corresponding fiscal period exceedthe guaranteed rate of return. The Board ofTrustees shall declare and distribute dividendswithin three months after the close of each fiscalyear at the guaranteed rate unless a higher rate ofreturn in justified by the Bank's earnings aftermaking reasonable allowance for administration,contingencies and growth, in which case dividendsshall be declared and distributed at a higher rate.The capital gains derived from the sale or transfer

of such shares and all income derived therefrom inthe form of dividends shall be fully exempt fromtaxes.

Section 78.Special Guaranty Fund- In the eventthat the Bank shall be unable to pay the bonds,debentures, and other obligations issued by it, afixed amount thereof shall be paid from a specialguaranty fund to be set up by the Government, toguarantee the obligation of the Land Bank, andestablished in accordance with this Section, andthereupon, to the extent of the amounts so paid, the

Government of the Republic of the Philippines shallsucceed to all the rights of the holders of suchbonds, debentures or other obligations: Provided,however, That for the next four years after theestablishment of the Bank, the payment to thespecial guaranty fund should not exceed onemillion pesos per year, after which period, theGovernment shall pay into the guaranty fund thesum of five hundred thousand pesos each year untilthe cumulative total of such guaranty fund is noless than twenty percent of the outstanding netobligation of the Land Bank at the end of any singlecalendar year.

The guaranty fund shall be administered by theCentral Bank of the Philippines in the manner mostconsistent with its charter. For the purpose of suchfund, there shall be appropriated annually the sumof one million pesos out of any moneys in theNational Treasury not otherwise appropriated, untilthe total amount of twenty million pesos shall havebeen attained.

Section 79.Receiving Payments and TimeDeposits - The Bank, under the supervision of theMonetary Board and subject to the provisions of theGeneral Banking Act, shall receive savings andtime deposits from the small landholders in whosefavor public lands or landed estates acquired by the

Land Authority have been sold and, for thispurpose, establish, and maintain branches andoffices in such areas as may be necessary toservice such deposits. The Monetary Board shallsupervise and authorize the Bank to receivesavings and time deposits from the public in areaswhere facilities for such a service do not exist orcannot be adequately provided by other depositinstitutions.

Section 80.Making Payment to Owners of LandedEstates - The Land bank shall make payments in

the form herein prescribed to the owners of landacquired by the Land Authority for division andresale under this Code. Such payment shall bemade in the following manner: ten per centum incash and the remaining balance in six percent, tax-free, redeemable bonds issued by the Bank inaccordance with Section seventy-six, unless thelandowner desires to be paid in shares of stockissued by the Land Bank in accordance withSection seventy-seven in an amount not exceedingthirty per centum of the purchase price.

In the event there is an existing lien onencumbrance on the land in favor of anyGovernment institution at the time of acquisition bythe Land Bank, the bonds and/or shares, in thatorder, shall be accepted as substitute collaterals tosecure the indebtedness.

The profits accruing from payment shall be exemptfrom the tax on capital gains.

Section 81.Capital- The authorized capital stockof the Bank shall be one billion five hundred million

pesos divided into ninety million shares with a parvalue of ten pesos each, which shall be fullysubscribed by the Government and sixty millionpreferred shares with a par value of ten pesos eachwhich shall be issued in accordance with theprovisions of Sections seventy-seven and eighty-three of this Code. Of the total capital subscribedby the Government, two hundred million pesosshall be paid by the Government within one yearfrom the approval of this Code, and one hundredmillion pesos every year thereafter for two years forwhich purpose the amount of two hundred million


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pesos is hereby appropriated upon the effectivity ofthis Code, and one hundred million pesos everyyear for the next two years thereafter, out of thefunds in the National Treasury not otherwiseappropriated for the purpose: Provided, That ifthere are not enough funds in the National Treasury

for the appropriation herein made, the Secretary ofFinance, with the approval of the President of thePhilippines, shall issue bonds or other evidence ofindebtedness to be negotiated either locally orabroad in such amount as may be necessary tocover any deficiency in the amount above-appropriated but not exceeding four hundred millionpesos, the proceeds of which are herebyappropriated: Provided, further, That the bonds tobe issued locally shall not be supported by theCentral Bank: Provided, finally, That there isautomatically appropriated out of the

unappropriated funds in the National Treasury suchamounts as is necessary to cover the losses whichshall include among other things loss of earningsoccasioned by the limitation of the resale costherein provided such that said amount togetherwith the administrative expenses mentioned inSection ninety hereof shall not exceed in theaggregate the equivalent of two and one-half percentum of its assets limited therein.

Section 82.Government Shares - All shares ofstock in the Bank subscribed or owned by the

Government shall not be entitled to participate inthe income earned by the Bank from itsinvestments and other operations, whether in theform of cash or stock dividends or otherwise.

Amounts expended for the administration of theBank shall not be deemed as a participation of theGovernment in income.

Section 83.Preferred Shares - All preferred sharesof stock issued under Section seventy-seven of thisCode shall be entitled to the income earned by theBank on its investments and other operations and

shall have a limited right to elect annually onemember of the Board of Trustees and one memberof the Committee on Investments: Provided, Thatthe holders of such preferred shares of stock shallnot bring derivative suits against the Bank. Suchpreferred shares shall be fully transferable:Provided, further, That upon the liquidation of theBank, the redemption of such preferred sharesshall be given priority and shall be guaranteed atpar value.

Section 84.Voting of Shares - The voting power ofall the shares of stock of the Land Bank owned orcontrolled by the Government shall be vested in thePresident of the Philippines or in such person orpersons as he may from time to time designate.

Section 85.Use of Bonds - The bonds issued bythe Land Bank may be used by the holder thereofand shall be accepted in the amount of their facevalue as any of the following:

(1) Payment for agricultural lands or otherreal properties purchased from theGovernment;

(2) Payment for the purchase of shares ofstock of all or substantially all of the assetsof the following Government owned or

controlled corporations: The NationalDevelopment Company; Cebu PortlandCement Company; National Shipyards andSteel Corporation; Manila Gas Corporation;and the Manila Hotel Company.

Upon offer by the bondholder, thecorporation owned or controlled by theGovernment shall, through its Board ofDirectors, negotiate with such bondholderwith respect to the price and other termsand conditions of the sale. In case there are

various bondholders making the offer, theone willing to purchase under terms andconditions most favorable to the corporationshall be preferred. If no price is acceptableto the corporation, the same shall bedetermined by a Committee of Appraiserscomposed of three members, one to beappointed by the corporation, another by thebondholder making the highest or only offer,and the third by the two members sochosen. The expenses of appraisal shall beborne equally by the corporation and the

successful purchaser.

Should the Government offer for sale to thepublic any or all of the shares of stock or theassets of any of the Government owned orcontrolled corporations enumerated herein,the bidder who offers to pay in bonds of theLand Bank shall be preferred provided thatthe various bids be equal in every respectexcept in the medium of payment.


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(3) Surety or performance bonds in allcases where the Government may requireor accept real property as bonds; and

(4) Payment for, reparations goods.

Section 86.Board of Trustees - The affairs andbusiness of the Bank shall be directed, its powersexercised and its property managed and preservedby a Board of Trustees. Such Board shall becomposed of one Chairman and four members, oneof whom shall be the head of the Land Authoritywho shall be an ex-officio member of such Boardand another to be elected by the holders ofpreferred shares. The Chairman and two membersof the Board of Trustees shall serve on full-timebasis with the Bank. With the exception of the headof the Land Authority and the member elected by

the holders of preferred shares, the Chairman andall members of the Board shall be appointed by thePresident with the consent of the Commission on

Appointments for a term of seven years, except thatthe first Chairman and members to be appointedunder this Code shall serve for a period of three,five and seven years, such terms to be specified intheir respective appointments. Thereafter theChairman and members, with the exception of theex-officio member, appointed after such initialappointment shall serve for a term of seven yearsincluding any Chairman or member who is

appointed in place of one who resigns or isremoved or otherwise vacates his position beforethe expiration of his seven-year term. TheChairman and the two full-time members of theBoard shall act as the heads of such operatingdepartments as may be set up by the Board underthe authority granted by Section eighty-seven ofthis Code. The Chairman shall have authority,exerciseable at his discretion, to determine fromtime to time the organizational divisions to beheaded by each member serving full time and tomake the corresponding shifts in designations

pursuant thereto. The compensation of theChairman and the members of the Board ofTrustees serving full time shall be twenty-fourthousand and eighteen thousand pesos,respectively. The other members of the Board shallreceive a per diem of one hundred pesos for eachsession of the Board that they attend.

Section 87.The Chairman and Vice-Chairman -The Chairman of the Board shall be the chiefexecutive officer of the Bank. He shall have directcontrol and supervision of the business of the Bank

in all matters which are not by this Code or by theby-laws of the Bank specifically reserved to bedone by the Board of Trustees. He shall beassisted by an Executive Vice-Chairman and oneor more vice-chairman who shall be chosen andmay be removed by the Board of Trustees. The

salaries of the Vice-Chairmen shall be fixed by theBoard of Trustees with the approval of thePresident of the Philippines.

Section 88.Qualifications of Members - No personshall be appointed Chairman or member of theBoard unless he is a man of accepted integrity,probity, training and experience in the field ofbanking and finance, at least thirty-five years of ageand possessed of demonstrated administrative skilland ability.

Section 89.Committee on Investments - Thereshall be a Committee on Investments composed ofthree members; the member of the Board ofTrustees elected by the holders of preferred sharesas Chairman, one member to be appointed by thePresident of the Philippines from among thegovernment members of the Board of Trustees,and another member to be selected by the holdersof preferred shares under Section eighty-three ofthis Code. The Committee on Investments shallrecommend to the Board of Trustees thecorporations or entities from which the Land Bank

shall purchase shares of stock.

The Land Bank shall not invest in any corporation,partnership or company wherein any member of theBoard of Trustees or of the Committee onInvestments or his spouse, direct descendant orascendant has substantial pecuniary interest or hasparticipation in the management or control of theenterprise except with the unanimous vote of themembers of the Board of Trustees and of theCommittee on Investments, excluding the memberinterested, in a joint meeting held for that purpose

where full and fair information of the extent of suchinterest or participation has been adequatelydisclosed in writing and recorded in the minutes ofthe meeting: Provided, That such interestedmember shall not in any manner participate in thedeliberations and shall refrain from exerting anypressure or influence whatever on any official ormember of the Bank whose functions bear on orrelate to the investment of the funds of the Bank inthe enterprise: Provided, further, That the totalinvestment in any single corporation, partnership,


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company, or association shall not exceed five percentum of the total investible funds.

Section 90.Personnel; Cost of Administration -The Administrative expenses of the Bank duringany single fiscal year shall not in any case exceed

two and one-half per centum of its total assets. TheBoard of Trustees shall provide for an organizationand staff of officers and employees necessary tocarry out the functions of the Bank, fix theircompensation, and appoint and remove suchofficers and employees for cause. The Bankofficers and employees shall be subject to the rulesand regulations issued by the Civil ServiceCommission but shall not fall under the Wage andPosition Classification Office. The Board ofTrustees shall recommend to the Civil ServiceCommission rules and regulations for the

recruitment, appointment, compensation,administration, conduct, promotion and removal ofall Bank officers and employees under a strict meritsystem and prepare and conduct examinationsunder the supervision of said Commission.

Section 91.Legal counsel- The Secretary ofJustice shall be ex-officio legal adviser of the Bank.

Any provision of law to the contrarynotwithstanding, the Land Bank shall have its ownLegal Department, the chief and members of whichshall be appointed by the Board of Trustees. The

composition, budget and operating expenses of theOffice of the Legal Counsel and the salaries andtraveling expenses of its officers and employeesshall be fixed by the Board of Trustees and paid bythe Bank.

Section 92.Auditor- The Auditor General shall bethe ex-officio auditor of the Bank and shall appointa representative, who shall be the auditor in chargeof the auditing office of the Bank. The AuditorGeneral shall, upon the recommendation of theauditor of the Bank, appoint or remove the

personnel of the auditing office. The compensation,budget and operating expenses of the auditingoffice and the salaries and traveling expenses ofthe officers and employees thereof shall be fixed bythe Board of Trustees and paid by the Banknotwithstanding any provision of law to thecontrary.

Section 93.Report on Condition of Bank- Therepresentative of the Auditor General shall make aquarterly report on the condition of the Bank to thePresident of the Philippines, to the Senate through

its President, to the House of Representativesthrough its Speaker, to the Secretary of Finance, tothe Auditor General and to the Board of Trustees ofthe Bank. The report shall contain, among otherthings, a statement of the resources and liabilitiesincluding earnings and expenses, the amount of

capital stock, surplus, reserve and profits, as wellas losses, bad debts, and suspended and overduepaper carried in the books as assets of the Bank,and a plantilla of the Bank.

Section 94.Auditing Rules and Regulations - TheAuditor General shall, with respect to the Bank,formulate improved and progressive auditing rulesand regulations designed to expedite theoperations of the Bank and prevent the occurrenceof delays and bottlenecks in its work.

Section 95.Removal of Members - The Presidentof the Philippines may, at any time, remove theChairman or any member of the Board appointedby him if the interest of the Bank so requires, forany of the following causes:

(1) Mismanagement, grave abuse ofdiscretion, infidelity in the conduct offiduciary relations, or gross neglect in theperformance of duties;

(2) Dishonesty, corruption, or any act

involving moral turpitude; and

(3) Any act or performance tending toprejudice or impair the substantial rights ofthe stockholders.

Conviction of the Chairman or a member for acrime carrying with it a penalty greater than arrestomayor shall cause the removal of such Chairman ormember without the necessity of Presidentialaction.

The Chairman or member may, in any of the abovecases, be civilly liable for any damage that mayhave been suffered by the stockholders.

Section 96.Transfer of Claims and Liabilities - Theassets of the former Land Tenure Administrationand the National Resettlement and Rehabilitation

Administration in the form of claims and receivablesarising from the sale or transfer of private andpublic lands, agricultural equipment, machinery,tools and work animals, but excluding advances


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made for subsistence, to small landholders shall,after an exhaustive evaluation to determine theirtrue asset value, be irrevocably transferred to theBank under such arrangements as the Land

Authority and the Bank shall agree upon.Thereafter, the Bank shall have authority and

jurisdiction to administer the claims, to collect andmake adjustments on the same and, generally, todo all other acts properly pertaining to theadministration of claims held by a financialinstitution. The Land Authority, upon request of theBank, shall assist the latter in the collection of suchclaims. The Land Authority shall be entitled tocollect from the Bank no more than the actual costof such collection services as it may extend. Theclaims transferred under this Section shall not beconsidered as part of the Government'ssubscription to the capital of the Bank.

Section 97.Regulation - The Bank shall not besubject to the laws, rules and regulations governingbanks and other financial institutions of whatevertype except with respect to the receipt of savingsand time deposits in accordance with Sectionseventy-nine of this Code, in which case the legalreserve and other requirements prescribed by theCentral Bank for such deposits shall apply. TheBank shall be operated as an autonomous bodyand shall be under the supervision of the CentralBank.

Section 98.Tax Exemption - The operations, aswell as holdings, equipment, property, income andearnings of the Bank from whatever sources shallbe fully exempt from taxation.

Section 99.Organization of Bank- The Bank shallbe organized within one year from the date that thisCode takes effect.

Section 100.Penalty for Violation of the Provisionsof this Chapter- Any trustee, officer, employee or

agent of the Bank who violates or permits theviolation of any of the provisions of this Chapter, orany person aiding or abetting the violations of anyof the provisions of this Chapter, shall be punishedby a fine not to exceed ten thousand pesos or byimprisonment of not more than five years, or bothsuch fine and imprisonment at the discretion of theCourt.

CHAPTER VAGRICULTURAL CREDIT ADMINISTRATION

Section 101.Reorganization of ACCFA to Align ItsActivities - The administrative machinery of theAgricultural Credit and Cooperative Financing

Administration created under Republic ActNumbered Eight hundred twenty-one, as amendedby Republic Act Numbered Twelve hundred andeighty-five, shall be reorganized to enable it to alignits activities with the requirements and objectives ofthis Code and shall be known as the AgriculturalCredit Admini

RA 3844 Agricultural Land Reform Code

Documents

Transcript of RA 3844 Agricultural Land Reform Code