THE AGRICULTURAL REFORM CODE

Republic Act No. 3844

Enacted on August 8, 1963 during the incumbency of President Diosdado P. Macapagal

(1961-1965)
Amended by R.A. 10374 (July 23, 2012) which expanded the life of the Land Bank of
the Philippines
Amended by R.A. 9700 (July 27, 2009) amending R.A. 6657 on Comprehensive
Agrarian Reform Law of 1988
Amended R.A. 6389 Agrarian Reform Special Fund

Objective
To create a system of owner-cultivatorship and economic family-size farm as basis of
Philippine agriculture.
Prominent Features
1. Share Tenancy System to Agricultural Leasehold System
2. BILL OF RIGHTS for agricultural workers
3. Department of Agrarian Reform (DAR) serves as machinery for acquisition and
distribution of agricultural land
4. Land Bank as the financial arm of the agrarian reform program.

Effect on Share Tenancy Contracts

Existing share tenancy contracts may continue until the end of agricultural year unless
the contract provides for a shorter period.
Presumption of Leasehold Relationship if a new share tenancy is created (without
prejudice to any lawful contracts the parties may enter into).
Leasehold contracts perfected prior to the Code will be respected.

Form of Lease Contract

1. Made in quadruplicate in a language or dialect known to the agricultural lessee;
2. Signed or thumb-marked by the Agricultural lessee personally and the agricultural
lessor in the presence of two witnesses chosen by each party;
3. Acknowledge before the municipal court where the land is located;
4. Registered with the Municipal Treasure (Custodian of leasehold contracts Registry of
Agricultural Leasehold Contracts).
Note: The witness of the agricultural lessee is there to explain the contents of the contract if
the latter is unable to read.

Leasehold Relation
FORM

PARTIES

TENURE

Established by operation of

Limited to the person who

Right to continue working

law in accordance with

furnishes the landholding

on the landholding

Section four of this Code

either as owner, civil law

Security of tenure on his

and, in other cases, either

lessee, usufructuary, or legal

landholding and cannot

orally or in writing,

possessor, and the person who

be ejected therefrom

expressly or impliedly.

personally cultivates the same.

unless authorized by the

Court for cause

Grounds for Extinguishment of the Leasehold

1. Abandonment without the knowledge of the agricultural lessor;
2. Voluntary surrender by the agricultural lessee, with written notice three (3) months in
advance;
3. Absence of successor of the lessee in case of death or permanent incapacity.

Qualified Successors of the Lessee

Personally chosen by the lessee one (1) month prior to his death or permanent incapacity
from the following:
1. Surviving spouse
2. Eldest direct descendant by consanguinity
3. Next eldest descendant/s in order of age
Failure to Choose: Priority will be according to the order enumerated.

Alienation of the Landholding

The purchaser or transferee of the landholding shall be SUBROGATED to the rights and
SUBSTITUTED to the obligations of the agricultural lessor.
Mere expiration of term/period of the leasehold contract does not extinguish the relation.
Terms and Conditions Contrary to Law, Morals, Public Policy
1. Excessive rental;
2. Payment of consideration in excess of the fair rental value;
3. Contract contains a condition that requires the lessee to:
a. Rent work animals or hire farm implements from the lessor or 3rd
persons;
b. Work or render service other than his duties with or without
compensation;
c. Answer to any fine, deductions, and/or assessments.

Termination of Leasehold by the Lessee

1. Cruel, inhumane or offensive treatment of the lessee by the lessor or his family;
2. Non-compliance of the lessor to the Code or the lease contract;
3. Compulsion to work or render service not considered as farm work or any work or
service without compensation;

4. Commission of a crime by the lessor or his representative against the lessee or any
member of his immediate family;
5. Voluntary surrender due to more advantageous circumstances.

Exemption from Lien and/or Execution

1. 25 % of the entire produce of the land; and
2. Work animals and farm implements belonging to the lessee which must not exceeding
PHP 1000
Exemption to the exemption:
Those mentioned above are not exempt from execution if issued upon judgment for its
price or judgment of foreclosure of a mortgage.

Grounds for Dispossession

1. Land has been declared as residential, commercial, industrial, or other urban purposes
by an authorized government agency;
Disturbance Compensation = 5x the average gross harvest of the landholding in
the last 5 years
2. Failure of the lessee to comply with the terms and conditions of the lease contract;
3. Planted different crops or used the landholding other than what was agreed upon;
4. Failure to adopt proven farm practices (consideration on the financial capacity and
credit facilities available)
5. Damage or destruction of the land or permanent improvements by the fault or
negligence of the lessee;
6. Failure to pay rental when it falls due;
7. Employment of a sub-lessee
Note:

Dispossession is not automatic. An action/petition must be filed by the lessor with

Obligations

Prohibitions

Rights

DARAB and prove the existence of the grounds.

Bill of Rights
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 eight (8) hours
5. Right to claim for damages for death or injuries sustained while at work
6. Right to compensation for personal injuries, death, illness
7. Right against suspension or lay-off
8. Right of pre-emption
9. Right of redemption
10. Right to a home lot

Mode of Payment of Rental

In MONEY or PRODUCE:
If in produce must be paid immediately after threshing/processing
If in money - within a reasonable time from threshing or processing.

Agricultural Lessee

 To cultivate and take care of the

Contracting

To have peaceful

farm as a good father of a

additional

possession and

family according to proven farm

landholdings

enjoyment of the

practices.

from a different

land.

Inform the lessor of any

lessor.

trespass by third persons

To manage and

Cultivating an

Take care of work animals and

work on the land

economic-size

with proven farm

farm improvements given by the

farm without

practices.

lessor (loss of such makes the

knowledge and

To mechanize all

lessee liable to their value)

consent of the

phase of farm

lessor (if the

work.

Keep the farm and crops

attended to ( unjustified

landholding is

abandonment Court order

sufficient in size)

forfeited in favor of the lessor)

To deal with millers

and processors &

Employment of a

Three (3) days advance

attend to issuance

sub-lessee

of quedans or

notification of the date of

(Exemption: in

warehouse

harvesting or threshing.

case of

receipts.

To pay lease rental when it falls

due

temporary

To have a home lot

incapacity).

within the land he

leases.

Enforceability of Loans Obtained By an Agricultural Lessee

To be enforceable, loans obtained by an agricultural lessee should be:
1. Written in language or dialect know to the agricultural lessee; and
2. Signed or thumb-marked by the agricultural lessee or by his agent.

Prescriptive Period
Three (3) years reckoned from the time the cause of action accrued.

Expropriation of Private Agricultural Lands

They shall be expropriated in the following order:

1. Idle or abandoned lands;

2. Those whose area exceeds 1,024 hectares;
3. Those whose area exceeds 500 hectares but not more than 1,024 hectares;
4. Those whose area exceeds 144 hectares but not more than 500 hectares;
5. Those whose area exceeds 75 hectares but not more than 144 hectares.

Agricultural Lessor
Obligations
Keep the lessee

Prohibitions
Dispossessing the lessee

Rights
Inspect and observe

in peaceful

except when authorized by

compliance with the

cultivation and

Court.

terms and conditions of

cultivation of

Requiring the lessee to

the

indirectly or directly assume

landholding

payment of taxes.

To keep intact

Requiring the lessee to

their contract.
Propose change of use
or crops planted (Court
will settle disagreement

all

indirectly or directly assume

but lessee will not be

improvements

payment of rent the lessor is

ejected due to

existing at the

under obligation to pay to

conversion for some

time the

3rd persons.

other agricultural

leasehold was
entered into

Dealing with millers or

processors without the

purposes)
To require the lessee to

lessees authorization.

adopt proven farm

Discourage or interfere

practices (financial

unions of lessees within his

capacity and credit

landholding

facilities)
Mortgage expected
rentals

Land Rights Limitation on Expropriation of Private Agricultural Lands

10- Year prohibitory period against encumbrance, sale, mortgage, or transfer from the date
of full payment and acquisition.

After the prohibitory period, disposition or sale may be made only in favor of persons
qualified to acquire economic-sized farms.
Exemption:
Hereditary Succession

Department of Agrarian Reform

1. Implements laws, programs and policies for the acquisition and distribution of all
agricultural lands as provided by laws;
2. Resettle landless farmers and farm workers in government-owned agricultural estates
which shall be distributed to them as provided by laws;
3. Recommend and provide incentives for voluntary sharing of lands by owners of
agricultural lands;
4. Acquire, determine the value, subdivide into family-size farm, develop and distribute
to qualified tillers, actual occupants and displaced urban poor, private agricultural
lands regardless of area and crops planted;
5. Administer and dispose of, under a settlement scheme, all portions of the public
domain declared as alienable and disposable lands for speedy distribution to and
development by deserving and qualified persons who do not own any land and under
such terms and conditions as the Department may prescribe, giving priority to
qualified and deserving farmers in the province where such lands are located;
6. Provide free legal assistance to farmers covered by agrarian reform and expedite the
resolution of agrarian conflicts and land tenure problems either through conciliatory or
adversary proceedings;
7. Provide create, responsive and effective information, education and communication
programs and projects both for the tenant beneficiaries, landowners, the government
and private sectors and the general public, thereby generating a broad spectrum of
support and understanding of the new agrarian reform program;
8. Strengthen agrarian reform beneficiaries organization to a degree of national viability
that would enable them to share in the shaping of government policies and

institutionalize farmers participation In agrarian reform policy formulation, program

implementation and evaluation;
9. Promote the organization and development and cooperatives of agrarian reform
beneficiaries and register the same;
10. Implement all agrarian reform laws and for this purpose issue subpoena, subpoena
duces tecum, and writs of execution of its orders, and decisions and other legal
processes to ensure compliance form all parties concerned for successful and
expeditious program implementation;
11. Undertake land surveys on lands covered by agrarian reform and issue patents to
farmers covered by agrarian reform, both on private and public lands;
12. Develop, implement and undertake alternative and innovative land development
schemes and land tenure systems such as, but not limited to land consolidation, land
forming cooperative farming and agro-industrial estates;
13. Approve or disapprove conversion of agricultural lands to non agricultural uses such
as residential and industrial conversion in accordance with the existing provisions of
law;
14. Undertake land use management studies;
15. Compensate the landowners covers by agrarian reform;
16. Integrate and synchronize program implementation of the Land Bank of the Philippines
and other relevant civilian and military government and private entities involve
mandated to support the agrarian reform program through inter-agency committees
and Agrarian Reform Coordinating Councils; and
17. Perform such other functions as may be provided by law.
THE LAND BANK
Established to:
1. Finance Government acquisition of landed estates for division and resale to
small landholders; and
2. To aid in the purchase of the landholding of the agricultural lessee from the
landowner.

Powers and Functions:

1. To prescribe, repeal and alter its own by-laws to determine its operating policies, and
to issue such rules and regulations as may be necessary;
2. To adopt, alter and use a corporate seal;
3. To hold, purchase, acquire and own real and personal property, introduce necessary
improvements thereon to enhance and develop their social and economic values, and
to sell, mortgage or otherwise dispose of the same;
4. To sue and be sued, make contracts, negotiate and secure loans from both local and
foreign sources. Before undertaking any such credit operation, the bank, through the
Secretary of finance, shall request the opinion, in writing, of the Monetary Board on the
monetary implications of the contemplated action. All loans from foreign sources shall
be subject to approval by the President of the Philippines shall be fully guaranteed by
the Philippine Government;
5. To grant short, medium and long term loans advances against security of real estate
and/or other acceptable assets for the establishment, development or expansion of
agricultural, industrial, home building or home financing projects and other productive
enterprises;
6. To finance and/or guarantee the acquisition, under P.D No. 85 dated December
25,1972, of farm lots transferred to tenant-farmers pursuant to P.D No. 27 dated
October 21, 1972.
7. To underwrite, hold, own purchase, acquire, sell, mortgage, dispose or otherwise
invest or reinvest in stocks, bond, debentures, securities and other evidence of
indebtedness of other corporations and of the government or its instrumentalities
which are issued for or in connection with any project or enterprise;
8. The provision of any law to the contrary notwithstanding, to guarantee acceptance(s),
credits, loans, transactions or obligations of any persons, co-partnership, association
or corporation in favor of any financing or banking institution whether foreign or
domestic; Provided, that the proceeds of such acceptances, credits, loans, transactions
or obligations are utilized or earmarked for the development and/ or expansion of
agriculture and industry;
9. To borrow from, or rediscount notes, bills of exchange and other commercial papers
with, the Central Bank. The rate of interest to be charged and the conditions on such

obligations or borrowings shall be subject to the rules and regulations of Monetary

board;
10. To act as trustee, or administer any trust or hold property in trust in accordance with
the provisions of law governing trust corporations; and
11. To act as an official government depository with full authority to maintain deposits of
the government, its branches, subdivisions and instrumentalities, and governmentowned or controlled corporations which deposits shall be subject to the liquidity flood
and/or reserve requirements as may be imposed by the Monetary Board upon other
commercial banks;
12. For the strengthening of the capital base of the bank, to establish a national marketing
umbrella for farmers and fisheries cooperatives to attract massive capital formation
from savings deposits of the cooperative members nationwide;
13. To exercise the general powers mentioned in the Corporation Law and the General
Banking Act, as amended insofar as they are not inconsistent or incompatible with
decree.
Factors for the Creation of Land Reform Districts (Sec.129)
1. Productivity of the area;
2. Suitability for economic-size farms;
3. Tenancy rate in the area;
4. Minimum fixed capital spending to develop the area;
5. Proximity of the area to resettlement projects; and
6. Number of farmers who cultivate uneconomic-sized farms.
a. Ability and readiness to be resettled;
b. Availability of idle or abandoned lands to be acquired or expropriated.
Court of Agrarian Relations
(Chapter IX)
Judicial function of the Court of Agrarian Relations is vested on an Executive Judge and
the Regional District Judges appointed by the President with consent from the
Commission on Appointments.
Fifteen (15) Regional Districts across the Philippines

 It shall have all the powers and prerogatives inherent in to the CFI/RTC.