Republic Act No. 6839

8/20/2019 Republic Act No. 6839

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PUBLIC ACT No. 3844

AN ACT TO ORDAIN THE AGRICULTURAL LAND REFORM CODE AND TO INSTITUTE LANDREFORMS IN THE PHILIPPINES, INCLUDING THE ABOLITION OF TENANCY AND THE

CHANNELING OF CAPITAL INTO INDUSTRY, PROVIDE FOR THE NECESSARY IMPLEMENTING

AGENCIES, APPROPRIATE FUNDS THEREFOR AND FOR OTHER PURPOSES

PRELIMINARY CHAPTER

TITLEDECLARATION OF POLICY AND COMPOSITION OF CODE

Sectio !. Title - This Act shall be known as the Agricultural Land Reform Code.

Sectio ". Declaration of Policy - It is the policy of the State

!"# To establish owner-culti$atorship and the economic family-si%e farm as the basis of &hilippine

agriculture and' as a conse(uence' di$ert landlord capital in agriculture to industrial de$elopment)

!*# To achie$e a dignified e+istence for the small farmers free from pernicious institutionalrestraints and practices)

!,# To create a truly $iable social and economic structure in agriculture conduci$e to greaterproducti$ity and higher farm incomes)

!# To apply all labor laws e(ually and without discrimination to both industrial and agriculturalwage earners)

!# To pro$ide a more $igorous and systematic land resettlement program and public landdistribution) and

!/# To make the small farmers more independent' self-reliant and responsible citi%ens' and asource of genuine strength in our democratic society.

Sectio 3. Composition of Code - In pursuance of the policy enunciated in Section two' the following areestablished under this Code

!"# An agricultural leasehold system to replace all e+isting share tenancy systems in agriculture)

!*# A declaration of rights for agricultural labor)

!,# An authority for the ac(uisition and e(uitable distribution of agricultural land)

!# An institution to finance the ac(uisition and distribution of agricultural land)

!# A machinery to e+tend credit and similar assistance to agriculture)

!/# A machinery to pro$ide marketing' management' and other technical ser$ices to agriculture)

!0# A unified administration for formulating and implementing pro1ects of land reform)


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!2# An e+panded program of land capability sur$ey' classification' and registration) and

!3# A 1udicial system to decide issues arising under this Code and other related laws andregulations.

CHAPTER I

AGRICULTURAL LEASEHOLD SYSTEM

Sectio 4. Abolition of Agricultural Share Tenancy - Agricultural share tenancy' as herein defined' ishereby declared to be contrary to public policy and shall be abolished &ro$ided' That e+isting sharetenancy contracts may continue in force and effect in any region or locality' to be go$erned in themeantime by the pertinent pro$isions of Republic Act 4umbered 5le$en hundred and ninety-nine' asamended' until the end of the agricultural year when the 4ational Land Reform Council proclaims that allthe go$ernment machineries and agencies in that region or locality relating to leasehold en$isioned in thisCode are operating' unless such contracts pro$ide for a shorter period or the tenant sooner e+ercise hisoption to elect the leasehold system &ro$ided' further' That in order not to 1eopardi%e internationalcommitments' lands de$oted to crops co$ered by marketing allotments shall be made the sub1ect of aseparate proclamation that ade(uate pro$isions' such as the organi%ation of cooperati$es' marketingagreements' or other similar workable arrangements' ha$e been made to insure efficient management on

all matters re(uiring synchroni%ation of the agricultural with the processing phases of such crops&ro$ided' furthermore' That where the agricultural share tenancy contract has ceased to be operati$e by$irtue of this Code' or where such a tenancy contract has been entered into in $iolation of the pro$isionsof this Code and is' therefore' null and $oid' and the tenant continues in possession of the land forculti$ation' there shall be presumed to e+ist a leasehold relationship under the pro$isions of this Code'without pre1udice to the right of the landowner and the former tenant to enter into any other lawful contractin relation to the land formerly under tenancy contract' as long as in the interim the security of tenure ofthe former tenant under Republic Act 4umbered 5le$en hundred and ninety-nine' as amended' and aspro$ided in this Code' is not impaired &ro$ided' finally' That if a lawful leasehold tenancy contract wasentered into prior to the effecti$ity of this Code' the rights and obligations arising therefrom shall continueto subsist until modified by the parties in accordance with the pro$isions of this Code.

Sectio #. Establishment of Agricultural Leasehold Relation - The agricultural leasehold relation shall be

established by operation of law in accordance with Section four of this Code and' in other cases' eitherorally or in writing' e+pressly or impliedly.

Sectio $. Parties to Agricultural Leasehold Relation - The agricultural leasehold relation shall be limitedto the person who furnishes the landholding' either as owner' ci$il law lessee' usufructuary' or legalpossessor' and the person who personally culti$ates the same.

Sectio %. Tenure of Agricultural Leasehold Relation - The agricultural leasehold relation onceestablished shall confer upon the agricultural lessee the right to continue working on the landholding untilsuch leasehold relation is e+tinguished. The agricultural lessee shall be entitled to security of tenure onhis landholding and cannot be e1ected therefrom unless authori%ed by the Court for causes hereinpro$ided.

Sectio 8. Extinguishment of Agricultural Leasehold Relation - The agricultural leasehold relationestablished under this Code shall be e+tinguished by

!"# Abandonment of the landholding without the knowledge of the agricultural lessor)

!*# 6oluntary surrender of the landholding by the agricultural lessee' written notice of which shallbe ser$ed three months in ad$ance) or


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!,# Absence of the persons under Section nine to succeed to the lessee' in the e$ent of death orpermanent incapacity of the lessee.

Sectio &. Agricultural Leasehold Relation Not Extinguished by Death or ncapacity of the Parties - Incase of death or permanent incapacity of the agricultural lessee to work his landholding' the leaseholdshall continue between the agricultural lessor and the person who can culti$ate the landholding

personally' chosen by the agricultural lessor within one month from such death or permanent incapacity'from among the following !a# the sur$i$ing spouse) !b# the eldest direct descendant by consanguinity) or!c# the ne+t eldest descendant or descendants in the order of their age &ro$ided' That in case the deathor permanent incapacity of the agricultural lessee occurs during the agricultural year' such choice shall bee+ercised at the end of that agricultural year &ro$ided' further' That in the e$ent the agricultural lessorfails to e+ercise his choice within the periods herein pro$ided' the priority shall be in accordance with theorder herein established.

In case of death or permanent incapacity of the agricultural lessor' the leasehold shall bind his legal heirs.

Sectio !'. Agricultural Leasehold Relation Not Extinguished by Expiration of Period! etc" - Theagricultural leasehold relation under this Code shall not be e+tinguished by mere e+piration of the term orperiod 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 thereof shall be subrogated to the rights and substituted to theobligations of the agricultural lessor.

Sectio !!. Lessee#s Right of Pre$emption - In case the agricultural lessor decides to sell the landholding'the agricultural lessee shall ha$e the preferential right to buy the same under reasonable terms andconditions &ro$ided' That the entire landholding offered for sale must be pre-empted by the Land

Authority if the landowner so desires' unless the ma1ority of the lessees ob1ect to such ac(uisition&ro$ided' further' That where there are two or more agricultural lessees' each shall be entitled to saidpreferential right only to the e+tent of the area actually culti$ated by him. The right of pre-emption underthis Section may be e+ercised within ninety days from notice in writing which shall be ser$ed by the owner on all lessees affected.

Sectio !". Lessee#s Right of Redemption - In case the landholding is sold to a third person without theknowledge of the agricultural lessee' the latter shall ha$e the right to redeem the same at a reasonableprice and consideration &ro$ided' That the entire landholding sold must be redeemed &ro$ided' further'That where these are two or more agricultural lessees' each shall be entitled to said right of redemptiononly to the e+tent of the area actually culti$ated by him. The right of redemption under this Section may bee+ercised within two years from the registration of the sale' and shall ha$e priority o$er any other right oflegal redemption.

Sectio !3. Affida%it Re&uired in Sale of Land Sub'ect to Right of Pre$emption - 4o deed of sale ofagricultural land under culti$ation by an agricultural lessee or lessees shall be recorded in the Registry of&roperty unless accompanied by an affida$it of the $endor that he has gi$en the written notice re(uired inSection ele$en of this Chapter or that the land is not worked by an agricultural lessee.

Sectio !4. Right of Pre$emption and Redemption Not Applicable to Land to be Con%erted intoResidential! ndustrial and Similar Purposes - The right of pre-emption and redemption granted underSections ele$en and twel$e of this Chapter cannot be e+ercised o$er landholdings suitably located whichthe owner bought or holds for con$ersion into residential' commercial' industrial or other similar non-agricultural purposes &ro$ided' howe$er' That the con$ersion be in good faith and is substantially carriedout within one year from the date of sale. Should the owner fail to comply with the abo$e condition' theagricultural lessee shall ha$e the right to repurchase under reasonable terms and conditions saidlandholding from said owner within one year after the aforementioned period for con$ersion has e+pired


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&ro$ided' howe$er' That the tenure of one year shall cease to run from the time the agricultural lesseepetitions the Land Authority to ac(uire the land under the pro$isions of paragraph "" of Section fifty-one.

Sectio !#. Agricultural Leasehold Contract in (eneral - The agricultural lessor and the agriculturallessee shall be free to enter into any kind of terms' conditions or stipulations in a leasehold contract' aslong as they are not contrary to law' morals or public policy. A term' condition or stipulation in an

agricultural leasehold contract is considered contrary to law' morals or public policy

!"# If the agricultural lessee is re(uired to pay a rental in e+cess of that which is hereinafterpro$ided for in this Chapter)

!*# If the agricultural lessee is re(uired to pay a consideration in e+cess of the fair rental $alue asdefined herein' for the use of work animals and7or farm implements belonging to the agriculturallessor or to any other person) or

!,# If it is imposed as a condition in the agricultural leasehold contract !a# that the agriculturallessee is re(uired to rent work animals or to hire farm implements from the agricultural lessor or athird person' or to make use of any store or ser$ices operated by the agricultural lessor or a thirdperson) or !b# that the agricultural lessee is re(uired to perform any work or render any ser$ice

other than his duties and obligations pro$ided in this Chapter with or without compensation) or !c#that the agricultural lessee is re(uired to answer for any fine' deductions and7or assessments.

Any contract by which the agricultural lessee is re(uired to accept a loan or to make payment therefor inkind shall also be contrary to law' morals or public policy.

Sectio !$. Nature and Continuity of Conditions of Leasehold Contract - In the absence of anyagreement as to the period' the terms and conditions of a leasehold contract shall continue until modifiedby the parties &ro$ided' That in no case shall any modification of its terms and conditions pre1udice theright of the agricultural lessee to the security of his tenure on the landholding &ro$ided' further' That incase of a contract with a period an agricultural lessor may not' upon the e+piration of the period increasethe rental e+cept in accordance with the pro$isions of Section thirty-four.

Sectio !%. )orm and Registration of Contract - Should the parties decide to reduce their agreement intowriting' the agricultural leasehold contract shall be drawn in (uadruplicate in a language or dialect knownto the agricultural lessee and signed or thumb-marked both by the agricultural lessee personally and bythe agricultural lessor or his authori%ed representati$e' before two witnesses' to be chosen by each party.If the agricultural lessee does not know how to read' the contents of the document shall be read ande+plained to him by his witness. The contracting parties shall acknowledge the e+ecution of the contractbefore the 1ustice of the peace of the municipality where the land is situated. 4o fees or stamps of anykind shall be re(uired in the preparation and acknowledgment of the instrument. 5ach of the contractingparties shall retain a copy of the contract. The 1ustice of the peace shall cause the third copy to bedeli$ered to the municipal treasurer of the municipality where the land is located and the fourth copy tothe 8ffice of the Agrarian Counsel.

5+cept in case of mistake' $iolence' intimidation' undue influence' or fraud' an agricultural contractreduced in writing and registered as hereinafter pro$ided' shall be conclusi$e between the contractingparties' if not denounced or impugned within thirty days after its registration.

Sectio !8. Registration of Leasehold Contract - The municipal treasurer shall' upon receipt of his copyof the contract' re(uire the agricultural lessee and agricultural lessor to present their respecti$e copies ofthe contract' and shall cause to be annotated thereon the date' time and place of registration as well asits entry or registration number.


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Sectio !&. Registry of Agricultural Leasehold Contracts - The 9unicipal Treasurer of the municipalitywherein the land is situated shall keep a record of all such contracts drawn and e+ecuted within his

1urisdiction' to be known as :Registry of Agricultural Leasehold Contracts:. ;e shall keep this registrytogether with a copy of each contract entered therein' and make annotations on said registry of allsubse(uent acts relati$e to each contract' such as its renewal' no$ation' cancellation' etc. 4o registrationfees or documentary stamps shall be re(uired in the registration of said contracts or of any subse(uentacts relati$e thereto.

Sectio "'. *emorandum of Loans - 4o obligation to pay money on account of loans including interestthereon obtained by the agricultural lessee from the agricultural lessor or his representati$e shall beenforceable unless the same or a memorandum thereof be in writing in a language or dialect known to theagricultural lessee' and signed or thumb-marked by him' or by his agent.

Sectio "!. Exemption from Lien and+or Execution - The following shall be e+empt from lien and7ore+ecution against the agricultural lessee

!"# Twenty-fi$e per centum of the entire produce of the land under culti$ation) and

!*#


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!"# To culti$ate and take care of the farm' growing crops' and other impro$ements on thelandholding as a good father of a family and perform all the work therein in accordance withpro$en farm practices)

!*# To inform the agricultural lessor within a reasonable time of any trespass committed by thirdpersons upon the farm' without pre1udice to his direct action against the trespasser)

!,# To take reasonable care of the work animals and farm implements deli$ered to him by theagricultural lessor and see that they are not used for purposes other than those intended or usedby another without the knowledge and consent of the agricultural lessor &ro$ided' howe$er' Thatif said work animals get lost or die' or said farm implements get lost or are destroyed' through thenegligence of the agricultural lessee' he shall be held responsible and made answerable thereforto the e+tent of the $alue of the work animals and7or farm implements at the time of the loss'death or destruction)

!# To keep his farm and growing crops attended to during the work season. In case of un1ustifiedabandonment or neglect of his farm' any or all of his e+pected produce may' upon order of theCourt' be forfeited in fa$or of the agricultural lessor to the e+tent of the damage caused thereby)

!# To notify the agricultural lessor at least three days before the date of har$esting or' whene$erapplicable' of threshing) and

!/# To pay the lease rental to the agricultural lessor when it falls due.

Sectio "%. Prohibitions to Agricultural Lessee - It shall be unlawful for the agricultural lessee

!"# To contract to work additional landholdings belonging to a different agricultural lessor or toac(uire and personally culti$ate an economic family-si%e farm' without the knowledge andconsent of the agricultural lessor with whom he had entered first into household' if the firstlandholding is of sufficient si%e to make him and the members of his immediate farm householdfully occupied in its culti$ation) or

!*# To employ a sub-lessee on his landholding &ro$ided' howe$er' That in case of illness ortemporary incapacity he may employ laborers whose ser$ices on his landholding shall be on hisaccount.

Sectio "8. Termination of Leasehold by Agricultural Lessee During Agricultural 0ear - The agriculturallessee may terminate the leasehold during the agricultural year for any of the following causes

!"# Cruel' inhuman or offensi$e' treatment of the agricultural lessee or any member of hisimmediate farm household by the agricultural lessor or his representati$e with the knowledge andconsent of the lessor)

!*# 4on-compliance on the part of the agricultural lessor with any of the obligations imposed upon

him by the pro$isions of this Code or by his contact with the agricultural lessee)

!,# Compulsion of the agricultural lessee or any member of his immediate farm household by theagricultural lessor to do any work or render any ser$ice not in any way connected with farm workor e$en without compulsion if no compensation is paid)

!# Commission of a crime by the agricultural lessor or his representati$e against the agriculturallessee or any member of his immediate farm household) or


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!# 6oluntary surrender due to circumstances more ad$antageous to him and his family.

Sectio "&. Rights of the Agricultural Lessor - It shall be the right of the agricultural lessor

!"# To inspect and obser$e the e+tent of compliance with the terms and conditions of theircontract and the pro$isions of this Chapter)

!*# To propose a change in the use of the landholding to other agricultural purposes' or in the kindof crops to be planted &ro$ided' That in case of disagreement as to the proposed change' thesame shall be settled by the Court according to the best interest of the parties concerned&ro$ided' further' That in no case shall an agricultural lessee be e1ected as a conse(uence of thecon$ersion of the land to some other agricultural purpose or because of a change in the crop tobe planted)

!,# To re(uire the agricultural lessee' taking into consideration his financial capacity and the creditfacilities a$ailable to him' to adopt in his farm pro$en farm practices necessary to theconser$ation of the land' impro$ement of its fertility and increase of its producti$ity &ro$ided'That in case of disagreement as to what pro$en farm practice the lessee shall adopt' the sameshall be settled by the Court according to the best interest of the parties concerned) and

!# To mortgage e+pected rentals.

Sectio 3'. /bligations of the Agricultural Lessor - It shall be the obligation of the agricultural lessor

!"# To keep the agricultural lessee in peaceful possession and culti$ation of his landholding) and

!*# To keep intact such permanent useful impro$ements e+isting on the landholding at the start ofthe leasehold relation as irrigation and drainage system and marketing allotments' which in thecase of sugar (uotas shall refer both to domestic and e+port (uotas' pro$isions of e+isting laws tothe contrary notwithstanding.

Sectio 3!. Prohibitions to the Agricultural Lessor - It shall be unlawful for the agricultural lessor

!"# To dispossess the agricultural lessee of his landholding e+cept upon authori%ation by theCourt under Section thirty-si+. Should the agricultural lessee be dispossessed of his landholdingwithout authori%ation from the Court' the agricultural lessor shall be liable for damages sufferedby the agricultural lessee in addition to the fine or imprisonment prescribed in this Code forunauthori%ed dispossession)

!*# To re(uire the agricultural lessee to assume' directly or indirectly' the payment of the ta+es orpart thereof le$ied by the go$ernment on the landholding)

!,# To re(uire the agricultural lessee to assume' directly or indirectly' any part of the rent' :canon:or other consideration which the agricultural lessor is under obligation to pay to third persons for

the use of the land)

!# To deal with millers or processors without written authori%ation of the lessee in cases wherethe crop has to be sold in processed form before payment of the rental) or

!# To discourage' directly or indirectly' the formation' maintenance or growth of unions ororgani%ations of agricultural lessees in his landholding' or to initiate' dominate' assist or interferein the formation or administration of any such union or organi%ation.


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Sectio 3". Cost of rrigation System - The cost of construction of a permanent irrigation system'including distributory canals' may be borne e+clusi$ely by the agricultural lessor who shall be entitled toan increase in rental proportionate to the resultant increase in production &ro$ided' That if the agriculturallessor refuses to bear the e+penses of construction the agricultural lessee or lessees may shoulder thesame' in which case the former shall not be entitled to an increase in rental and shall' upon thetermination of the relationship' pay the lessee or his heir the reasonable $alue of the impro$ement at thetime of the termination &ro$ided' further' That if the irrigation system constructed does not work' it shallnot be considered as an impro$ement within the meaning of this Section.

Sectio 33. *anner! Time and Place of Rental Payment - The consideration for the lease of the land shallbe paid in an amount certain in money or in produce' or both' payable at the place agreed upon by theparties immediately after threshing or processing if the consideration is in kind' or within a reasonabletime thereafter' if not in kind.

In no case shall the agricultural lessor re(uire the agricultural lessee to file a bond' make a deposit or paythe rental in ad$ance' in money or in kind or in both' but a special and preferential lien is hereby createdin fa$or of the agricultural lessor o$er such portion of the gross har$est necessary for the payment of therental due in his fa$or.

Sectio 34. Consideration for the Lease of Riceland and Lands De%oted to /ther Crops - Theconsideration for the lease of riceland and lands de$oted to other crops shall not be more than thee(ui$alent of twenty-fi$e per centum of the a$erage normal har$est during the three agricultural yearsimmediately preceding the date the leasehold was established after deducting the amount used for seedsand the cost of har$esting' threshing' loading' hauling and processing' whiche$er are applicable&ro$ided' That if the land has been culti$ated for a period of less than three years' the initial considerationshall be based on the a$erage normal har$est during the preceding years when the land was actuallyculti$ated' or on the har$est of the first year in the case of newly-culti$ated lands' if that har$est is normal&ro$ided' further' That after the lapse of the first three normal har$ests' the final consideration shall bebased on the a$erage normal har$est during these three preceding agricultural years &ro$ided'furthermore' That in the absence of any agreement between the parties as to the rental' the ma+imumallowed herein shall apply &ro$ided' finally' That if capital impro$ements are introduced on the farm notby the lessee to increase its producti$ity' the rental shall be increased proportionately to the conse(uent

increase in production due to said impro$ements. In case of disagreement' the Court shall determine thereasonable increase in rental.

Sectio 3#. Exemption from Leasehold of /ther 1inds of Lands - 4otwithstanding the pro$isions of thepreceding Sections' in the case of fishponds' saltbeds' and lands principally planted to citrus' coconuts'cacao' coffee' durian' and other similar permanent trees at the time of the appro$al of this Code' theconsideration' as well as the tenancy system pre$ailing' shall be go$erned by the pro$isions of Republic

Act 4umbered 5le$en hundred and ninety-nine' as amended.

Sectio 3$. Possession of Landholding2 Exceptions - 4otwithstanding any agreement as to the period orfuture surrender' of the land' an agricultural lessee shall continue in the en1oyment and possession of hislandholding e+cept when his dispossession has been authori%ed by the Court in a 1udgment that is finaland e+ecutory if after due hearing it is shown that

!"# The agricultural lessor-owner or a member of his immediate family will personally culti$ate thelandholding or will con$ert the landholding' if suitably located' into residential' factory' hospital orschool site or other useful non-agricultural purposes &ro$ided) That the agricultural lessee shallbe entitled to disturbance compensation e(ui$alent to fi$e years rental on his landholding inaddition to his rights under Sections twenty-fi$e and thirty-four' e+cept when the land owned andleased by the agricultural lessor' is not more than fi$e hectares' in which case instead ofdisturbance compensation the lessee may be entitled to an ad$anced notice of at least oneagricultural year before e1ectment proceedings are filed against him &ro$ided' further' Thatshould the landholder not culti$ate the land himself for three years or fail to substantially carry out


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such con$ersion within one year after the dispossession of the tenant' it shall be presumed thathe acted in bad faith and the tenant shall ha$e the right to demand possession of the land andreco$er damages for any loss incurred by him because of said dispossessions.

!*# The agricultural lessee failed to substantially comply with any of the terms and conditions ofthe contract or any of the pro$isions of this Code unless his failure is caused by fortuitous e$ent

or force ma1eure)

!,# The agricultural lessee planted crops or used the landholding for a purpose other than whathad been pre$iously agreed upon)

!# The agricultural lessee failed to adopt pro$en farm practices as determined under paragraph ,of Section twenty-nine)

!# The land or other substantial permanent impro$ement thereon is substantially damaged ordestroyed or has unreasonably deteriorated through the fault or negligence of the agriculturallessee)

!/# The agricultural lessee does not pay the lease rental when it falls due &ro$ided' That if the

non-payment of the rental shall be due to crop failure to the e+tent of se$enty-fi$e per centum asa result of a fortuitous e$ent' the non-payment shall not be a ground for dispossession' althoughthe obligation to pay the rental due that particular crop is not thereby e+tinguished) or

!0# The lessee employed a sub-lessee on his landholding in $iolation of the terms of paragraph *of Section twenty-se$en.

Sectio 3%. 3urden of Proof - The burden of proof to show the e+istence of a lawful cause for thee1ectment of an agricultural lessee shall rest upon the agricultural lessor.

Sectio 38. Statute of Limitations - An action to enforce any cause of action under this Code shall bebarred if not commenced within three years after such cause of action accrued.

CHAPTER IIBILL OF RIGHTS FOR AGRICULTURAL LABOR

Sectio 3&. Rights for Agricultural Labor - To enable the farm workers to en1oy the same rights andopportunities in life as industrial workers' they shall en1oy the following

!"# Right to self-organi%ation)

!*# Right to engage in concerted acti$ities)

!,# Right to minimum wage)

!# Right to work for not more than eight hours)

!# Right to claim for damages for death or in1uries sustained while at work)

!/# Right to compensation for personal in1uries' death or illness) and

!0# Right against suspension or lay-off.


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Sectio 4'. Right to Self$/rgani4ation - The farm workers shall ha$e the right to self-organi%ation and toform' 1oin or assist farm workers> organi%ations of their own choosing for the purpose of collecti$ebargaining through representati$es of their own choosing &ro$ided' That this right shall be e+ercised in amanner as will not unduly interfere with the normal farm operations. Indi$iduals employed as super$isorsshall not be eligible for membership in farm workers> organi%ations under their super$ision but may formseparate organi%ations of their own.

Sectio 4!. Right to Engage in Concerted Acti%ities - The farm workers shall also ha$e the right toengage in concerted acti$ities for the purpose of collecti$e bargaining and other mutual aid or protection.

?or the purpose of this and the preceding Section' it shall be the duty of the farm employer or manager toallow the farm workers' labor leaders' organi%ers' ad$isers and helpers complete freedom to enter andlea$e the farm' plantation or compound at the portion of the same where said farm workers li$e or staypermanently or temporarily.

Sectio 4". Right to *inimum -age - 4otwithstanding any pro$ision of law or contract to the contrary'farm workers in farm enterprises shall be entitled to at least &,.@ a day for eight hours> work &ro$ided'That this wage may' howe$er' be increased by the 9inimum


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Sectio 4$. Right Against Suspension of Lay$off - The landowner' farm employer or farm manager shallnot suspend' lay-off or dismiss any farm worker without 1ust cause from the time a farm workers>organi%ation or group of farm workers has presented to the landowner a petition or complaint regardingany matter likely to cause a strike or lockout and a copy thereof furnished with the epartment of Labor'or while an agricultural dispute is pending before the Court of Agrarian Relations. If it is pro$ed during thesaid period that a worker has been suspended or dismissed without 1ust cause' the Court may direct thereinstatement and the payment of his wage during the time of his suspension or dismissal or of any sumhe should ha$e recei$ed had he not been suspended or dismissed' without pre1udice to any criminalliability of the landowner' farm employer or farm manager as prescribed by Section twenty-four ofCommonwealth Act 4umbered 8ne hundred and three' as amended.

Sectio 4%. /ther Applicable Pro%isions - All other e+isting laws applicable to non-agricultural workers inpri$ate enterprises which are not inconsistent with this Code shall likewise apply to farm workers' farmlabor organi%ations and agrarian disputes as defined in this Code' as well as to relations between farmmanagement and farm labor and the functions of the epartment of Labor and other agencies.

Sectio 48. Exceptions to Preceding Section - The preceding Sections of this Chapter' e+cept Sectionsforty' forty-one' forty-two and forty-three shall not apply to farm enterprises comprising not more thantwel$e hectares.

CHAPTER IIILAND AUTHORITY

ARTICLE IO()*i+*tio * F-ctio o/ t0e L* A-t0o(it1

Sectio 4&. Creation of the Land Authority - ?or the purpose of carrying out the policy of establishingowner-culti$atorship and the economic family-si%e farm as the basis of &hilippine agriculture and other

policies enunciated in this Code' there is hereby created a Land Authority' hereinafter called the Authority'which shall be directly under the control and super$ision of the &resident of the &hilippines. The Authority

shall be headed by a Bo$ernor who shall be appointed by the &resident with the consent of theCommission on Appointments.

;e shall be assisted by two eputy Bo$ernors who shall be appointed by the &resident with the consentof the Commission on Appointments' each of whom shall head such operating departments as may be set

up by the Bo$ernor. The Bo$ernor and the eputy Bo$ernors shall hold office for fi$e years.

Sectio #'. 6ualifications and Compensation of (o%ernors - 4o person shall be appointed Bo$ernor or eputy Bo$ernor of the Authority unless he is a natural-born citi%en of the &hilippines' with ade(uate

background and e+perience in land reform here and7or elsewhere' and at least thirty-fi$e years of age.

The Bo$ernor shall recei$e an annual compensation of twenty-four thousand pesos) the eputyBo$ernors shall each recei$e an annual compensation of eighteen thousand pesos.

Sectio #!. Po7ers and )unctions - It shall be the responsibility of the Authority

!"# To initiate and prosecute e+propriation proceedings for the ac(uisition of pri$ate agriculturallands as defined in Section one hundred si+ty-si+ of Chapter I of this Code for the purpose of

subdi$ision into economic family-si%e farm units and resale of said farm units to bona fidetenants' occupants and (ualified farmers &ro$ided' That the powers herein granted shall apply

only to pri$ate agricultural lands sub1ect to the terms and conditions and order of priorityhereinbelow specified


12/39

a. all idle or abandoned pri$ate agricultural lands' e+cept those held or purchased withinone year from the appro$al of this Code by pri$ate indi$iduals or corporations for the

purpose of resale and subdi$ision into economic family-si%e farm units in accordance withthe policies enunciated in this Code &ro$ided' That the subdi$ision and resale shall be

substantially carried out within one year from the appro$al of this Code)

b. all pri$ate agricultural lands suitable for subdi$ision into economic family-si%e farmunits' owned by pri$ate indi$iduals or corporations worked by lessees' no substantialportion of whose landholding in relation to the area sought to be e+propriated' is plantedto permanent crops under labor administration' in e+cess of se$enty-fi$e hectares e+ceptall pri$ate agricultural lands under labor administration and lands ac(uired under Section

se$enty-one of this Code) and

c. in e+propriating pri$ate agricultural lands declared by the 4ational Land ReformCouncil or by the Land Authority within a land reform district to be necessary for theimplementation of the pro$isions of this Code' the following order of priority shall be

obser$ed

". idle or abandoned lands)

*. those whose area e+ceeds "'@* hectares)

,. those whose area e+ceeds @@ hectares but is not more than "'@* hectares)

. those whose area e+ceeds " hectares but is not more than @@ hectares)and

. those whose area e+ceeds 0 hectares but is not more than " hectares.

!*# To help bona fide farmers without lands or agricultural owner-culti$ators of uneconomic-si%efarms to ac(uire and own economic family-si%e farm units)

!,# To administer and dispose of agricultural lands of the public domain under the custody andadministration of the 4ational Resettlement and Rehabilitation Administration prior to the appro$al

of this Code and such other public agricultural lands as may hereafter be reser$ed by the&resident of the &hilippines for resettlement and sale' in accordance with such terms andconditions as are set forth under this Chapter &ro$ided' That the e+ercise of the authority

granted herein' as well as in the preceding sub-paragraph' shall not contra$ene public policy onthe permanency of forest reser$es or other laws intended for the preser$ation and conser$ation of

public forests)

!# To de$elop plans and initiate actions for the systematic opening of alienable and disposablelands of the public domain for speedy' distribution to and de$elopment by deser$ing and (ualified

persons or corporations)

!# To recommend to the &resident' from time to time after pre$ious consultation with theSecretary of Agriculture and 4atural Resources' what portion of the alienable or disposable public

lands shall be reser$ed for settlement or disposition under this chapter)

!/# To gi$e economic family-si%e farms to landless citi%ens of the &hilippines who need' deser$e'and are capable of culti$ating the land personally' through organi%ed resettlement' under theterms and conditions the Authority may prescribe' gi$ing priority to (ualified and deser$ing

farmers in the pro$ince where such lands are located)


13/39

!0# To reclaim swamps and marshes' obtain titles thereto whene$er feasible and subdi$ide theminto economic family-si%e farms for distribution to deser$ing and (ualified farmers)

!2# To undertake measures which will insure the early issuance of titles to persons or corporationswho ha$e actually settled and culti$ated disposable alienable lands of the public domain)

!3# To sur$ey' subdi$ide and set aside lands or areas of landholdings under its administration for economic family-si%e farms' large-scale farm operations' town sites' roads' parks' go$ernmentcenters and other ci$ic impro$ements as circumstances may warrant and to submit subdi$isionsur$ey plans conducted either by the go$ernment or pri$ate sur$eyors on parcels of lands under

its administration for $erification and appro$al either by the irector of Lands or by the LandRegistration Commission)

!"@# To inform the Agricultural &roducti$ity Commission and the 8ffice of the Agrarian Counsel of the problems of settlers and farmers on lands under its administration)

!""# To ac(uire for agricultural lessees e+ercising their right of pre-emption under Chapter I of thisCode' any landholdings mentioned thereunder)

!"*# To conduct land capability sur$ey and classification of the entire country and print maps)

!",# To make such arrangements with the Land =ank with respect to titles of agricultural lands of the public domain under its administration as will be necessary to carry out the ob1ecti$es of this

Code)

!"# To e+propriate home lots occupied by agricultural lessees outside their landholdings for resale at cost to said agricultural lessees) and

!"# To submit to the &resident of the &hilippines and to both ;ouses of Congress through their presiding officers' to the Secretary of ?inance and to the Auditor Beneral within si+ty days of the

close of the fiscal year' an annual report showing its accomplishments during the year) the

e+propriation proceedings it has undertaken) the e+penditures it has incurred and other financialtransactions undertaken with respect thereto.

Sectio #". Appointment of Subordinate /fficials and Employees - The Bo$ernor shall organi%e thepersonnel in such departments' di$isions and sections of the Authority as will insure their ma+imum

efficiency. ;e shall appoint' sub1ect to ci$il ser$ice rules and regulations' fi+ the compensation' sub1ect to


14/39

Sectio #4. Possession of the Land2 Procedure - The Authority' after commencing the e+propriation suit'may take immediate possession of the land upon deposit with the Court that has ac(uired 1urisdiction o$er

the e+propriation proceedings in accordance with the Rules of Court' of money' and bonds of the Land=ank' in accordance with the proportions pro$ided for under Section eighty of this Code' e(ual to the

$alue as determined by the Court in accordance with the pro$isions of Section fifty-si+ hereof.

Sectio ##. Expeditious Sur%ey and Subdi%ision - Immediately after the Authority takes possession of lands to be ac(uired by it under this Code' it shall undertake a subdi$ision sur$ey of the land intoeconomic family-si%e farms which shall be immediately assigned to beneficiaries selected in accordance

with Section one hundred and twenty-eight sub1ect to such rules and regulations as it may prescribe.

Sectio #$. 8ust Compensation - In determining the 1ust compensation of the land to be e+propriatedpursuant to this Chapter' the Court' in land under leasehold' shall consider as a basis' without pre1udice toconsidering other factors also' the annual lease rental income authori%ed by law capitali%ed at the rate of

si+ per centum per annum.

The owner of the land e+propriated shall be paid in accordance with Section eighty of this Act by the Land=ank and pursuant to an arrangement herein authori%ed.

Sectio #%. Duty of Court in Expropriation Proceedings - In e+propriation proceedings' it shall be the dutyof the Court to include in its resolution or order of e+propriation a pro$ision that the Land Authority shall'

after taking possession of the land and after the subdi$ision thereof' allow the Land =ank to ha$e the titlethereto for the purpose of paying the owner the 1ust compensation therefor.

Sectio #8. ssuance of Certificates of Title for Parcel or Lot - After the payment of 1ust compensation onthe land e+propriated the Land =ank shall cause the issuance of separate certificates of titles for each

parcel or lot in accordance with the subdi$ision sur$ey made under Section fifty-fi$e.

Sectio #&. Prohibition Against Alienation and E'ectment - Dpon the filing of the petition referred to inSection fifty-three the landowner may not alienate any portion of the land co$ered by such petition e+cept

in pursuance of the pro$isions of this Code' or enter into any form of contract to defeat the purposes of this Code' and no e1ectment proceedings against any lessee or occupant of the land co$ered by the

petition shall be instituted or prosecuted until it becomes certain that the land shall not be ac(uired by the Authority.

Sectio $'. Disposition of Expropriated Land - After separate certificates of titles ha$e been issued inaccordance with Section fifty-eight' the Land Authority' on behalf of the Republic of the &hilippines and in

representation of the Land =ank as the financing agency' shall allot and sell each parcel or lot to a(ualified beneficiary selected under Section fifty-fi$e of this Code' sub1ect to uniform terms and conditions

imposed by the Land =ank &ro$ided' That the resale shall be at cost which shall mean the purchaseprice not more than si+ per centum per annum' which shall co$er administrati$e e+penses' and actual

e+penses for subdi$ision' sur$eying' and registration &ro$ided' further' That such cost shall be paid onthe basis of an amorti%ation plan not e+ceeding twenty-fi$e years at the option of the beneficiary.

In case some agricultural lessees working portions of agricultural lands ac(uired by the go$ernment under this Code prefer to remain as lessees thereof' which preference shall be e+pressed in writing and attested

by a representati$e of the 8ffice of Agrarian Counsel' the resale and redistribution to them shall bedeferred until such time that such lessees are ready and willing to assume the obligations and

responsibilities of independent owners' which shall be manifested by a written notice to this effect by thelessees and which shall oblige the Land Authority forthwith to allot and sell such portions to such lesseesunder the same uniform terms and conditions. &ending the sale' such lessees shall continue to work on

their landholdings and recei$e the produce thereof' sub1ect' howe$er' to the re(uirement that they pay theLand =ank the allowable rental established in Section thirty-four. The Land =ank shall apply the rental to


15/39

the si+ percent added to the ac(uisition price and credit the balance to the ac(uisition cost in the name of the lessee as partial payment for the land.

The Land Authority shall administer said parcels of land during the period they are under lease.Competent management and ade(uate production credit shall be pro$ided in accordance with the

program de$eloped by the Land Reform &ro1ect Team for such area.

Sectio $!. /rgani4ation of Cooperati%e Associations - ?or the purpose of more efficient management'adoption of modern farm methods and techni(ues' and spreading risk' either through di$ersification of

farm pro1ects or mutual assumption of risks the farmer beneficiaries may organi%e themsel$es intocooperati$e associations with the ad$ice or assistance of the Agricultural &roducti$ity Commission and in

accordance with the guidelines established by said Commission for such associations.

Sectio $". Limitation on Land Rights - 5+cept in case of hereditary succession by one heir' landholdingsac(uired under this Code may not be resold' mortgaged' encumbered or transferred until after the lapseof ten years from the date of full payment and ac(uisition and after such ten-year period' any transfer'

sale or disposition may be made only in fa$or of persons (ualified to ac(uire economic family-si%e farmunits in accordance with the pro$isions of this Code &ro$ided' That a purchaser who ac(uired his

landholding under a contract to sell may secure a loan on the same from any pri$ate lending institution or

indi$idual for an amount not e+ceeding his e(uity on said landholding upon a guaranty by the Land =ank.

Sectio $3. nscription of Specific Prohibition Against Resale and Subdi%ision of Landholding -Certificates of titles of landholdings ac(uired by the Land Authority and resold to purchasers shall contain

therein a specific inscription prohibiting further subdi$ision and the resale' transfer or encumbrance of said landholdings e+cept as pro$ided in the preceding Section.

Sectio $4. Exemption from Attachment - Lands ac(uired under the pro$isions of this Chapter shall bee+empt from e+ecution and attachment' e+cept when the land itself is the property mortgaged' in

accordance with Section si+ty-two of this Code.

Sectio $#. Precedence of Expropriation Cases - 5+propriation cases filed by the Authority under pro$isions of this Chapter shall take precedence o$er all other ci$il cases pending before the Court and

shall be terminated within a period not e+ceeding si+ months from the date of filing.

ARTICLE IIIDit(i6-tio o/ A)(ic-5t-(*5 L* o/ t0e P-65ic Do7*i

Sectio $$. Title to Public Agricultural Land - Dpon reser$ation by the &resident of the &hilippines of public agricultural land a$ailable for disposition by the Land Authority' such land shall be sur$eyed' titledand transferred to the Land =ank' which shall reduce said title into indi$idual titles for specific parcels or

lots in accordance with the subdi$ision sur$ey conducted by the Land Authority under paragraph 3 of Section fifty-one &ro$ided' howe$er' That e+isting laws go$erning the ac(uisition of public lands shall

ha$e been complied with.

The Land Authority shall thereupon distribute in accordance with the pro$isions of this Code' each parcelor lot' sub1ect to the terms and conditions of the Land =ank' to a beneficiary selected pursuant to Sectionse$enty-one or in accordance with paragraph , of Section fifty-one' to a beneficiary selected pursuant to

paragraph , of Section one hundred twenty-eight.

Sectio $%. Census of Settlements - The Authority shall take a census of all settlements already made or started by farmers on their own initiati$e on public agricultural lands' forest lands' and on pri$ate titledlands which had been cleared' occupied and culti$ated wholly or partially by them' with or without legalsanction. The census shall include' among other things' the bona fide character of the settlements' thecharacter of the settlers or farmers' the e+act status of the lands settled' the feasibility of enlarging the


16/39

settlements' particularly in connection with the resources of the land occupied and the neighboring areas'actual and potential accessibility to markets' as well as strategic location of the settlement with respect to

national security.

Sectio $8. Assistance to Settlers in Transporting Themsel%es and Their 3elongings - The Authority may'in certain pro1ects' assist settlers in transporting themsel$es' their belongings' work animals and farm

e(uipment' if any' from the communities from which they are migrating to the settlement areas reser$edfor the purpose and for subsistence necessary until credit can be pro$ided by go$ernment financingagencies' or by any other credit institution by loaning to them the full amount re(uired for such purposes.These loans from the Land Authority shall be non-interest bearing' shall constitute a lien upon the land'and shall be amorti%ed o$er a period of ten years' payable annually beginning with the end of the third

year' after the date of arri$al in the settlement areas' sub1ect to the right of the borrower to pay in the fullat any time prior to the maturity of the loan.

Sectio $&. Assistance to Settlers in Securing E&uipment - The Authority may assist the settlers insecuring e(uipment' supplies and materials needed) or assist the cooperati$e associations of the newsettlers in securing the most ad$antageous prices or terms on farm implements and supplies needed.

Sectio %'. Pro%iding .ousing and Accommodations to Settlers - The Authority may help pro$ide housing

and other accommodations for the new settlers upon their arri$al in the settlement areas by the stationingthem in properly sur$eyed and subdi$ided lots reser$ed for the purpose help them organi%e community

acti$ities) and cooperate with the =ureau of ;ealth' the =ureau of &ublic Schools and other pertinentagencies of the Bo$ernment' in pro$iding ser$ices necessary for the proper establishment of community

facilities.

Sectio %!. Po7er of the Land Authority to Sell to .olders of 3onds ssued to )ormer Lando7ners-hose Lands .a%e 3een Purchased for Redistribution - The Land Authority shall sell' for a price not less

than the appraised $alue' any portion not e+ceeding one hundred forty-four hectares in the case of indi$iduals or one thousand twenty-four hectares in the case of corporations of the public agricultural

lands transferred to the Land =ank which is suitable for large-scale farm operations to any holder' who is(ualified to ac(uire agricultural lands through purchase' of bonds issued to former landowners whose

lands ha$e been purchased for redistribution under this Code' sub1ect to the condition that the purchaser

shall' within two years after ac(uisition' place under culti$ation at least thirty per centum of the entire areaunder plantation administration and the remaining se$enty per centum within fi$e years from the date of ac(uisition. The Bo$ernor of the Land Authority shall issue the title of said land upon showing that the

purchaser has begun the de$elopment and culti$ation of his land under plantation administration&ro$ided' That public agricultural land sold as hereinabo$e specified shall not be the ob1ect of any

e+propriation as long as the same shall be de$eloped and culti$ated for large-scale production under farmlabor management' e+cept as allowed by the Constitution.

The selling price of the portion of the public agricultural land sold under this Section shall be credited tothe Bo$ernment>s subscription to the Land =ank. As payment for the land sold under this Section' the

Land =ank shall accept as sole instruments of payment the bonds issued pursuant to Section se$enty-si+.Issued bonds accepted as payment for the land sold shall be cancelled to the e+tent of the amount paid.

All sales under this Code shall be sub1ect to the pro$ision of Chapter 6 of the &ublic Land Act co$eringsales of public agricultural lands insofar as they are not inconsistent with the pro$isions of this Code.

Sectio %". Duplicate Records to be )urnished the 3ureau of Lands - The Land Authority shall furnish the=ureau of Lands with the duplicate records of proceedings on applications for the sale or other disposition

of public agricultural lands under its administration.

Sectio %3. Transfer of Appropriations! Po7ers! )unctions! etc - The 4ational Resettlement andRehabilitation Administration and the Land Tenure administration are hereby abolished and their powers


17/39

and functions not inconsistent with this Code' balances of all appropriations' funds' e(uipment' recordsand supplies' as well as agricultural lands' public and pri$ate' under their administration' are hereby

transferred to the Authority &ro$ided' That the function of the Land Tenure Administration with respect tothe e+propriation of urban lands as pro$ided by e+isting laws is hereby transferred to and all hereafter be

undertaken by the &eople>s ;omesite and housing Corporation.

In addition to the appropriations herein transferred there is hereby appropriated from the general funds inthe 4ational Treasury not otherwise appropriated the sum of fi$e million pesos' or so much thereof asmay be necessary' to carry out the purposes of this Code.

To carry out the land capability sur$ey and classification mentioned in paragraph "* of Section fifty-oneand Section one hundred thirty-two of this Code' there is hereby appropriated out of the unappropriated

funds of the 4ational Treasury the amount of ten million pesos.

CHAPTER IVLAND BAN

Sectio %4. Creation - To finance the ac(uisition by the Bo$ernment of landed estates for di$ision andresale to small landholders' as well as the purchase of the landholding by the agricultural lessee from the

landowner' there is hereby established a body corporate to be known as the :Land =ank of the&hilippines:' hereinafter called the :=ank:' which shall ha$e its principal place of business in 9anila. The

legal e+istence of the =ank shall be for a period of fifty years counting from the date of the appro$alhereof. The =ank shall be sub1ect to such rules and regulations as the Central =ank may from time to

time promulgate.

Sectio %#. Po7ers in (eneral - To carry out this main purpose' the =ank shall ha$e the power

!"# To prescribe' repeal' and alter its own by laws' to determine its operating policies' and to issuesuch rules and regulations as may be necessary to achie$e the main purpose for the creation of

the =ank)

!*# To adopt' alter and use a corporate seal)

!,# To ac(uire and own real and personal property and to sell' mortgage or otherwise dispose of the same)

!# To sue and be sued' make contracts' and borrow money from both local and foreign sources.Such loans shall be sub1ect to appro$al by the &resident of the &hilippines and shall be fully

guaranteed by the Bo$ernment of the &hilippines)

!# Dpon recommendation of the Committee on In$estments' to hold' own' purchase' ac(uire' sellor otherwise in$est' or rein$est in stocks' bonds or other securities capable of gi$ing the =ank a

reasonably assured income sufficient to support its financing acti$ities and gi$e its pri$atestockholders a fair return on their holdings &ro$ided' howe$er' That pending the organi%ation of

the Committee on In$estments' the =ank may e+ercise the powers herein pro$ided without therecommendation of said Committee on In$estments &ro$ided' further' That in case of the

dissolution of the Land =ank all unsold public lands transferred to it which may be allocated to theBo$ernment of the &hilippines in the course of li(uidation of the business of the =ank shall re$ert

to the epartment of Agriculture and 4atural Resources) and

!/# To pro$ide' free of charge' in$estment counselling and technical ser$ices to landownerswhose lands ha$e been ac(uired by the Land =ank. ?or this purpose' the Land =ank may

contract the ser$ices of pri$ate consultants.


18/39

Sectio %$. ssuance of 3onds - The Land =ank shall' upon recommendation by the =oard of Trusteesand appro$al of the 9onetary =oard of the Central =ank' issue bonds' debentures and other e$idences of indebtedness at such terms' rates and conditions as the =ank may determine up to an aggregate amount

not e+ceeding' at any one time' fi$e times its unimpaired capital and surplus. Such bonds and other obligations shall be secured by the assets of the =ank and shall be fully ta+ e+empt both as to principaland income. Said income shall be paid to the bondholder e$ery si+ !/# months from the date of issue.

These bonds and other obligations shall be fully negotiable and unconditionally guaranteed by theBo$ernment of the Republic of the &hilippines and shall be redeemable at the option of the =ank at or

prior to maturity' which in no case shall e+ceed twenty-fi$e years. These negotiable instruments of indebtedness shall be mortgageable in accordance with established banking procedures and practices togo$ernment institutions not to e+ceed si+ty per centum of their face $alue to enable the holders of such

bonds to make use of them in in$estments in producti$e enterprises. They shall also be accepted aspayments for reparation e(uipment and materials.

The =oard of Trustees shall ha$e the power to prescribe rules and regulations for the registration of thebonds issued by the =ank at the re(uest of the holders thereof.

Sectio %%. ssuance of Preferred Shares of Stoc5 to )inance Ac&uisition of Landed Estates - The Land=ank shall issue' from time to time' preferred shares of stock in such (uantities not e+ceeding si+ hundred

million pesos worth of preferred shares as may be necessary to pay the owners of landed estates inaccordance with Sections eighty and eighty-one of this Code. The amount of shares that the =ank mayissue shall not e+ceed the aggregate amount need to pay for ac(uired estates in the proportions

prescribed in said Section eighty of this Code. The =oard of Trustees shall include as a necessary part of the by-laws that it shall issue under Section se$enty-fi$e of this Code' such formula as it deems ade(uate

for determining the net asset $alue of its holdings as a guide and basis for the issuance of preferredshares. The shares of stock issued under the authority of this pro$ision shall be guaranteed a rate of

return of si+ per centum per annum. In the e$ent that the earnings of the =ank for any single fiscal year are not sufficient to enable the =ank' after making reasonable allowance for administration' contingenciesand growth' to declare di$idends at the guaranteed rate' the amount e(ui$alent to the difference betweenthe =ank>s earnings a$ailable for di$idends and that necessary to pay the guaranteed rate shall be paidby the =ank out of its own assets but the Bo$ernment shall' on the same day that the =ank makes suchpayment' reimburse the latter in full' for which purpose such amounts as may be necessary to enable theBo$ernment to make such reimbursements are hereby appropriated out of any moneys in the 4ationalTreasury not otherwise appropriated. The =ank shall gi$e sufficient notice to the =udget Commissioner

and the &resident of the &hilippines in the e$ent that it is not able to pay the guaranteed rate of return onany fiscal period. The guaranteed rate of return on these shares shall not preclude the holders thereof from participating at a percentage higher than si+ per centum should the earnings of the =ank for the

corresponding fiscal period e+ceed the guaranteed rate of return. The =oard of Trustees shall declare anddistribute di$idends within three months after the close of each fiscal year at the guaranteed rate unless a

higher rate of return in 1ustified by the =ank>s earnings after making reasonable allowance for administration' contingencies and growth' in which case di$idends shall be declared and distributed at a

higher rate. The capital gains deri$ed from the sale or transfer of such shares and all income deri$edtherefrom in the form of di$idends shall be fully e+empt from ta+es.

Sectio %8. Special (uaranty )und - In the e$ent that the =ank shall be unable to pay the bonds'debentures' and other obligations issued by it' a fi+ed amount thereof shall be paid from a special

guaranty fund to be set up by the Bo$ernment' to guarantee the obligation of the Land =ank' andestablished in accordance with this Section' and thereupon' to the e+tent of the amounts so paid' the

Bo$ernment of the Republic of the &hilippines shall succeed to all the rights of the holders of such bonds'debentures or other obligations &ro$ided' howe$er' That for the ne+t four years after the establishment of

the =ank' the payment to the special guaranty fund should not e+ceed one million pesos per year' after which period' the Bo$ernment shall pay into the guaranty fund the sum of fi$e hundred thousand pesos

each year until the cumulati$e total of such guaranty fund is no less than twenty percent of theoutstanding net obligation of the Land =ank at the end of any single calendar year.


19/39

The guaranty fund shall be administered by the Central =ank of the &hilippines in the manner mostconsistent with its charter. ?or the purpose of such fund' there shall be appropriated annually the sum of one million pesos out of any moneys in the 4ational Treasury not otherwise appropriated' until the total

amount of twenty million pesos shall ha$e been attained.

Sectio %&. Recei%ing Payments and Time Deposits - The =ank' under the super$ision of the 9onetary

=oard and sub1ect to the pro$isions of the Beneral =anking Act' shall recei$e sa$ings and time depositsfrom the small landholders in whose fa$or public lands or landed estates ac(uired by the Land Authorityha$e been sold and' for this purpose' establish' and maintain branches and offices in such areas as maybe necessary to ser$ice such deposits. The 9onetary =oard shall super$ise and authori%e the =ank to

recei$e sa$ings and time deposits from the public in areas where facilities for such a ser$ice do not e+istor cannot be ade(uately pro$ided by other deposit institutions.

Sectio 8'. *a5ing Payment to /7ners of Landed Estates - The Land bank shall make payments in theform herein prescribed to the owners of land ac(uired by the Land Authority for di$ision and resale under

this Code. Such payment shall be made in the following manner ten per centum in cash and theremaining balance in si+ percent' ta+-free' redeemable bonds issued by the =ank in accordance with

Section se$enty-si+' unless the landowner desires to be paid in shares of stock issued by the Land =ankin accordance with Section se$enty-se$en in an amount not e+ceeding thirty per centum of the purchase

price.

In the e$ent there is an e+isting lien on encumbrance on the land in fa$or of any Bo$ernment institution atthe time of ac(uisition by the Land =ank' the bonds and7or shares' in that order' shall be accepted as

substitute collaterals to secure the indebtedness.

The profits accruing from payment shall be e+empt from the ta+ on capital gains.

Sectio 8!. Capital - The authori%ed capital stock of the =ank shall be one billion fi$e hundred millionpesos di$ided into ninety million shares with a par $alue of ten pesos each' which shall be fully subscribed

by the Bo$ernment and si+ty million preferred shares with a par $alue of ten pesos each which shall beissued in accordance with the pro$isions of Sections se$enty-se$en and eighty-three of this Code. 8f thetotal capital subscribed by the Bo$ernment' two hundred million pesos shall be paid by the Bo$ernment

within one year from the appro$al of this Code' and one hundred million pesos e$ery year thereafter for two years for which purpose the amount of two hundred million pesos is hereby appropriated upon the

effecti$ity of this Code' and one hundred million pesos e$ery year for the ne+t two years thereafter' out of the funds in the 4ational Treasury not otherwise appropriated for the purpose &ro$ided' That if there arenot enough funds in the 4ational Treasury for the appropriation herein made' the Secretary of ?inance'

with the appro$al of the &resident of the &hilippines' shall issue bonds or other e$idence of indebtednessto be negotiated either locally or abroad in such amount as may be necessary to co$er any deficiency inthe amount abo$e-appropriated but not e+ceeding four hundred million pesos' the proceeds of which arehereby appropriated &ro$ided' further' That the bonds to be issued locally shall not be supported by the

Central =ank &ro$ided' finally' That there is automatically appropriated out of the unappropriated funds inthe 4ational Treasury such amounts as is necessary to co$er the losses which shall include among other

things loss of earnings occasioned by the limitation of the resale cost herein pro$ided such that saidamount together with the administrati$e e+penses mentioned in Section ninety hereof shall not e+ceed in

the aggregate the e(ui$alent of two and one-half per centum of its assets limited therein.

Sectio 8". (o%ernment Shares - All shares of stock in the =ank subscribed or owned by theBo$ernment shall not be entitled to participate in the income earned by the =ank from its in$estments andother operations' whether in the form of cash or stock di$idends or otherwise. Amounts e+pended for the

administration of the =ank shall not be deemed as a participation of the Bo$ernment in income.

Sectio 83. Preferred Shares - All preferred shares of stock issued under Section se$enty-se$en of thisCode shall be entitled to the income earned by the =ank on its in$estments and other operations and


20/39

shall ha$e a limited right to elect annually one member of the =oard of Trustees and one member of theCommittee on In$estments &ro$ided' That the holders of such preferred shares of stock shall not bring

deri$ati$e suits against the =ank. Such preferred shares shall be fully transferable &ro$ided' further' Thatupon the li(uidation of the =ank' the redemption of such preferred shares shall be gi$en priority and shall

be guaranteed at par $alue.

Sectio 84. 9oting of Shares - The $oting power of all the shares of stock of the Land =ank owned or controlled by the Bo$ernment shall be $ested in the &resident of the &hilippines or in such person or persons as he may from time to time designate.

Sectio 8#. ,se of 3onds - The bonds issued by the Land =ank may be used by the holder thereof andshall be accepted in the amount of their face $alue as any of the following

!"# &ayment for agricultural lands or other real properties purchased from the Bo$ernment)

!*# &ayment for the purchase of shares of stock of all or substantially all of the assets of thefollowing Bo$ernment owned or controlled corporations The 4ational e$elopment Company)

Cebu &ortland Cement Company) 4ational Shipyards and Steel Corporation) 9anila BasCorporation) and the 9anila ;otel Company.

Dpon offer by the bondholder' the corporation owned or controlled by the Bo$ernment shall'through its =oard of irectors' negotiate with such bondholder with respect to the price and other terms and conditions of the sale. In case there are $arious bondholders making the offer' the one

willing to purchase under terms and conditions most fa$orable to the corporation shall bepreferred. If no price is acceptable to the corporation' the same shall be determined by a

Committee of Appraisers composed of three members' one to be appointed by the corporation'another by the bondholder making the highest or only offer' and the third by the two members sochosen. The e+penses of appraisal shall be borne e(ually by the corporation and the successful

purchaser.

Should the Bo$ernment offer for sale to the public any or all of the shares of stock or the assetsof any of the Bo$ernment owned or controlled corporations enumerated herein' the bidder who

offers to pay in bonds of the Land =ank shall be preferred pro$ided that the $arious bids be e(ualin e$ery respect e+cept in the medium of payment.

!,# Surety or performance bonds in all cases where the Bo$ernment may re(uire or accept realproperty as bonds) and

!# &ayment for' reparations goods.

Sectio 8$. 3oard of Trustees - The affairs and business of the =ank shall be directed' its powerse+ercised and its property managed and preser$ed by a =oard of Trustees. Such =oard shall be

composed of one Chairman and four members' one of whom shall be the head of the Land Authority whoshall be an e+-officio member of such =oard and another to be elected by the holders of preferred shares.

The Chairman and two members of the =oard of Trustees shall ser$e on full-time basis with the =ank.


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be set up by the =oard under the authority granted by Section eighty-se$en of this Code. The Chairmanshall ha$e authority' e+erciseable at his discretion' to determine from time to time the organi%ational

di$isions to be headed by each member ser$ing full time and to make the corresponding shifts indesignations pursuant thereto. The compensation of the Chairman and the members of the =oard of

Trustees ser$ing full time shall be twenty-four thousand and eighteen thousand pesos' respecti$ely. Theother members of the =oard shall recei$e a per diem of one hundred pesos for each session of the =oard

that they attend.

Sectio 8%. The Chairman and 9ice$Chairman - The Chairman of the =oard shall be the chief e+ecuti$eofficer of the =ank. ;e shall ha$e direct control and super$ision of the business of the =ank in all matterswhich are not by this Code or by the by-laws of the =ank specifically reser$ed to be done by the =oard of Trustees. ;e shall be assisted by an 5+ecuti$e 6ice-Chairman and one or more $ice-chairman who shall

be chosen and may be remo$ed by the =oard of Trustees. The salaries of the 6ice-Chairmen shall befi+ed by the =oard of Trustees with the appro$al of the &resident of the &hilippines.

Sectio 88. 6ualifications of *embers - 4o person shall be appointed Chairman or member of the =oardunless he is a man of accepted integrity' probity' training and e+perience in the field of banking and

finance' at least thirty-fi$e years of age and possessed of demonstrated administrati$e skill and ability.

Sectio 8&. Committee on n%estments - There shall be a Committee on In$estments composed of threemembers) the member of the =oard of Trustees elected by the holders of preferred shares as Chairman'one member to be appointed by the &resident of the &hilippines from among the go$ernment members of

the =oard of Trustees' and another member to be selected by the holders of preferred shares under Section eighty-three of this Code. The Committee on In$estments shall recommend to the =oard of

Trustees the corporations or entities from which the Land =ank shall purchase shares of stock.

The Land =ank shall not in$est in any corporation' partnership or company wherein any member of the=oard of Trustees or of the Committee on In$estments or his spouse' direct descendant or ascendant hassubstantial pecuniary interest or has participation in the management or control of the enterprise e+ceptwith the unanimous $ote of the members of the =oard of Trustees and of the Committee on In$estments'e+cluding the member interested' in a 1oint meeting held for that purpose where full and fair information of

the e+tent of such interest or participation has been ade(uately disclosed in writing and recorded in the

minutes of the meeting &ro$ided' That such interested member shall not in any manner participate in thedeliberations and shall refrain from e+erting any pressure or influence whate$er on any official or member of the =ank whose functions bear on or relate to the in$estment of the funds of the =ank in the enterprise&ro$ided' further' That the total in$estment in any single corporation' partnership' company' or association

shall not e+ceed fi$e per centum of the total in$estible funds.

Sectio &'. Personnel2 Cost of Administration - The Administrati$e e+penses of the =ank during anysingle fiscal year shall not in any case e+ceed two and one-half per centum of its total assets. The =oardof Trustees shall pro$ide for an organi%ation and staff of officers and employees necessary to carry outthe functions of the =ank' fi+ their compensation' and appoint and remo$e such officers and employeesfor cause. The =ank officers and employees shall be sub1ect to the rules and regulations issued by the

Ci$il Ser$ice Commission but shall not fall under the


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Sectio &". Auditor - The Auditor Beneral shall be the e+-officio auditor of the =ank and shall appoint arepresentati$e' who shall be the auditor in charge of the auditing office of the =ank. The Auditor Beneral

shall' upon the recommendation of the auditor of the =ank' appoint or remo$e the personnel of theauditing office. The compensation' budget and operating e+penses of the auditing office and the salariesand tra$eling e+penses of the officers and employees thereof shall be fi+ed by the =oard of Trustees and

paid by the =ank notwithstanding any pro$ision of law to the contrary.

Sectio &3. Report on Condition of 3an5 - The representati$e of the Auditor Beneral shall make a(uarterly report on the condition of the =ank to the &resident of the &hilippines' to the Senate through its

&resident' to the ;ouse of Representati$es through its Speaker' to the Secretary of ?inance' to the Auditor Beneral and to the =oard of Trustees of the =ank. The report shall contain' among other things' a

statement of the resources and liabilities including earnings and e+penses' the amount of capital stock'surplus' reser$e and profits' as well as losses' bad debts' and suspended and o$erdue paper carried in

the books as assets of the =ank' and a plantilla of the =ank.

Sectio &4. Auditing Rules and Regulations - The Auditor Beneral shall' with respect to the =ank'formulate impro$ed and progressi$e auditing rules and regulations designed to e+pedite the operations of

the =ank and pre$ent the occurrence of delays and bottlenecks in its work.

Sectio . Remo%al of *embers - The &resident of the &hilippines may' at any time' remo$e theChairman or any member of the =oard appointed by him if the interest of the =ank so re(uires' for any of

the following causes

!"# 9ismanagement' gra$e abuse of discretion' infidelity in the conduct of fiduciary relations' or gross neglect in the performance of duties)

!*# ishonesty' corruption' or any act in$ol$ing moral turpitude) and

!,# Any act or performance tending to pre1udice or impair the substantial rights of thestockholders.

Con$iction of the Chairman or a member for a crime carrying with it a penalty greater than arresto mayor shall cause the remo$al of such Chairman or member without the necessity of &residential action.

The Chairman or member may' in any of the abo$e cases' be ci$illy liable for any damage that may ha$ebeen suffered by the stockholders.

Sectio &$. Transfer of Claims and Liabilities - The assets of the former Land Tenure Administration andthe 4ational Resettlement and Rehabilitation Administration in the form of claims and recei$ables arisingfrom the sale or transfer of pri$ate and public lands' agricultural e(uipment' machinery' tools and workanimals' but e+cluding ad$ances made for subsistence' to small landholders shall' after an e+hausti$e

e$aluation to determine their true asset $alue' be irre$ocably transferred to the =ank under sucharrangements as the Land Authority and the =ank shall agree upon. Thereafter' the =ank shall ha$eauthority and 1urisdiction to administer the claims' to collect and make ad1ustments on the same and'

generally' to do all other acts properly pertaining to the administration of claims held by a financialinstitution. The Land Authority' upon re(uest of the =ank' shall assist the latter in the collection of suchclaims. The Land Authority shall be entitled to collect from the =ank no more than the actual cost of suchcollection ser$ices as it may e+tend. The claims transferred under this Section shall not be considered as

part of the Bo$ernment>s subscription to the capital of the =ank.

Sectio &%. Regulation - The =ank shall not be sub1ect to the laws' rules and regulations go$erningbanks and other financial institutions of whate$er type e+cept with respect to the receipt of sa$ings andtime deposits in accordance with Section se$enty-nine of this Code' in which case the legal reser$e and


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other re(uirements prescribed by the Central =ank for such deposits shall apply. The =ank shall beoperated as an autonomous body and shall be under the super$ision of the Central =ank.

Sectio &8. Tax Exemption - The operations' as well as holdings' e(uipment' property' income andearnings of the =ank from whate$er sources shall be fully e+empt from ta+ation.

Sectio &&. /rgani4ation of 3an5 - The =ank shall be organi%ed within one year from the date that thisCode takes effect.

Sectio !''. Penalty for 9iolation of the Pro%isions of this Chapter - Any trustee' officer' employee or agent of the =ank who $iolates or permits the $iolation of any of the pro$isions of this Chapter' or any

person aiding or abetting the $iolations of any of the pro$isions of this Chapter' shall be punished by a finenot to e+ceed ten thousand pesos or by imprisonment of not more than fi$e years' or both such fine and

imprisonment at the discretion of the Court.

CHAPTER VAGRICULTURAL CREDIT ADMINISTRATION

Sectio !'!. Reorgani4ation of ACC)A to Align ts Acti%ities - The administrati$e machinery of the

Agricultural Credit and Cooperati$e ?inancing Administration created under Republic Act 4umbered 5ighthundred twenty-one' as amended by Republic Act 4umbered Twel$e hundred and eighty-fi$e' shall be

reorgani%ed to enable it to align its acti$ities with the re(uirements and ob1ecti$es of this Code and shallbe known as the Agricultural Credit Administration.

Sectio !'". )inancing - To finance the additional credit functions of the Agricultural Credit Administrationas a result of the land reform program laid down in this Code' there is hereby appropriated the sum of onehundred fifty million pesos out of funds in the 4ational Treasury not otherwise appropriated in addition to

e+isting appropriations for the Agricultural Credit and Cooperati$e ?inancing Administration.

Sectio !'3. Pri%ilege of Rediscounting - The Agricultural Credit Administration is hereby granted thepri$ilege of rediscounting with the Central =ank of the &hilippines' the e$elopment =ank of the

&hilippines and the &hilippine 4ational =ank eligible e$idence of indebtedness ac(uired by it in carryingon its authori%ed acti$ities' at an interest rate e(ual to the lowest charged by the abo$e financing

institution on any pri$ate person or entity.

Sectio !'4. Po7er to /btain Additional )unds - 4othing in this Section shall limit the power of the Agricultural Credit Administration to obtain from the Central =ank of the &hilippines' the e$elopment=ank of the &hilippines' the &hilippine 4ational =ank and other financing institutions' such additional

funds as may be necessary for the effecti$e implementation of this Act &ro$ided' That such additionalfunds are to be utili%ed as loans to farmers and7or farmers> cooperati$es.

Sectio !'#. Loaning Acti%ities - Loaning acti$ities of the Agricultural Credit Administration shall bedirected to stimulate the de$elopment and operation of farmers> cooperati$es. The term :?armers>Cooperati$es: shall be taken to include all cooperati$es relating to the production and marketing of

agricultural products and those formed to manage and7or own' on a cooperati$e basis' ser$ices andfacilities' such as irrigation and transport system' established to support production and7or marketing of agricultural products.

Dnder such rules and regulations in accordance with generally accepted banking practices andprocedures as may be promulgated by the Agricultural Credit Administration' Rural =anks and

e$elopment =anks may' in their respecti$e localities' be designated to act as agents of the AgriculturalCredit Administration in regard to its loaning acti$ities.


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Sectio !'$. Credit to Small )armers - &roduction loans and loans for the purchase of work animals'tillage e(uipment' seeds' fertili%ers' poultry' li$estock' feed and other similar items' may be e+tended tosmall farmers as defined in Republic Act 4umbered 5ight hundred twenty-one' based upon their paying

capacity and such securities as they can pro$ide' and under such terms and conditions as the AgriculturalCredit Administration may impose' pro$ided the amount thereof does not e+ceed two thousand pesos' or such amount as may be fi+ed by the &resident' but in no case shall the amount of loan e+ceed eighty per centum of the $alue of the collateral pledged. In instances where credit is e+tended for items which are

not consumed in their use' such items may be pledged as security therefor. The Agricultural Credit Administration shall promulgate such rules and regulations as may be necessary in the e+tension of theloans herein authori%ed so as to assure their repayment &ro$ided' That such rules and regulations shall

follow and be in accordance with generally accepted financing practices and procedures.

Sectio !'%. Security for Loans - The production of the borrower' after deducting the lease rental and7or liens thereon' shall be accepted as security for loans &ro$ided' That said production is pledged to the

Agricultural Credit Administration with appropriate safeguards to insure against its unauthori%eddisposition &ro$ided' further' That the amount of loan shall not e+ceed si+ty per centum of the $alue of

the estimated production.

Sectio !'8. Loans to Cooperati%es - The Agricultural Credit Administration is hereby authori%ed to

e+tend such types of loans as it may deem necessary for the effecti$e implementation of this Code' toeligible farmers> cooperati$es as herein defined' under such terms and conditions as it may impose andwith such securities as it may re(uire. A farmers> cooperati$e that has been registered with the Securitiesand 5+change Commission and affiliated with the Agricultural Credit Administration shall be eligible for loans if' in the 1udgment of the latter' its organi%ation' management and business policies are of such

character as will insure the safety and effecti$e use of such loans.

Sectio !'&. Loans for Construction or Ac&uisition by Purchase of )acilities - Loans for the constructionor ac(uisition by purchase of facilities of farmers> cooperati$es may be granted by the Agricultural Credit

Administration.

Sectio !!'. nterest on Loans - The total charges including interest and insurance fees on all kinds of loans shall not be more than eight per centum per annum &ro$ided' That if an impairment of the

capitali%ation of the Agricultural Credit Administration is imminent by reason of the limitation of the interestrate herein pro$ided' there is automatically appropriated out of the unappropriated funds in the 4ationalTreasury such amounts as is necessary to co$er the losses of the Agricultural Credit Administration' but

not e+ceeding si+ million pesos for any one year.

Sectio !!!. nstitution of Super%ised Credit - To pro$ide for the effecti$e use of credit by farmers' the Agricultural Credit Administration may institute a program of super$ised credit in cooperation with the

Agricultural &roducti$ity Commission.

Sectio !!". (uidance to Cooperati%es - The Agricultural Credit Administration shall ha$e the power toregister and pro$ide credit guidance or assistance to all agricultural cooperati$es including irrigation

cooperati$es and other cooperati$e associations or fund corporations.

Sectio !!3. Auditing of /perations - ?or the effecti$e super$ision of farmers> cooperati$es' the head of the Agricultural Credit Administration shall ha$e the power to audit their operations' records and books of account and to issue subpoena and subpoena duces tecum to compel the attendance of witnesses andthe production of books' documents and records in the conduct of such audit or of any in(uiry into their affairs. Any person who' without lawful cause' fails to obey such subpoena or subpoena duces tecum

shall' upon application of the head of Agricultural Credit Administration with the proper court' be liable topunishment for contempt in the manner pro$ided by law and if he is an officer of the association' to

suspension or remo$al from office.


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Sectio !!4. Prosecution of /fficials - The Agricultural Credit Administration' through the appropriatepro$incial or city fiscal' shall ha$e the power to file and prosecute any and all actions which it may ha$e

against any and all officials or employees of farmers> cooperati$es arising from misfeasance or malfeasance in office.

Sectio !!#. )ree Notarial Ser%ices - Any 1ustice of the peace' in his capacity as notary e+-officio' shall

render ser$ice free of charge to any person applying for a loan under this Code either in administering theoath or in the acknowledgment of instruments relating to such loan.

Sectio !!$. )ree Registration of Deeds - Any register of deeds shall accept for registration' free of charge any instrument relati$e to a loan made under this Code.

Sectio !!%. -riting$off ,nsecured and /utstanding Loans - Sub1ect to the appro$al of the &residentupon recommendation of the Auditor Beneral' the Agricultural Credit Administration may write-off from its

books' unsecured and outstanding loans and accounts recei$able which may become un

Republic Act No. 6839

Documents

Transcript of Republic Act No. 6839