Department of Agrarian Reform

The history of the law on leasehold tenancy could be seen as a progression from one of election and limited operation to one of compulsion and comprehensive application. AHDacC

Under Section 14 of R.A. 1199, which became operative as early as 30 August 1954, the tenant already had the right to choose a leasehold tenancy arrangement.

By virtue of R.A. 3844 which took effect on 8 August 1963, agricultural share tenancy was declared to be contrary to public policy and was, thereby, abolished. This was further strengthened in Sec. 4 of R.A. 6389 which provided that agricultural share tenancy throughout the country shall be automatically converted to agricultural leasehold.

Under Sec. 35 of R.A. 3844, however, certain landholdings were exempted such as fishponds, saltbeds, and lands principally planted to citrus, coconuts, cacao, coffee, durian, and other similar permanent trees. This provision of the law was expressly repealed by the Comprehensive Agrarian Reform Law or R.A. 6657 which took effect on 15 June 1988.

The significant implications of this evolution of the law are thus: (1) the abolition of share tenancy now covers all agricultural landholdings without exceptions; (2) leasehold tenancy is no longer just an option which exists by operation of law, and (3) agricultural leasehold can be a preliminary step to land ownership. Hence, all share-crop tenants were automatically converted into agricultural lessees as of 15 June 1988, whether or not a leasehold agreement has been executed.

In accordance with these developments of the law, Sec. 12 of R.A. 6657 mandates the Department of Agrarian Reform (DAR) to determine and fix the lease rentals within retained areas and areas not yet acquired for agrarian reform in accordance with Sec. 34 of R.A. 3844.

II. DEFINITION OF TERMS

A. Agricultural Lessee — a person who, by himself and with the aid available from within his immediate farm household, cultivates the land belonging to, or possessed by, another with the latter's consent for purposes of production, for a price certain in money or in produce or both. It is distinguished from civil law lessee as understood in the Civil Code of the Philippines.

All references to the lessee in the masculine gender form (him or his) shall also be construed to refer to lessees in the feminine gender form (her).

B. Agricultural Year — the period of time required for raising a particular product, including the preparation of the land, sowing, planting and harvesting of crops and, whenever applicable, threshing of said crops: Provided, however, That in case of crops yielding more than one harvest from one planting, "agricultural year" shall be the period from the preparation of the land to the first harvest and thereafter from harvest to harvest. In both cases, the period may be shorter or longer than a calendar year.

C. Immediate Farm Household — the members of the family of the lessee and other persons who are dependent upon him for support and who usually help him in his activities.

D. Proven Farm Practices — sound farming practices generally accepted through usage or officially recommended by the Department of Agriculture for a particular type of farm.

E. Normal Harvest — the usual or regular produce obtained from the land when it is not affected by any fortuitous event like drought, earthquake, volcanic eruption, and the like.

F. Indiscriminate Cutting — the felling of trees that tend to materially affect the productivity of the farm.

III. POLICIES AND GOVERNING PRINCIPLES

Pursuant of Sec. 12 of R.A. 6657, and in order to fully implement the provisions of R.A. 3844, as amended, on agricultural leasehold, the following policies and principles are hereby issued:

A. Agricultural leasehold shall be based on a tenancy relationship. Such relationship exists when the following requisites are all present.

1. The parties are the landowner and the tenant;

2. There is consent by the landowner for the tenant to work on the land either conveyed verbally or in writing, expressly or impliedly;

3. The subject land is agricultural in nature;

4. The purpose is agricultural production; cTESIa

5. There is personal cultivation on the part of the tenant, when he does it in persons and/or with the aid of labor within his immediate farm household; and

6. There is sharing of harvests or there is a consideration for the lease of the land in an amount certain in money or in produce, or both.

[Rafael Gelos vs. The Honorable Court of Appeals and Ernesto Alzona G.R. No. 86186, May 8, 1992; Yolanda Caballes vs. DAR et Al., G.R. No. 78214, December 5, 1988, 168 SCRA 247.]

B. Cultivation is not limited to the plowing and harrowing of the land, but also the husbanding of the ground to forward the products of the earth by general industry the taking care of the land and fruits growing thereon, fencing of certain areas, and the clearing thereof by gathering dried leaves and cutting of grasses. In coconut lands, cultivation includes the clearing of the landholding, the gathering of the coconuts, their piling, husking and handling as well as the processing thereof into copra, although at times with the aid of hired laborers.

[Coconut Cooperative Marketing Association, Inc. (COCOMA) vs. Court of Appeals, Nos. L-46281-83, August 19, 1988, 164 SCRA 568; Wenceslao Hernandez vs. Hon. Intermediate Appellate Court et al., G.R. No. 74323, September 21, 1990, 189 SCRA 758.]

C. Under agricultural leasehold, the lessee shall have physical possession and enjoyment as well as management of the farm. (c.f. Sec. 23, R.A. 3844)

D. The lease rental to be paid by all agricultural lessees shall not be more than the equivalent of twenty-five percent (25%) of the average normal harvest during the three (3) agricultural years immediately preceding 15 June 1988, after deducting the amount used for seeds and the cost of harvesting, threshing, loading, hauling and processing, whichever is applicable. (See Annex "A-1", Lease Rental Worksheet)

E. If the land has been cultivated for a period of less than three (3) agricultural years prior to 15 June 1988, the initial rental shall be based on the average normal harvest during the preceding agricultural years when the land was actually cultivated.

After the lapse of the first three (3) normal harvests, the final rental shall be based on the average normal harvest during these three (3) preceding agricultural years.

If there had been no normal harvest, the estimated normal harvest during the three (3) preceding agricultural years shall be considered as the normal harvest.

F. The lease rental shall cover the whole farmholding attended to by the lessee. Computation of lease rental shall include both primary and secondary crops existing as of 15 June 1988. Secondary crops which are planted to an aggregate area of half a hectare or less shall not be included in the computation of the lease rental.

Where there are two or more tenants on the same lot, each producing a different crop, they may decide to have a joint leasehold agreement or execute separate leasehold agreements, with the owner of the land, whichever is feasible.

G. Where the rental has been fixed, whether in case or in kind, such rental shall constitute the consideration for the use of the land and the lessee may diversify and/or plant secondary crops, provided that all the expenses are shouldered by him/her.

H. The lessor may propose a change in the use of the landholding, from one agricultural use to another, in which the case the change shall be agreed upon by the landowner and the lessee.

In case of disagreement, as to the proposed diversification or change from one agricultural use to another, the matter shall be settled by the Provincial Agrarian Reform Adjudicator (PARAD), or in his absence the Regional Agrarian Reform Adjudicator (RARAD), according to the best interest of the parties concerned.

I. An agricultural lessee shall continue in the enjoyment and possession of his landholding except when his dispossession has been authorized by the proper tribunal in a judgment that is final and executory for causes provided by law. However, the non-payment of the rental due to crop failure to the extent of seventy-five percent as a result of a fortuitous event, shall not be a ground for dispossession, although the obligation to pay the rental due that particular crop is not thereby extinguished. [Sec. 36 (6), R.A. 3844] EDSAac

J. If capital improvements are introduced on the farm not by the lessee to increase its productivity, the rental shall be increased proportionately to the consequent increase in production due to said improvements. The cost of the capital improvement, including interest thereon, will be determined, and the number of years shall be fixed within which the increase in rental shall be paid.

K. The leasehold agreement shall be in writing, preferably using the attached leasehold agreement form (Annex "A") duly notarized and registered with the Municipal Treasurer's Office and annotated at the back of the Transfer Certificate of Title on file with the Register of Deeds. Refusal of any party to sign a leasehold contract shall not affect the tenant's status as lessee.

L. Existing leasehold agreements shall be respected provided that the agreed lease rental do not exceed the maximum provided by law. For the purpose of determining compliance, these agreements shall be subject to the Municipal Agrarian Reform Officer's (MARO) period review.

M. At all times, the lessor shall respect the rights of the lessee to have peaceful possession and enjoyment of the land and to deal with millers and processors and attend to the issuance of quedans and warehouse receipts for the produce due him (Sec. 23 (4), R.A. 3844). Any act by the landowner or any person representing him in violation hereof shall be prima facie evidence of dispossessing the lessee of the landholding.

N. If the landowner refuses to accept the provisional lease rental on account of disagreement, the lessee shall deposit the contested lease rental with the nearest Land Bank of the Philippines (LBP) Office in a trust account in the name of the landowner if the payment is in cash, or in a designated bonded warehouse if the payment is in kind, with written notice given to the MARO and the landowner.

IV. COVERAGE

These Rules shall apply to all tenanted agricultural lands including but not limited to the following:

A. Retained areas under R.A. 6657 and P.D. 27; and

B. Tenanted agricultural lands not yet acquired for distribution under CARP pursuant to R.A. 6657.

V. EFFECTIVITY OF LEASEHOLD

A. Leasehold arrangements covered by this Order took effect on the first agricultural year immediately following the conversion to leasehold, as follows:

1. Tenanted rice and corn lands, as of 10 September 1971, the effectivity of R.A. 6389;

2. Tenanted sugar lands, upon the election by the tenant, or as of 15 June 1988, by operation of R.A. 6657, whichever is sooner; and

3. All other tenanted agricultural lands by agreement of the parties or as of 15 June 1988, whichever is sooner.

B. The agricultural leasehold relationship shall be valid until it is extinguished on the following grounds:

1. Abandonment of the lessee without the lessor's knowledge;

2. The lessee voluntarily surrenders the landholding after giving notice to the lessor three months in advance. (Sec. 8, R.A. 3844); or

3. The lessee has no successors pursuant to Section 9, R.A. 3844, as amended in the event he dies or becomes permanently incapacitated.

VI. SPECIFIC POLICIES FOR LANDS PRIMARILY DEVOTED TO SUGARCANE AND COCONUT

A. Sugarcane Lands

1. In order to improve progressively the condition of the lessee, and as part of the leasehold arrangement, the lessee shall have the following rights to be exercised by him personally or through a duly registered cooperative/farmers' association of which he is a bonafide member. ATEHDc

a) To enter into a contract with the sugar central millers for the milling of the sugarcane grown on the leased property.

b) To be issued a warehouse receipt (quedan) or molasses storage certificate by the sugar central for the manufactured sugar, molasses and other by-products.

c) To have free access to the sugar central's factory, facilities, and laboratory for purposes of checking and/or verifying records and procedures in the processing of sugarcane through professional representation.

d) To be furnished a weekly statement of cane and sugar account showing, among other things, the tonnage of the delivered cane and analysis of the crusher juice.

e) To be given thirty (30) days notice in writing before the sugar and other by-products are sold through public auction.

f) To be provided with the standard tonnage allocation by the miller/sugar central.

2. The determination of the average normal harvest to be used in computing the lease rental in sugarcane lands shall be based on the following:

a) If the leasehold relationship existed before 15 June 1988, the effectivity of R.A. 6657, the average normal harvests of the three agricultural years immediately before the date the leasehold relationship was established shall be used.

b) If the leasehold relationship was established on 16 June 1988 by operation of R.A. 6657, the average normal harvest of the three (3) agricultural years immediately preceding the said date shall be used.

c) If the land has been cultivated for less than three years prior to June 15, 1988, the provisions of Section III (E) shall apply.

3. An agricultural year for sugarcane shall be understood to mean the period from land preparation to harvesting. Ratooning (from trash burning to harvesting) shall likewise be considered as one agricultural year.

4. The leasehold agreement (see Annex "B") shall include both the sugarcane products (sugar) and by-products (molasses), and the lease rental shall be computed based on VI (6) hereof.

5. The lease rental of the land shall be paid in an amount certain in money or in produce, or both, as may be agreed upon by the parties. Such rental shall be paid after the exact produce shall have been determined using the Certificate of Quedan and molasses storage certificate issued by the sugar central/miller.

6. The lease rental for sugarcane lands shall be not more than twenty five (25%) percent of the average normal harvest less the value of the cost for seeds/cane points, harvesting (cutting), loading, hauling and/or trucking fee, and cost of processing, pursuant to Sec. 34 of R.A. 3844. (See Annex "C", Sample Computation)

7. The agricultural lessees shall not be required to assume, directly or indirectly, any part of the rent, or other considerations which the agricultural lessor is under obligation to pay third persons for the use of the land. (Sec. 31, R.A. 3844)

Any contract by which the agricultural lessee is required to accept a loan or to make payment(s) in kind shall be contrary to law, moral or public policy. (Sec. 15, R.A. 3844)

The agricultural lessor may mortgage expected rentals. (Sec. 29, R.A. 3844) CHIScD

8. Notwithstanding the above provisions of the law and any contract of mortgage existing between the landowner-planter and financial institutions to the contrary, it is unlawful for the landowner-planter to mortgage to any entity (e.g., banks or any financial institution) that part of the produce which is due to the agricultural lessee.

If the landowner incurred loans from a bank or any financial institution, such bank can only attach the fixed lease rental due to the landowner. It shall be unlawful for the bank or any financial institution to withhold the quedan covering the portion of the crop due to the lessee.

9. The DAR shall encourage the sugarcane farmer-lessee to establish associations or cooperatives which shall assist them or directly deal with the millers, processors, transport operators, and financial and banking institutions. The DAR shall likewise assist farmer-lessees to secure milling accommodations and/or membership in sugar planters associations.

B. Coconut Lands

1. The indiscriminate cutting of coconut trees shall be deemed a prima facie evidence to dispossess the tenant of his landholding.

In order to rebut this presumption, the following are required:

a) written consent of the tenant; and

b) certification by the Philippine Coconut Authority (PCA) or a resolution from the Municipal Board, allowing the cutting for valid reasons.

2. The application of the allowable deductible items in coconut shall depend on the final product. If the final product is copra, the deductible items are:

a) The cost of harvesting, which shall include picking and piling;

b) The cost of processing, which shall include husking, splitting, scooping, and drying.

If the final product is green nuts, the deductible items above shall be used except for the cost of processing. If the final product is husked nuts, the costs in items 2.a and 2.b and the cost of husking shall be used.

3. The lease rental for coconut lands shall not be more than twenty-five (25%) percent of the average normal harvest for the preceding three (3) calendar years less the value of the deductible items pursuant to Sec. VI-B (2) of this Administrative Order. (See Sample Computation, Annex "D")

4. In case there is large-scale replanting in the coconut area initiated by the lessor which may affect the normal coconut production in particular and the leasehold arrangement in general, a new lease rental may be computed proportionate to the decrease in production.

VII. PROCEDURES

A. Identification Phase

The MARO shall identify all landholdings still under share tenancy as of the effectivity of R.A. 6657, and list the landowner and the share tenants thereon, with the assistance of the Barangay Agrarian Reform Committee (BARC), and people's organizations/non-government organizations (POs/NGOs) that are present in the area.

B. Determination and Fixing of Rental

The MARO shall schedule the mediation conference and formally invite the landowner and the lessee(s), using the prescribed forms contained in Annexes "E" and "E-1" with notice to the BARC. Priority shall be given to those represented by peasant's organizations. The voluntary application by any lessor or lessee for the fixing of the rental shall likewise be immediately acted upon. cTDIaC

The MARO with the assistance of the BARC or in the absence thereof, the Barangay Council concerned, shall jointly conduct the mediation conference between the landowner and the lessee(s) for the purpose of fixing the lease rental. The MARO shall, within thirty (30) days from application, fix the lese rental in accordance with these Rules and Regulation. For this purpose the following steps shall be undertaken:

1. Both parties shall be required to submit production data or any evidence as proof of the average normal harvest, including the cost of deductible item(s), during the three (3) agricultural pears immediately preceding. In the absence of the foregoing production data or documents, the production data released by the proper government agency (e.g., the Philippine Coconut Authority in the case of coconut production) may be accepted as basis.

2. Notice for the mediation conference shall be given to the lessee and to the lessor or his administrator or overseer for the farm. On the basis of the documents and/or evidence presented or as gathered by them, the MARO, with the assistance of the BARC, shall proceed with the computation of the lease rental applying the formula prescribed under these Rules.

3. In the event any party fails to appear during the scheduled conference despite notice, the MARO, in addition to mailing the notice at the last known address of the parties, shall cause the posting of two successive notices (seven days apart) at the Municipal Hall, the Barangay Hall and the place where the land is located. The second notice shall be posted at least ten (10) days prior to the scheduled conference. Compliance with these requirements is sufficient for the MARO to fix the rental on data gathered by him/her or presented by the other party.

C. Documentation Phase

1. In case of agreement, the rental to be paid as consideration for the lease of land shall be embodied in the prescribed leasehold agreement from which shall be drawn up in five copies in the language or dialect known to the parties or their duly authorized representatives before two witnesses. In no case shall the rental agreed by the parties exceed the fixed lease rental computed according to the foregoing rules.

2. Before the parties affix their signatures to the document denominated as Leasehold Agreement, the MARO or any member of the BARC shall explain to the parties the contents thereof, and the policies herein prescribed.

3. The parties shall acknowledge the execution of the documents before the Municipal Trial Court judge where the land is situated or before the DAR lawyer commissioned as Notary Public. The MARO shall register the Leasehold Agreement with the Municipal Treasurer. Each party shall be furnished a copy of the registered Leasehold Agreement. The Provincial Agrarian Reform Officer (PARO) shall cause the annotation of the leasehold agreement at the back of the Transfer Certificate of Title on file with the Register of Deeds.

D. In case of disagreement or non-approval by any of the parties involved in the determination of the lease rental, the MARO shall compute and fix the provisional lease rental in accordance with these Rules. The MARO shall comply with the following requirements:

1. The MARO shall prepare a corresponding Leasehold Documentation Folder which shall contain the following:

a) Documents or evidence presented or gathered by the tenant-tiller, landowner, MARO and other parties involved relative to tenurial relationship as well as production data, deductible item(s) provided by law, and other relevant information;

b) Minutes of conferences/meetings held for the purpose of establishing tenurial relationship, determining and fixing rental, and resolving conflicts, if any; IECcaA

c) Worksheet forms used in the computation of lease rentals; and

d) Investigation Report, if any. A copy of the order for the provisional lease rental shall be sent to the landowner, the lessee, the MARO and the PARO.

2. On the basis of the documents submitted by the MARO, the PARAD, or in his absence, the RARAD, shall review the provisional lease rental within thirty (30) days from receipt of the leasehold document folder.

3. Upon motion of the landowner and by order of the PARAD, the lessee shall be required to deposit the provisional lease rental with the nearest LBP Office in a trust account in the name of the landowner if the payment is in cash or in a designated bonded warehouse if the payment is in kind; with written notice given to the MARO.

4. This provisional lease rental shall continue in force until the matter has been finally resolved.

E. For immediate and effective implementation on leasehold operation, the PARO and the MARO shall undertake a massive information dissemination campaign.

VIII. RESOLUTION OF PROTEST

Any party who disagrees with the Order of the PARAD fixing the rental may bring the matter to the Adjudication Board at the DAR Central Office within fifteen (15) days from receipt thereof otherwise the Order becomes final and executory.

IX. PERIODIC REVIEW

The DAR shall immediately and periodically review and adjust the rental structure for all leasehold arrangement regardless of crops, in all regions, taking into account the following considerations:

A. The effect of the use of fertilizer and other related expenses as a cost of production, and its impact on the rental structure;

B. The rate of compliance with the leasehold arrangements; and

C. The impact of leasehold on the quality of life of the beneficiaries and agricultural productivity.

X. TRANSITORY PROVISIONS

Immediately upon the effectivity of this Administrative Order.

A. The DAR-Field Operations Group (DAR-FOG) shall make an inventory of existing sugar milling contracts and review the same for compliance with these Rules and Regulations. The DAR-FOG shall also exert best efforts in effecting an orderly transition from tenancy to leasehold, specially in the sugar areas, with respect to amendment, revision or phaseout of existing milling contracts, provision of credit support and the like.

B. The DAR Adjudication Board, its Provincial and Regional Adjudicators shall act expeditiously on all pending motions for the release of the proceeds of milling operations, which have been deposited in trust for the landowner and tenant, in order to increase the productivity of the sugar areas.

XI. EFFECTIVITY

This Administrative Order shall take effect ten (10) days after its publication in two (2) national newspapers of general circulation. All other orders, circulars, memoranda and rules and regulations, or portions thereof inconsistent herewith are hereby revoked, canceled, or modified accordingly.

Quezon City, 3 May 1993.

(SGD.) ERNESTO D. GARILAO
Secretary

ANNEX "A"

AGRICULTURAL LEASEHOLD AGREEMENT

KNOW ALL MEN BY THESE PRESENTS :

This Agricultural Leasehold Agreement, entered into by and between _____________________, Filipino, of legal age, ______________ (civil status), a resident of ____________________________________________, hereinafter referred to as AGRICULTURAL LESSOR, and _________________ Filipino, also of legal age, _______________________ (civil status) and a resident of _________________________ and hereinafter referred to as AGRICULTURAL LESSEE. ISAaTH

WITNESSETH:

1. That effective 15 June 1988, upon the effectivity of R.A. No. 6657, an agricultural leasehold relation was created by operation of law between the AGRICULTURAL LESSEE and the AGRICULTURAL LESSOR over a farm lot which is a portion of a parcel situated at Barrio _____________, Municipality of ___________, Province of ______________, owned or legally possessed by the AGRICULTURAL LESSOR and covered by Transfer Certificate of Title No. __________, which farm lot consisting of ______________ hectares, is bounded on THE:

North - land owned or cultivated by: ________________________

South - land owned or cultivated by: ________________________

East - land owned or cultivated by: _________________________

West - land owned or cultivated by: ________________________

2. That said leasehold relation shall continue every agricultural year thereafter until terminated or modified in accordance with law;

3. That the average normal harvest during the three agricultural years immediately preceding the effectivity of this agreement are as follows:

19 ______ ____________ cavans ___________kilos

4. That per agreement of the parties and approved by the DAR, the rental for said land shall be ___________________ (P_______) (if in cash) per annum or __________________________ (if in kind, indicate applicable unit of measure) of _____________________ (kind of crop) of ________________ (variety), said rentals representing not more than the equivalent of 25% of the average normal net harvest during the agricultural years 19___, 19___, and 19___, after subtracting from the gross harvest the deductible items as reflected in the attached Lease Rental Worksheet which forms an integral part of this agreement (Annex A-1);

5. That the said rental shall be paid to the AGRICULTURAL LESSOR or his/her duly authorized representative at the ________________ (specified place as agreed upon);

6. Non-payment of the rental due to crop failure to the extent of seventy-five per centum as a result of a fortuitous event, shall not be a ground for dispossession, although the obligation to pay the rental due that particular crop is not thereby extinguished;

7. That once the rental is fixed, such rental shall be deemed consideration for the use of the land, and the AGRICULTURAL LESSEE may diversify and/or plant secondary crops, provided he/she shoulders all the expenses;

That the AGRICULTURAL LESSEE shall not employ a sub-lessee on his/her landholding provided, that in case of illness or temporary capacity, he/she may employ laborers whose services on his/her landholding shall be paid on his/her account;

9. That the AGRICULTURAL LESSEE shall not cause undue erosion of the soil or impair its fertility;

10. That it shall be unlawful for the AGRICULTURAL LESSEE to mortgage/sell his/her leasehold rights over the landholding;

11. That the AGRICULTURAL LESSOR shall not, without the AGRICULTURAL LESSEE'S written consent, destroy crops and trees in the farmholding; and

12. That any change or modification of the terms and conditions of this agreement or the sale or transfer of the land to another shall not in any way affect the right of the AGRICULTURAL LESSEE to the peaceful possession and cultivation of the landholding.

IN WITNESS HEREOF, the parties hereunto set their hands this ___________ day of __________ 19___, in the Municipality of _________________, Province of ___________________, Philippines.

_________________ ________________

Agricultural Lessor Agricultural Lessor

_________________ ________________

Witness Witness

APPROVED

_____________________________

(Municipal Agrarian Reform Officer)

ACKNOWLEDGMENT

REPUBLIC OF THE PHILIPPINES)

PROVINCE/CITY _____________) S.S.

At the Municipality of __________________, Province of ________________ in this day of _______________ 19___ appeared the following persons: TDAHCS

Name Res.Cert.No. Date Place

known to me to be the persons who executed the foregoing Agricultural Leasehold Agreement and acknowledged to me that the same is their free act and deed.

_________________________________________

Municipal Trial Judge/Duly Authorized DAR Lawyer

ANNOTATION OF REGISTRATION

Office of the Municipal Treasurer

__________________ _______________

City/Municipality Province

On this __________ day of ____________ 19___ at ______________ o'clock (AM/PM) the parties to the foregoing instrument appeared before me and presented four copies of this Agreement of Agricultural Leasehold for registration. This Agreement is hereby registered and entered in the Registry of Agricultural Leasehold Agreement of this Municipality/City at the time and date mentioned above, as Agricultural Leasehold Agreement No. __________

______________________

Municipal / City Treasurer

______________________

Municipal / City

______________________

Province

__________________

Note:

a) This form may be modified to suit local conditions and peculiarities, but should substantially contain the above provisions.

b) This agreement should preferably be translated into the local dialect for easier understanding especially by the farmer-beneficiaries.

ANNEX "A-1"

LEASE RENTAL WORKSHEET

I. NORMAL GROSS HARVEST/PRODUCTION

1st CROP(AGRICULTURAL YEAR)

19___ __________________________

TOTAL _________________________

2ND CROP (AGRICULTURAL YEAR)

19___ __________________________

II. APPLICABLE DEDUCTIBLE ITEM (S):

(R.A. 3844, AS AMENDED) SPECIFY UNIT OF MEASURE

1st CROP 2nd CROP

1. Amount Use for Seeds ____ ____ ____ ____ ____ ____

2. Harvesting ____ ____ ____ ____ ____ ____

3. Threshing ____ ____ ____ ____ ____ ____

4. Loading ____ ____ ____ ____ ____ ____

5. Hauling ____ ____ ____ ____ ____ ____

6. Processing ____ ____ ____ ____ ____ ____

III. ACTUAL TOTAL AMOUNT DEDUCTIBLE

1st CROP 2nd CROP

19_____ ___________________ ___________________

TOTAL ___________________________________________

IV. DETERMINATION OF LEASE RENTAL (S)

1st CROP 2ND CROP

1. Total Normal Gross Harvest ___________ __________

2. Less Actual Total Amount

Deductible ___________ __________

3. Total Net Normal Harvest ___________ __________

4. Average Net Harvest

(Total Net Harvest Divided By 3) ___________ __________

5. Lease Rental (25% of Average

Net Harvest Production) ___________ __________

Prepared by: ____________________

Approved by: ___________________

ANNEX "B"

AGRICULTURAL LEASEHOLD AGREEMENT

(For Sugarcane Lands)

KNOW ALL MEN BY THESE PRESENTS :

This Agricultural Leasehold Agreement, entered into by and between _______________, Filipino, of legal age, ________ (civil status), a resident of _________________________ hereinafter referred to as AGRICULTURAL LESSOR, and ____________________, Filipino, also of legal age, _____________ (civil status) and a resident of ______________________ hereinafter referred to as AGRICULTURAL LESSEE. IaAHCE

WITNESSETH:

1. That effective 15 June 1988, upon the effectivity of R.A. 6657, an agricultural leasehold relation was created by operation of law between the AGRICULTURAL LESSEE and the AGRICULTURAL LESSOR over a farm lot which is a portion of a parcel of land situated at Barrio _______________, Municipality of ________________, Province of ___________, owned or legally possessed by the AGRICULTURAL LESSOR and covered by Transfer Certificate of Title No. ________, which farm lot, consisting of ___________ hectares, is bounded on the:

North - land owned or cultivated by: ___________________________

South - land owned or cultivated by: ___________________________

East - land owned or cultivated by: ____________________________

West - land owned or cultivated by: ___________________________

2. That said leasehold relation shall continue every agricultural year thereafter until terminated or modified in accordance with law;

3. That the average normal harvest during the three agricultural years immediately preceding the effectivity of this agreement are as follows:

19____ ___________piculs _________(1st Agr'l. year)

19____ _____ tons piculs ______ (2nd Agr'l. Year-1st ratoon)

19____ _____ tons piculs ______ (3rd Agr'l. Year-2nd ratoon)

4. That as per agreement of the parties and approved by the DAR, the rental for said land shall be ___________________ (P______) (if in cash) per harvest or ______________ piculs (if in kind), said rentals representing not more than the equivalent of 25 % of the average normal net harvest during the agricultural years 19___, 19___, and 19___, after subtracting from the gross harvest the deductible items as reflected in the attached Lease Rental Worksheet which forms an integral part of this agreement (Annex B-1);

5. That the said rental shall be paid to the AGRICULTURAL LESSOR or his/her duly authorized representative at the milling site of __________ (name of the sugar central) located at ________________ (specified place as agreed upon);

8. That the AGRICULTURAL LESSEE shall not employ a sub-lessee on his/her landholding provided, that in case of illness or temporary capacity, he/she may employ laborers whose services on his/her landholding shall be paid on his/her account;

9. That the AGRICULTURAL LESSEE shall not cause undue erosion of the soil or impair its fertility;

10. That it shall be unlawful for the AGRICULTURAL LESSEE to mortgage/sell his/her leasehold rights over the landholding;

11. That the AGRICULTURAL LESSOR shall not, without the AGRICULTURAL LESSEE'S written consent, destroy crops and trees in the farmholding; and

12. That the AGRICULTURAL LESSEE shall have the following rights to be exercised by him personally or through a duly registered cooperative/farmers associations of which he is a bonafide member:

a. To enter into a contract with the sugar central/miller for the milling of the sugar cane grown on the leased property;

b. To be issued a warehouse receipt (QUEDAN) or molasses storage certificate by the sugar central for the manufactured sugar molasses and other by-products;

c. That they have free access to the sugar central factory, facilities and laboratory for purposes of checking and/or verifying records and procedure in the processing of sugarcane by himself/herself or through professional representation; ISCDEA

d. To be furnished a weekly statement of cane and sugar account showing, among other things, the tonnage of the delivered cane and analysis of the crusher juice;

e. To be given thirty-day written notice before the sugar and other by-products are sold through public auction; and

f. To be provided with the standard tonnage allocation bu the miller/sugar central.

13. That any change or modification of the terms and conditions of this agreement or the sale or transfer of the land to another shall not in any way affect the right of the AGRICULTURAL LESSEE to the peaceful possession and cultivation of the landholding.

IN WITNESS HEREOF, the parties hereunto set their hands this ____________ day of ________ 19___, in the Municipality of __________, Province of ____________, Philippines.

________________ _________________

Agricultural Lessor Agricultural Lessee

WITNESSES

____________________ ___________________

APPROVED:

____________________________

(Municipal Agrarian Reform Officer)

ANNEX "B-1"

LEASE RENTAL WORKSHEET

(For Sugarcane Land)

I. NORMAL GROSS HARVEST/PRODUCTION (Per Hectare)

1. First Agricultural Year = First Crop

Year 19___, ____ Tons of Sugarcane equivalent to _______ piculs and ______ kilograms of Molasses

2. Second Agricultural Year = First Ratoon

Year 19___, ____ Tons of Sugarcane equivalent to ________ piculs and _________ kilograms of Molasses

3. Third Agricultural Year = Second Ratoon

Year 19___, ____ Tons of Sugarcane equivalent to ________ piculs and _______ kilograms of Molasses

II. COMPUTE FOR THE NET INCOME OF EVERY AGRICULTURAL YEAR

(Average Gross Income Less Allowable Deductible Costs)

1. First agricultural year (gross income)

_____ piculs x P_______ (price per picul) =P______

_____ kg. of molasses x P_______ (price per kg.) =P______

Gross Income ..........................................................=P______

Less: Allowable Deductible Costs

a. Cost of seeds (cane points) = P___________

b. Cost of harvesting/cutting = P___________

c. Cost of loading and handling = P___________

d. Cost of processing/milling = P___________

Net Income ............................................= P___________

2. Second Agricultural Year = 1st Ratoon (Gross income)

______ piculs x P______ (price per picul) =P______

______ kg. of molasses x P_______ (price per kg.) =P______

Gross Income ............................................................=P______

Less: Allowable Deductible Costs

a. Cost of seeds (if any) = P_________

b. Cost of harvesting/cutting = P_________

c. Cost of loading and handling = P_________

d. Cost of processing/milling = P_________

Net Income...................................................= P_________

Note: Cost of seeds during ratooning, if any, may be variable.

3. Third Agricultural Year = 2nd Ratoon (Gross income)

_____ piculs x P _______ (price per picul) =P_____

_____ kg. of molasses x P _______ (price per kg.) =P_____

Gross Income.............................................................=P_____

Less: Allowable Deductible Costs

a. Cost of seeds (cane points) = P_________

b. Cost of harvesting/cutting = P_________

c. Cost of loading and handling = P_________

d. Cost of processing/milling = P_________

Net Income ............................................= P_________

Note: Cost of seeds during ratooning, if any, may be variable.

III. COMPUTE FOR THE LEASE RENTAL

a. Net income - First Crop P_________

b. Net income - Second Crop (1st Ratoon) P_________

c. Net income - Third Crop (2nd Ratoon) P_________

Total Net Income.........................................................P_________

Average Net Income (Total Net Income/3)...................P_________

Average Lease Rental for 1 hectare (Average Net

Income x 25%)......................................................P____________

ANNEX "C"

SAMPLE COMPUTATION FOR LEASE RENTAL IN TENANTED SUGAR LAND (Canlubang, Laguna Case)

GIVEN:

Area - 1 hectare

Frequency of harvest - 1st (new) harvest (10 to 12 mos.)

- 1st ratoon and 2nd ratoon

(9 to 10 mos. Per ratoon)

Production per hectare - 88.5 tons for the 1st harvest

equivalent to 86.26 piculs and

3,416 kg. of molasses

- 77 tons for the 1st ratoon

equivalent to 81.3 piculs and 3,191

kg. molasses

- 68 tons for the 2nd ratoon

equivalent to 74 piculs and 2,195

kg. of molasses

Price per picul - P569 as of 1988

P645 as of 1989

P650 as of 1990

Price per Molasses per kg. - P1.00/kg. as of 1988

- P1.00/kg. as of 1989

- P1.20/kg. as of 1990

COMPUTATION :

A. Compute for the net income of every agricultural year (average gross income less allowable deductible cost). DTcASE

First Agricultural year

Gross Income

86.26 piculs x P569

Per picul P49,081.94

3,416 kg. of molasses

x 1.00 kg. P 3,416.00 P52,497.94

========

Allowable deductible

Cost of seeds P30/1000

(cane points at 50,000)

(cane points /ha.) P 1,500.00

Harvesting/cutting

(P65/ton x 88.5 tons) 5,752.50

Loading and handling/

Trucking (P75/ton x

88.5 tons) 6,637.50

Processing/milling

(325 of produce) 15,706.00 P29,596.00

======== =========

Net Income P22,901.94

Second Agricultural Year (First Ratoon)

Gross Income

81.3 piculs x P645 per

picul P52,438.50

3,191 kg. of molasses x

1.00 kg 3,191.00 P55,629.50

========

Less: allowable deductible cost

Cost of seeds (if any)

Harvesting/cutting (P65/

ton x 77 tons) P 5,005.00

Loading and hauling/

Trucking (P75 x

77 tons) 5,775.00

Processing/milling (32%

of produce) 16,780.32 P27,560.32

======== ==========

Net Income P28,069.18

Note: Cost of seeds during ratooning, if any, may be variable.

Third Agricultural Year (Second Ratoon)

Gross Income

74 piculs x P650/picul P48,100.00

2,195 kg. of molasses x

1.20/kg. 2,634.00 P50,734.00

========

Cost deductible cost

Cost of Seeds (if any)

Harvesting/cutting

(P80/ton x 68 tons) P 5,440.00

Loading and hauling/

trucking (P120/ton

x 68 tons) 8,160.00

Processing/milling

(32% of produce) 15,392.00 P28,992.00

========

Net Income P21,742.00

Note: Cost of seeds during ratooning, if any may be variable.

B. Compute for the lease rental

First year P22,901.94

Second year 28,069.18

Third year 21,742.00

========

Total Net Income P72,713.12

Average Net Income = Total Net Income/3

= P72,713.12/3

= P24,237.706

Average Lease Rental = Average Net Income x 0.25

for 1 hectare = P24,237.706 x 0.25

= P6,059.43

ANNEX "D"

SAMPLE COMPUTATION FOR LEASE RENTAL IN COCONUT LANDS

GIVEN

Area - 7 hectares

No. of tree/hectare - 70 to 100 coconut trees

No. of harvests/year - 8 harvests

Frequency of harvest - Every 30 to 45 days

Age of coconut trees - 20 to 50 years old

Buying Price - P806 per 1,000 husked nuts

Cost of Labor (final product is husked nut)

A. Harvesting

Picking (pagkawit/pag-akyat) P90 per 1,000 nuts

Piling (pag-iipon) P35 per 1,000 nuts

B. Hauling/Loading

(paghakot/pag-karga) P70 per 1,000 nuts

C. Processing

Husking (pagtatapas) P80 per 1,000 nuts

COMPUTATION :

1. Get the average normal harvest and gross income of the three agricultural years immediately before the date the leasehold relationship was established. EaDATc

May-June (1st agri. Year) 3,000 nuts

July-August (2nd agri. Year) 6,000 nuts

September-October (3rd agri. Year) 4,000 nuts

==========

Total 13,000 nuts

Average normal harvest (13,000/3) 4,333 nuts

Average gross income (4,333 nuts at

P806 per 1,000 nuts) P3,492.40

2. Get the average deductible cost for the three agricultural years using the applicable deductible items.

1st Agricultural year

Picking (3,000 nuts at P90 per 1,000 nuts) P270.00

Piling (3,000 nuts at P35 per 1,000 nuts) 105.00

Hauling (3,000 nuts at P70 per 1,000 nuts) 210.00

Husking (3,000 nuts at P60 per 1,000 nuts) 180.00

======

Total cost for the 1st agricultural year 765.00

2nd Agricultural year

Picking (6,000 nuts at P90 per 1,000 nuts) P540.00

Piling (6,000 nuts at P90 per 1,000 nuts) 210.00

Hauling (6,000 nuts at P90 per 1,000 nuts) 420.00

Husking (6,000 nuts at P90 per 1,000 nuts) 360.00

======

Total cost for the 2nd agricultural year 1,530.00

3rd Agricultural year

Picking (4,000 nuts at P90 per 1,000 nuts) P360.00

Piling (4,000 nuts at P90 per 1,000 nuts) 140.00

Hauling (4,000 nuts at P90 per 1,000 nuts) 280.00

Husking (4,000 nuts at P90 per 1,999 nuts) 240.00

========

Total cost for the 3rd agricultural year 1,020.00

Average deductible cost

(765 + P1,530 + P1,020)/3 1,105.00

3. Compute for the net income.

Net income (Average gross income less average

Deductible costs or P3,492.40 - P1,105.00) 2,387.40

4. Compute for the lease rental.

Lease rental for the 7 hectares per harvest

(25% of P2,387.40)

596.85

Lease rental for one year (rental per harvest

Multiplied by the no. of harvest per

Year or P596.85 x 8 harvests) P4,774.60

ANNEX "E"

FORMAL INVITATION TO THE LESSOR

__________________

Date

____________________ (Name of Landowner)

____________________ (Address)

____________________

Sir/Madam:

Pursuant to AO 5 Series of 1993, we wish to invite you to a conference on:

Date: ___________________

Time: ___________________

Place: ___________________

in order to determine and fix the lease rental for the landholding tenanted by ______________________, situated at _________________, which is covered by agricultural leasehold. THAECc

Very truly yours,

________________ (Signature of MARO)

________________ (Printed name)

________________ (Designation)

________________ (Station)

copy furnished:

Barangay Agrarian Reform Committee (BARC)

ANNEX "E-1"

FORMAL INVITATION TO THE LESSEE

______________

Date

_____________________ (Name of Landowner)

_____________________ (Address)

Sir / Madam:

Pursuant to AO 5 Series of 1993, we wish to invite you to a conference on:

Date: _________________________

Time: _________________________

Place: _________________________

in order to determine and fix the lease rental for the land which you are cultivating as tenant of _____________________ (Name of landowner) and which is covered by agricultural leasehold.

Very truly yours,

________________ (Signature of MARO)

________________ (Printed name)

________________ (Designation)

________________ (Station)

copy furnished:

Barangay Agrarian Reform Committee (BARC)

ANNEX "F"

DEPARTMENT OF AGRARIAN REFORM MUNICIPAL AGRARIAN REFORM OFFICE

__________________ (Name)

__________________ (Address)

__________________

RE: FIXING OF RENTAL CONTROL NO. _______________

BY THE DAR

ORDER FOR THE FIXING OF PROVISIONAL LEASE RENTAL

Pursuant to Section 12 of R.A. 6657, the DAR is mandated to determine and fix immediately the lease rental of the subject hereof in accordance with Section 34 of R.A. 3844, as amended. The subject land which has an area of _____________ is situated at ____________ Owned by _______________ and tenanted by ___________

On the basis of the data and other relevant information gathered by MARO and verified by PARO, an agricultural tenancy relation has been established in accordance with the law and by virtue of the Order, shall now be governed by an agricultural leasehold relation under the terms and conditions hereunder specified. SCIcTD

On the basis of production data available, it is shown that the average gross normal harvest during the three (3) preceding agricultural years from (e.g. 15 June 1988) is _______________ broken down as follows:

YEAR NORMAL GROSS PRODUCTION

______________ _____________________________

The applicable deductible item(s) in the areas as determined by the DAR amounted to P_____________ broken down as follows:

YEAR DEDUCTIBLE ITEM(S) AMOUNT

______________ ___________________ _______________

The average normal gross production and the allowable productions having been established, the average normal production thereof for three (3) normal crop years is multiplied by 25% to arrive at the provisional lease rental to be paid by the lessee, which in this case is ________________, or _________________ (if in kind, indicate applicable unit of measure) of ________________ (kind of crop).

Due to the disagreement of the parties over this provisional lease rental, Order is hereby issued:

Fixing the provisional lease rental in favor of the landowner in the amount of _________________ (P ) per year (if in cash) or ____________ if in kind, until such time that the PARAD or the courts are able to finally resolve the matter;

Directing the AGRICULTURAL LESSEE to pay said rental direct to the landowner, at ________________ (place) on _____________ (date), or deposit the rental with the Land Bank of the Philippines or a designated bonded warehouse, at the option of the landowner;

Directing that the records of the case be forwarded to the Provincial Adjudicator of the province of __________________ for further proceedings and resolution.

SO ORDERED.

____________________ (Place), _______________ (Date)

_________________________

Signature and Name of MARO

HELP CENTER

CONTACT INFORMATION

Department of Agrarian Reform
Elliptical Road, Diliman
Quezon City, Philippines

Copyright Information

HELP CENTER

CONTACT INFORMATION

Department of Agrarian Reform Elliptical Road, Diliman Quezon City, Philippines

Copyright Information

Department of Agrarian Reform
Elliptical Road, Diliman
Quezon City, Philippines