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ARELLANO UNIVERSITY SCHOOL OF LAW AGRARIAN LAW AND SOCIAL LEGISLATION CLASS ATTY. GEFER MANCOL 2 nd SEMESTER, ACADEMIC YEAR 2017-2018 GROUP II

CHAPTER II AGRICULTURAL LEASEHOLD CONCEPT

A. AGRICULTURAL LAND REFORM CODE (Rep. Act. No. 3844)

A. AGRICULTURAL LAND REFORM CODE (Rep. Act. No. 3844) REPUBLIC ACT No. 3844 AN ACT TO

REPUBLIC ACT No. 3844

AN ACT TO ORDAIN THE AGRICULTURAL LAND REFORM CODE AND TO INSTITUTE LAND REFORMS 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

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

1. PREFATORY STATEMENTS

The thrust of this legislation is the drastic abolition of share tenancy system. It provided for the automatic conversion of the sharecropper to the status of an agricultural lessee, governed by the system of agricultural leasehold which is established either:

a. by agreement of the parties, whether oral or written, or

b. by operation of law.

The Agricultural Land Reform Code still finds application to the following:

a. areas which have not come within the operation and implementation of P.D. No. 27;

b. agricultural laborers subject to the provisions of the Labor Code;

c. organization and operation of the Land Bank;

d. provisions on resettlements of farmers;

e. right to pre-emption and redemption, with respect to land-owner’s retained area, should such landowner decide to sell his tenanted / leased retained area, the tenant has the preferential right to purchase and / or redeem the same in case the land is sold to a third person without the tenant’s knowledge;

f. right of the tenant / lessee to 75% share from the standing crops;

Three shifts in the mode of acquisition

a. The automatic conversion of the status of share tenant to leaseholder characterized by payment of fixed rentals;

b. The second shift which is the conversion of the leaseholder to amortizing owner, characterized by the Land Bank purchase of the property with a concomitant obligation

imposed on the tenant-lessee to pay Land Bank on amortization basis the purchase price of the farmholding;

c. The third shift which converts the status of an amortizing owner into full owner or owner- cultivator upon full payment of the remaining balance of the amortization.

Section 3. Composition of Code -

1. An agricultural leasehold system to replace all existing share tenancy systems in agriculture;

2. A system of crediting rental as amortization payment on purchase price;

3. A declaration of rights for agricultural labor;

4. A machinery for the acquisition and equitable distribution of agricultural land;

5. An institution to finance the acquisition and distribution of agricultural land;

6. A machinery to extend credit and similar assistance to agricultural lessees, amortizing owners-cultivators, owners-cultivator and cooperatives;

7. A machinery to provide marketing, management and other technical assistance and / or services to agricultural lessees, amortizing owners-cultivators, owner-cultivator, cooperatives;

8. A machinery for cooperative development;

9. A department for formulating and implementing projects of agrarian reform;

10. An expanded program of land

11. A judicial system to decide issues arising under this Code.

12. A machinery to provide legal assistance to agricultural lessees, amortizing owners- cultivator, and owners-cultivator.

Repayment Scheme and Credit Assistance

The same scheme of repayments to the Land Bank of the Philippines of the purchase price of lands acquired under the operation of the Agricultural Land Reform Code, applies to lands acquired under both P.D. No. 27 and R.A. No. 6657, with the difference that the period of amortization payments to the Land Bank which was staggered within the period of 15 years under P.D. No. 27, has been extended to 30 years under Section 26 of R.A No. 6657.

The functions of a machinery that used to extend credit and financial assistance to agricultural lessees, amortizing owners-cultivator, owners-cultivator and cooperatives which the Code of Agrarian Reforms had entrusted with the defunct Agricultural Credit Administration (ACA) are now being implemented by the Land Bank of the Philippines.

Jurisdiction on Agrarian Disputes All agrarian disputes are now under the cognizance of the Department of Agrarian Reform thru the Agrarian Reform Adjudication Board.

The Department of Agrarian Reform Adjudication Board (DARAB) in turn delegates its functions to the respective Regional and Provincial Adjudicators of the DAR. Any decision, order, award or ruling of the DAR on any agrarian dispute, may be brought to the Court of Appeals on certiorari.

Special Agrarian Courts

Under the present law (R.A. No. 6657) all controversies involving the determination of just compensation and prosecution of all criminal offenses arising from violations of the provisions of this Act, fall under the original and exclusive jurisdiction of Special Agrarian Courts.

Bureau of Agrarian Legal Assistance

They shall be responsible for the development of plans and programs for the extension of legal information to farmers; extension of legal services to them.

DEFINITION OF TERMS

Agricultural land means land devoted to any growth, including but not limited to crop lands, saltbeds, fishponds, idle land and abandoned land.

Agricultural lessee means 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.

Agricultural lessor means a person, lets or grants to another the cultivation and use of his land for a price certain.

Agricultural year means the period of time required for raising a particular agricultural product.

Farm implements means hand tools or machineries in a farm enterprise.

Immediate farm household - means the members of the family of the lessee or lessor and other persons who are dependent upon him for support.

Proven farm practices means sound farming practices.

Personal cultivation means cultivation by the lessee or lessor in person.

Work animals means animals ordinarily employed in a farm enterprise.

Agrarian dispute means any controversy relating to terms, tenure or condition of employment, or concerning an association or representation of persons in negotiating, maintaining, changing or seeking to arrange terms on conditions of employment.

Agricultural owner-cultivator means any person who, personally cultivates his own land.

Fair rental value means the value not in excess of allowable depreciation plus 6% interest per annum.

Incapacity means any cause or circumstance which prevents the lessee from fulfilling his contractual and other obligations under the Code.

Modes of Land Tenure Allowed under R.A. No. 3844

1.

Leasehold system characterized by a tenant farmer personally and actually cultivating the farmholding under a leasehold relationship whereby the lessee pays a fixed amount of rental whether in cash or in kind to the lessor.

2.

Share tenancy- the relationship which exists whenever two persons agree on a joint undertaking for agricultural production wherein one party furnishes the land and the other his labor, with either or both contributing any one or several of the items of production, the tenant cultivating the land personally with the aid of labor available from members of his immediate farm household, and the produce thereof to be divided between the landholder and the tenant.

3.

Owner-cultivatorship - a land tenure mode where a person who, providing capital and management, personally cultivates his own land with the aid of his immediate family and household.

4.

Cooperative-cultivatorship which is a form of agrarian relationship among members of a cooperative who work and live on the land as tillers in common.

5.

Labor administration which employs laborers and workers on a daily wage basis, and engaged in a large scale plantation farming of permanent crops by their respective managers.

How Leasehold Relation is Established

1. by agreement of the parties

2. by operation of law implementation of R.A. No. 3844 providing for the abolition of share tenancy.

Parties to Leasehold Relation

1. the landholder

2. the person who personally cultivates the land.

ESSENCE OF LEASEHOLD RELATION

1. It is essentially personal, in the sense that it cannot be exercised by third persons other than the lessor himself, and the lessee who personally cultivates the land;

2. It has the nature of an in rem or real relationship, because it imposes a burden upon the land subject of the landholding and continues to exist even by the death or incapacity of either party, or the expiration of the agreement.

Tenurial Arrangement of Leasehold

It makes it a penal offense to eject a tenant illegally from his holding except upon approval of the court

Definitions of Security of Tenure

· Political Science

- Security of Tenure is a term used in political science to describe a constitutional or legal guarantee that a political office-holder cannot be removed from office except in exceptional and specified circumstances.

· Business Dictionary

- According to business dictionary, security of tenure is a legal protection afforded to (1) tenants of dwelling houses (usually under a rent act) against arbitrary rent increases and landlord's attempts to repossess the property through eviction, or (2) employees in certain professions (such as teaching) against summary dismissal without just cause.

Security of Tenure and 1987 Constitution

Security of Tenure is guaranteed by the Constitution. This guarantee means that an employee cannot be dismissed from the service for causes other than those provided by the law and only after due process is accorded the employee. According to Article XIII, Section 3 of 1987 Constitution:

“Section 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunites for all. It shall guarantee the rights of all workers of self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage.”xxx In Addition, According to De Guzman vs Comelec, G.R. No. 129118, July 19, 2000, “The guarantee of security of tenure under the Constitution is not a guarantee of perpetual employment. It only means that an employee cannot be dismissed (or transferred) from the service for causes other than those provided by law and after due process is accorded the employee. What it seeks to prevent is capricious exercise of the power to dismiss. But, where it is the law-making authority itself which furnishes the ground for the transfer of a class of employees, no such capriciousness can be raised for so long as the remedy proposed to cure a perceived evil is germane to the purposes of the law.”

Security of Tenure and Labor Code

The Labor Code also guarantees the right of labor’s to security of tenure. Article 279 of the same code states that:

“ART. 279. Security of tenure. - In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. (As amended by Section 34, Republic Act No. 6715, March 21, 1989).” According to PHILIPPINE-SINGAPORE TRANSPORT SERVICES, INC. vs NATIONAL LABOR RELATIONS COMMISSION (G.R. No. 95449, August 18, 1997) There are two facets of Article 279 of Labor Code. To wit:

a. The legality of act of dismissal

b. The legality in manner of dismissal

The illegality of the act of dismissal constitutes discharge without just cause, while illegality in the manner of dismissal is dismissal without due process.

Tenurial Arrangement of Leasehold

The leasehold relation may either by agreement of parties (orally or in writing) or by implication entitles the leasehold tenant to security of tenure until its extinguishment by any of the

causes provided by law. Ejecting a tenant illegally from his land holding is considered as a penal offence. No person is allowed to eject a tenant except upon approval of the court. Presidential Decree No. 583, signed by President Ferdinand Marcos, penalizes persons, including judges, fiscal or any investigating officer, and members of Armed Forces of the Philippines who will order illegal ejectment, ouster, exclusion or removal of any tenant-farmer from the land they tilled. According to Section 2 of such decree:

“Section 2. Any judge of the Court of Agrarian Relations, Court of First Instance, City or Municipal Court or any fiscal or any investigating officer, including members of the Armed Forces of the Philippines, who shall order the ejectment, ouster, exclusion or removal of any tenant- farmer from the land tilled by him or who shall take cognizance of any ejectment case or any other similar case designed to exclude, oust, eject or remove a tenant-farmer from the land tilled by him without first complying with the provisions of Presidential Decree No. 316 shall, upon conviction, be punished by prision mayor and perpetual absolute disqualification.” Presidential Decree No. 316 prohibits ejectment of tenant-tillers from their farmholdings without due process. Section 1. No tenant-farmer in agricultural lands primarily devoted to rice and corn shall be ejected or removed from his farmholding until such time as the respective rights of the tenant- farmer and the landowner shall have been determined in accordance with the rules and regulations implementing Presidential Decree No. 27. Section 2. Unless certified by the Secretary of Agrarian Reform as a proper case for trial or hearing by a court or judge or other officer of competent jurisdiction, no judge of the Court of Agrarian Relations, Court of First Instance, municipal or city court, or any other tribunal or fiscal shall take cognizance of any ejectment case or any other case designed to harass or remove a tenant of an agricultural land primarily devoted to rice and corn, and if any such cases are filed, these cases shall first be referred to the Secretary of Agrarian Reform or his authorized representative in the locality for a preliminary determination of the relationship between the contending parties. If the Secretary of Agrarian Reform finds that the case is a proper case for the court or judge or other hearing officer to hear, he shall so certify and such court, judge or other hearing officer may assume jurisdiction over the dispute or controversy.”

.

Doctrine on security of land tenure

Security of land tenure “the agricultural leasehold relation under this Code, shall not be extinguished by mere expiration of the term or period in the leasehold contract, in case the agricultural lessor sells, alienates of transfers the legal possession of the landholding, the purchaser or transferee thereof shall be subrogated to the rights and substituted to the obligations of the agricultural lessor.”

In order to possess the status of a de jure tenant, the following essential requisites must concur, to wit:

1. the parties are the landowner and the tenant;

2. the subject is agricultural land;

3. there is consent;

4. the purpose is agricultural production;

5. there is personal cultivation;

6. there is sharing of harvests.

The absence of one does not make an occupant of a parcel of land or a cultivator thereof, a de jure tenant, hence cannot invoke the defense of security of tenure.

What then constitutes as family-size farm so as to give rise to tenancy relationship?

Family-size farm an area of farmland that permits efficient use of labor and capital resources of the farm family and will produce an income sufficient to provide a modest standard of living to meet a farm family’s needs for food, clothing, shelter, and education with possible allowance for payment of yearly installments on the land, and reasonable reserves to absorb yearly fluctuations in income.

What now is the effect of the law to cultivator-tiller of a less than family-size farms?

Such landholder-tiller or tiller-sharer, is at most considered as a mere caretaker before the eyes of the law who is not entitled to the security of tenure.

Should the landholding be sold or alienated to a new owner, what happens to the rights and obligations of the transferee and his heirs?

The transferee and his heirs are subrogated to the rights and obligations of the former landowner. However, the change of landowner cannot be allowed to raise the status of a mere caretaker or tiller sharer to that of an agricultural tenant and leaseholder.

Causes for Extinguishment of Leasehold Relation

1. Abandonment of the landholding;

2. Voluntary surrender of the landholding;

3. Absence of successor or qualified heir, in case of death or permanent incapacity of the lessee;

4. Judicial ejectment of the lessee;

5. Acquisition by the lessee of the landholding;

6. Termination of the leasehold under Sec. 28;

7. Mutual consent of the parties;

8. Conversion of the landholding for non-agricultural purposes.

Obligations of the Lessees

1. To cultivate and take care of the farm as a good father of a family

2. To inform the agricultural lessor any trespass committed by third persons upon the farm;

3. To take reasonable care of the work animals and farm implements delivered to him by the agricultural lessor, he shall be held responsible and made answerable therefore to the extent of the value of the work animals and / or farm implements at the time of the loss, death or destruction;

4. To keep his farm and growing crops attended to during the work season. In case of unjustified abandonment all of the expected produce, any upon order of the court be forfeited in favor of the agricultural lessor.

5. To notify the agricultural lessor at least three (3) days before the date of harvesting;

6. To pay the lease rental to the agricultural lessor when it falls due.

Section 26, R.A. No. 3844, empowers the lessee to take direct action against any trespasser to the landholding without waiting for the response from the lessor.

Prohibitions to Agricultural Lessee

a. To contract to work additional lanholdings belonging to a different agricultural lessor;

b. To acquire and personally cultivate a family-size farm without knowledge and consent of the agricultural lesor;

c.

To employ a sub-lessee.

Termination of Leasehold by the Lessee

1. Cruel, inhuman or offensive treatment of the agricultural lessee by the agricultural lessor;

2. Non-compliance on the part of the agricultural lessor with any of the obligations imposed;

3. Compulsion of the agricultural lessee by the agricultural lessor to do any work not in any way connected with farm work;

4. Commission of a crime by the agricultural lessor against the agricultural lessee

5. Voluntary surrender due to circumstances more advantageous to him and his family.

Rights of the Agricultural Lessor

Agricultural Lessor is a person, natural or juridical, who, either as owner, civil law lessee, usufructuary, or legal possessor, lets or grants to another the cultivation and use of his land for a certain price in money or in produce or both.

Section 29 of the Code of Agrarian Reform provides for the Right of the Agricultural lessor. The agricultural lessor can exercise the right provided as long as it does not interfere with the lessee’s peaceful possession of the landholding.

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

(1) To inspect and observe the extent of compliance with the terms and conditions of their contract and the provisions of this Chapter; (2) To propose a change in the use of the landholding to other agricultural purposes, or in the kind of crops to be planted: Provided, That in case of disagreement as to the proposed change, the same shall be settled by the Court according to the best interest of the parties concerned:

Provided, further, That in no case shall an agricultural lessee be ejected as a consequence of the conversion of the land to some other agricultural purpose or because of a change in the crop to be planted; (3) To require the agricultural lessee, taking into consideration his financial capacity and the credit facilities available to him, to adopt in his farm proven farm practices necessary to the conservation of the land, improvement of its fertility and increase of its productivity: Provided, That in case of disagreement as to what proven farm practice the lessee shall adopt, the same shall be settled by the Court according to the best interest of the parties concerned; and (4) To mortgage expected rentals.

Obligations of the Lessor

1. To keep the lessee in peaceful possession and cultivation of his landholding;

2. To keep intact the permanent useful improvements existing on the landholding.

The lessee may seek relief from the nearest Regional Agrarian Reform Adjudicators (RARAD) or the Provincial Agrarian Reform Adjudicators (PARAD) to compel the agricultural lessor to comply with this obligation in case of refusal, neglect or resistance on the part of the lessor.

Prohibition to the Agricultural Lessor

1. To dispossess the agricultural lessee of his landholding except upon authorization by the court under Section 36.

2. To require the agricultural lessee to assume, the payment of the taxes on the landholding;

3. To require the agricultural lessee to assume, any part of the rent, to pay to third persons for the use of the land;

4. To deal with millers or processors without written authorization of the lessee;

5. To discourage, the formation, maintenance or growth of unions or organizations of agricultural lessees in his landholding.

Ground for Disposition of Agricultural Lessee

1. When the landholding is declared by the Department Head to be suited for residential, commercial, industrial or some other urban purposes;

2. Failure to comply with any of the of the terms and conditions of the contract of lease;

3. Planting of crops or used the landholding for a purpose other than what had been previously agreed upon;

4. Failure to adopt proven farm practices as determined under paragraph 3 of Section twenty-nine;

5. When through fault or negligence of the lessee, the land or other substantial permanent improvement thereon is substantially damaged or destroyed or has reasonably deteriorated;

6. Failure to pay the lease rental when it falls due;

7. Employment of a sub-lessee.

The above causes are grounds for ejectment of an agricultural lessee only after observance of due process.

Lessee’s Right of Pre-emption and Redemption

In case the agricultural lessor decide to sell the landholding, the agricultural lessee shall have the preferential right to buy the same under reasonable terms and conditions: each shall be entitled to said preferential right only to the extent of the area actually cultivated by him. The right of pre- emption may be exercised within one hundred eighty (180) days from notice in writing, which shall be served by the owner on all lessees affected and the Department of Agrarian Reform.

He must either tender payment of, or present a certificate from the Land Bank that it shall make payment pursuant to Sec. 80 of this Code. If the latter refuses to accept such tender or presentment, he may consign it with the Court.

Any dispute as to reasonableness of the terms and conditions, may be brought by the lessee or by the Department of Agrarian Reform to the proper Court of Agrarian Relations.

Right of Pre-emption

Granted by the Code of Agrarian Reform to the agricultural lessee to purchase the property subject of his landholding, from the agricultural lessor, before said land is sold to a third person other than the lessee or lessees.

Procedure to avail of right:

2.

If lessee agrees on the terms and conditions stated in landowner’s offer, he should give notice within 180 days but not less than 30 days to lessor of his intent to exercise right of pre-emption.

3. Lessee to tender payment to lessor or present a certificate issued by the Land Bank

4. In case of refusal by lessor, lessee may consign the purchase money with the Department of Agrarian Reform, thru the proper Regional or Provincial Adjudicator of the place where the land lies.

5. If there is more than one lessee, each shall be entitled to purchase the extent of the area actually cultivated by them.

Lessee’s Right of Redemption

Lessee also enjoys right of redemption. Redemption means the action of regaining or gaining possession of something in exchange for payment or clearing a debt. Right of redemption differs from right of pre-emption as the former contemplates of a consummated sale and transfer of ownership of landholding to a third person while in the latter, no such sale to a third person has yet taken place. Section 12 of R.A. 3844 states that:

Section 12. Lessee's Right of Redemption - In case the landholding is sold to a third person without the knowledge of the agricultural lessee, the latter shall have the right to redeem the same at a reasonable price and consideration: Provided, That the entire landholding sold must be redeemed: Provided, further, That where these are two or more agricultural lessees, each shall be entitled to said right of redemption only to the extent of the area actually cultivated by him. The right of redemption under this Section may be exercised within two years from the registration of the sale, and shall have priority over any other right of legal redemption.”

If the vendee (third person) refuse to accept the lessee’s offer to redeem, the agricultural lessee who is actual cultivator of the landholding shall file his petition with DAR through proper Regional or Provincial Adjudicator where the land lies to compel the vendee-third person to have the land redeemed. DAR shall initiate the redemption process. Land Bank shall make payment of the redemption price which will be agreed upon by the parties or will be fixed by DAR. The same will be repaid by the lessee in legitimate amortization basis.

Should the area subject of redemption be bigger that the area actually cultivated, the excess shall be divided equally among the lessees by mutual agreement, if not, it will be decided in proper judicial proceeding before the DARAB. The lessee has 180 days to exercise the right of redemption. 180 days starts from time he learned of the sale of landholding by the lessor in favour of the third person.

CARL of 1988 does not affect right of redemption of the lessee as it only repealed Section 35 or R.A. 3844. The rest of the provisions of R.A. 3844 not contrary to CARL shall have suppletory application.

Right to Self-organization

The farmworkers shall have the right to self-organization and form, join or assist farmworkers’ organizations of their own choosing for the purpose of collective bargaining through representatives of their own choosing.

Bill of Rights for Agricultural Labor:

1. Right to self organization;

2. Right to engage in concerted activities.

4.

Right to work for not more than eight hours;

5. Right to claim for damages for death or injuries sustained while at work;

6. Right to compensation for personal injuries; death or illness;

7. Right against suspension or lay-off.

Comments:

The right to self organization includes the right to strike and hold picket in order to compel the management in the case of large scale plantations and multinational corporations to meet the demands of the farm workers for wage increase and better working conditions.

Right to Engage in Concerted Activities

Comments:

The provisions are corollary to the right to self-organization, and includes the right to strike and hold picket in order to compel the management in the case of large-scale plantations and multinational corporations doing business in the Philippines to meet the demands of the farmworkers for wage increase and better working conditions

Right against suspension and lay-off

Under this section, suspension, dismissal or lay-off is enjoined of any farmworker who is a member of a farmers’ association or group that has served a copy of a petition or complaint on the employer or manager of a farm enterprise on any matter, like demand for wage increase or better working conditions that may cause a strike or lockout and copy of such petition or complaint which is pending before the DAR is furnished the Secretary of Labor.

Irrigation Facilities

Permanent irrigation system may be constructed at the expense of the lessor:

1. Should the lessor refuse to bear the expenses, he should not be entitled to the increase in rental and shall upon the termination of the leasehold relationship pay the lessee or his their the reasonable value of the improvements at the time of the termination;

2. Should the lessor bear expenses he shall be entitled to an increase in the rental proportionate to the resultant increase in production.

Management of Irrigation System

1. When constructed and operated by the government. Lessees either as individuals or groups shall allocate not more than 25% of their rental collection to the government.

2. Irrigation systems installed and / or constructed at expense of landowner or agricultural lessor acquisition of these irrigation system shall be initiated by the DAR to be financed by the Land Bank.

Lease of Ricelands and Lands Devoted to Other Crops

1. 25% of the average normal harvest shall be the amount of rental for ricelands or estimated normal harvest during the three (3) agricultural years immediately preceding the establishment of the leasehold after deducting the expenses for seeds, cost of harvesting, threshing, loading, hauling and processing;

3.

No agreement as to rental the court (now DAR) shall fix a provisional rental until fixed rental is determined within (30) days from submission of the case for decision.

Amortization Payment for Land under Leasehold:

The rentals paid by the lessee to the lessor at the place agreed upon by the parties shall be credited as amortization payments for the purchase price of the landholding titled by the leasee:

a) When the landholding is expropriated by the government;

b) When it is redeemed.

Whatever balance remaining after crediting as amortization the rental paid, the same may be finances by the Land Bank in the same ratio and mode of payment provided under Section 80 of the Code.

Default on the Part of the Lessee:

three (3) installments on the loan, the lender shall immediately notify the Land Bank and the DAR so that appropriate steps shall be taken by these agencies:

Should the lessee incur default in the payment of at least

a) to answer for the default in case the failure is due to fortuitous event

b) to take over the ownership and administration of the landholding.

Where the case of the default is attributable to the lessee, the DAR shall endeavor to substitute the defaulting amortization owner. In case the default is due to fortuitous event, the Land Bank shall assume the payment of the balance and the farmer shall be released from his obligation.

Purchase payment of the landholding in favor of the agricultural lessee may consist of:

1.

Cash payment

-

10 %

-

Balance payable by LBP bonds at 6% interest per annum

-

Tax free to mature after 25 years

2.

Balance payable in LBP bonds

-

6% per annum

-

Tax free to mature after 25 years

Amortizing owners whose lands have been surveyed:

- May avail of the assistance of the Land Registration Commission and the Bureau of Lands in the approval of the corresponding certificates of title with the encumbrance duly annotated. Certificate of title:

- Amortizing owner may avail of loans from private lending institutions.

- Amortizing owner can borrow up to not less than 60% of the fair market value of the property. Default of lessee

- The lessee will be held criminally liable by default if any of the following is violated:

a) Violation of the of provisions Section 13 and 27 of paragraph one, of section 31.

b) Any person, natural or juridical who induces another, as tenant, to excute or to enter into a share tenancy contract with himself or another is in violation of this code.

c) Any person who violates the provisions of section 40, 41 and 42 of this code.

Period of Prescription

An action to enforce any cause of action accruing under this Code (R.A. No. 3844) shall be brought within the period of three (3) years.

GROUP 2 Members:

Basallaje, Marlon V. Camposuela, Mark Anthony B. Colipano, Aprille G. Corpuz, Ma. Visitacion C. Dacanay, Joshua Benjamin T. Diaz, Nathaniel N. Dioquino, John Freko B. Domatog, Mary Grace P. Gasatan, Marieshem L. Isubol, Donna Cel A. Mendoza, John Maxwel Memoracion, Michael Angelo L. Zagado, Simon Peter S.