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;

2. Average normal harvest for three (3) preceding years.

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.

Section 34. Consideration for the Lease of Riceland and Lands Devoted to Other Crops - The
consideration for the lease of riceland and lands devoted to other crops shall not be more than the
equivalent of twenty-five per centum of the average normal harvest during the three agricultural years
immediately preceding the date the leasehold was established after deducting the amount used for
seeds and the cost of harvesting, threshing, loading, hauling and processing, whichever are applicable:
Provided, That if the land has been cultivated for a period of less than three years, the initial
consideration shall be based on the average normal harvest during the preceding years when the land
was actually cultivated, or on the harvest of the first year in the case of newly-cultivated lands, if that
harvest is normal: Provided, further, That after the lapse of the first three normal harvests, the final
consideration shall be based on the average normal harvest during these three preceding agricultural
years: Provided, furthermore, That in the absence of any agreement between the parties as to the
rental, the maximum allowed herein shall apply: Provided, finally, That 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. In case of
disagreement, the Court shall determine the reasonable increase in rental.
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:

Should the lessee incur default in the payment of at least 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:

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 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.