The transition from the oppressive share tenancy system to Agricultural Leasehold represents one of the most significant shifts in Philippine agrarian reform. Rooted in the principle of social justice, the legal framework governing these contracts seeks to ensure the security of tenure for farmers while balancing the economic interests of landowners.
1. Governing Laws
The primary statutes governing agricultural leasehold in the Philippines are:
- Republic Act No. 3844 (Agricultural Land Reform Code): Abolished share tenancy and established the leasehold system as the standard.
- Republic Act No. 6389: Amended RA 3844, further strengthening the rights of lessees.
- Republic Act No. 6657 (Comprehensive Agrarian Reform Law of 1988): Reaffirmed the leasehold system for lands not yet redistributed under the land-to-the-tiller program.
2. Essential Elements of a Leasehold Relationship
A valid agricultural leasehold relationship is not merely a contract but a legal status. For it to exist, the following six elements must concur:
- Consent: The parties must agree to the relationship (express or implied).
- Subject Matter: The land must be agricultural in nature.
- Purpose: The land is used for agricultural production.
- Consideration: The tenant pays a "lease rental" (in money or produce).
- Personal Cultivation: The lessee must cultivate the land personally with the help of their immediate farm household.
- Agricultural Lessor: The person who furnishes the land as the owner, civil law lessee, usufructuary, or legal possessor.
3. Rights of the Agricultural Lessee
The law grants the lessee several "indefeasible" rights that cannot be waived even by contract:
A. Security of Tenure
The most critical right. Once a leasehold relationship is established, the lessee cannot be ejected from the land except by a final and executory order from the Department of Agrarian Reform Adjudication Board (DARAB) based on specific legal grounds. The death of the lessor or the sale of the land to a third party does not terminate the relationship.
B. Right of Pre-emption and Redemption
If the landowner decides to sell the landholding, the agricultural lessee has the preferential right to buy it under reasonable terms (Pre-emption). If the land is sold to a third party without the lessee's knowledge, the lessee has the right to buy it back from the buyer within a period prescribed by law (Redemption).
C. Right to a Management Soul
The lessee has the right to manage the farm, choose the crops to be planted, and determine the methods of cultivation, provided they follow proven farm practices.
4. Obligations of the Lessee and Lessor
The relationship is a bilateral contract involving specific duties:
| Party | Primary Obligations |
|---|---|
| Agricultural Lessee | Pay the lease rental on time; care for the land as a "good father of a family"; inform the lessor of any trespass; and use the land for the agreed purpose. |
| Agricultural Lessor | Keep the lessee in peaceful possession; shoulder the cost of permanent improvements (unless otherwise agreed); and respect the lessee's autonomy in farm management. |
5. Determination of Lease Rental
Under RA 3844, the maximum lease rental for rice and other short-duration crops is generally fixed at 25% of the average normal harvest during the three agricultural years immediately preceding the date the leasehold was established, after deducting the seeds and the cost of harvesting and threshing.
6. Grounds for Termination and Dispossession
A leasehold relationship is not eternal, but it can only be terminated under specific conditions:
- Voluntary Surrender: The lessee gives up the land, often requiring written notice.
- Total Abandonment: The lessee leaves the land without any intent to return.
- Death of the Lessee: The leasehold is inherited by the surviving spouse, the eldest direct descendant, or the next eldest descendant, in that order, provided they are willing and able to cultivate.
Ejectment (Dispossession) can only occur for cause, such as:
- Failure to pay lease rental (unless caused by a fortuitous event).
- Unauthorized use of the land for non-agricultural purposes.
- Failure to adopt proven farm practices resulting in a substantial decline in production.
- Substantial damage to the land due to the lessee's negligence.
7. Jurisdictional Authority
Disputes arising from agricultural leasehold contracts—whether they involve the fixing of rentals, ejectment, or the exercise of redemption rights—fall under the exclusive original jurisdiction of the Department of Agrarian Reform (DAR). Specifically, the DARAB handles the quasi-judicial resolution of these agrarian disputes.