Introduction

In the Philippine agricultural sector, tenancy agreements have long been a cornerstone of rural economic relations, particularly in rice and other crop production. The "tersya" system represents a traditional and standard form of share tenancy where the landowner typically receives one-third (tersya, derived from the Spanish word for "third") of the net harvest as their share. This arrangement, rooted in colonial practices and formalized under modern agrarian laws, balances the contributions of landowners and tenants while aiming to ensure equitable distribution of produce. Despite agrarian reforms shifting towards leasehold or ownership, tersya remains relevant in existing tenancy contracts. This article delves into the intricacies of the tersya landowner share, including its legal foundations, operational mechanics, rights and obligations, disputes, and evolving status in the Philippine context, providing a thorough examination for stakeholders in agriculture.

Historical Background

The tersya system traces its origins to the Spanish colonial era, where hacienda systems imposed sharecropping arrangements on indigenous farmers. Under the encomienda and later the friar estates, tenants (kasama) often surrendered a portion of their harvest to landowners, with divisions varying by region and crop. The term "tersya" specifically emerged in Central Luzon and other rice-producing areas, denoting a one-third share for the landowner after deducting production costs.

Post-independence, the American colonial influence introduced tenancy reforms, but inequities persisted, leading to peasant unrest like the Hukbalahap rebellion. The Philippine government responded with laws to standardize shares, culminating in the Agricultural Tenancy Act of 1954 (Republic Act No. 1199), which codified tersya as a baseline for fair division. Subsequent reforms under Presidents Magsaysay, Macapagal, and Marcos aimed to transition from share tenancy to leasehold, viewing tersya as potentially exploitative due to unequal bargaining power. Today, while comprehensive agrarian reform has distributed millions of hectares, tersya persists in non-reformed lands or voluntary agreements.

Legal Framework Governing Tersya Agreements

The tersya system is embedded within the broader framework of Philippine agrarian laws:

Agricultural Tenancy Act of 1954 (Republic Act No. 1199), as amended: This foundational law defines share tenancy as a system where the tenant cultivates the land and shares the produce with the landowner. Section 32 stipulates that the share shall be proportionate to contributions, but in practice, for rice lands where the tenant provides labor and some inputs, the landowner's share is often set at one-third of the net produce. Amendments via Republic Act No. 2263 and Republic Act No. 3844 (Agricultural Land Reform Code) reinforced this, prohibiting shares below certain thresholds to protect tenants.
Agricultural Land Reform Code (Republic Act No. 3844, 1963): This code aimed to abolish share tenancy in favor of leasehold but allowed existing tersya agreements to continue under regulated terms. It mandated that the landowner's share not exceed 25-30% in some cases, but tersya (33%) was tolerated if mutually agreed and documented.
Code of Agrarian Reforms (Presidential Decree No. 27, 1972): Under martial law, this emancipated tenants in rice and corn lands, converting share tenancy to leasehold with fixed rentals. However, tersya arrangements outside Operation Land Transfer (OLT) scopes remained valid.
Comprehensive Agrarian Reform Law (Republic Act No. 6657, 1988), as amended by RA 9700: CARL prioritizes land distribution but recognizes tenancy in non-covered areas. Section 8 allows voluntary tenancy agreements, including tersya, provided they comply with minimum shares and are registered with the Department of Agrarian Reform (DAR).
Department of Agrarian Reform Administrative Orders: DAR AO No. 2, Series of 2009, and similar issuances provide guidelines for tenancy contracts, requiring written agreements and adjudication processes for disputes.

Supreme Court jurisprudence, such as in De los Santos v. Jarra (G.R. No. L-19547, April 30, 1963), upholds tersya as valid if not oppressive, while Cabatan v. Court of Appeals (G.R. No. 98394, October 26, 1992) emphasizes proportionality and tenant protections.

Tenancy agreements must be in writing, signed before witnesses, and registered with the Municipal Agrarian Reform Office (MARO) to be enforceable.

Mechanics of the Standard Tersya Share

Under the tersya system:

Division of Produce: The gross harvest is first subjected to deductions for shared expenses (e.g., seeds, fertilizers, irrigation fees, harvesting costs). The net produce is then divided into three equal parts: one-third to the landowner (tersya), and two-thirds to the tenant. This assumes the tenant shoulders most labor and variable costs, while the landowner provides the land and possibly fixed inputs like farm machinery.
Crop-Specific Applications: Primarily used in palay (rice) production, where yields are measurable in cavans or sacks. For example, if the net harvest is 300 cavans, the landowner gets 100 cavans. Variations exist for corn, sugarcane, or coconut, but tersya is less common there, with 50-50 or 70-30 splits prevailing.
Deductions and Contributions: Expenses are classified as:
- Tenant-exclusive: Labor, plowing, transplanting.
- Shared: Seeds, pesticides (divided equally or proportionately).
- Landowner-exclusive: Land taxes, permanent improvements. Disputes over deductions are common, requiring receipts and mutual agreement.
Computation Formula: Net Produce = Gross Harvest - Total Deductible Expenses. Landowner Share = (Net Produce) / 3. Tenant Share = (Net Produce) × 2/3.

If the landowner contributes more (e.g., mechanization), the share may adjust upward, but not exceeding 50% under RA 1199.

Rights and Obligations of Parties

Landowner Rights

Receive the tersya share promptly after harvest.
Inspect the land and harvest process.
Terminate tenancy for just causes (e.g., non-payment, subletting) under Section 36 of RA 1199, with DAR approval.
Recover advances or loans from the tenant's share.

Landowner Obligations

Provide the land in cultivable condition.
Respect tenant's peaceful possession.
Share in expenses as agreed.
Comply with agrarian laws, avoiding ejection without cause.

Tenant Rights

Security of tenure: Cannot be ejected except for valid grounds, with right to compensation for improvements.
Pre-emptive right to buy the land under CARL.
Home lot allocation (up to 3,000 sqm).
Exemption from landowner share if harvest fails due to fortuitous events.

Tenant Obligations

Cultivate diligently using good husbandry practices.
Pay the tersya share honestly.
Maintain the land and report damages.
Not sublet without consent.

Both parties must adhere to the principle of pacta sunt servanda, with contracts interpreted in favor of the tenant per social justice doctrines.

Enforcement, Disputes, and Remedies

Registration and Documentation: Agreements must be filed with MARO; unregistered contracts are voidable.
Adjudication: Disputes over shares go to the Provincial Agrarian Reform Adjudicator (PARAD) or DAR Adjudication Board (DARAB), with appeals to the Court of Appeals. Common issues include underreporting harvest or inflated deductions.
Remedies for Non-Compliance:
- For tenants: File for specific performance, damages, or injunction against ejection.
- For landowners: Seek eviction, recovery of share via replevin, or damages.
- Criminal sanctions under RA 1199 for willful non-payment or fraud.
Force Majeure: Shares are adjusted or waived in cases of typhoons, droughts, or pests, per Article 1680 of the Civil Code.

Impact of Agrarian Reforms on Tersya

The shift to leasehold under PD 27 fixed rentals at 25% of average normal harvest (minus expenses), rendering tersya obsolete in reformed rice/corn lands. CARL further distributed lands to tenants, but tersya survives in:

Non-CARL covered crops (e.g., vegetables).
Voluntary land transfers.
Idle or disputed lands.

Recent DAR policies encourage conversion to leasehold, offering tenants fixed payments for stability.

Current Status and Challenges

As of recent developments, tersya is declining due to urbanization, climate change, and migration, but it persists in regions like Nueva Ecija and Isabela. Challenges include:

Exploitation: Tenants often accept lower effective shares due to debt bondage (utang na loob).
Climate Vulnerability: Variable yields affect divisions.
Legal Gaps: Enforcement is weak in remote areas, leading to informal agreements.

Government programs like the Agrarian Reform Beneficiaries Development and Sustainability Program (ARBDSP) provide support to transition out of tersya.

Conclusion

The standard tersya landowner share embodies a historical compromise in Philippine agricultural tenancy, offering a structured division while highlighting ongoing inequities. Grounded in laws promoting social justice, it protects both parties but faces obsolescence amid reforms favoring tenant ownership. Stakeholders must navigate its mechanics carefully, ensuring compliance to foster sustainable rural development. As agriculture evolves, understanding tersya remains essential for resolving disputes and advancing equitable land relations.