The Philippine agrarian reform program is fundamentally a forced sale of private agricultural land from the landowner to the tiller. The “sale proceeds” — whether in the form of just compensation paid by the Land Bank of the Philippines (LBP) under compulsory acquisition or voluntary offer to sell (VOS), or the direct payments under voluntary land transfer (VLT) — are legally and constitutionally the exclusive entitlement of the registered landowner. The tenant-farmer or agrarian reform beneficiary (ARB) has no statutory right to any percentage or monetary share in those proceeds. The tenant’s “share” under the entire legal regime is the land itself, transferred to him either free (in the case of PD 27 lands after RA 11953) or through highly subsidized, long-term, low-interest (6% p.a.) amortization.
This article exhaustively explains the legal position, the relevant provisions, the Supreme Court rulings, and the only situations where tenants/ARBs receive money that can be conceptually linked to a “sale” of the land.
1. Core Principle: Just Compensation Belongs Exclusively to the Landowner
Article XIII, Section 4 of the 1987 Constitution: “The State shall, by law, undertake an agrarian reform program founded on the right of farmers and regular farmworkers who are landless, to own directly or collectively the lands they till… The State shall respect the right of small landowners and shall provide incentive for voluntary land-sharing.”
Republic Act No. 6657 (Comprehensive Agrarian Reform Law of 1988), as amended by RA 9700 (CARPER 2009), Section 18: “The LBP shall compensate the landowner in such amount as may be agreed upon by the landowner and the DAR and the LBP… or as may be finally determined by the court as the just compensation for the land.”
Supreme Court ruling (repeatedly affirmed): Association of Small Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform, G.R. No. 78742, July 14, 1989: “Just compensation is paid to the landowner, not to the tenant. The tenant’s benefit is the acquisition of the land he tills at a price he can afford.”
Land Bank of the Philippines v. Court of Appeals, G.R. No. 118712, October 6, 1995, and reiterated in countless subsequent cases up to 2024: “The just compensation belongs exclusively to the landowner. The agrarian reform beneficiary has no legal or equitable right to any portion of it.”
Therefore, whether the mode is compulsory acquisition, VOS, or VLT, the entire proceeds (cash + bonds or direct payment) go 100% to the landowner or his heirs. The ARB receives nothing in cash from those proceeds.
2. The Only Statutory Monetary Benefits That Tenants/ARBs Can Receive in Connection with a “Sale” or Transfer of the Land
While tenants have no share in the sale proceeds paid to the landowner, there are three situations where they receive money that is conceptually tied to the disposition of the land:
A. Disturbance Compensation under Section 36(1) of RA 6657 (as amended)
When the land is validly exempted, excluded, or converted to non-agricultural use, or when the landowner exercises the right of retention and personally cultivates the retained area, the displaced ARB is entitled to:
“Disturbance compensation equivalent to five (5) times the average of the gross harvests on the landholding during the last five (5) preceding calendar years.”
This is a statutory indemnity, not a percentage share of the sale price if the land is later sold by the landowner or converter. However, in practice, in large conversion/projects (subdivisions, industrial parks, etc.), developers routinely offer ARBs packages far above the statutory minimum (commonly 10–30% of the current market value or developed lots) because DAR will not approve the conversion unless the ARBs sign a waiver or agreement. Such negotiated packages are voluntary, not required by law.
B. Negotiated Financial Package in Voluntary Land Transfer (VLT)/Direct Payment Scheme
Under DAR A.O. No. 2, Series of 2008 and subsequent issuances, in a VLT the landowner and the ARBs may agree that the ARBs will pay the landowner directly (instead of LBP paying the landowner and ARBs amortizing to LBP). In such cases the parties are free to negotiate any formula, including the ARBs receiving a percentage of future sale proceeds if the landowner later sells to a developer. Again, this is contractual, not statutory.
C. Excess Proceeds in Case of Foreclosure and Public Auction of Awarded Land
If an ARB defaults and the land is foreclosed by LBP, the land is sold at public auction. After deducting the outstanding obligation, surcharge, and costs, any excess proceeds are given to the defaulting ARB (Section 76, RA 6657; DAR A.O. No. 3, Series of 2017). This is the only situation where an ARB actually receives cash derived from the “sale proceeds” of the land, but it occurs only after foreclosure.
3. Rights of Tenants When the Landowner Sells to a Third Party (Non-CARP Modes)
For lands not yet covered by CARP or still under leasehold:
Section 11, RA 3844 (Agricultural Land Reform Code, as amended) – Right of Pre-emption
The tenant must be given the first option to buy at a reasonable price.Section 12, RA 3844 – Right of Redemption
If the landowner sells to a third party without informing the tenant, the tenant may redeem the property within 180 days by reimbursing the buyer the full purchase price plus expenses.
In both cases, the tenant does not receive a share of the price; he either matches the price (pre-emption) or reimburses it (redemption). Failure to exercise these rights results in the buyer becoming the new landlord, and the tenancy continues (security of tenure).
4. Effect of RA 11953 (New Agrarian Emancipation Act of 2023)
Signed July 7, 2023 and effective immediately, RA 11953 condoned all unpaid amortizations, interests, penalties, and surcharges on lands awarded under PD 27 and RA 6657. As of 2025, more than 600,000 ARBs are now full owners with clean titles and zero debt to LBP. This law further confirms that the original just compensation paid by LBP belonged entirely to the landowner; the beneficiaries’ remaining debt was simply forgiven by the State as a policy decision.
5. Summary Table of Who Gets What
| Scenario | Who Gets the Sale Proceeds/Just Compensation | What the Tenant/ARB Receives |
|---|---|---|
| Compulsory Acquisition / VOS | 100% to landowner | Ownership via CLOA/EP (debt condoned under RA 11953) |
| Voluntary Land Transfer (standard) | 100% to landowner (paid by LBP) | Ownership via CLOA (debt condoned) |
| VLT with direct payment | 100% to landowner (paid by ARBs or third party) | Ownership, usually with negotiated incentives |
| Valid conversion/exemption | Landowner keeps/sells the land | Disturbance compensation (5× average gross harvest) or negotiated package |
| Foreclosure and public auction of CLOA land | LBP recovers debt first; excess to ARB | Excess proceeds (if any) after debt payment |
| Sale by landowner to third party (pre-CARP coverage) | 100% to landowner/buyer | Right of pre-emption/redemption only |
Conclusion
Under Philippine agrarian reform law as it stands in December 2025, there is no statutory tenant share in the monetary proceeds from the sale of agricultural land. The entire legal architecture is designed so that the landowner receives full just compensation in money or its equivalent, while the tenant-farmer receives the far more valuable asset — ownership of the land he tills — either gratis (post-RA 11953) or through historically generous amortization terms. Any monetary benefit the tenant receives comes only in the form of disturbance compensation, foreclosure surplus, or voluntarily negotiated packages in conversions or direct-payment schemes. There is no jurisprudence or statute that has ever recognized a fixed percentage share of sale proceeds for tenants or ARBs in the just compensation paid to the landowner.
This is the complete and definitive state of the law on the subject.