AN ACT AMENDING REPUBLIC ACT NUMBERED THIRTY EIGHT HUNDRED AND FORTY-FOUR

Case Overview and Summary

Summary of Republic Act No. 6389 (An Act Amending the Agricultural Land Reform Code)

Title and Declaration of Policy (Sections 1-2)
- This Act shall be known as the "Code of Agrarian Reforms of the Philippines".
- It establishes policies for cooperative-cultivatorship, economic family-size farms, dignified existence for small farmers, viable agricultural structure, equal labor laws for agricultural workers, land resettlement, empowering small farmers, prioritizing agrarian reform financing, involving local governments, and evolving a system of land use and classification.

Composition of the Code (Section 3)
- Establishes an agricultural leasehold system to replace share tenancy.
- Provides for crediting rental as amortization payment on purchase price.
- Declares rights for agricultural labor.
- Creates machinery for land acquisition, distribution, financing, credit assistance, marketing assistance, cooperative development, agrarian reform projects, land surveys, judicial system, and legal assistance.

Automatic Conversion to Agricultural Leasehold (Section 4)
- Agricultural share tenancy is declared contrary to public policy and shall be automatically converted to agricultural leasehold.
- Provisions for continuing credit assistance, work animal and equipment sales, and existing share tenancy contracts.

Lessee's Rights (Sections 11-12)
- Agricultural lessees have preferential right to buy the landholding under reasonable terms (Section 11).
- Agricultural lessees have the right to redeem the landholding if sold to a third party without their knowledge (Section 12).

Powers and Functions of the Department of Agrarian Reform (Section 51)
- Initiate expropriation proceedings for acquiring private agricultural lands, with specified order of priority (Section 51(1)).
- Acquire private agricultural lands through negotiated purchase for distribution to actual occupant-tillers (Section 51(2)).
- Help landless farmers acquire economic family-size farm units of not more than 6 hectares (Section 51(3)).
- Administer and dispose of public agricultural lands for resettlement and sale (Section 51(4)).
- Develop plans for opening public lands for distribution (Section 51(5)).
- Give economic family-size farms to landless citizens through organized resettlement (Section 51(6)).
- Reclaim swamps and marshes for agricultural purposes and subdivide them into economic family-size farms (Section 51(7)).
- Undertake measures to ensure early issuance of titles to settlers of public lands (Section 51(8)).
- Survey, subdivide, and set aside lands for economic family-size farms, large-scale operations, town sites, and other improvements (Section 51(9)).
- Inform relevant agencies about problems of settlers and farmers for extension services (Section 51(10)).
- Acquire landholdings for agricultural lessees exercising pre-emption and redemption rights (Section 51(11)).
- Conduct land capability survey and classification (Section 51(12)).
- Make arrangements with the Land Bank regarding titles of public agricultural lands (Section 51(13)).
- Expropriate home lots occupied by agricultural lessees for resale to them (Section 51(14)).
- Ensure that distributed agricultural lands are sold only to the government by beneficiaries (Section 51(15)).
- Submit annual report to the President, Congress, Secretary of Finance, and Auditor General (Section 51(16)).

Just Compensation (Section 56)
- In determining just compensation for expropriated lands, the court shall consider the fair market value, assessed value, and other pertinent factors.
- The Land Bank shall pay the landowner in accordance with Section 80.

Sale of Public Agricultural Lands (Section 71)
- The Department can sell up to 144 hectares of public agricultural lands to holders of bonds issued to former landowners, subject to conditions of cultivation within specified timeframes.
- The selling price shall be credited to the Land Bank, and bonds shall be accepted as payment.

Issuance of Bonds by the Land Bank (Section 76)
- The Land Bank can issue bonds, debentures, and other evidences of indebtedness up to 5 times its unimpaired capital and surplus.
- These bonds shall be secured by the Bank's assets, tax-exempt, fully negotiable, unconditionally guaranteed by the government, and redeemable within 25 years.
- The bonds can be mortgaged up to 60% of their face value for investments in productive enterprises.

Payment to Landowners (Section 80)
- The Land Bank shall pay landowners for acquired lands with 20% in cash and the remaining balance in 6% tax-free redeemable bonds, unless the landowner desires to be paid in shares of stock up to 30% of the purchase price.
- Existing liens or encumbrances on the land shall be secured by the bonds and/or shares.
- Profits from the payment shall be exempt from capital gains tax.

Use of Bonds (Section 85)
- The bonds issued by the Land Bank can be used for:
1. Payment for agricultural lands or other real properties purchased from the government.
2. Payment for shares of stock or assets of specified government-owned or controlled corporations.
3. Surety, bail bonds, or performance bonds where the government requires real property as bonds.
4. Payment for reparations goods.
5. Security for loans from specified government financial institutions.
6. Legal reserves against deposit liabilities of banks, subject to Central Bank conditions.

Reorganization of the Agricultural Credit Administration (ACA) (Sections 101, 105-106, 108, 110, 112)
- The ACA's administrative machinery shall be reorganized to align with the objectives of the Code (Section 101).
- The ACA's Board of Governors shall be composed of specified members, including representatives of farmers and the minority political party (Section 101).
- The ACA's loaning activities shall be directed to stimulate the development and operation of farmers' cooperatives, with rural banks and other banks acting as agents (Section 105).
- The ACA can extend production loans and loans for agricultural inputs to small farmers and tillers of the land, subject to specified limits and conditions (Section 106).
- The ACA can extend loans to eligible farmers' cooperatives at specified interest rates (Section 108).
- The total charges on all kinds of loans shall not exceed 12% per calendar year, with provisions for covering losses (Section 110).
- The ACA has the power to register, finance, and supervise agricultural cooperatives, associations, and organizations (Section 112).

Functions of Extension Workers (Section 124)
- Extension workers shall disseminate technical information, demonstrate improved practices, assist farmers in securing services, visit new farm operators, promote youth development, encourage formation of farmer groups, and promote and assist in organizing farmers' cooperatives.

Participation of Local Governments (Section 128-A)
- The Department shall involve local governments and secure their participation in various aspects of the Agrarian Reform Program, such as the leasehold system, land acquisition and distribution, cooperative development, and other operational activities.
- The Department shall formulate policies and programs and render technical assistance to local governments.

Powers of the Courts of Agrarian Relations (Section 155)
- The Courts of Agrarian Relations shall have all powers and prerogatives inherent in or belonging to the Court of First Instance.
- The Courts shall not be strictly bound by technical rules of evidence and procedure, except in expropriation cases.
- The Courts are authorized to conduct compulsory arbitration in agrarian disputes.
- Agricultural tenants, tillers, or lessees shall be entitled to the rights of a pauper litigant and privileges of an indigent litigant.

Functions of the Office of the Agrarian Counsel (Sections 163-164)
- The Office of the Agrarian Counsel shall represent tenants, agricultural lessees, farm workers, and agricultural owner-cultivators who cannot engage private counsel in cases before the Courts of Agrarian Relations and other courts (Section 163).
- The Agrarian Counsel, Deputy Agrarian Counsel, and Special Attorneys are authorized to administer oaths and acknowledgments free of charge (Section 164).

Criminal Violations (Section 167)
- Collusion between an agricultural lessee and lessor, or a vendor and vendee, to simulate agricultural contracts or loans for benefits under the Agrarian Reform Program shall be punishable by imprisonment of up to 5 years and a fine not exceeding ₱5,000 (Section 167(6)).
- The period for filing criminal actions shall cease to run when a case is filed before the Court of Agrarian Relations for determining a prejudicial question, until the determination becomes final (Section 167).

Agricultural Credit from Lending Institutions (Section 34)
- All lending institutions, whether public or private, shall set aside at least 25% of their loanable funds for agricultural credit to agricultural lessees, owner-cultivators, amortizing owners, and cooperatives registered with the ACA.

Demonstration Farm or Pilot Project (Section 35)
- The Department is authorized to segregate an area of 3,000 hectares from its reservations as a demonstration farm or pilot project for the moshave-type of communal agriculture resettlement program.

Rights and Privileges of Personnel (Section 36)
- Personnel of abolished, merged, renamed, or reorganized agencies shall have the same rights and privileges afforded under the Agricultural Land Reform Code.
- ₱1 million is appropriated from the National Treasury, with 10% set aside for expenses of the organizing staff.

Repeals, Modifications, and Effectivity (Sections 37-39)
- References to the Land Reform Project Administration, National Land Reform Council, and Land Authority shall be understood to refer to the Department of Agrarian Reform (Section 37).
- Inconsistent laws or parts of laws are repealed or modified accordingly (Section 38).
- This Act shall take effect upon its approval (Section 39).