GROUP 3 – AGRARIAN LAW AND SOCIAL
LEGISLATION supplied with water by means of power-pump
SATURDAY – 6:00 PM TO 8:00 PM
CHAPTER III TENANTS EMANCIPATION DECREE
Presidential Decree No. 27 which took effect on
October 21, 1972
Prefatory Statement
Under PD No. 27 there is no more leasehold in
tenanted rice and corn lands. The tiller
automatically becomes the amortizing owner of
the land he tills without even the benefit of
expropriation. The three shift underlines under
RA No. 3844 no longer apply.
EO No. 228 by Corazon Aquino provides that
“all qualified beneficiaries are now deemed full
owners as of October 21, 1972 of the land they
acquired by virtue of Presidential Decree No.
27.” However, if such beneficiaries have not
completed amortization on the land, they have
to continue paying the land amortizations.
A. Phrases and Terms under PD No. 27
(1) Private agricultural lands primarily devoted
to rice and corn – refer to lands of private
ownership planted with rice and corn as
principal crops as of October 21, 1972, not
being part of the public domain and are under
the effective control and supervision of natural
or juridical persons. - The controlling criterion is
that the land has been proven to be suitable for
the production of rice and corn as their
principal crops, although seasonal crops are
from time to time planted thereon.
(2) Tenant farmer – farmer who actually tills the
land, whether under share tenancy or lease
tenancy. In case the share-tenant or lessee
employs sub-tenants or sub-lessees who
actually till the land, the latter shall be
considered the tenant-farmers.
(3) Irrigated Land – denotes a farmland that is
or gravity flows system or other modes of
irrigation.
(4) Non-irrigated or upland refers to a farmland
located on a higher elevation or terrain and is
not provided with water supply through any
method of irrigation and is almost rainfed.
(5) Normal crop year denotes an agricultural
period of 12 months of planting and harvesting
activities whether on a double or triple cropping
not attended by any natural calamity.
(6) Right of retention in rice and corn lands is a
right pertaining to a landowner or a landholding
devoted to rice and corn retain an area of 7
hectares for his own individual farming if such
landowner is cultivating or will now cultivate it.
COMMENT:  The landowner could be
compelled to transfer his landholding in favor of
a tenant-farmer even if the retained area is less
than 7 hectares should he be found by the DAR
to be an absentee or with sources of income
other than the retained area, EXCEPT when the
cause of his absenteeism is due to force
majeure.
B. Tenant Beneficiaries
 The tenant-farmer shall be deemed
owner of a portion constituting a family
size of 5 hectares, if not irrigated, and 3
hectares, if irrigated.
 A tenant beneficiary who fails to take
advantage of his right under the Decree
or is guilty of abandonment of his farm
holding, may be deprived thereof, in
which case the landholding shall revert
to the government and not the
landowner.
 In case the land is transferred to the
tenant-farmer, the latter shall pay the
Land Bank in 15 years with interest at
6% per annum. The value of the land to
 be transferred to the tenant-farmer
shall be equivalent to two and one-half
(2 ½) times the average harvest of
three normal crop years immediately
preceding the promulgation of PD No.
27.
 Should he default in the payment of his
amortizations, the farmer’s cooperative
which he is affiliated with, shall answer
for the remaining balance. (It is
therefore essential that the tenant
farmer in order to become a bona fide
beneficiary that he must be a member
of a duly recognized farmers’
cooperative, otherwise, he shall not be
entitled to the issuance of a certificate
of title to his farmholding.)
 Payment of such amortizations is
guaranteed by the government by
purchasing shares of stock in GOCC like
the Land Bank and DBP.
 Title to land acquired under PD No. 27
shall not be transferred to third
persons except by hereditary
succession or in favor of government.
Hereditary succession should be limited
only to intestate succession under the
Civil Code. Sec. 27 of RA No. 6657 has
the effect of amending the provision of
PD No. 27. Lands acquired under these
laws, may now be transferred by (a)
hereditary succession, (b) to the
government, (3) LBP, (4) other qualified
beneficiaries, and (5) even third
persons after the lapse of ten years
from the issuance and registration of
the Emancipation Patent or Certificate
of Land Ownership Award.
C. MATURITY DATE OF LAND BANK OF
THE PHILIPPINES (LBP) BONDS
What are LBP Bonds?
LBP bonds are certificates of indebtedness,
approved by the Monetary Board of the Central
Bank, fully tax-exempt both as to principal and
income, and bear interest at the rate of 6% per
annum redeemable at the option of LBP at or
before maturity, which in no case shall exceed
25 years. They are fully negotiable and
unconditionally guaranteed by the government
of the Republic of the Philippines. (Maddumba
v. GSIS)
These bonds are deemed contracts and the
obligations resulting therefrom fall within the
purview of the non-impairment clause of the
Constitution, and any impairment thereof may
take any encroachment in any respect upon the
obligation and cannot be permitted. Thus, the
value of these bonds cannot be diminished by
any direct or indirect act, particularly, since said
bonds are fully guaranteed by the government
of the Philippines. They are issued not in the
open market nor for the primary purpose of
raising funds or pooling financial resources, but
in the captive market of landowners and to
facilitate the speedy transfer of lands to the
tenant-farmers in support of the Land Reform
Program of the government. They are not
ordinary commercial paper in that sense subject
to discounting.
All outstanding LBP bonds that are retained by
the original landowner-payee or by their heirs
are deemed matured up to one-twenty fifth
(1/25) of their yearly face value from their date
of issue to the date of Executive Order No. 228
and may be claimed by the original landowner-
payee by surrendering the bonds to the LBP.
(Sec. 4, E.O. No. 228).
The original landowner-payee may claim
payment for the remaining unmatured period
of the surrendered bonds under any of the
modes of compensation provided in Section 3,
subsections (a) (b) or (c) of E.O. No. 228. In
order to meet the financial requirements, the
Central Bank shall remit to the LBP such sums as
may be necessary from the Sinking Fund
established by the LBP from the retirement of
its bonds and other long-term obligations and
which Sinking Fund is administered by the
Central Bank, provided, however, that there is
no change in maturity of other outstanding LBP
bonds acquired and held by transferees from
original bondholders.
The landowner is exempt from capital gains tax
on the compensation paid to him under this
Executive Order.
D. Procedure in Case Landowner Refuses
to Accept Payment
In the event the landowner does not accept
payment of the compensation, it shall be held in
trust for him by the Trust Department of the
Land Bank. The cash portions of the
compensation and such portions that mature
yearly shall be invested only in government
securities fully guaranteed by the Republic of
the Philippines. All the net earnings thereof
shall be for the benefit of the landowner, his
heirs or successors in interest.
Lease rentals paid to the landowner by the
farmer beneficiary after October 21, 1972, shall
be considered as advance payment for the land.
E. Effect of Failure to Pay Amortization
Failure of the farmer-beneficiary to pay 3
annual amortizations shall be sufficient cause
for the LBP to foreclose on the mortgage.
Foreclosure proceeding shall be commenced by
serving final notice of payment to the defaulting
tenant-farmer by the LBP which shall furnish
DAR with a copy of such notice.
After the lapse of 30 days from service of final
notice to both the farmer and the DAR, the LBP
shall register a certification under oath of its
intent to foreclose with the Register of Deeds.
PAYMENT
In the event the tenant-farmer defaults in the
payment of the amortization, P.D. No. 27
ordains that the amortization due shall be paid
by the farmer’s cooperative where the
defaulting tenant-farmer is a member, with the
cooperative having a right of recourse against
the farmer. Thus, if the tenant-farmer defaults,
the landowner is assured of payment since the
farmers’ cooperative will assume the obligation.
Executive Order (E.O.) No. 228, issued on July
17, 1987, modified P.D. No. 27 on the manner
of payment and provided for different modes of
payment of the value of the land to the
landowner, the pertinent portion reads:
SECTION 3. Compensation shall be paid to the
landowners in any of the following modes, at
the option of the landowners:
(a) Bond payment over ten (10) years, with
ten percent (10%) of the value of the land
payable immediately in cash, and the balance in
the form of LBP bonds.
(b) Direct payment in cash or in kind by the
farmer-beneficiaries with the terms to be
mutually agreed upon by the beneficiaries and
landowners and subject to the approval of the
Department of Agrarian Reform; and
(c) Other modes of payment as may6 be
prescribed or approved by the Presidential
Agrarian Reform Council {Emphasis supplied}
In the event a dispute arises between the
landowner and the tenant-farmer on the
amount of the lease rentals, Section 2 of E.O.
No. 228 provides that the DAR and the
concerned BCLP shall resolve the dispute. In any
case, the Land Bank of the Philippines shall
process the payment of the landowner’s
compensation claim, which it shall hold in trust
for the landowner, pending resolution of the
dispute. Thus, under this scheme, as with
P.D.No. 27, the landowner is assured of
payment of the full value of the land under E.O.
No. 228/
When the allegation involves the non-payment
of a debt and the opposing party raises the
defense of payment, the burden shifts from the
party alleging non-payment who claims
payment of the debt. Thus,. In the case of (BPI
vs Spouses Reynaldo, G.R. No.176664, July 21,
2008):
“As a general rule, one who pleads payment has
the burden of proving it. Even where the
plaintiff must allege non-payment, the general
rule is that the burden rests on the defendant
to prove payment, rather than on the plaintiff
to prove non-payment. The debtor has the
burden or showing with legal certainty that the
obligation has been discharged by payment.
F. How Foreclosure may be Lifted
A foreclosure may be lifted by the tenant-
farmer, or any of his compulsory heirs, within
the period of 2 years from its registration, by
paying the LBP all unpaid amortizations on the
land with interest thereon of 6% per annum.
In case of failure to life the foreclosure,
ownership of the land shall be deemed
transferred to the LBP.
G. Sale of Lands Foreclosed
The LBP, not later than 3 months after its
registration of the land, shall sell the foreclosed
land to any interested landless farmer duly
certified to as bona fide landless farmer by the
DAR of the barangay or the two closest
barangays where the land is situated.
The cost of the land is the unpaid amortizations
due on the land as of the date of the sale with
interest thereon of 6% per annum.
H. Prior Notice of Sale
The LBP, at least 1 month prior to the sale, shall
furnish the DAR with a notice of sale and shall
post similar notice in the town hall or any
suitable place frequented by the public of the
barangay.
I. Affidavit Required to Voluntary
Dealings
No voluntary deed or instrument purporting to
be any encumbrance or conveyance of private
agricultural land principally devoted to rice and
corn or any portion thereof shall be registered
unless accompanied by an affidavit of the
vendor or executor stating the land involved is
not tenanted, or if tenanted, the same is not
primarily devoted to the production of rice and
corn.
J. Status Quo over Lands Covered by PD No. 27
Upon effectivity of PD No. 27, all tenant-farmers
of private agricultural lands primarily devoted
to rice and corn are deemed owners if the land
they till. Pending the issuance of implementing
rules and regulations which were never issued
at all until the issuance of PD No. 228 and the
enactment of RA No. 6657, the relations
between landowners and tenants were placed
in their status quo. In effect the agricultural
land leasehold relationships with respect to rice
and corn lands of seven (7) hectares, but also
private agricultural lands of seven (7) hectares
in aggregate areas, or land used for residential,
commercial, industrial or other purposes from
which they derive adequate income to support
their families.
With respect to landowners whose landholdings
fall within the exempted limit but who have
offered their landholdings for transfer under PD
No. 27, the same are immediately placed within
the coverage of operation land transfer.
Operation Land Transfer further
Further extends to home lots occupied by
tenant-farmers of land principally developed to
rice and corn by virtue of the mandates of LO!
No. 75 dated July 10, 1978, regardless o
whether or not the home lot is found inside or
outside the farm lot or equivalent to 2-5 times
the harvest of three normal crop year
immediately preceding October 21, 1972.
In case of failure to agree on the price, the
tenant-farmer may request the DAR to
exprobrate home lot for sale to the farmer. In
no case shall tenant-farmer ejected from the
home lot during the pendency of the
expropriation proceedings.
If the home lot is owned by another person
other than the land leased, the price of resell
shall be that agreed upon and in case of
disagreement, the value of the home lot shall
be the same as the valuation of the owner
appearing in the tax declaration
duty of the Register of Deeds to prepare a
corresponding certificate of title for the
farmer’s farmholding and the issuance of the
owner’s duplicate certificate of title to the
grantee-beneficiary.
EO No. 228 now allows transfer of lands
acquired by the operation PD No. 27 and other
agrarian reform laws, provided such beneficiary
has fully paid his remaining amortizations to the
LBP, and the transferee is a qualified
beneficiary. It can even transfer the same in
favor of third persons not a beneficiary,
whether natural or juridical, after the lapse of
10 years from the issuance and registration of
the Emancipation Patent or Certificate of Land
Ownership Award.

K. Certificate of Land Transfer as Evidence

of Ownership

This is immediately issued to the tenant-farmer

after identifying the farmer’s landholding, as
soon as the DAR has transferred the
landholding to him and recognized as a
qualified beneficiary.

This is not yet considered as absolute evidence

of ownership but only as a provisional title of
ownership thereof while he remains as
amortizing owner. It is, however, a registrable
valid evidence of ownership which can be
accepted as collateral for a loan with any
financing institution.

L. Mechanics on Issuance of
Emancipation Patent

As soon as the tenant-farmer had fully paid his

amortization to the LBP, an Emancipation
Patent is issued to him by the DAR.

The lands covered by an Emancipation Patent

have the character of registered lands under
the Torrens System. After an entry is made of
such Emancipation Patent in the corresponding
registration book, it becomes the ministerial