PRESIDENTIAL DECREE NO.

27

TENANT EMANCIPATION LAW

 APPLICABILITY OF THE LAW

• Supplements the Comprehensive Agrarian

Reform Law (RA 6657)
1.   Presidential Decree No. 27 – Tenants' Emancipation
Decree(October 21, 1972).

2. Letter of Instructions (LOI) No. 474 - PLACING UNDER

OPERATION LAND TRANSFER (OLT) TENANTED
RICE/CORN LANDS SEVEN HECTARES OR LESS IN
AREAS UNDER CERTAIN CONDITIONS (OCTOBER 21,
1976)
 CONSTITUTIONALITY

1. Presidential Decree No. 27 was assumed to

be constitutional and upheld as part and parcel of the
law of the land (Association of Small Landowners in the
Philippines Inc. vs. Secretary of Agrarian Reform, 175
SCRA 342 (1989).

2.  Letter of Instructions No. 474; Constitutionality was

upheld in Zurbano vs. Estrella, 137 SCRA 333 (1989) 
The REQUISITES FOR COVERAGE under OPERATION
LAND TRANSFER (OLT) program are the following:
 
1. The land must be DEVOTED to RICE or CORN crops;
and

2.There must be a system of SHARE CROP or LEASE

TENANCY obtaining therein. 

If either of these requisites is ABSENT, the land is NOT

COVERED under OLT. Hence, a landowner NEED NOT APPLY
FOR RETENTION, where his ownership over the entire
landholding is INTACT and UNDISTURBED. (Eudosia Daez
and/or Her Heirs represented by Edriano D. Daez vs. the Hon.
CA, et al., 325 SCRA 857). 
SIZE OF THE LAND TRANSFERRED TO THE TENANT-FARMER

a. five (5) ha, if not irrigated; or

b. three (3) ha, if irrigated

STAGES OF LAND TRANSFER

1. Issuance of Certificate of Land Transfer to the

farmer-beneficiary; and

2. Issuance of Emancipation Patent

The TITLE to the land owned by the tenant shall not be
transferable except BY HEREDITARY SUCCESSION or TO
THE GOVERNMENT in accordance with this Decree, the Code
of Agrarian Reform and other existing laws and regulations.

NOTE: Sec. 6, EO 228 provides,"Ownership of lands

acquired by the farmer-beneficiary may be transferred
after full payment of amortizations."

The EMANCIPATION PATENT awarded to the TENANT-

BENEFICIARY CREATES a VESTED RIGHT OF ABSOLUTE
OWNERSHIP in the landholding – "a right which has
become fixed and established and is no longer open to
doubt or controversy." (Pagtalunan vs. Tamayo, 183 SCRA
252) 
The Mode of Transfer of Lands  to Tenant-Beneficiaries under
Presidential Decree No. 27 are the following: 

1.  OPERATION LAND TRANSFER (OLT) under PD 27 and EO

228; and

Operation Land Transfer is the ORDERLY and

SYSTEMATIC TRANSFER of land from the landowner to the
tenant-farmer under Presidential Decree No. 27.

2.    DIRECT PAYMENT SCHEME(DPS). — The landowner and

the tenant-beneficiary can AGREE on the DIRECT SALE terms
and conditions which are not onerous to the tenant-beneficiary.

The value of the land shall be equivalent to two and one half (2-
1/2) times the AVERAGE HARVEST OF
THREE NORMAL CROP YEARS IMMEDIATELY PRECEDING
THE PROMULGATION OF THIS DECREE.
 SIGNIFICANCE
CERTIFICATE OF LAND TRANSFER EMANCIPATION PATENT

• Does not vest upon tenant- • Vest upon tenant-beneficiary

beneficiary ownership over the absolute ownership over the
land. landholdings.

• Merely qualifies the tenant- • Constitute conclusive authority

beneficiary to posses the land for the issuance of an original or
and comply with certain transfer certificate of title in his
conditions preparatory to name.
ownership. .

• If complied with the conditions,

he is issued an Emancipation
Patent.
 RULES ON COVERAGE OF LANDS UNDER PD 27.

Rule 1

Landed estates  or landholdings larger than 24 hectares

(LOI 46 (December 7, 1972) -  covered by OLT  and there is
no retention to the landowner.

Rule 2

Landholding of 24 hectares or less (but above 7 hectares (

LOI 46 and LOI 227(November 16, 1974) covered by OLT but
landowner is entitled to retention  except if LOI 474 (October 21,
1976) applies. 
Rule 3
Landholding of seven (7) hectares or less
is EXEMPTED from OLT except if LOI 474 is applicable
under the following circumstances: 

Landowner owns  other agricultural  land of  more than

seven hectares in aggregate area, or he owns
COMMERCIAL, INDUSTRIAL, RESIDENTIAL or
URBAN LAND where he derives an adequate
income, DAR Memo, Circular No. 11, s. 1978 (April 21,
1978) Adequate income is at least FIVE THOUSAND
(P5000.00) PESOS per annum. (Gross Income).
Lands not covered by Presidential Decree No. 27.

1.  Private agricultural lands which are NOT PRIMARILY

DEVOTED TO RICE OR CORN, or 

2. There is NO SYSTEM OF SHARE CROP OR LEASE

TENANCY obtaining in the landholding.
 CANCELLATION OF EMANCIPATION PATENTS.

a. Abandonment of the land;

b. Neglect or misuse of the land;
c. Failure to pay 3 annual amortizations;
d. Misuse or diversion of financial and support
services;
e. Sale, transfer or conveyance of the right to the
use of the land; and
f. Illegal conversion of the land.
 PAYMENT OF JUST COMPENSATION TO LAND OWNER.

a. Direct payment to the landowner by the farmer-

beneficiaries, in cash or in kind, on terms mutually
agreed upon by beneficiaries and land owners and
subject to the approval of DAR;

b. Payment by the Landbank with 10% payable in cash

immediately and the balance payable in form of
landbank bonds over 10-year period, with 1/10 th of the
face value maturing every year until 10th year;

c. Other modes of payment as may prescribed or

approved by the PARC.
Right of Retention by Landowners under Presidential
Decree No. 27. Supplemental Guideline 
A.O. No. 04, Series of 1991).

The policy statements are as follows:

A.  Landowners covered by PD 27are entitled to retain SEVEN

hectares, except those whose entire tenanted rice and corn
lands are subject to acquisition and distribution under OLT. 
B. Landowners who filed their application for retention
BEFORE 27 August 1985, the deadline set by 
Administrative Order No. 1, Series of 1985, may retain not more
than seven hectares of their landholding covered by PD 27
regardless of whether or not they complied with LOI Nos. 41, 45,
and 52.

Landowners who filed their application for retention

BEFORE 27 August 1985, the deadline set by 
Administrative Order No. 1, Series of 1985, may retain not more
than seven hectares of their landholding covered by PD 27
regardless of whether or not they complied with LOI Nos. 41, 45,
and 52.

However, landowners who filed their application for

retention AFTER the 27 August 1985 deadline and DID NOT
COMPLY with the requirements of LOI Nos. 41, 45, and 52shall
C. A landowner WHO HAS DIED must have manifested
during his lifetime his intention to exercise his right of
retention prior to 23 AUGUST 1990 (The finality of the
Supreme Court decision in the case "Association of Small
Landowners of the Philippines, Inc. et al. vs. Honorable
Secretary of Agrarian Reform) to allow his heirs to now
exercise such right under these Guidelines. Said heirs must
show proof of the original landowner's intention.

The heirs may also exercise the original landowner's right of

retention if they can prove that the decedent HAD NO
KNOWLEDGE of OLT coverage over the subject property. 
The REQUISITES for the exercise by the landowner of
his RIGHT OF RETENTION are the following: 

1.  The land must be DEVOTED TO RICE OR CORN

CROPS;

2.  There must be a system of share-crop or lease tenancy

obtaining there.

3.  The size of the landholding MUST NOT EXCEED

TWENTY FOUR (24) hectares provided that at least seven
(7) hectares thereof are covered lands and more than seven
(7) hectares of it consist of “other agricultural lands.”
AN OWNER MAY NOT RETAIN UNDER THE
FOLLOWING CASES:

a) If he, as of October 21, 1972, owned more than 24 hectares

of tenanted rice or corn lands; or

b) By virtue of LOI 474, if he, as of 21 October 1972,

owns less than 24 hectares of tenanted rice but additionally
owns the following:

  Other agricultural land of more than seven hectares,

whether tenanted or not, whether cultivated or not, and
regardless of the income derived therefrom; or

 Land used for commercial, industrial, residential or

other  urban purposes, from which he derives adequate
income to support himself and his family.
 The BENEFICIARIES of Presidential Decree No. 27 are
TENANT-FARMERS, thus:

“This shall apply to TENANT-FARMERS of PRIVATE

AGRICULTURAL LANDS PRIMARILY DEVOTED TO RICE OR
CORN under a SYSTEM OF SHARE-CROP or LEASE-
TENANCY, whether classified as landed estate or not.

“The tenant-farmers, whether in land classified as landed estate

or not shall be DEEMED OWNER of a portion constituting
a family-size farm of FIVE (5) hectares if not irrigated and
THREE (3) HECTARES IF IRRIGATED. 
The tenant shall pay for THE COST OF THE LAND, including
interest of six (6) percent per annum in FIFTEEN (15)
YEARS of fifteen (15) equal annual amortizations.

NOTE: The period is extended to twenty (20) years equal

annual amortizations under Sec. 6, E.O. 228of July 17, 1987
by Pres. Corazon C. Aquino. 
October 21, 1976
 
LETTER OF INSTRUCTIONS NO. 474
 
TO                :     The Secretary of Agrarian Reform
 
WHEREAS, last year I ordered that small landowners of tenanted
rice/corn lands with areas of less that twenty-four hectares but
above seven hectares shall retain not more than seven hectares
of such lands except when they own other agricultural lands
containing more than seven hectares or land used for residential,
commercial, industrial or other urban purposes from which they
derive adequate income to support themselves and their families;
WHEREAS, the Department of Agrarian Reform found that in the
course of implementing my directive there are many landowners of
tenanted rice corn lands with areas of seven hectares or less who
also own other agricultural lands containing more than seven
hectares or lands used for residential, commercial, industrial or
other urban purposes where they derive adequate income to
support themselves and their families;

WHEREAS, it is therefore necessary to cover said lands under the

Land Transfer Program of the government to emancipate the
tenant-farmers therein.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of
the Philippines, do hereby order the following:
1.         You shall undertake to place under the Land Transfer
Program of the government pursuant to Presidential Decree No.
27, all tenanted rice/corn lands with areas of seven hectares or
less belonging to landowners who own other agricultural lands of
more than seven hectares in aggregate areas or lands used for
residential, commercial, industrial or other urban purposes from
which they derive adequate income to support themselves and
their families.
2.         Landowners who may choose to be paid the cost of their
lands by the Land Bank of the Philippines shall be paid in
accordance with the mode of payment provided in Letter of
Instructions No. 273 dated May 7, 1973.
Done in the City of Manila, this 21st day of October in the year of
Our Lord, nineteen hundred and seventy-six.
 ASSOCIATION OF SMALL LANDOWNERS V.
SECRETARY OF DAR, G.R. No. 78742
(175 SCRA 343), July 14, 1989

FACTS:

These are consolidated cases involving common legal questions

including serious challenges to the constitutionality of R.A. No.
6657 also known as the "Comprehensive Agrarian Reform Law
of 1988“

In G.R. No. 79777, the petitioners are questioning the P.D No. 27
and E.O Nos. 228 and 229 on the grounds inter alia of separation
of powers, due process, equal protection and the constitutional
limitation that no private property shall be taken for public use
without just compensation.
In G.R. No. 79310, the petitioners in this case claim that the
power to provide for a Comprehensive Agrarian Reform Program
as decreed by the Constitution belongs to the Congress and not
to the President, the also allege that Proclamation No. 131 and
E.O No. 229 should be annulled for violation of the constitutional
provisions on just compensation, due process and equal
protection. They contended that the taking must be
simultaneous with payment of just compensation which such
payment is not contemplated in Section 5 of the E.O No. 229.

In G.R. No. 79744, the petitioner argues that E.O Nos. 228 and
229 were invalidly issued by the President and that the said
executive orders violate the constitutional provision that no
private property shall be taken without due process or just
compensation which was denied to the petitioners.
In G.R. No 78742 the petitioners claim that they cannot eject
their tenants and so are unable to enjoy their right of retention
because the Department of Agrarian Reform has so far
not issued the implementing rules of the decree. They therefore
ask the Honorable Court for a writ of mandamus to compel the
respondents to issue the said rules.

ISSUE:

Whether or not the laws being challenged is a valid exercise of

Police power or Power of Eminent Domain.
 RULING:

Police Power through the Power of Eminent Domain, though

there are traditional distinction between the police power and the
power of eminent domain, property condemned under police
power is noxious or intended for noxious purpose, the
compensation for the taking of such property is not subject to
compensation, unlike the taking of the property in Eminent
Domain or the power of expropriation which requires the payment
of just compensation to the owner of the property expropriated.
WHEREFORE, the Court holds as follows:

1.         R.A. No. 6657, P.D. No. 27, Proc. No. 131, and E.O. Nos. 228 and 229
are SUSTAINED against all the constitutional objections raised in the herein
petitions.

2.      Title to all expropriated properties shall be transferred to the State only

upon full payment of compensation to their respective owners.
3.         All rights previously acquired by the tenant-farmers under P.D. No. 27
are retained and recognized.

4.     Landowners who were unable to exercise their rights of retention under

P.D. No. 27 shall enjoy the retention rights granted by R.A. No. 6657 under the
conditions therein prescribed.

5.     Subject to the above-mentioned rulings, all the petitions are DISMISSED,

without pronouncement as to costs.
End of Presentation..

Thank You..